Unwelcome guests: City should regulate Airbnbs

by Editorial Board - July 31, 2018

It’s tough finding a hotel room in Yellowknife these days.

That’s what happens when a place suddenly and unexpectedly becomes a touristic destination.

The city has always been a magnet for adventurous types, but things really started heating up back in 2010 after Canada cut a deal with the People’s Republic of China and got Approved Destination Status from the Chinese government.

Since then, many thousands of Chinese tourists have flocked to Canada and a goodly number of them are coming up here.

But between the Asians, Europeans, Americans and other Canadians who are drawn to our city’s eccentric charms, it’s no wonder you can’t find a hotel room in this town during peak tourist season.

Airbnb hosts have an unfair tax advantage and it’s up to governments to step in and level
the playing field. NNSL file photo

A number of enterprising citizens have done their best to fill this supply gap by offering short-term rentals through online platforms such as Airbnb, VRBO, Flip Key, Roomorama and other platforms.

In many ways, short-term rentals have been beneficial. Thanks to them, folks who might otherwise struggle to pay their mortgages are enjoying additional revenue by renting out their extra bedrooms and tourists who might not be able to afford a hotel room can get cheap accommodations.

Plus, tourists get a genuine Northern experience when they stay in the basements or extra rooms of genuine Northerners.

But there are downsides.

In some communities, short-term rentals have been depleting the stock of long term rentals, which pushes up the price of rent.

There is little evidence that this has been happening in Yellowknife. According to the Canada Mortgage and Housing Corporation (CMHC), the city’s apartment vacancy rate has been relatively stable. It decreased from 4.2 per cent in 2016 to 3.5 per cent in 2017, and it is unlikely that vacancy rates or rents will change much this year, it said.

But when you look online, you can see that 147 properties in Yellowknife are currently listed on Airbnb. That’s a lot of under-the-table business because up to now the owners of these properties have been left to their own devices.

The current state of affairs gives short-term rentals an unfair advantage over the traditional hotel, motel and B&B industry.

The city is proposing a new tax of up to five per cent to hotel bills. The funds would go to support a new organization that would promote tourism in the city.

It is unfair that Airbnb hosts should be allowed to operate without paying taxes or having business licences while they benefit from the marketing and promotions being paid for by the rest of the hospitality industry.

In addition, it’s unfair that many small bed and breakfasts in the community pay for a business licence while Airbnb hosts are getting a free ride.

The City of Yellowknife is looking to change that by proposing new regulations that will govern short-term rental operators, which is a good thing. This state of lawless capitalism should not be allowed to persist and it’s up to governments to step in and level the playing field.

To that end, council is considering a number suggested regulations that could take effect on January 1, 2019.

For the most part, they make sense but the harshest regulations should not be imposed.

Especially the recommendation that anyone listing a short‐term rental without a business licence should pay a fine of $1,000 per day. That would definitely stifle the industry.

In addition, the city should make it as easy as possible for property owners to acquire a business licence to rent part or all of their property on a short‐term basis.

To that end, administration is recommending that owners be allowed to apply for a licence online, which is good because excessive red tape could strangle the industry.

The municipal recommendations state business licence fees for short-term rentals would not exceed $100, which is reasonable. If the amount is too high, people will either operate clandestinely or not at all.

The cost of a licence should be scaled to the size and complexity of the operation to prevent people from going nuts and starting up hotel-sized Airbnb operations. To prevent that, the city needs to adopt a clear definition of what constitutes a short-term rental, which it has not yet done.

And generally, regulations for short-term rentals should be kept to a minimum. There is no need to adopt as restrictive a system as city governments have imposed in Toronto and Vancouver because that would impede growth of the city’s burgeoning tourism sector and it’s hard enough getting a hotel room around here.

Tourism is becoming big business in this city. In 2017, it contributed approximately $200 million dollars to the territorial economy.

We should not impose too many regulations that would impede this growth but we should find a way to make sure everyone gets a fair slice of the pie.