Executive rentals are collateral damage in backlash against Airbnb
Condominium buildings are adopting bylaws that ban short-term rentals
TORONTO – After first disrupting the hotel business industry, shared rental services like Airbnb are making life difficult for Canada’s corporate housing sector.
Condominium buildings across the country are increasingly shutting their doors to companies that help find temporary accommodations for executives on short-term work projects or their families, following some well-publicized disruptions caused by overnight guests.
They are adopting bylaws that ban short-term rentals, which some buildings define as anything less than three, six or even 12 months.
“Since our average stay is 56 days that doesn’t necessarily work for us,” says Jeff Brookhouser, CEO of Premiere Suites.
“There have been cases where condominium boards just said we won’t allow these companies to do business in our building and we won’t allow any transient types of stays.”
Premiere Suites has units available in 450 buildings across Canada, with about 10 to 15 per cent no longer welcoming their business.
“So it’s significant, not unmanageable, but significant for sure,” he said in an interview.
Corporate housing is a $250-million-a-year business in Canada. It’s a small component of the $2.8 billion residential rental space comprised mostly of stays of less than 30 days.
The problem is particularly acute in British Columbia, which is struggling with housing shortages.
Airbnb has had a huge impact on all housing providers because it has attracted regulatory attention, says Terry Rodgers, founder of HighStreet Accommodations and Canadian managing director for the Corporate Housing Providers Association.
Corporate housing flew under the radar for years before being tarred with the same brush as short-term stays despite their different customer base and operations, she said. While Airbnb hosts often leave condo keys in lockboxes and sometimes don’t know who is using the units, corporate housing providers ensure its accommodation meets standards and staff are on call to address emergencies and repairs.
Companies with long histories of service in a municipality can often carve out exclusions to individual building bylaws, but it’s a bigger challenge when operating in new geographies, says Shannon McGuey of Calgary-based Imperial Suites.
The Tour des Canadiens highrises in Montreal has been particularly difficult. They charge extra fees to move in and $100 for each change of occupant in a bid to discourage rentals, she said.
The towers adjacent to the Bell Centre gained a reputation as a party palace, much to the chagrin of permanent residents, because of the number of units available on Airbnb.
“There’s a very high number of what claim to be corporate housing providers in that market that have burnt the bridges for us,” she said.
The situation facing those providing executive housing worsened a few years ago when lawyers identified condo board bylaws as a new source of business, Rodgers said.
“You can see in some of the ways that these bylaws are being written that people are just trying to sort of lash out and see what else they can do to reduce this thing that they perceive as a danger.”
That has put pressure on condo owners, frequently investors who purchased their units hoping to make some money from rental.
Airbnb has helped these people by making it very easy for individual investors to hook up with customers through its booking service.
The global accommodation giant has expanded with Airbnb for Work, which has attracted average stays of about five days.
In 2018, Airbnb for Work expanded beyond just business travel to include team building, offsite events and meetings, and relocations.
“Our goal is to help transferees instantly feel like they belong in their new communities,” Airbnb said.
Corporate housing professionals don’t underestimate the potential threat from Airbnb as use by business travellers has grown.
Millennials who already feel comfortable using the service for leisure trips will undoubtedly book for business. That’s especially true for employees of small- or medium-sized companies who make their own accommodations decisions and like the booking service’s ability to review inventory availability.
McGuey sees competition from Airbnb growing in the next few years.
“It certainly means we’ll have to act quickly in order to compete because the reality is that Airbnb has created an empire,” she said. “They are creating their platform to attract the business user to go to their website rather than go to people like us.”
Airbnb says its services are complementary to existing relocation programs.
“Longer-term rentals are an important part of the housing market and we are committed to continuing our work with cities across Canada to ensure a healthy, responsible home-sharing community that balances the concerns of housing affordability with the rights of everyday people to share their homes.”