Viewpoint: Ottawa needs to crack down on Airbnb ‘ghost hotels’

By Sarah Newman

Surprising though it may sound, not all millennials are big fans of Airbnb — especially not millennial renters.

Young renters across Canada in tourist-friendly neighbourhoods like Centretown are increasingly being priced out of the market by apartment towers turned into Airbnb “ghost hotels”, with thousands of units being removed from the rental marketplace by lucrative “entire-home” Airbnbs.

The Uber-style hotel app, which was built to enable homeowners to rent out guest rooms to tourists, has grown exponentially since its 2008 launch. Now a hospitality and tech behemoth, Airbnb claims to have “democratized” the hotel industry by making B&B hosting an easy venture for regular people: a share-economy startup that allows struggling homeowners to make mortgage payments by renting empty rooms to cash-strapped travellers.

But a study last week by Centretown-based investment firm CBRE Canada has found that “entire-home rentals” accounted for nearly 80 per cent of Ottawa’s Airbnb listings. In real terms? Contrary to Airbnb PR manager Alex Dagg’s oft-repeated refrain (“The vast majority of our hosts are sharing their primary residence”) the real majority of Airbnb hosts are not budget-conscious couples renting out an underused bedroom, but landlords and property management companies maximizing their investment properties’ incomes.

A fairly average Airbnb, at $100 a night, can beat out a traditional rental even if it’s only occupied three-quarters of the time. To make $2,100 per month, a traditional Ottawa rental has to be pretty swanky, while a $2,100 per month Airbnb only has to be well-located and bedbug-free.

Canadian tourist destinations such as Toronto, Vancouver and Montreal are finding their rental markets squeezed and inflated, as landowners feel entitled to price traditional rentals higher and higher to compensate for the money they “lose” by skipping the Airbnb route.

Ottawa is hardly the first city to be hit by this. An August study by UCLA researchers found that every time neighbourhoods get more Airbnb rentals, the average rent goes up like clockwork. McGill University urban planners found that the top one per cent of Torontonian Airbnb “hosts” — usually big companies with dozens of listings — earned one-eighth of all Toronto Airbnb profit. Online forums are rife with stories of Canadian renters being evicted to make room for lucrative Airbnb rentals.

But the fact that we’re not first to face this phenomenon gives Ottawa a leg up. We can learn from other cities’ examples. And for the sake of renters currently being priced out of their apartments, Ottawa city council needs to get moving now to preserve our rich supply of rentable dwellings.

The City of Toronto proposed a 10-per-cent tax on all revenues gained from short-term rentals. In both Toronto and Vancouver this summer, municipal politicians agreed on outright bans of Airbnbs that aren’t in “primary residences”, which would force a return to the spare-bedroom ethos.

Quebec has decided that Airbnbs will be taxed like traditional hotels, helping to disincentivize the Airbnb business strategy.

But as of this summer, city officials in Ottawa were still wondering aloud what to do, telling CBC at one point they weren’t even sure they had the power to deter Airbnb.

The few councillors who spoke out against Airbnb were primarily focused on trash and parking nuisances, not the impact on the rental market.

Nobody’s saying it will be easy. Airbnb puts up a good fight, and tourism-related businesses are sure to suffer if Airbnb is hampered. But the city needs to be loyal to local citizens and start seriously cracking down, before Ottawa’s rental market becomes as depleted as Toronto’s or Vancouver’s.

Everybody needs a place to live.