Top News

AirBnB and hotels competing for St. John's tourist business

The growing popularity of sites like Airbnb give homeowners options to make some money from unused spaces, but also presents competition for local hotels.
The growing popularity of sites like Airbnb give homeowners options to make some money from unused spaces, but also presents competition for local hotels.

When it comes to accommodations, travellers’ priorities differ greatly, from cost to comfort. Hostels, hotels, B&Bs and now private residences can play on these differences to compete for valuable tourist business.

AirBnB, the popular service that allows travellers to let spare rooms, infrequently used pieds-a-terre or their regular homes, is part of what has come to be known as the sharing economy, which includes services such as Couchsurfing and Uber.

Simply put, the sharing economy takes the money out of the hands of brand-name operations and puts it in the pockets of individuals who want to earn off the resources at their disposal, with a percentage going to the administration service.

Letting an apartment is not a new concept, but it was one previously reserved for long-term stays of a few weeks or months. Someone travelling for a few nights would book at room at a hotel, something many people are now opting out of in favour of cheaper options with fewer amenities.

“I had a big house all to myself and it was a way to make some extra money,” says Melissa Hogan, who began letting spare bedrooms in her house on AirBnB in July 2016.

Her available room, which looks out over Signal Hill, as well as giving guests access to shared common areas and a shared washroom, has had 70 per cent occupancy through the summer and is well reviewed.

Hogan has found that, unlike customers planning to stay in a hotel, her guests — most of whom are under the age of 40 — often don’t book very far in advance.

When asked what she thinks about competition between AirBnB and hotels, Hogan says, “To me, it’s not really a problem because they don’t really compete with me.”

She explained that someone who wants to stay in a hotel is unlikely to be the same person who wants to stay in a room in her house.

“I think travellers like having the option to spend the extra money elsewhere,” says Hogan, who finds there is a 50/50 chance she will stay in a hotel or an AirBnB when she travels.

“It’s doing fairly well. It’s been a steady summer,” Kelly Finlay, general manager of the Marriott hotel on Duckworth Street, says when asked how business is this summer.

She says they have not seen an increase in business since last year, and some of the small drops are potentially related to customers choosing AirBnB.

“I’m concerned with the fact that we don’t really know how much the city is growing in the AirBnB market,” says Finlay.

She does not appear overly concerned by the new competition, however, saying, “When you’re booking a hotel, you know exactly what you’re getting,” something that can be hard to predict with other, less regulated accommodations.

For Jennifer Collins, who has been letting her entire downtown home on AirBnB since May, the impulse for putting it on the website came more from the need to supplement her income.

The house, which accommodates two guests, has been consistently booked through July and the first half of August, and Collins has been very happy with the guests she has had.

“I try to take my hotel experience and try to make it as close to that as I can with additions like yoga mats and water bottles,” says Collins, who spends three hours cleaning and preparing the house before guests check in. She markets the house as a health and wellness location to try to draw like-minded people who will respect her home. Collins also puts products in the house to try to promote local businesses, and her seven-year old son likes to leave notes for their guests.

“I’ve travelled a lot and it’s really nice to be able to provide it,” says Collins.

While guests are staying in their home, she and her son have stayed with family or friends, or have gone camping.

Collins is unsure if she will continue to let her house on AirBnB throughout the year, saying it will depend heavily on whether she will need to find a way to supplement her income with the rate increase on heating set to take place this coming winter.

Carole Foley, owner of the Roses Heritage Inn on Military Road, one of the largest B&Bs in the city with 11 rooms, with unique art and freshly made breakfast each morning, appeals to those looking for a sweet St. John’s experience.

After a rough winter, Foley says, business was normal in July, but certainly behind in August, a lag she attributes to the number of AirBnB offerings in the city.

“The big thing is taxes,” says Foley, explaining that hotels are required to pay 19 per cent tax on bookings — 15 per cent HST and a 4 per cent accommodation tax that drives prices up. The AirBnB places are not subject to the same tax regulations and “it’s putting everyone out of business,” she says.

“I’m telling my councillor that they’ve got to spend some auditing time,” says Foley. “I’m pressing them to make that 4 per cent uniform or get rid of it.”

The Roses Heritage Inn also has greater costs than an AirBnB because the regulations on hotels require them to maintain certain professional standards, such as having sprinklers checked every year.

Despite the drop-off in business during early August, Foley says there is some chance it could catch up in the second half of the month, and business at the quaint inn is looking good for September and beyond with bookings into 2018.

The Downtown Executive Suites, a small, independent apartment hotel on Queens Road, straddles the line between hotel and AirBnB. The hotel offers secure, furnished apartments without any of the traditional amenities.

Owner Steven Campbell matches his price to what the market will bear. When asked how business is going this year, he says, “What we’ve found is that in order to be able to fill, we’ve had to reduce our rates from last year somewhere in the vicinity of 15 to 20 per cent.”

Those reductions are significantly less than what other businesses with the same pricing model have had to make to keep their doors open, he says.

Campbell, who is able to list his apartments on AirBnB, attributes the problems they are having to the increase in taxes that also hurt the Roses Heritage Inn.

“I’m competing with all the moms and pops who aren’t charging the HST,” says Campbell, who has found that despite his apartments being listed on the site, most of his bookings still come directly through the hotel’s website or through services such as Expedia.

Recent Stories