Grappling with Ghost Hotels

By: Joanne Sasvari

How do short-term rentals affect communities and what can you do?

You may think you understand how short-term rentals like Airbnb and Vrbo affect your community and your business, but David Wachsmuth actually knows, because he has crunched the numbers.

“The evidence is clear that short-term rentals are taking housing out of the market,” says the Canada Research Chair in Urban Governance at McGill University, where he is also an Associate Professor in the School of Urban Planning and an Associate Member in the Department of Geography. “Housing unaffordability undermines what makes communities vibrant and liveable.”

Wachsmuth will be speaking about his research at the BC Tourism & Hospitality conference in Richmond this March. And the news isn’t all bad.

“I don’t think the relationship between the hotel industry and short-term rental industry has to be a zero-sum game,” he says, although it may seem that way right now because short-term rentals “have kind of run wild.” In fact, he adds, “Short-term rentals and hotels occupy a valuable place in the broader landscape of accommodation.”

How short-term rentals affect a community depends on the community itself—it’s a different situation in downtown Vancouver than in a small town dependent on seasonal tourism, where elected officials may be reluctant to “kill the goose that lays the golden egg.”

“What started as an easy way to home share has become something altogether different.”

But in either case, Wachsmuth says, short-term rentals have seen incredible growth over the last decade or so and we are only now understanding their true impact. The main issue is that what started as an easy way to home share has become something altogether different.

“Home sharing is a win-win for a neighbourhood, but commercial short-term rentals don’t work that way,” he says.

Short-term rentals don’t pay commercial taxes like hotels do and they don’t comply with the same health and safety regulations. Instead, they provide an “opportunity for people to convert residential properties into ghost hotels. We’re getting the worst of both worlds here.”

In a condo tower, for instance, “You expect to have neighbours, but you find it’s been turned into a hotel. It undermines any kind of community you can expect to have in a building or a neigbourhood.”

Meanwhile, in smaller communities, the affects can be even more dramatic. Wachsmuth worked with Ontario’s Prince Edward County, which has a huge tourism industry, and found that the housing issue “was even worse that I could have imagined.” It wasn’t just low-paid seasonal service workers who couldn’t find places to live, but doctors and other full-time professionals. “It’s an extremely huge impact,” he explains. “The downside is, we all pay.”

Part of the challenge is that short-term rentals benefit a very small but highly motivated group of people—landlords—but negatively affect a very large group of people who feel helpless to change it.

“Vancouver brought in new rules restricting short-term rentals to primary residences.”

That’s why Wachsmuth is so excited to see what has been happening in Vancouver. In 2018, the city brought in new rules restricting short-term rentals to primary residences—in other words, home sharing. Since then, some 500 housing units have been returned to a market that desperately needs them.

“That is really, really good news,” he says. “The City of Vancouver has really been the pioneer in the country. Over the past couple of years, they really figured out how to make it work.”

With its wide range of hotels and well-regulated short-term rentals, Vancouver is going to be well placed when tourism returns post-pandemic, he notes, and the best solution for other communities is to work toward similar principal residential requirements.

As Wachsmuth says, “We’re all better off if home sharing is home sharing and hotels are hotels.”