Bill Geist's Zeitgeist

Might it Be You?

This past week, several hospitality corporations caused market volatility by suggesting that consumers are pulling back from 2023 spending levels with their brands. Conveniently missing from their comments was that, just maybe, their offerings no longer hold the same appeal as they once did; that consumers are just as interested in traveling...just not to these particular products.

Take AirBnb's claim that market demand for travel is softening. Then why aren't branded hotels sounding the same alarm? Could it be that the STR platforms have allowed marginal players into their mix, causing those of us that initially loved the experience to think twice, three times before booking because we've been burned by experiences that were not even close to what was promised? Our last three rentals have encouraged us to go back to branded and boutique hotels...and I'm sure we're not the only ones. So...it's not the consumer. It's a decline in product quality.

Or Disney's excuse for their Theme Parks posting flat numbers YTD. You can say it's consumers pulling back, but (as reported in the WSJ) a longtime regular customer opines, "Disney has gotten ridiculously expensive. And I ate much better in Italy for much cheaper."

Consumer demand will naturally flatten somewhat after the post-COVID fueled spike and with the American presidential election weeks away. But, let's not send the economy into a dizzy by broad-based claims that it's the consumer...when it might be the quality and price of the product.

Just sayin...

 

 

New on DMOU: New York State's STR Legislation

When it comes to Short Term Rentals, trying to put the genie back into the bottle has proven elusive for most governments. Initially defended as a property rights play, elected leaders are now grappling with its unintended impact on affordable housing. On this edition of DMOU, we welcome 1000 Island International Tourism Council CEO Corey Fram with a fascinating story of how, after several twists and turns, the New York State Legislature actually passed a bill this session that brings STRs outside of New York City into the Tourism and Community Development eco-system. And, it all came down to framing the issue as not a Tourism or Fairness issue…but as one that cities, towns and villages actually cared about. Plus a Bonus Round question that has me remembering the best moments of “Slap Shot.” Join us.

Not Quite the Intended Result

As cities across Europe push back against mass tourism, some have instituted fees on non-residents with the stated intention of dissuading tourists from visiting. My friend (and past guest on DMOU) George Tzougros from the Wisconsin Arts Board (celebrating their 50th) shared a recent analysis of some of those fees and taxes with me over the weekend...and, they're not working.

Well, at least not in slowing down the number of visitors clogging their streets and attractions. According to National Geographic, the taxes (most under $10 a day) are having no discernible impact on visitation (ya think?).

What they are doing is raking in a ton of cash, ostensibly for resident quality of life mitigation.

One can only hope that's where the money goes.

Tenerife Targets Tourism

On the 20th of this month, several groups plan to stage a day of protests on the magical island of Tenerife. The complaint is not uncommon. These groups maintain that life there is "collapsing," besieged by Short Term Rentals.

An activist said, "People are living in their cars and even in caves, and locals can't eat, drink or live well. Airbnb and Booking.com are like a cancer that is consuming the island bit by bit." 

Don't get me wrong. We sometimes use STRs when it fits our needs (though our recent experiences have been seriously lacking). But governments need to step in to regulate these lodging options so they don't inadvertently jack the price of available housing for residents and workforce.

 

Short Term Rentals & the Housing Crisis

The basic tenets of Supply and Demand would certainly support the concept that transferring homes and apartments into Short Term Rentals would cause remaining housing prices to increase. To be fair, Airbnb responds: "There are a number of complex factors driving today's housing affordability crisis — from growing income inequality, to decades of exclusionary zoning, and even changing location preferences post-pandemic, including the rise of remote working from home — but many experts agree the primary driver of the affordability crisis is chronic underproduction of housing, not short-term rentals. Unfortunately, short-term rentals, which in most cities make up a tiny portion of local housing stock, have become a convenient but misguided scapegoat for a housing crisis that started long before the founding of Airbnb."

Rebuttal accepted...but then, there is what has happened in Irvine CA since that community banned STRs: Within two years of the ban, long-term rents decreased significantly; roughly 60,000 rental units in the city saw a 3% rent decrease, on average.

It's a fascinating read in the ongoing conversation of how to balance the needs of all sides.

Image Credit: Tristen Rouse / St. Louis Public Radio

They Can't Afford to Live There Anymore

While it is certainly getting better, hospitality businesses (in general) have been notorious in paying entry-level workers less than a living wage for decades. And, as we've been saying since the reopening of America after COVID, we don't have a workforce problem...we have a housing problem. Especially in highly attractive places to live.

A recent study by the Economic Innovation Group shows, among other things, that inbound residents into Arizona's Maricopa County and Florida's Lee County earn significantly more than those residents departing those communities. In Lee County's case, that differential was roughly $50,000/year.

Those with the means are displacing those without, who are being forced to move to be able to afford living expenses. 

Like I said...it's not a workforce issue. But it certainly impacts our industry's ability to hire qualified talent.

New on the DMOU Podcast: Cannabis Tourism

Almost half of American States have legalized the recreational use of cannabis...but many DMOs in those States struggle with ways to promote the advantage they possess against States that don't. On this episode of DMOU, we talk with Brian Applegarth, the foremost expert in the intersection of cannabis and tourism, about how to escape the stigma...and focus on the health, wellness and inclusionary aspects of this amazing community asset. A fascinating episode.

What Hoteliers are Thinking Today

Prior to the Plague, the best Destination Marketing professionals had a pretty good idea of what their hoteliers were thinking. But today? 

The DMOU podcast is back from Holiday Hiatus with STR's Vail Ross, talking about the new demands, pressures and opportunities facing today's hotel executives. And, it's one of over 100 conversations waiting for you in the DMOU vault.

And, be sure to subscribe on Apple Podcasts, Spotify or wherever you listen to podcasts to ensure that you're notified the moment a new episode drops. Because we're looking forward to a great 2023.

Do the Math

The arguments surrounding Short Term Rentals are as varied and nuanced as a Pantone Color Wheel. Even more so for me, as I often choose these accommodations based on my need and circumstance. So, I am definitely not anti-Short Term Rental.

But, I come down squarely on the need for licensing, inspection and tax policy that mirrors the requirements government places on traditional lodging. It's only fair. And that extends to enforcement...which apparently isn't happening in Los Angeles.

A recent study suggests that nearly half of the city's Short Term Rentals were in violation of L.A.'s home sharing laws...opening up the opportunity for the City to collect over $300 million in fees and fines. They collected less than $40,000 last year.

C'mon guys...I know that local governments often fail to think like entrepreneurs. But, do the freaking math. Isn't the promise of $300 million worth hiring 10 or 15 compliance officers? Even the most arithmetically challenged among us can see that.

Just saying...

Municipalities Should Have the Authority

Let's be clear, some of our best and most memorable overnight stays have been in short term rentals. But, STRs are strangling workforce development in several communities around the nation by taking full-time housing off the market. That's a dilemma.

Outside of the gobs of money that STR companies are funneling into political candidates, how does a State say to its municipalities that they do not have the authority to regulate the voracious consumption of housing stock that is creating existential harm to residents and workforce?

It's like an issue we've struggled with for decades here in Madison. Because there are so many State and University owned buildings downtown (that are exempt from local property taxes), city residents are forced to pay significantly more in property tax than those in other cities. To make up for this, the City has asked for the ability to enact a half penny sales tax (which most thinking Madisonians would approve) in order to reduce property taxes. But the State blocks this because legislators want to be able to say they are holding the line on taxes so their re-election chances improve.

Municipalities should have the option to do what they believe is right for their residents without State intervention. If taxes get too onerous, residents will turn out those responsible. We really don't need the State to tell us how to run our communities. But they can't hep themselves, apparently.

Kudos to Akron for jumping ahead of a State bill that would prohibit requiring STRs to play by the same rules as other lodging businesses. And, by a 13-0 vote.

I mean really, cosmetologists and hairdressers must be licensed. Someone renting out their home as a business shouldn't be?

Sigh....