Bill Geist's Zeitgeist

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....

 

 

They (Mostly) Like Us!

Yesterday, Longwoods International & Destinations International released the 2021 Resident Sentiment Study, revealing how both Americans and Canadians feel about aspects of the Travel and Tourism Industry.

We'll all take our own queues from the data. Our take is that the carnage wrought by COVID has slightly improved American attitudes regarding the importance of Tourism...but not nearly as much as one would have expected or desired. A bigger attitude shift comes when residents are asked if people who use Short Term Rentals can be disruptive to neighborhoods (i.e., is this segment of our industry beginning to wear out its welcome?).

You can learn more on these questions and more here. And, thanks to Longwoods and DI for the intel.

A Bargain with the Devil

That's how one Airbnb operator described their experience with the Sharing Economy to the Wall Street Journal...another unseen victim of the government's response to the 'VID.

What started as a way to make a little side cash by renting out spare rooms rapidly turned into a full-time profession for many real estate speculators who discovered they could make more money renting to visitors than leasing to residents. In many communities, the price of housing skyrocketed as available inventory was snapped up by investors to flip into Airbnb and VRBO rentals.

But, when travel stopped on the Ides of March, so did the revenue stream that many of these speculators depended upon to pay their mortgages. And thus, we'll be seeing a portion of this housing inventory come back on the market.

Good for hotels. Good for home buyers. Bad for entrepreneurs that got caught with all their eggs in one basket.

Unintended Consequences

I remember debating a community development consultant on the Sharing Economy about five years ago. I argued for the need for regulation to level the playing field; that people who played by the rules (taxi drivers) faced losing their jobs (or worse) in the face of a free-for-all of "cabbies" that simply had to sign up on an online platform to compete. She chided me for being "old-school" and not realizing where the economy was headed.

That's the point. I did.

Fast forward to the present and home-sharing plays like Airbnb. Today, it's not so much that we can all be innkeepers without health inspections and, in some cases, not paying the appropriate taxes. The lodging community seems to have absorbed most of the hit in most communities. But, the unintended consequence is far more insidious.

Here in Madison, there was an initial move to limit the number of Airbnbs in a block as on-street parking downtown is already notoriously difficult for residents. Multiply three couples (with three cars) renting a house on a game-day weekend by 5 houses on a block and you've got a problem. Once again, those who play by the rules (hotels) must provide parking. Those who don't, don't. Of course, the State of Wisconsin swooped in and made that conscious consideration mute with a "hey, whatever" law that would supersede ours.

Which is kinda what has happened in Arizona, where a State law now prevents communities from effectively regulating home-sharing. And, particularly hard hit has been Sedona, as 20% of the housing stock there has been taken over by short-term rentals. That means residential housing is becoming scarce...and scarcity drives price.

Many people who work in the area can no longer afford to live in the area.

Sold to the public as a way for homeowners to make extra money, one legislator now says "We never anticipated that somebody would go into a neighborhood, purchase a home and turn it into a mini-hotel." And, that's because no one ever anticipates unintended consequences...until it's too late.

Which is why (as much as it is a creative buzz kill) we should all seriously consider the "what could go wrong" factor for every new initiative that sounds so right.

A Sharing Economy that Shares?

Home sharing plays, such as Airbnb, have not only disrupted the taxi industry...but, according to many, neighborhoods that report increasingly unaffordable housing, lack of sufficient parking for residents and the "evisceration" of the character locals love. And, as tourism must work first for residents, that's not a good thing.

Enter Fairbnb, a Dutch start-up that is about to launch a sharing play that gives back to the community to fund projects in the neighborhood, selected by the residents being impacted. It's not a perfect solution, but this story from City Lab offers hope to neighborhoods what welcome Fairbnb into their homes.

The Invisible Burden

In our work with up-and-coming destinations, we often attempt to encourage an awareness of the potential of "over-tourism." Being on the DMO Board for an ascendant destination, most in the room scoff at the notion. There's lots of time to think about that, they say.

Not really. Success in destination market carries with it the seeds of its own destruction. There is an "invisible burden," according to a new report commissioned by The Travel Foundation. And, we're seeing it take root even in communities that aren't bursting at the seams with hoards of tourists.

Consider the growing number of communities in which the City is now refusing to pay for festival and event security. Or, the impact that Airbnb rentals are having in urban neighborhoods that don't have enough parking spaces for residents, let alone overnight guests.

The Visitor economy is vital to quality of life, economic development and long-term sustainability. But...we cannot ignore the "invisible burden."

The study is worth your read.

The Dark Side of Disruption

To paraphrase CSN&Y: "Four dead in NYC."

As of last month, four New York cabbies had committed suicide because of mounting financial pressures brought about by the explosion of ride-sharing platforms such as Uber and Lyft. And, much of the blame can be laid at the feet of City officials.

Tightly regulated, cabbies used to fight for a limited number of "medallions" that would give them the right to drive a taxi and make $200 a day. Only 13,600 medallions are issued...but, with 63,000 disruptive ride-sharing drivers now on the streets, many cabbies say they're lucky to make $50 a day.

Disruption. It's all shits and grins until somebody shoots themselves on the steps of City Hall.

While we love the convenience and experience of ride-sharing, we can't ignore that there is a dark side to disruption.

Wait...Airbnb is a Reason to Say "No?"

Feasibility is at the core of every hotel development. Will the property be able to be sustainable, given other factors in the marketplace?

So, you look at historic, present and future demand, at the competition, the budget of the Destination Marketing Organization, the anticipated growth of the region's economy and a number of other markers.

Twenty-some years ago, as Madison was looking to build its Frank Lloyd Wright designed Convention Center, feasibility experts cautioned that the simultaneous development of an adjacent headquarter hotel could spell disaster for one of the other existing downtown hotels. Wait three years, they said, until the market demand stabilizes. And, because we cared for the hotels that had been our partners for decades, we did.

So, you can imagine my surprise at a headline over the weekend that read: "Danville has the Market for Downtown Hotel, but it could harm Airbnbs."

Pardon me?

Don't get me wrong. I think Airbnb is a wonderful addition to our destination experiences...IF they are required to play by the same rules as hotels.

But, in what alternate universe would any community consider not pursuing a Downtown hotel because it might pose a threat to a disruptive platform that allows people to rent their homes? 

Yeah...the alternative universe in which we live.