Short-Term Rentals Key to YK’s Future Growth

If the City of Yellowknife had the option to close or open the Explorer Hotel during a tourism and construction boom, which action would be more consistent with its stated goals of accommodating more visitors? This is the scale of what’s at stake as the City drafts regulations for short-term rentals, including sites like Airbnb and Booking.com. As we formalize the role of this market in the North, there are some priorities and realities to consider.

The short-term rental market is an important component of both the hospitality industry and of temporary housing in Yellowknife. There are more than 7,000 individual housing units in Yellowknife, but only 930 hotel rooms. As of this writing, there are 148 total offerings listed for short-term rental on Airbnb. That’s a sizable increase in our hotel capacity – comparable to the capacity of the Explorer Hotel. Given that it is such a small proportion of the overall rental market it is unlikely to affect rental rates.

Yellowknife now receives more than 75,000 guests per year for a total of about 533,000 guest nights, and we only cover two-thirds of that need with our campgrounds, bed-and-breakfasts and hotels. Friends and family take up the slack. MidWest Properties just bought the Coast Hotel and is converting it to an apartment building, taking 58 hotel units off the market. Meanwhile, each visitor who does manage to find a place to stay is spending an average of $281.45 per day in the North.

Work crews who come up to build our city’s hospitals and schools are banned from setting up temporary work camps within city limits, but they need somewhere to stay – preferably a furnished place where they can cook their own meals and easily communicate with their team. My company rents five furnished apartments for as brief a stay as one week, and well over half of our guests are contractors. They’ve come to Yellowknife to work in valued areas such as hospital construction, Giant Mine remediation, staffing airlines, federal government departments and a university offering science and technology camps for kids. Even construction crews working on building new hotel rooms are booking short-term rentals.

The Residential Tenancy Act, which takes precedence over by-laws, makes one thing clear: week-to-week leases are allowed for any property, under the same conditions as month-to-month leases. As it happens, the average stay of a visitor to Yellowknife is one week, so any new City rules may apply to a minority of bookings. Still, if you want someone to stay for six days instead of seven, it looks like you may soon need to purchase a business license and submit to who knows what other conditions.

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Twenty-first century consumers have come to expect on-demand goods and services. As part of this development, there is a greying of definitions between hotels and apartment units. Condominium boards are free to decide against short-term rentals – Northern Heights has done exactly that – but if we continue aggressively marketing our city as a tourist and conference destination, we owe it to the people who believe us to show them hospitality and make some room for them.

Legislation has to come from a perceived need. Other than one or two vocal opponents with clear personal motives, I see the vast majority of need coming from the other side – a need for more supply, greater flexibility of tenancy, and a feeling that Yellowknifers should be free to share their homes with newcomers in the ways we’ve always done. There is a long northern tradition of housesitting, for example, which only differs from short-term rental in its payment via pet- and-plant-sitting services. If anything, Bed and Breakfast regulations should be loosened to match the new reality of consumer driven demand – it’s hard to argue that sleeping in beds is not a permitted residential use.

To get a sense of how much risk is attached to a short-term rental unit, look to the insurance companies. They make a note of which properties are used for Airbnb, but their insurance premiums don’t differ. So the market has priced the risk at zero. The quality of offerings is regulated by the website’s star system – a great reference check for both tenants and landlords, offering years of consistent behavior as proof of reputation.  

With the boom in tourism and all the construction projects requiring southern workers, any kind of restrictions on that and associated reduction in supply can be expected to have adverse economic effects. New supply takes about two years to construct, in the meantime, it makes sense to have other sectors taking up the slack.

Sam Gamble is a managing director of CloudWorks Adventure Capital, a Yellowknife-based real estate investment company. His column aims to explore the second and third order economic effects of decisions facing the North.

Opinion

YKU

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