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Victoria considers hotel tax for home lodgings booked online

Victoria city staff hope to tap into the exploding online rental industry that many homeowners are using to link their spare rooms with vacationers looking for cheaper alternatives to hotels.
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Victoria Mayor Dean Fortin: "Right now, it's almost an underground economy, and one of the things that is very important to the City of Victoria and other cities is each hotel room contributes a small tax toward marketing the destination."

Victoria city staff hope to tap into the exploding online rental industry that many homeowners are using to link their spare rooms with vacationers looking for cheaper alternatives to hotels.

City staff have been in talks with Airbnb, a website for people who rent out lodgings in their homes, exploring the notion of entering into a partnership that would allow the city to collect the equivalent of its hotel tax from people using the site.

“Right now, it’s almost an underground economy, and one of the things that is very important to the City of Victoria and other cities is each hotel room contributes a small tax toward marketing the destination,” said Mayor Dean Fortin, adding it’s an opportunity to level the playing field with hotels and bed-and-breakfast operations.

If councillors agree, city staff hope to enter into formal meetings with Airbnb to address issues such as zoning and bylaws, shared promotion of the city and neighbourhoods, and ensuring listed rentals are available for emergency accommodations in the event of a disaster.

But some in the hospitality business say levelling the field might be harder than expected. “Airbnb is just the tip of the iceberg,” said Earl Wilde, president and general manager of the Victoria Regent Waterfront Hotel. “There’s lots of them out there. There’s HomeAway and VRBO [Vacation Rental By Owner] and FlipKey and Premiere, etc., etc. So it adds a lot of inventory competing with the hotels.”

In San Francisco, the board of commissioners recently passed a law setting conditions for Airbnb hosts, including limiting rentals to 90 days a year. It stopped short of adding an amendment that would have held Airbnb accountable for $25 million in back hotel taxes it has not collected.

Wilde speculated 50 per cent of Airbnb’s customer base might switch to another provider should they be required to collect and remit a hotel tax. “But it’s better to start than to not start. The Airbnb — if that’s where we start — that’s OK, but it’s a big job to try to regulate all these things.”

Based in San Francisco, Airbnb is one of several websites that allow users to generate revenue from their properties. Airbnb, which collects payments, transfers them to hosts and earns a profit by charging users service fees, has grown to more than 34,000 cities in 190 countries. Hosts can have any number of listings, so they can rent out each room of a home individually, or rent various outbuildings or camping spots on a single property.

Victoria has 354 active Airbnb hosts. Between 2008 and this summer, more than 1,000 local hosts used the site. A city staff report says more than 7,300 guests used Airbnb in Victoria from April 2013 to March 2014, for a total of 30,017 guest nights.

Tourism expert Frank Bourree, owner and CEO of the Chemistry Consulting Group, said attempting to regulate Airbnb is appropriate.

“There’s a bit of an unlevel playing field here. Hotels that operate in town are required to pay hotel tax and these operators are not. They also are at a different property classification for their property tax and are not subject to any of the fire- and building-code types of issues,” Bourree said. “I think it’s a growing trend and a growing issue, and the city does need to get their heads around this.”

bcleverley@timescolonist.com