Airbnb regulations coming as Saskatchewan hospitality revenue declines

Dragon’s Nest Bed and Breakfast have been a staple of Regina’s Cathedral neighbourhood since 2004. The three-storey character home is hard to miss with metal dragons on the property’s gates and 600-pound Chinese dragon statue greeting guests.

In the past three years, however, co-owner Rick Urbanski has noticed a drop off in business.

“In 2016, we generated just over $57,000 in revenue. An average decline of about $25,000 from the last five years — on average,” he said.

He looked at his business to see what was going on and linked the decline to the growth of Airbnb and similar short-term rental services.

Dragon’s Nest is staying afloat, but Urbanski said he’s relying on returning guests and not seeing many new faces.

“Just over the weekend was the Queen City Marathon. Normally I’m full during an event like that and I had two people that weren’t even running in the marathon,” he said.

Airbnb has seen major growth — just last week the company announced Regina saw more growth than any other city worldwide last year.

Now a firmly entrenched business in many urban centres, Airbnb is drawing increased attention from regulators.

As first reported by the Regina Leader-Post, the Saskatchewan government is talking with the Airbnb and similar companies about introducing PST.

“We’re hopeful that we can get compliance. You’ve probably heard from the hotel and hospitality associations, and they want a level playing field,” finance ministry spokesperson Jeff Welke said.

A level playing field is exactly what Regina Hotel Association president Tracy Fahlman is looking for.

“Our hotel industry to date, this is 2019, is running about 56-57 per cent occupancy,” she said.

“That’s down two per cent compared to last year. So has the AirBNB, home-sharing sector taken a chunk out of that? Absolutely it has.”

Welke said talks on adding PST to Airbnb are going well, and charging the tax isn’t new for the company.

Airbnb rentals are subject to PST in B.C at eight per cent. Quebec charges a 3.5 per cent lodging tax. Some Ontario cities, including Ottawa, Barrie and Windsor, all include a four per cent municipal tax on bookings.

Global News reached out to Airbnb for comment but did not receive a reply.

There is no public timeframe on when Saskatchewan may begin charging PST. Welke said there is no estimate on what kind of revenue this could bring in.

According to Fahlman, the Regina hotel sector will pay about $200,000 to $250,000 less PST to the province this year. She said that could be an indication of revenue lost to untaxed rentals.

That’s not the only area the conventional hospitality industry wants to see the playing field levelled.

Urbanski said he pays about $5,000 annually in licensing, safety, insurance and inspection fees. Dragon’s Nest has looked at posting their rooms on Airbnb, but runs risks of moving their established business to the platform.

“If I stop doing those kind of things, code-wise and everything, I don’t know what would happen. I could lose my operational licence, I could be fined. I don’t know I haven’t tried it,” he said.

The City of Regina does have rules for Airbnb hosts on the books. They are supposed to register and get approval from the city, however only one has. A second is currently going through the process.

With upwards of 300 Airbnb accommodations in Regina, the city is looking at revising rules, and those are expected to be brought to council later this year.

The City of Saskatoon has been working on a report to inform local bylaws for a number of years. It was originally expected to be released in June. A city spokesperson said the report has faced some delays, but should be coming out this fall.

Until then, Urbanski is left working by the book. He’s checked out a few Airbnbs, and said some don’t even serve breakfast. He wondered how you can be a bed and breakfast without the breakfast.