There are many articles and editorials about Airbnb and short-term rental legislation in Maine. It was reported last week that Portland is getting closer to regulating short term rentals. Is everyone having the right discussions? I would like to suggest a different angle for review. As a member of the industry that is having the major disruption, I hope these discussions not only find resolutions but create opportunity. The discussions at the city level are troublesome and frustrating to me as a professional Bed and Breakfast owner. I appreciate the dialogue about creating sustainable neighborhoods, but I think more of the discussion should be about the industry of tourism in Maine. In my mind, this is a tourism issue. If anyone is renting out nightly, they have entered the tourism business. The dynamics and the legislation of short-term rentals will shape summer tourism. Can the State of Maine, or its cities and towns formulate a working relationship with Airbnb? Will there be enough housing for seasonal employees? What pricing will the market dictate with a glut of nightly options on the market? These are just a few of the challenges. There are opportunities here also and I will address them.
WORKING RELATIONSHIP WITH LARGEST MARKET DISRUPTOR
The first challenge and opportunity that I see for Maine is its relationship with Airbnb. Why hasn’t anyone brought Airbnb to the table for these discussions? It may be difficult, but why hasn’t someone called the company and tried to negotiate a platform for Maine? There are things that Airbnb can initiate on their website for Maine properties. In NY and California, you are only allowed to have one property, one host. In some cities, Airbnb actually collects and reports sales tax. Perhaps towns can lean on Airbnb to enforce minimum night stays. Maine has a short window of time for tourism businesses to make their financial goals. Maine needs to have this discussion sooner than later. In these discussions, perhaps Maine officials might learn more about creating opportunities for other sectors of the tourism business. Airbnb just introduced the function of trips. Maine is known for their outdoor adventures. Perhaps Maine can shine on this platform and draw more tourists to the State for outdoor adventures. I encourage the leadership of Maine, particularly those in the Maine office of Tourism, to reach out to the Airbnb Company and see what agreements can be made. Airbnb is in a place right now that it is to their benefit to make communities work and not have legislative problems. It is rumored that the company would like to go public and IPO investors do not like controversy.
A big challenge facing Maine tourism businesses right now is that there are less housing options for summer employees. With more homeowners opting to rent nightly instead of monthly, summer employees have fewer options. I am not sure those that are breaking town ordinances understand that their piece of the tourism economy is essential. We need homes in the residential outlying areas to rent monthly or at least stick to the weekly rental ordinance. I welcome competition and feel Maine can benefit from more residents cashing in on the tourism business. But if homeowners are going to change the dynamics of how the industry works, they should know what challenges it ultimately presents. The reality will be – no workers – crappy hospitality – guests do not return. In the summer of 2016, in Camden, there were few apartments for workers. One home hosted 20 student workers. Some students even left because of the lack of housing. Yes, businesses should hire locals to work, but many locals are looking for year round work with benefits. The J1 visa workers have been beneficial to Maine tourism. Can we turn this lack of employee housing into an opportunity? I believe we can. First I hope that some homeowners see value in renting to workers instead of renting nightly. Secondly, reliable transportation systems can be created. We need to figure out how to establish bus and rail systems that can move people around quicker and farther. If the housing in the downtowns are full of tourists, why can’t we figure out a way to have the employees live further out? Most student employees do not have a car and most rely on a bike while working in Maine. Although riding a bike is nice, it is not always practical. Figuring out how to get bus service in towns should be on the agenda. It doesn’t even have to be year round, just during the high season of early June to end of October.
PRICING AND COMPETITION
Online travel agents have allowed small properties and destinations to compete with larger, wealthier establishments. Maine has more visibility and can compete with other destinations worldwide because of the internet and the travel industry websites. Maine’s branding is distinct and accurate. Maine is portrayed as an adventure land. The more platforms that get that message out there, the better for Maine tourism. Having Maine more visible is a good thing. Hopefully, there will be so many guests that the laws of revenue management will be in everyone’s favor. Revenue management is a system of using analytics to determine consumer behavior to optimize revenue. Once you are hooked into these online travel agents, it is very hard to escape the pressures of competitive pricing. If there are more units on the market, the management suggests that you lower your price and this creates a race to the bottom. If there are fewer units available, the management suggests you raise your price. This fluctuation can be unnerving. Competition is good for the consumer but can be hard for the small business owner.
Competition not only dictates pricing but it will force homeowners to maintain their properties at a higher standard to attract guests. This could be a plus for the thousands of historic homes in Maine. In all parts of Maine, there are people buying up real estate with the specific purpose of renting it out. This could help fill empty space and gentrify dilapidated areas. I find it amazing that Portland has the ability to attract professional Airbnbers. In other parts of the country that have more culturally different people and better climate, it is easy to see why those Airbnb locations will be successful. But in Maine, where the weather is harsh and there are fewer people it is hard to see Airbnb empires being successful year round. According to AIRDNA, Maine isn’t even on the chart for best investment places for Airbnb in the USA. Maybe this is a fad or maybe there is true opportunity. Perhaps the promise of Airbnb wealth will attract young entrepreneurs to Portland. If the trend is to find nice properties in lovely places, then Maine can definitely compete with any state in the USA for this type of industry. Maine has many fantastic locations. Maybe the Live and Work in Maine organization should look into this option.
I hope I have introduced a couple of ideas in this blog entry. I am a small business owner in Maine and I would like to see opportunity created from disruption. We are a creative state with very smart people. Don’t let the Airbnb controversy lead to angry residents and tourism businesses losing money. Ask not how can we regulate Airbnb, ask what Airbnb can do for the State of Maine.