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The Globe and Mail

Airbnb study shows website adds tourism dollars to city

The Airbnb Inc. application is displayed on an Apple Inc. iPhone and iPad in this arranged photograph in Washington, D.C., U.S., on Friday, March 21, 2014.

Andrew Harrer/Bloomberg

Facing growing scrutiny from municipal authorities around the world, home-sharing service Airbnb is battling back with statistics showing it contributes to local economic activity, rather than destroying it.

In Canada, Airbnb's largest destination is Montreal, followed by Toronto and Vancouver. Some 73,800 Airbnb guests travelled to Montreal in the year ended March 2014, double the year before, according to a study done by the company and released Thursday.

Airbnb activity contributed $55-million to the Montreal economy over 12 months ending last March, the study found. Travellers using the service stay longer in the city and spend more money than typical visitors as they roam well past the city centre.

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Meanwhile, Airbnb helps many Montrealers who host visitors make ends meet, according to the findings. The typical Airbnb host in Montreal earns $280 a month, renting out their home 52 nights per year.

While Airbnb has swelled in popularity since its inception in 2008 as travellers turn to the service in increasing numbers to find cheap accomodations, the company has also drawn criticism from established operators who charge that it dodges local rules. Officials overseeing tourism regulation are scrambling to figure out how much to crack down on the service, and others like it, without harming their larger contribution to the so-called sharing economy.

Barcelona, Berlin and New York are among the cities that have examined the legality of Airbnb's business recently . The situation underscores the potential difficulty Airbnb will wrestle with in the months ahead as the estimated $10-billion (U.S.) company weighs a public listing.

The accomodation booking website says it is open to discussing regulatory changes that might affect its business, including asking the travellers who use its service to pay special lodging taxes in Canada like hotel patrons do. Such a tax was recently implemented by the city of San Francisco, Calif., the company's home base.

"We're having conversations right across the country with various tourism officials as well as provincial authorities," Airbnb Canada country manager Aaron Zifkin said Thursday. "You have to remember, a lot of these laws that we're discussing predate the internet."

Airbnb warns hosts that it is their responsibility to abide by local regulations, including landlord/tenant agreements. Under Quebec law, anyone who rents out an accomodation unit for 31 days or less has to obtain a classification certificate from Tourisme Québec, a kind of operating permit. Operators also have to collect and remit a lodging tax among other requirements.

According to the government, however, many Airbnb hosts never bother. Last year, the province investigated 2,000 people for renting out their homes without proper permits. A Tourism Quebec spokeswoman admitted government agents were even posing as Airbnb clients in a bid to flush out repeat offenders.

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Quebec has since struck a government-industry committee to examine "illegal accomodations." Airbnb is not part of that committee.

Rivals allege the company has already done significant damage.

The 136 bed and breakfast businesses that existed in Montreal in 2010 have since dwindled to 61, said Patryck Thenevard, a Montreal bed and breakfast owner who sits on the board of industry trade group Association Hôtellerie Québec. Part of the decline is recession-related, he acknowledged. But he said unfair competition from Airbnb and similar sites has also played a significant role.

Airbnb so far has succeeded because it has accomodation costs for thousands of travellers. But that doesn't mean it's automatically sustainable, said Jeffrey Church, an economist at the University of Calgary. He argued that tighter regulation could level the playing field for Airbnb's competitors in some markets. In others, travellers could continue to put up with the uncertainty of not knowing whether their host is abiding by the rules.

"We would expect in [the free market] that this will" sort itself out, said Mr. Church, noting that business conditions for Airbnb could vary city to city and even apartment building to apartment building. "It might take a long time for that sorting to happen."

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