Wine Country hoteliers reveal impact of short-term rentals on tourism business
Vacation rentals will not be ignored. They have infiltrated the lodging industry at lightning speed, thanks to a multitude of online marketplaces.
The trend is being led by the formidable Airbnb, Inc., a San Francisco-based $31 billion company with plans to go public this year. Airbnb has about a dozen competitors in the space, including VRBO (Vacation Rentals By Owner), HomeAway and FlipKey. When people talk casually about renting an Airbnb or VRBO, those are synonyms for property rentals. It's kind of like Kleenex being the ubiquitous name for tissues.
In the North Bay, depending on who you ask, short-term rentals - defined as a stay of less than 30 days - are a blessing, a curse or a nonissue. Healdsburg, a popular tourist destination in Sonoma County, has lost hotel business to short-term rentals, said Circe Sher, a partner at Piazza Hospitality, which develops and manages a host of properties. Some of Piazza's properties are in Healdsburg, where the company is based. They include Hotel Healdsburg, H2, The Spa Hotel Healdsburg and Harmon Guest House.
“There's definitely been examples where people would opt to book a house rather than book at one of our hotels because of the rate,” said Sher, who declined to share numbers. “It happens year-round, but definitely more in high season and with people who are traveling for weddings.”
High season is generally June through October, with a spike at wine grape harvest time, which is key in Healdsburg as the city is situated among the Russian River, Dry Creek and Alexander valleys - among the county's premier wine-producing regions.
Piazza has stepped up its marketing efforts and use of its social media channels to promote its' properties' value and experiential offerings, such as spas and restaurants, she said.
Long-term, Sher said she anticipates the growing prevalence of short-term vacation rentals to reduce occupancy and lower average daily room rates at Piazza's properties.
Like Piazza's Healdsburg properties, Farmhouse Inn, a boutique hotel located in the Russian River Valley community of Forestville, has seen big groups opt to stay at short-term rentals, said Brian Gipson, director of sales and marketing, but not enough to have a large impact on its business. Farmhouse Inn doesn't specifically market against short-term rentals, focusing instead on engaging with past guests and its top feeder markets, comprised of the Bay Area, Los Angeles, New York, Dallas and Chicago, Gipson said.
“Our selling and positioning advantage with Airbnb (and other online platforms) is the level of services, the unique and intimate relationships we enjoy with the community to create lifetime memories,” he said.
Gipson also noted that visitors who choose to stay at a short-term rental through Airbnb or a similar service don't have access to any formalized plan for managing unexpected natural disasters, such as fires, floods, power outages and mandatory evacuations that Sonoma County has gone through the last several years.
In Marin County, the majority of visitors come for the day, something the Marin County Visitors Bureau plans to address in 2020, according to its 2019 annual report. Such regulations currently vary among the county's towns and cities; some allow rentals, such as San Rafael, while others like Sausalito don't.
From a tourism perspective, short-term rentals are an important part of the lodging mix, said Tim Zahner, executive director of Sonoma Valley Visitors Bureau. But, he noted, there are some caveats.
“Those operators who are in compliance with local government regulations and respect the neighbors - collect taxes, operate where zoning allows, have adequate management - can be a good option for travelers like multigenerational families or those who like a kitchen and other amenities,” Zahner said. “The challenges include those who don't comply with local regulations or respect the neighbors, as hotels can't operate that way, and it reflects poorly on those rentals who are good actors.”
Claudia Vecchio, president and CEO of Sonoma County Tourism, said the presence and growth of short-term rentals in the county has affected its hotel industry.
“The lodging sector most impacted are bed and breakfast properties; however, many of these have teamed with Airbnb or VRBO to offer rooms as part of those programs,” Vecchio said.
Sonoma County Tourism doesn't yet have a complete picture of the vacation rental segment for several reasons, including the fact that many of those properties do not report transient occupancy tax (TOT), she noted.