As Grand Rapids attracts growing numbers of travelers with events like ArtPrize, brewery tours, Restaurant Week and myriad business conventions, many out-of-town guests are turning to non-traditional lodging accommodations during their visit.
Jenny Lasko has been renting rooms in her home in the city’s East Hills neighborhood via the online house sharing platform Airbnb Inc. and other similar web-based services since 2012. Over those two years, she’s seen a shift in the reasons people have rented from her. Initially, many of the guests were in town for tourism, but Lasko is also getting more frequent bookings from business travelers, many of whom are attending local conferences and want to stay in a neighborhood rather than in one of the many downtown hotels.
“(Airbnb) is really the eBay of lodging internationally right now,” Lasko said. “If you’re staying at somebody’s house rather than a hotel, it’s cheaper and you can spend more money in town — and they always do.”
Specifically, many of the guests are speakers or attendees at downtown conventions who want to experience the city from a different perspective by staying in the neighborhoods, she said. They enjoy being within walking or biking distance to attractions in the rehabilitated neighborhoods along Wealthy and Cherry streets. To assist her guests in enjoying their stay, she provides gift cards to many neighborhood businesses including locally owned bars, coffee shops and restaurants.
REACTING TO DISRUPTION
San Francisco-based Airbnb is one of a handful of new digital platforms in the process of disrupting long-standing industries like the hospitality sector. Hoteliers and the broader tourism industry are certainly taking notice, just as the taxi industry is watching ride-sharing platforms such as Uber and Lyft.
These new digital platforms — often referred to as a part of the “sharing economy” — allow strangers to leverage technology such as smartphones to provide services that were previously offered only by specialized industries.
But in so doing, the upstarts have caused consternation for numerous cities that cite issues such as zoning ordinances, fears about safety and what impact these services could have on long-time businesses. In Grand Rapids, officials have sought to provide opportunities for the large number of stakeholders who stand to be impacted by the issue to have a say in the process as the city looks to create regulations.
One West Michigan hotel developer told MiBiz that his own less-than-stellar experience in a California Airbnb led him to realize that the traditional hospitality industry isn’t going away anytime soon.
“With a hotel you know what you are getting,” said Max Benedict, principal at Grand Rapids-based Third Coast Development Partners LLC.
The firm is building a Hampton Inn & Suites hotel off Michigan Street near Grand Rapids’ Medical Mile. The hotel is slated to open in the fall of 2015, Benedict said. Third Coast expects hospital guests and travelers who want to be in proximity to downtown but aren’t looking for a premium brand such as the JW Marriott to be the target market for the property.
Downtown tourism agency Experience Grand Rapids has loosely followed the Airbnb and short-term rental debate on a national scale for about a year, said President Doug Small. The organization helps market downtown hotels and other tourism-related attractions and receives nearly 80 percent of its funding based on the success of those hotels.
It comes as no surprise that Small said he has “selfish reasons” for preferring visitors to choose traditional accommodations when coming to Grand Rapids. However, Experience Grand Rapids does not intend to interfere with the regulatory process of services such as Airbnb and Uber, Small said.
“We are not against it, but we applaud the due diligence the city is doing,” Small said. “For Airbnb, there are certain travelers for whom that is their niche. … It is our job to promote the city. Once (tourists) are here, it is their choice of where they want to stay.”
COMING UNDER FIRE
Cities of all sizes across the country and worldwide are grappling with how to handle these new types of technology-enabled services. However, one publication specifically called out Grand Rapids as a city where the sharing economy is “under attack.”
Last month, Time magazine ran an online article that cited Grand Rapids as one of seven cities around the world where proposed regulations on room-sharing would be cost prohibitive and a nuisance for homeowners who wish to rent out a room for short stays.
“Big cities such as San Francisco and New York have been confronting the unusual tax and regulatory conundrums posed by sharing economy businesses like Lyft, Uber and Airbnb for years. Now it’s Grand Rapids’ turn,” according to the report.
In particular, the report called out the “strict new regulations” city officials have been discussing, particularly for Airbnb hosts.
The city’s proposed regulations have gone through several iterations, including calling for homeowners to pay $291 for a license to rent a room, disallowing any kind of vacation rentals because of a statute calling for owner-occupancy and requiring owners to notify all neighbors within 300 feet of the rental situation in their homes.
Most of the issues surrounding Airbnb are in regards to questions of zoning and the commercialization of a home, according to city officials.
Grand Rapids’ historic Heritage Hill neighborhood situated just outside the downtown area has been particularly active in working to create a policy for room sharing. Craig Nobbelin, chair of the zoning committee for the Heritage Hill Neighborhood Association, said the organization wants to ensure that sharing hosts can only rent one room.
“Neighbors want to protect the nature of the neighborhood,” Nobbelin said. “We would be concerned if it grew into use of multiple rooms.”
KEEPING AN OPEN MIND
There are roughly a dozen active Airbnb hosts in Grand Rapids, Lasko said. That group has been gearing up for about a year to make sure they can be compliant with whatever regulations the city enacts.
The small group of hosts are not opposed to the city regulating shared housing, Lasko said. Rather, they want to ensure that the large number of stakeholders have a say in the process and that — from an economic development perspective — the needs of many different kinds of visitors are met.
“People want to stay in neighborhoods to see the actual city before they go to the conference,” she said. “There are no hotels (in my neighborhood), so it’s the only way to experience the city.”
Over the two years that Lasko has been an Airbnb host, she said she has earned approximately $6,000 in income — which is taxed — and has hosted more than 150 people.
Grand Rapids city commissioners are expected to vote on proposed regulations for room rentals in August.
Commissioners MiBiz spoke with for this report say they are open to keeping short-term rentals a viable option for residents and visitors alike, particularly when they view the issue through the lens of economic development.
“It allows more people to enjoy and spend their hard-earned dollars in our great city,” City Commissioner Walt Gutowski told MiBiz in an email. “This is how many of today’s tourists (and) business people travel.”
Gutowski added that safety for renters and residents needs to be top of mind for city officials when seeking a course of regulatory action.
While understanding the safety concerns presented by Airbnb and other such room-sharing services, Lasko said her experience with renting her house has helped make her neighborhood safer.
Not long ago, Lasko remembers when the neighborhood just south of Wealthy Street was considered unsafe. Now, neighbors have commented that they appreciate the increased amount of traffic in the area, noting that it leads to a greater feeling of community and safety, she said.
Third Coast’s Benedict also cited safety concerns as a reason he expects the hotel business to maintain its dominant position for the foreseeable future. While he said that his first experience in an Airbnb will most likely be his last, he sees where the service has room to grow.
“I view (Airbnb) as good for Grand Rapids because of events like ArtPrize,” Benedict said. “There are people who want to spend their money here, and it adds extra capacity which will have financial benefits for the city.”