There is a significant oversupply in short-term rental homes in Calgary, and surprisingly this trend occurs during the peak tourist season in the spring and summer months.
According to data provided by AllTheRooms Analytics, supply in short-term rental homes begins to rise above demand beginning in March, hitting a high in the middle of summer.
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For instance, at the peak in July 2019, the company’s data shows there was a market supply of about 3,750 units, with nightly booking rates hitting an annual high of about 55% during this period.
Annual booking rate patterns through the changing seasons have been constant over the past three years, even with the surge in short-term rental supply from the growing prominence of Airbnb and HomeAway.
Since January 2017, the number of short-term rental units in the city grew by approximately 50%.
As well, average daily rates for these properties have been relatively flat throughout the changing seasons over the last three years, with average rates hovering at between $60 and $70 in the winter and spiking to an average $90 to $100 during the peak summer season, coinciding with the Stampede. Gross revenues in the industry during the peak summer season are as much as three times the low point of the winter season.
Analysts suggest the City of Calgary’s forthcoming new regulations on short-term rentals could be beneficial for operators, as the oversupply is leading to lower daily rates to compete for business.
The municipal government’s approved regulations, which could go in effect in February 2020, would require short-term rental operators to hold a license in order to operate, with annual fees ranging from $100 for up to four rooms and $191 for homes with five or more rooms. There would also be an additional cost of a $104 fire safety inspection.
This could generate millions in new annual revenue for the cash-strapped city, while providing regulations to protect residential developments and neighbourhoods.