Newport, RI’s AirBnB Crisis: Time For A Ban?

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The most expensive hotel rates in the country.

In August of 2012, CheapHotels.org announced that Newport had the most expensive hotel rate in the country, with the cheapest available room available at $319. (The cheapest available room on that site for this Friday night is $369). Traditionally, high prices mean a market primed for “disruption”. Aquidneck Island in general and Newport specifically does not have enough commercially available rooms to satisfy demand at the height of the summer season.

AirBnb = Uber for Apartments…with one important difference

In steps AirBnb to help fill the gap. It offers cheaper rates for the renters, which they love. It gives landlords way more money than they’d make from your typical long-term renters, even given Newport’s crazy summer rates for luxurious homes ($4000+).

The big difference is that nobody uses a rental car as their long-term daily driver. Nor do most people rent a car to drive for Uber. Cars driven for Uber are typically owned by the driver and would simply not be driven if it weren’t for  the financial opportunity presented by Uber. The cost of the disruption is borne by traditional taxi companies, who just can’t respond to shifts in demand in real time like Uber and Lyft can.

The corrosive nature that AirBnb presents to a community is that it cannibalizes the long-term rental market. There aren’t many homes in Newport that people were just leaving vacant until AirBnB came along.  Those were rentals that were taken out of the market for residents and presented to tourists with a substantial premium attached. In most cases, a landlord is making what they’d normally make in rent for a month in 3-4 nights.

Where are Newport’s workers supposed to go?

We know one girl who had a nice place on Broadway that she lived at for a couple years. Then, at the beginning of the summer, her lease wasn’t renewed and her apartment and those in the rest of the building were “converted” to AirBnb.

Then another friend of ours came back to Newport in the thick of this situation, struggling to find a place in the middle of the summer…but he lucked out and got one. He had just returned to Rhode Island after living in Colorado for the last couple years. He had a great bartending job making great money in Breckenridge. Things were going  great right up until he couldn’t find anywhere to live. The place he was living converted to an AirBnb at the end of his lease and there was nowhere for him to go. Neighbors started to disappear until one day no one knew anyone on their block. So eventually he had to give up and came back to Newport, another place where a similar problem is happening. According to the article “Did AirBnb Kill The Mountain Town?“, his experience is becoming the norm. The one difference is that Newport already has ordinances in place that it can enforce while Breckenridge was wide open.

This summer, Craigslist has had maybe a dozen listing for rooms for rent with availability before September 1. This is a city of 25,000 people. There should be some turnover. Roommates have fights. Couples break up. People get sick or even die. But no one had rooms listed to rent for the summer. The summer rental market in Newport has always been tight but we can’t remember it being this tight.

So as downtown homes cease to be rentable, where do the people who make a living in Newport go? Perhaps it’s time to gentrify Newport Heights (and make it just like their odd commercial). Actually, we’re not sure if “gentrification” would be the right term for those fleeing economic hardship. Maybe a high-rise apartment building on the old Naval Hospital site. Alternatively, when Newport Grand heads off to Tiverton, make that into another housing complex (though there might be some controversy about what’s under the parking  lot).

Totally unaffordable.

The problem isn’t that Newport workers aren’t earning enough. People working in town tend to do quite well in the summer. The problem is that people aren’t about to bust their ass serving all week just to try to pay the grand at the end of seven days that AirBnB rentals are asking for. Especially when these apartments were asking for $1000 a month a couple years ago.

Come September, landlords have to make the call between keep AirBnbing or load up with Salve students for the winter. At the end of the day, it might be better for them to have the reliability of regular rent when it comes time to pay that February mortgage bill.

Up Next: Should Newport Ban AirBnB?


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