Black Market Economies
There’s been much ado across the globe about Uber, Airbnb, and the so-called ‘sharing economy’. For someone who has long been involved in actual sharing economies, I have a high degree of scepticism for this ‘new wave’. After all, Cooperatives are the original sharing economy developers. What would a large-scale corporate model offer that cooperatives don’t? As it turns out, not much.
Uber and Airbnb are not built on shared capital. Instead, they are modern digital serfdoms that offer less protection to workers, customers, and communities than traditional corporate and cooperative models. They undermine a wide swath of protections like employment laws, zoning laws, taxation laws, and safety laws, while creating huge profits for the company owners. Hint: the company owners are not the same people who drive Uber cars and rent out Airbnb suites. There’s a whole lot of discussion on the internet about this, so I’ll let you do your own research.
What I would like to do is bust a common myth people use to defend companies like Airbnb: that a legitimate Bed & Breakfast (B&B) business is difficult to start because it is encumbered by unnecessary rules. As someone who advises small business start-ups and writes business plans for a living, this gives me chuckle every time. B&B operations have some of the lowest regulations and barriers to entry of almost any business I know. Seriously. While running a B&B is a lot of hard work and sacrifice, getting one started is a piece of cake. For anyone interested in providing short-term accommodations as a way to boost your income, here’s a quick guide on how to can do so as a legitimate operator.
Guide to Starting a Legitimate Bed & Breakfast in the City of Prince George.
First and foremost, you must understand the legal limitations of a B&B business. Most of this is contained in the Prince George Zoning Bylaw, designed to protect the form and character of neighbourhoods and to encourage the highest and best use of our lands for the environmental, social and economic benefit of all.
The limitations of a B&B operation in the Prince George Zoning Bylaw are:
- B&B accommodations must be temporary in nature
- A B&B can only operate out of a single or two-unit house (no apartments, four-plexes, etc)
- The house must be in a residential zone that permits B&B’s. Most residential zones do permit B&Bs, but there are a few exceptions. Not sure what the zoning of your house is? Use PG Map or call the City’s Planning Department to find out
- The B&B owner must live in the house as a primary resident
- There can be no more than two sleeping units in your home (exceptions available for rural residences)
- The sleeping units must be in the principle dwelling (no outbuildings, etc. Exceptions available for rural residents)
- Each sleeping unit must accommodate only one family (no hostel-style rooms that place multiple strangers in one unit)
- You cannot also operate an agritourism business, community care facility, boarding house, or secondary suite on the same property
- You can employ up to one non-resident employee
- You must provide one off-street parking space per sleeping unit
There are a few other applicable laws you should know about as well:
- All accommodation providers in Prince George are required to charge their customers a 2% Hotel Tax on overnight stays. The revenue from this tax goes directly to the Tourism office to promote tourism in Prince George
- As with all businesses, you must abide all applicable provincial and federal laws (taxation, tenancy act, employment standards, etc)
Not flexible enough? Some rural residential zones offer additional permissions for ‘agri-tourist accommodations’ which allows for up to four sleeping units and can be located in outbuildings, separate from the primary dwelling.
Want to rent an entire house through Airbnb? Want to offer a longer-term accommodation? These are not considered B&B operations. They are tenancy relationships. You do not require a business licence, but you must abide by the BC Tenancy Act.
Still not flexible enough? You can apply for a Development Variance Permit from the City, which goes to Council. This can take 5-6 weeks and cost $500 plus the costs of notification. There are no guarantees that Council will approve the variance permit, but it’s an option if you feel your totally-unique-out-of-the-box business truly adds value to the community.
Now that you understand the rule for operating a B&B in Prince George, here are the steps you should take to get started.
Steps to opening a B&B:
- Build a business plan. Every entrepreneur should plan for their goals before they invest their time and money. Free/low-cost coaching and support for business plan development can be had at Community Futures Fraser-Fort George or the Aboriginal Business Development Centre.
- Ensure you can operate within all the limitations of the Zoning Bylaw criteria.
- Apply for a City of Prince George business licence – cost $87 per year (note: this is surprisingly low – a full $53 less than a standard home-based business licence).
- Obtain a health permit, if applicable. Northern Health does not require any permits or inspections for B&B operations with four or less sleeping units which only provide accommodation and/or breakfast. The only exception is If you are not connected to the city’s water system. If you are on well-water, you must provide water testing results to Northern Health.
- Update your home insurance to reflect the new B&B operation.
Once you are set up as a legitimate operator, you can advertise your B&B anywhere you like, including Airbnb, but be warned: Airbnb’s transactions fees are pretty outrageous. They charge a 3% fee on the host and 6%-12% fee on the guest for every booking. Yes, for every booking, Airbnb is pocketing 9%-15% of the transaction. By comparison, Paypal’s transactions fees are 2.9% + $0.30 per transaction.
By operating as a legitimate B&B owner, you can advertise in many other accommodation listings and benefit from the promotion by our local Tourism office. More importantly, by operating as a legitimate B&B, you are respecting the rules of the neighbourhood and industry you operate in, and are supporting and giving back to the community. Right now, there are only six active business licences for B&Bs businesses in Prince George. There are 10 B&Bs listed within city limits on Tourism PG’s website. There are 57 rental listings in Prince George operating through Airbnb. If you are reading this, and you are one of them, yes, we know who you are. It’s on the internet.
So, as you can see, going legitimate is really not so hard. Of course, operating any small business comes with lots of challenges. Always create a business plan before you take the plunge. The Prince George Public Library has a great resource called the Business Plans Handbook, which includes an example Bed & Breakfast Business plan. Small Business BC has published this great B&B resource guide, and there are a tonne of books on the subject.