Maine hotels say under-the-radar room rentals are ‘illegal,’ undercut business

In Portland, Corey Saenz rents her three-bedroom Munjoy Hill apartment to short-stay visitors for up to $380 per night.
William Hall | The Forecaster
In Portland, Corey Saenz rents her three-bedroom Munjoy Hill apartment to short-stay visitors for up to $380 per night.
Posted May 27, 2014, at 5:29 p.m.
Last modified May 28, 2014, at 6:49 a.m.

PORTLAND, Maine — With summer tourism season unofficially kicking off this week, visitors to southern Maine have more lodging options than ever — including online apartment sharing services some consider illegal.

It’s no secret Portland’s hotel business is booming. In May, two new hotels opened their doors: the 131-room Courtyard Marriott on Commercial Street and the 130-room Hyatt Place on Fore Street.

In December, the former Eastland Park Hotel re-opened after an extensive renovation as the Westin Portland Harborview, now the largest hotel in the state. Construction is underway on The Press, a boutique hotel scheduled to open in April 2015 at 390 Congress St.

However, some travelers are turning to stealth digs, with a growing number of local rooms, apartments and houses informally rented for short-term stays through websites such as Airbnb.com.

Airbnb is a do-it-yourself service homeowners use to rent more than 600,000 properties worldwide. More than 11 million people have booked stays through Airbnb since it was founded in 2008.

The company recently has come under fire by the hotel industry and government officials across the country, claiming Airbnb hosts lease their properties in violation of state and local laws, including safety, tax and zoning regulations.

On May 21, after a year-long dispute that made national headlines, the New York State attorney general reached an agreement with Airbnb to obtain data about New York City hosts. The information will help the state prosecute offenders of a rule that prohibits apartment rentals of less than 30 days, unless a permanent resident of the apartment is present.

‘It just isn’t fair’

In Maine, under-the-radar rooming hasn’t received the same sort of attention, but some believe it should.

“It just isn’t fair,” Greg Dugal, executive director of the Maine Innkeepers Association, said in a recent interview. “[Airbnb] creates a playing field that isn’t level. These people are profiting from activity that is illegal and shouldn’t be promoted.”

Maine law places a wide variety of requirements on hotels, bed-and-breakfasts and other lodging places. For example, B&Bs renting to more than three guests must be outfitted with fire sprinklers, fire alarms and smoke detectors. They must also be licensed and meet state codes for drinking water and plumbing.

In addition, the state requires property owners to collect an 8 percent sales tax for lodging fewer than 28 days, including “casual” stays in vacation homes and condominium units. Municipalities often impose requirements of their own on where and how many rooms can be rented.

Still, lured by the extra income and the ease of marketing extra living space, hosts don’t always pay close attention to the red tape. They’re flocking to the Airbnb website, as well as short-term rental site VRBO.com and posting on craigslist.com.

Attempts to reach an Airbnb representative for comment were not successful, but Dugal said he believes the number of Maine hosts in recent months has “grown exponentially” as a result of social media and press attention.

Last week, Airbnb.com listed more than 300 short-term rentals in Portland, ranging from a 182-square-foot bedroom located downtown for $75 a night to a three-bedroom, three-bathroom farmhouse on Great Diamond Island, which can be yours for $3,000 per week.

On Munjoy Hill, a neighborhood that commands some of the highest rents in the city — and in the state — Corey Saenz used Airbnb earlier this month to rent her three-bedroom Congress Street apartment for the first time.

“For me, this was a natural way to make money, in which I didn’t have to get another job,” said Saenz, a 46-year-old lawyer who owns the building that includes her home and two other apartments.

Saenz pays $500 a month to stay in another apartment when she needs one, but she rents her own place for $200 a night — a price that will increase to $350-$380 per night during June, July and August. Most of her season is already booked.

“This is a destination spot, and I think I have a nice place,” Saenz said. Besides its prime location, just steps away from the Eastern Promenade, the apartment offers access to a backyard garden with a cobblestoned patio, a wet bar and a fire pit.

But she doesn’t seem worried about regulatory fine print. As with the other two apartments she lets out on a traditional lease basis, her own apartment meets monthly rental requirements, but not necessarily the more stringent ones of a short-stay space.

“I’m just trying this out, and I don’t know if I have regulations to jump through. I’m not really looking into what I should be doing,” she said. “But should government be more involved? No. And I’m certainly not going to be putting the hotels out of business.”

Cities and towns take notice

Portland officials aren’t too concerned about the potential conflict between hotels and hospitable home owners. Nevertheless, the city is keeping an eye on how landlords such as Saenz rent their spaces to short-stay visitors, according to Jeff Levine, the city’s director of Planning and Urban Development.

Levine said enforcing regulations over vacation room-letting “hasn’t been a huge priority,” but Portland will crack down on illegal rentals as the need arises. Portland’s zoning laws restrict where B&Bs can operate and define a B&B as an owner-occupied building that rents three to nine rooms to transient guests.

“We have a policy of realism, like other municipalities,” Levine said. “If there are problems, we’ll get involved.”

Other municipalities have taken a more active stance.

In 2012, Cape Elizabeth adopted an ordinance that requires property owners with fewer than nine tenants to go through a permitting process before renting out space for less than 30 days. Permits are only granted after a town inspection determines whether the property has adequate fire protection, sanitary waste disposal, appropriate exits, parking and evacuation plans.

Steven Crockett, who has been renting his two Shore Road properties for more than 10 summers, calls the rules “over-regulation.”

For most of that time, he has used VRBO.com to market the three-bedroom and one-bedroom properties, and he credits the website with helping provide $80,000 in seasonal income.

Crockett, 53, said he collects and submits the state lodging tax, but he admits some of the town’s requirements considered, though not enacted — such as fire sprinklers — would have been “a deal-breaker” that might have forced him to get out of the short-stay business.

“All in all, the popularity [of short-term, online rentals] has caught the attention of the town,” he said. “And the regulation that’s resulted has been a real thorn in my side.”

A few miles away, in the Willard Square area of South Portland, Maggie Birlem worries her city might adopt similar measures if short-stay, DIY rentals continue to rise in popularity. Birlem, 39, began renting her three cottages last year through VRBO.com.

“Should people be able to tell you how to use your own home? I’m really nervous about that possibility,” she said. “And I don’t want the neighbors to raise a stink.”

Media reports have claimed Airbnb guests often trash their rooms, using them for wild parties and causing property damage. But Airbnb advertises it will cover hosts for damages up to $1 million, and Birlem says the best way to avoid potential problems is to rent to responsible guests.

She said she requires a security deposit from her temporary tenants and uses her intuition to screen them, after hosting more than 100 guests last summer.

“Once in a while you get the feeling that someone is not the right fit,” she said.

Saenz also relies on that feeling. She says she looks for guests who are visiting for a specific purpose, not a party destination.

“If they’re coming here for a reason, that’s good enough for me,” she said.

Jason Lamb, a 24-year-old engineer from Minnesota who recently booked another Portland residence through a website, echoed her rationale.

“I try to be a good guest,” he said. “When I come to someplace like Portland, I am trying to get the most value for my dollar. So I want to be respectful of where I stay. Hopefully that is a good value for the host as well.”

 

CORRECTION:

A previous version of this story requires correction. The lodging sales tax is now 8 percent, not 7 percent as previously stated.

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