Charlotte, Raleigh, Wilmington Wrestle With B&B Vs. Airbnb

Dec 11, 2014

The Oakwood Inn Bed and Breakfast (left) is in an 1871 Victorian-Era home on downtown Raleigh's Blooworth Street. Three blocks away, neighbor Terry McManus recently listed a room for rent through Airbnb in her 1921 arts-and-crafts-style home. More than 2,600 rooms are available for rent in North Carolina through Airbnb.
Credit Jorge Valencia

The Oakwood Inn Bed & Breakfast was built in 1871, and since 2001, Doris Juerkiwicz has been the owner and innkeeper. It was earlier this year that she heard about some brand new competition.

A woman ran the bell at Victorian-era house in historic Oakwood in downtown Raleigh, and asked Juerkiwicz if she remembered her.

'I used to stay with you, but I'm staying at your neighbor's now because I just can't beat the price.'

"She said, 'I used to stay with you, but I'm staying at your neighbor’s now because I just can’t beat the price,'" Juerkiwicz remembers.

After some light research, Juerkiwicz realized her former guest's visit meant people down her street were renting their spare bedrooms on the Internet, using the website AirBnB, which has become a smash hit around the world and is valued at $10 billion.

Juerkiwicz's neighbors likely don't have the same routine she does: She wakes at 5 a.m. every day to make breakfast for guests, and, she points out, they probably don't have the same overhead costs: health and fire code, higher property taxes, business mortgage.

"You know, I'd love to be able to lower my rates to compete with the AirBnB people, but I can't because my expenses are so high," she said on a recent morning.

Competition From The Internet

More people every day are turning to the Internet to offer services to complete strangers. In North Carolina, more than 2,600 rooms are available for rent on AirBnB. The taxi-like service Uber is offered in 10 cities across the state, the website Sharehammer offers tool rentals, and other sites offer at-home dinner services and textbook rentals.

As those industries are evolving, traditional business owners have been complaining to their local officials, saying they're getting edged out by unfair competition.

As those industries are evolving, traditional business owners, like Juerkiwicz, have been complaining to their local officials, saying they're getting edged out by unfair competition. The issue has come up in Charlotte, Raleigh and Wilmington, and state lawmakers say they're in the weeds about how or whether to regulate the new businesses.

That's not unusual, says Carl Mela, a professor at the Duke University Fuqua School of Business. Some places are slowly figuring it out, such as the ski resort town of Breckenridge, CO, which requires AirBnB providers to register.

"The town actually monitors carefully, aggressively the services so as to spot them," Mela says. "And if there's a violation, they'll let the owner know."

The town then uses revenue from AirBnB to promote tourism. It seems the community has reached a favorable outcome, but major technological change has always brought unexpected and long-lasting challenges, says Gregory Fairchild, a professor at the University of Virginia Darden School of Business.

"There was a period when we began to move from people traversing life on carriages and on horses to using steam-driven automobiles," Farichild said. "And when they did, guess what, we had to think about how people would drive, and we had to think about licensing, and we even had to think about accidents."

While those safety, quality and regulatory concerns are being sorted out, the peer-to-peer industry continues to expand.

From Bed & Breakfast To AirBnB

On a recent Friday, Terry McManus welcomed a room rental guest to her arts-crafts-style house in the Oakwood neighborhood, just a few blocks from the Oakwood Inn.

McManus, a retired teacher who represents artists, welcomed her guest, a college professor on a birthday trip with her husband, with coffee and truffles. McManus doesn't intend to compete with traditional bed breakfast places, she said.

"I'm not doing this with the same passion that they are," she said. "I have a sense of wanting to be connected, and wanting to entertain, and making a little bit of extra money, but I'm not trying to be a full-blown bed and breakfast."

It's worth noting: McManus' guest on this particular Friday used to prefer travel staying at bed and breakfast places, until friends told her about AirBnB this summer.

For now, Raleigh has ordered a study of how other cities are handling AirBnB and other peer-to-peer businesses. The council is expected to take up the issue again in January.