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Questions remain on short-term rental capacity, Aspen's unique lodging market

  • 10 min to read
Aspen rentals

Visitors to Aspen walk on the downtown mall recently.

 

Operators of Pitkin County’s many unique lodging options are evaluating what a May 27 public health order permitting short-term stays means for them. Lodging facilities booking stays under 30 days may only host up to 50% of their occupancy ability, and must first submit a safety plan to the county.

Bob Schultz, the county’s consulting business liaison, said his inbox is overrun with questions from the lodging community this week.

“Aspen has one of the more complex mixes of lodging units of any place I've ever been, and so we are trying to work through it,” Schultz said.

A set of guidelines provided by the county recommend strategies for keeping staff and guests from transmitting the coronavirus, but leaves ample leeway for businesses to work out the execution on their own.

“Lodging management is encouraged to be creative in how to apply these best practices and implement these measures in your establishment,” the guidelines state.

The guidelines also link to a document spelling out best practices for cleaning a communal living space to ensure disease is not spread from one group of occupants to the next.

“Cleaning a vacation rental is no small task, even when we are not faced with a global pandemic. A housekeeper is expected to take a property that is in disarray from departing guests and completely reset it—eradicating the microbes that have been left behind in the property and creating a like-new experience for arriving guests,” the cleaning guidelines read.

As long as they have submitted their guidelines, and are keeping occupancy below 50%, Aspen’s many short-term rental options are all now allowed, including hotels, lodges, motels, developed campgrounds, bed and breakfasts, condo-hotels, Airbnb, VRBO and retreats. The only short-term lodging that remains banned in the county are privately managed rental units.

For guests seeking to book lodging in the area, there is no resource that provides a list of hotels that have had their safety plans approved, but hotels are given a printable certificate of compliance that they can display for guests who arrive in person.

Penalties for skirting the public health order include a $5,000 fine, or up to 18 months in jail. However, as has been the case since public health orders banned short-term stays in March, there is no structure in place to monitor compliance in the reopening phase, and little appetite to deploy the penalties.

Who is watching

“The enforcement issue is still something I struggle with,” said Pitkin County Sheriff Joe DiSalvo. “As far as enforcement goes I'm not going to be punitive about this until it becomes unreasonable. I would prefer an educational route and contacting homeowners.”

The county public health ordinance also touches on requirements regarding face coverings, restaurant occupancy, mass gatherings and what should be done if someone is symptomatic. Throughout the document, it is stressed that the measures should be self-regulated. The small public health team is not able to also act as regulators of the short-term rental ordinance.

“I don't think they have the time. They are doing contact tracing, they are following the ups and downs. I mean they are juggling chainsaws, and I just don't think that it's a priority,” DiSalvo said.

Ward Hauenstein is the Aspen City Council member assigned as a liaison to the lodging industry as the city works on response and recovery from the economic shutdown due to COVID-19. He agrees that as the industry reopens, the mission is not to catch businesses that are out of compliance.

“I think there is less of an appetite for draconian enforcement than there is for education and just making people aware of what's expected of them and why,” Hauenstein said.

As he speaks to businesses owners, Schultz said he believes everyone is truly trying their best to put public health first, and as long as the county’s COVID-19 caseload remains low, there will not be anyone checking up nightly to make sure rental units are staying within the mandated capacity.

“Really it's up to us, because Pitkin County isn’t going to be looking in people’s condo windows. This is about us as a collective group of people wanting to get our economy moving and be safe. So if everybody has that in their heart, they are going to make good decisions,” Schultz said.

Gray areas

Just a couple of days into the reopening, business owners still have outstanding questions, though. Because of Aspen’s unique lodging market, the 50% capacity requirement is a moving target, even within a single location.

For “condo-tels” in which a single, on-site management oversees a mix of short-term rentals and ownership units that can be rented when owners are not present, the occupancy allowance will vary, depending on who the units are occupied by.

Properties such as the Gant, W, Aspen Alps and Aspen Square, do not have to count owner-occupied units in their nightly roundup. If a guest is staying in one of the ownership units, however, that visitor would be counted toward the 50% calculation.

Counting occupancy in private homes that are rented through property management companies is also a fuzzy number. Related visitors staying in a private residence can rent the place at full occupancy.

Schultz said the balance of the occupancy counts is a calculated risk. And the property managers are well aware that adhering to public health guidelines may prove a good business strategy, if it avoids a second social distancing shutdown.

“People are taking this very seriously. I think it's one of the things that the economic side of the community should be very proud of,” Schultz said. “Overwhelmingly, the interest is ‘how do I be safe?’ I feel really really good going into this. It's obviously a risk but if we are all in it together then, if it doesn't work, then we will deal with it together.”

The lodging industry is one of the last to be allowed to reopen, and according to the variance granted to Pitkin County by the governor, will be shut down again if COVID-19 cases reach more than 18 in a week and indicate community spread.

Visitors welcome

The local lodging industry was shut down by the coronavirus on March 23, when all nonessential retail businesses were closed and visitors and second-home owners asked to vacate the area. That followed the ski area shutdown stipulated by the governor, effective March 15.

City councilmember Skippy Mesirow is the managing director of Sky Run Aspen property management. He said unlike restaurants, which could still operate to-go menus, or retail which could pivot to online sales, the lodging industry had no other option but to go completely dark.

“It was a complete hit. We were mandated zero revenue by the government,” Mesirow said.

Even before the public health order required it, many of the properties started losing sales, as the coronavirus spread to the United States.

“Early March we started shutting down right away. It's our biggest month of the year. Christmas is the biggest week, but March is our busiest month, and we missed almost the entire thing.”

Bob Schultz said the swift action allowed the county to maintain an A grade and never saw a spike of COVID-19 cases that could not be addressed by the health care system. As hotels reopen, visitors are encouraged to enter the community, which may bring us back to the level of threat experienced during the initial shutdown.

“In March when the lifts were open, we had infections and the community spread had started. The lifts closed and the visitors left and the infection rate is negligible. We want to allow people to return to visit, and we want employees to be able to go home safe without worrying about infecting their family. And we want the visitors to have a good time and go home healthy,” Schultz said.

The May 27 amended public health order does not require a quarantine period for visitors, but asks that they be vigilant about reporting and testing symptoms.

“Any person that is not a Local Resident that travels to or visits Pitkin County must be free of any symptoms consistent with COVID-19 before arrival,” the order states. “All Visitors and Guests will self-screen for symptoms each morning during their stay.”

The exception

Beyond the capacity caps and sanitary requirements, there is an entire sector of the hospitality industry that is still outright banned. Any short-term rental that is rented out privately can not operate during this phase of the public health order.

In practice, this most often looks like an owner listing their spare room, house, or accessory dwelling unit directly on sites like Airbnb or VRBO. The ordinance does not differentiate if the private manager is on-site, local, or remote; none of the options are permitted. It was a later addition to allow private residences to be rented short term, if they are professionally managed by a company like Mesirow’s.

“When this first started getting considered it was just lodging. My perspective was if the primary goal is public health, and the means by which we achieve that are physical social distance cleanliness cleaning, etcetera, in many ways a short-term rental home is easier to achieve those goals in than a lodge,” he said.

While taking a significant hit in his business, Mesirow was simultaneously passing legislation allowing the city to declare an emergency ordinance, working 60-hour weeks in council meetings and consulting with constituents regarding Aspen’s response to the pandemic.

“Public health has to be No. 1. That is very clear to me as a citizen, as a business owner, as a council person. There is nothing more sacred than life and had we not taken the actions required to flatten this curve, we could be closed for many more months — and summer months instead of offseason months,” Mesirow said.

Mesirow said that, particularly with a local host, the reduced density of private rentals and the elimination of shared common areas between parties could be a benefit to containment.

DiSalvo said he has noticed the influx of visitors to Aspen as the stay-at-home orders have loosened. He said he was surprised Pitkin County sought the variance allowing higher capacity gatherings and occupancies in restaurants and hotels.

“VRBOs may be safer than a hotel. Because you could be totally self-contained in a VRBO. In a hotel you’ve got to go out for food and wine and whatever else,” DiSalvo said.

Councilmember Ward Hauenstein said it is clear that some owners have been disobeying the mandate, and privately renting their homes during the stay-at-home order.

“I know some people have been doing short-term rentals the whole time. It’s a question of, we have regulations, how draconian do you want to be on enforcing them?” he said.

And he said the bigger picture still should be on containing the spread of the virus.

“If you have four people in a condo at the Alps, and four people in a single family residence in the West End, the health implications are the same. The same implications for the hospital,” he said. But “trying to find equity between those different markets is something that we as a city don't have a lot of control over.”

Short-term regulations

In some communities that banned short-term rental by owner during COVID-19, Airbnb was able to turn off all bookings listed on its site for that area. In Aspen, the site remains live, and visitors could still browse the hundreds of active listings inviting them to town. Airbnb did not respond to the Aspen Daily News’ interview request, but lists a refund policy on its website for any bookings made prior to March 14.

For any booking made after that date, the site will no longer allow refunds except in cases of the guest or the host testing positive for COVID-19. The company puts the responsibility of researching the local lodging laws on the guest.

“After the declaration of COVID-19 as a global pandemic by the World Health Organization, the extenuating circumstances policy no longer applies because COVID-19 and its consequences are no longer unforeseen or unexpected. Please remember to carefully review the host's cancellation policy when booking and consider choosing an option that provides flexibility,” the website reads.

There are more than 1,000 units available for booking through rent-by-owner websites within Aspen city limits. Just 50 of them have filed for their free permit with the city. The permit requires a local contact person to be listed. Community Development Director Phillip Supino said the contact person does not have to be a property manager, but just needs to be available in the event of an emergency.

“In the case of complaints or life safety related matters somebody in the Roaring Fork Valley can be contacted to address the issue,” Supino said.

The permits also help the city finance office when it comes time to remit taxes on the money earned by renting out private property. In one of the last city council work sessions before the COVID-19 outbreak led to the local emergency declaration, the city’s finance department presented a strategy to better capture the number of short-term rentals operating in Aspen without remitting lodging taxes.

“We do feel that we don't have everybody in compliance,” said Pete Strecker, Finance Director.

By the end of the year, the city hopes to have a software up and running that has proprietary ways of skimming listings and identifying businesses that are booking guests. The compliance measures, along with the switch to a fee-based business license, would bring in more tax revenue, but could also be used to track violators of a public health order, or help to coordinate a backend shutdown as other cities have managed during self-isolation mandates.

The program is not in place in time to help catch anyone who was illegally booking throughout the spring. And because the public health order is dictated by the county, the city does not have the mandate or the jurisdiction to chase violators.

“The city and community development are not in a position to enforce the county’s public health directives, with respect to short-term rentals or lodging operations,” Supino said.

While the majority of short-term rental operations have gotten by without permitting their business or paying taxes, it is their lack of licensure that has kept them out of the current reopening. Whereas hotels, lodges and professional management companies can all submit their businesses safety plans and receive their certificate of compliance from the county health department, the county is not able to assure that individual operators are adhering to the same standards.

“How do we know what you are doing if you are unlicensed,” Schultz said.

Open the gates

Even with the variance allowing Pitkin County’s hospitality sector to house a higher percentage of guests than elsewhere in the state, it will be a tough summer for Aspen’s short-term rental industry.

As the liaison to the lodging sector, Hauenstein has checked in with operators, who have reopened this week. Anecdotally, most of the current guests are from out of state, and planning on longer stays.

“People that are open now are losing money. Most people will say it’s about 35% occupancy to break even, and nobody is anywhere close to that,” Hauenstein said.

Mesirow said beginning about a month ago, he started getting contacted by people who were interested in booking his properties. He said he was hearing from Colorado residents of bigger cities, who thought maybe Aspen was a safer place to wait out the pandemic.

“We have had to turn away a lot of customers and clients over the last month. We don't normally have to turn away anybody in May,” Mesirow said.”It’s clear to me that, at least for now, people who are in drivable markets are looking to escape from the cities.”

Opening the gates to visitors helps the industry, but threatens the regional health care system. Aspen Valley Hospital only has 25 beds in its emergency room.

“I'm trepidatious and I'm hopefully optimistic,” he said.

Public health officials will be keeping their eye on the infection data. Mesirow said there are other aspects of public health beyond the spread of infectious disease that the community also needs to be accounting for as it balances the economic reopening.

“A future where everything is closed, businesses are shuttered, people are leaving town, that doesn't lead to good public health outcomes,” He said. “I think we are all just searching for … survivable normality without overrunning our health care system and seeing unnecessary death. And no one has that answer. No one in the world has figured that out yet.”

Alycin Bektesh is a reporter for the Aspen Daily News. She can be reached at Alycin@aspendailynews.com or on Twitter @alycinwonder.