The Impact of Tariffs & Regulations on Short-Term Rentals in Canada

In this episode of STR Data Lab, Jamie Lane, Chief Economist at AirDNA, welcomes Catherine Ratcliffe, CEO of STR Benefits Consulting and Lost Together Stays. The conversation takes a deep dive into how tourism’s economic impact, new regulations, and short-term rental tax policies are reshaping Canada’s vacation rental industry.

With recent political and economic shifts, Canadian short-term rental (STR) operators are facing significant challenges, from currency fluctuations and travel restrictions to new regulations in key markets like Montreal and British Columbia. Catherine shares her expert insights on navigating these uncertainties and highlights strategies for vacation rental investment in a rapidly changing landscape.

What You’ll Learn in This Episode

  • The impact of proposed tariffs and regulations on the Canadian tourism economy
  • How political tensions are influencing cross-border travel between the U.S. and Canada
  • Recent changes in short-term rental tax laws and enforcement in key provinces
  • The evolving regulatory landscape in Montreal and British Columbia
  • Strategies for navigating uncertainty in the vacation rental investment market

Episode Highlights

The Growing Political & Economic Impact on Tourism

Catherine opens the conversation by highlighting how political changes and economic policies are affecting short-term rentals across Canada. She notes that recent tariffs and travel restrictions between the U.S. and Canada have created economic uncertainty, directly impacting travel demand.

The Canadian dollar has weakened, making it more expensive for Canadians to travel abroad while making Canada a more attractive destination for American travelers. However, heightened political tensions and travel warnings may discourage some visitors, creating mixed effects on the market.

Jamie points out that Canadians make up a large portion of U.S. short-term rental demand, with over 20 million Canadians traveling to the U.S. in the past year. That accounts for nearly 30% of all international visitors. Any changes in travel behavior due to political factors could create ripple effects across both economies.


How New Short-Term Rental Taxes & Regulations Are Impacting Hosts

Recent policy changes have significantly altered the short-term rental tax landscape in Canada. In cities like Montreal and Vancouver, new rules have increased tax obligations for hosts, requiring them to register their properties and pay additional tourism and occupancy taxes.

Catherine explains that while short-term rental tax policies aim to create fair competition with hotels, they also introduce complexities for hosts trying to remain compliant. She urges STR operators to stay informed about local tax laws, as enforcement is becoming stricter in many provinces.

Key tax changes include:

  • New GST/HST collection requirements for STR operators across Canada
  • Higher provincial taxes for vacation rentals in major tourism markets
  • Stricter enforcement of tax compliance, leading to increased audits and penalties

These changes add a financial burden to STR hosts, making it essential to integrate tax planning into investment strategies.


Montreal’s Short-Term Rental Ban: A Turning Point for STR Regulations

One of the biggest surprises in Canadian STR regulations was Montreal’s sudden short-term rental ban, which restricts STR operations outside of peak summer months. This drastic move caught many investors off guard and raised concerns about government overreach in the rental market.

Catherine explains that the regulation was introduced in response to safety concerns following a tragic fire in an illegal STR property. However, rather than focusing on better enforcement, the government chose to impose sweeping bans that limit legal operations.

The effects of this regulation include:

  • A 50% reduction in active STR listings in some areas
  • Increased difficulty for tourists finding accommodations outside of hotels
  • Uncertainty for investors, as other cities may adopt similar measures

Despite these challenges, Catherine believes policy shifts in Montreal could lead to new opportunities elsewhere, particularly in surrounding areas that still allow STRs.


British Columbia’s Evolving STR Market: What Hosts Need to Know

British Columbia has long been a hotspot for vacation rental investment, but new laws have led to a 10% decline in STR listings across the province. While some feared a major industry collapse, the impact has been uneven, with some areas seeing only minor shifts.

Key changes include:

  • Victoria’s market shrinking by 50%, signaling a strong regulatory crackdown
  • New zoning laws restricting short-term rentals in residential areas
  • Reduced demand due to fewer available properties, making STRs in allowed zones more valuable

Catherine highlights that some investors have switched to long-term rentals, while others are waiting to see how enforcement plays out. She advises hosts to stay ahead of regulatory changes and consider shifting their focus to areas with more favorable policies.


Vacation Rental Investment: Navigating Market Uncertainty

With changing tax laws and increased regulations, STR investors must rethink their vacation rental investment strategies. Catherine shares key factors to consider when evaluating new STR markets:

  1. Regulatory Stability – Investing in cities with long-standing STR-friendly policies reduces risk.
  2. Tax Implications – Understanding short-term rental tax obligations can prevent unexpected financial strain.
  3. Cross-Border Travel Trends – American travel to Canada is increasing, creating new demand for STRs.
  4. Diversification – Expanding into secondary markets or offering extended-stay rentals can mitigate risk.
  5. Revenue Optimization – Using tools like dynamic pricing and occupancy forecasting can help maintain profitability.

Jamie and Catherine agree that while Canadian STRs face growing challenges, opportunities still exist for well-prepared investors.


Actionable Takeaways for STR Investors

  1. Monitor political and economic trends to anticipate shifts in tourism economic impact.
  2. Stay updated on new short-term rental tax laws and register properties to remain compliant.
  3. Diversify vacation rental investment portfolios by considering emerging markets.
  4. Adapt to changing regulations by shifting to STR-friendly zones or extended-stay models.
  5. Leverage market data to adjust pricing, occupancy strategies, and tax planning.

Conclusion: What’s Next for STRs in Canada?

Catherine predicts that Canada’s short-term rental market will continue evolving, with new regulations and tax policies shaping the industry’s future. While some cities are restricting STRs, others are embracing them, creating shifting opportunities for investors.

For operators looking to navigate market uncertainty, understanding tax obligations, staying compliant, and adapting investment strategies will be key to long-term success.

Catherine encourages STR hosts to engage with industry networks, stay informed on policy updates, and proactively plan for tax changes to stay ahead of these changes.

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Up Next:

Why Consistency is King in Luxury Travel with Jonah Hanig

In this episode of STR Data Lab, Jamie Lane, Chief Economist at AirDNA, sits down with Jonah Hanig, CEO of Rove Travel, to discuss the evolution of short-term luxury rentals, the challenges of managing boutique home rentals, and how private villa rentals are reshaping the premium hospitality space.

Jonah shares how his experience living in Airbnbs during the pandemic exposed a gap in the market for consistent, high-end rental experiences. This led to the creation of Rove Travel, a company focused on providing luxury home rentals with a hotel-level experience.

As New York City’s midterm rental laws tighten, Rove Travel has expanded into high-end markets like southeast Florida, the Hamptons, New York, and Aspen, Colorado, developing a brand that guarantees quality, service, and exclusivity.

What You’ll Learn in This Episode

  • How Rove Travel ensures consistency across short-term luxury rentals
  • The key differences between boutique home rentals and luxury hotels
  • How high-end travelers’ expectations shape private villa rentals
  • The importance of branding and service in the luxury STR market
  • Strategies for expansion into high-end short-term rental markets

Episode Highlights

The Birth of Rove Travel: Bridging the Gap in Luxury STRs

Jonah Hanig’s inspiration for Rove Travel came from his own experiences living in Airbnbs during the pandemic. While some properties exceeded expectations, others fell short due to poor maintenance, inconsistent service, and misleading listings.

This lack of brand consistency in the short-term rental market led Jonah to develop a company that curates high-end properties and ensures five-star service for luxury travelers.

Rove Travel began in New York City but quickly expanded to other high-end vacation destinations that appeal to their clientele.

Luxury STRs vs. High-End Hotels: What Sets Rove Travel Apart

Unlike standard vacation rentals, short-term luxury rentals operate in direct competition with high-end hotels. Rove Travel differentiates itself by offering privacy, space, and exclusivity while maintaining hotel-quality service.

Jonah explains that travelers choosing a private villa rental over a hotel expect:

  • Impeccable property quality – Every home must meet Rove’s strict design and maintenance standards
  • Top-tier amenities – From central heating and AC to luxury furnishings
  • Personalized service – A 24/7 concierge team handles guest requests, from dinner reservations to private chefs

Rove Travel competes with luxury hotels while offering a more private and personalized experience by meeting these expectations.

Boutique Home Rentals: Why Service & Consistency Matter

One of the biggest challenges in boutique home rentals is maintaining consistency across properties. Unlike hotels, where guests expect uniform experiences, luxury STRs vary significantly.

Jonah emphasizes that Rove Travel ensures high service levels by:

  1. Selecting only investment properties – They do not manage primary residences, ensuring homes are always guest-ready.
  2. Conducting strict quality assessments – Each property is reviewed based on design, functionality, and luxury features.
  3. Providing in-house management – Unlike many STR companies that rely on third-party managers, Rove handles guest support and issue resolution internally.

These factors help Rove Travel deliver a seamless luxury experience, setting it apart from traditional STR platforms.


Expansion Strategy: How Rove Travel Chooses New Markets

As Rove Travel expands beyond New York, Jonah shares how they identify high-value locations for short-term luxury rentals.

Factors influencing market selection include:

  • Guest demand trends – Identifying where high-net-worth travelers prefer to stay
  • Homeowner overlap – Many of Rove’s existing property owners own multiple luxury homes in different markets
  • Regulatory environment – Focusing on cities with clear midterm and short-term rental laws

This strategy has led Rove Travel to expand into the Hamptons, Aspen, and Miami, where demand for private villa rentals continues to grow.

Marketing & Distribution: How Luxury STRs Attract High-End Guests

Attracting luxury travelers requires a different marketing approach than traditional STRs. While platforms like Airbnb and Vrbo are still valuable, Jonah explains that direct bookings and concierge partnerships play a bigger role in luxury STRs.

Rove Travel’s marketing strategy includes:

  • Targeted SEO for boutique home rentals – Competing in specific high-end markets rather than trying to rank nationally
  • Social media and influencer marketing – Leveraging luxury travel influencers to showcase their properties
  • High-end direct booking platform – Rove Travel’s custom booking system ensures guests receive a premium, hotel-like experience

Rove Travel builds long-term brand loyalty by focusing on direct relationships with high-end travelers.

Challenges in Luxury STRs: Maintaining Service Excellence

Luxury travelers expect flawless service, making guest experience management a critical component of short-term luxury rentals.

Jonah shares some of the biggest challenges Rove Travel faces:

  1. Property readiness – Ensuring homes meet high-end standards before guests arrive
  2. Guest problem resolution – Quickly handling issues like maintenance requests or unexpected disruptions
  3. Owner expectations – Balancing homeowners’ revenue goals with guest satisfaction

Rove Travel invests in strong customer service teams and ensures each home is meticulously inspected before every stay to overcome these challenges.

Key Takeaways for Luxury STR Operators

  1. Luxury guests expect consistency – Ensure every home meets high-end standards before listing it.
  2. Service is just as important as the property – A 24/7 concierge team can set your business apart.
  3. Expand strategically – Enter markets where demand and supply align with luxury traveler expectations.
  4. Marketing should target high-end guests – Focus on SEO, direct bookings, and social media partnerships.
  5. Quality control is key – Regular property inspections and guest feedback loops ensure continuous improvement.

Conclusion: The Future of Short-Term Luxury Rentals

The luxury STR market continues to evolve, and Rove Travel is at the forefront of setting new industry standards. They bridge the gap between boutique home rentals and five-star hotels by focusing on high-end service, premium properties, and a seamless booking experience.

As more travelers seek private villa rentals with hotel-quality amenities, the demand for curated luxury experiences will only grow. Jonah’s insights offer valuable lessons for investors and hosts looking to enter or expand in the high-end STR market.

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