Hospitality Group Sonder Snaps Up SA Housing for Short-Term Renting

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Southtown Flats. Photo by Kathryn Boyd-Batstone.

Kathryn Boyd-Batstone / Rivard Report

Sonder, a short term rental hospitality business, leases multiple units around the center-city including Southtown Flats.

Nearly a year after the San Antonio City Council introduced new regulations for the short-term rental industry, a vast majority of the rentals in town are being operated much like hotels, with off-site property owners accounting for more than two-thirds of the permitted homesteads.

Throughout the globe in major metropolitan cities, a new type of Airbnb host has emerged. Where the platform mainly grew out of the desire to pair travelers with local hosts, often renting their spare rooms to wanderlust-driven adventurers, the company has increasingly drawn what it calls “pro hosts,” or whole organizations built on providing hospitality to Airbnb guests and other alternative lodging customers.

That includes San Francisco-based Sonder, which has quickly expanded throughout North America as well as London and Paris renting apartments, furnishing them, and then listing them online for short-term stays.

Sonder has become a $1 billion company since its founding in 2012 as the Airbnb market has become an increasing presence in the hospitality sector. In San Antonio, the company leases 10 units at Southtown Flats in the Lone Star Arts District and 15 apartments at 1800 Broadway near the Pearl District. It’s not the only company operating in the city with such a business model, local officials say. Evolve and Stay Alfred also manage and lease vacation rentals in San Antonio.

1800 Broadway.

Bonnie Arbittier / Rivard Report

The 1800 Broadway Apartments

Robin Lozano joined Sonder as general manager of the San Antonio area in July 2018 when the company was ramping up for its expansion to the city.

“San Antonio is definitely a huge tourist destination,” Lozano said. “When we started working on this market … my first task was to do a deep dive on the San Antonio market. … We surprised folks [at Sonder] who don’t live here [about] the impact of the hospitality market on San Antonio.” 

Among the impetuses for passing an ordinance was to capture hotel occupancy tax revenue from Airbnb and other short-term rentals that were skirting that obligation. Hotel occupancy taxes collected from listings on Airbnb and other such platforms nearly doubled three-quarters into fiscal year 2019 thanks to the enforcement.

Last year’s short-term rental ordinance has helped the City enforce a growing industry that had not been a significant contributor to the revenue gathered from hotel stays. The short-term rental industry started as a way for homeowners to make money off of their surplus space or to turn summer homes into supplemental income the rest of the year.

But residents in San Antonio’s urban core neighborhoods have not embraced the proliferation of some short-term rentals with open arms.

Cherise Rohr-Allegrini, who presides over the Lavaca Neighborhood Association, said short-term rentals are turning her neighborhood into a hotel zone. Although Sonder said it is expressly interested in locating in commercial zones and not residential areas such as the King William Historic District and the Lavaca neighborhood, Rohr-Allegrini and her neighbors are concerned that taking away housing stock from multi-family developments will fuel a housing shortage that is increasingly putting urban-core residences out of reach for the middle class.

“You’re taking off housing stock on the market that would be available to middle-income families, and all that’s left is the very high-end stuff,” Rohr-Allegrini said. “We need people in our neighborhoods who we want to interact with on a regular basis, and you can’t do that with Airbnb guests.”

She said the Lavaca neighborhood is generally supportive of Type 1 short-term rentals, in which the owner occupies the property he or she rents out, but that Type 2 properties, where owners do not live on the property, have created problems in the Southtown neighborhood.

Such issues include a lessened sense of community. Neighborhoods like Lavaca, she said, were founded on close neighborly relations.

“[The homes in Lavaca] are built with front porches for a reason,” she said. “You reach out to your neighbors. When you don’t have a neighbor you don’t have that sense of community.”

Although Sonder does not have properties in the Lavaca neighborhood, investor-owners have purchased homes just to flip them into Airbnbs, Rohr-Allegrini said. If the Airbnb guests are making too much noise, leaving trash out, or blocking driveways, Lavaca residents have little recourse because they do not know the out-of-town homeowners, she said.

“Whole-home short-term rentals have changed our way of life down here significantly over a four-year period,” said Jody Newman, a Lavaca resident and Southtown small business owner.

Newman questioned how a company could list so many units in one property when the City has density restrictions on Type 2 rentals. Whole-home rentals are limited to 12.5 percent of the units in a multi-family building. At Southtown Flats, Sonder’s listings comprise 4.4 percent of the units and 6.5 percent at 1800 Broadway. Sonder is in compliance with the local ordinance.

Overall, Type 2s make up more than two-thirds of the permitted short-term rentals in San Antonio, according to data from the City. Of the 1,605 registered short-term rentals, 517 are owner-occupied and 1,088 are whole-home rentals.

The lion’s share of those rentals is concentrated in Councilman Roberto Treviño’s urban District 1, which includes the Pearl, downtown, and much of Southtown. In fact, nearly two out of every five permitted short-term rentals are situated in Treviño’s district. The councilman was not available for an interview by publication time.

Adopted last November, the short-term rental ordinance strikes a balance between addressing residents’ concerns and granting the personal liberties to property owners who wish to profit off of their surplus housing or investment homes, said Michael Shannon, who heads the City’s Development Services Department.

“I think the story right now is the ordinance is working,” Shannon said.

Shannon and his department are set to present findings from the first year the ordinance has been in effect. The presentation has not been confirmed for City Council business just yet, but Shannon expects to brief the Council’s planning and community development committee in the next few months.

While the City maintains an open line of communication and still receives complaints about Type 2 short-term rentals, Shannon said the ordinance’s density limitations sufficiently protects against concerns residential zones could become hubs for tourists. That language came about partially with companies such as Sonder in mind.

“We’re very aware of the Sonder business model,” he said, adding the company joined the conversation around regulating the short-term rental industry late into the process last year. “Our ordinance is such that they’re allowed to work within [it]. It was important for the City to learn that Type 2 operators are not just in neighborhoods but also in multi-family apartments and condominium developments.”

Meanwhile, Sonder will continue to expand its reach in the San Antonio market. It has signed leases on 40 local units altogether to lease as short-term rentals. Guests can book a stay at a Sonder rental through its website, Airbnb, or other travel and lodging platforms.

The company is also in the midst of redeveloping several units in a downtown building at 515 E. Travis St., which it expects to begin renting out next summer, Lozano said. Over the next few months, Sonder will bring online between 17 and 30 units near Hemisfair Park, she said.

“One of the great things about Sonder is that the Marriot or Hyatt can’t build a 20-room hotel, she said. “But we can have 10 or 20 units in an apartment building that allow us to show off places people might not get to see otherwise. It’s a unique experience for people who are coming to visit San Antonio.”

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