Posted: August 01, 2008
Making money during the DNC
Are homeowners (and rental agencies) really cashing in?Rebecca Cole
With just four weeks to go before the Democratic National Convention, it’s down to the wire for the rental agencies that sprung up this year to help owners rent their home, apartment or condo to one of the thousands of visitors descending on Denver.
Amid all the media hype about a shortage of hotel rooms throughout the city and surrounding areas, many homeowners and rental agencies anticipated the DNC as a way to make a quick buck and cash in on the action. Using Craigslist and companies like Democratic Convention Housing.com and RentDNC.com, homeowners from as far away as Castle Pines and Boulder listed their properties and crossed their fingers.
So are panicked visitors frantically trying to get accommodations because all the hotel rooms are gone? Are they paying exorbitant nightly rates to savvy homeowners who count their dollars and plan exotic vacations or renovations with the largesse?
Not so much. Although some residences, mainly those within walking distance to the Pepsi Center, have been rented, the mad rush for non-hotel housing hasn’t materialized.
"It’s picking up more than it was before but not a rampant scene like we want it to be," said Matt Conway, director of sales and marketing for Democratic Convention Housing.com. "When the DNC came our way, we wanted to leverage our inventory of furnished units downtown. We also contacted a lot of homeowners who have second-home properties in downtown Denver."
Conway said they’ve rented 48 properties so far out of about 100 available — including three units to a team from Facebook. The majority of the rentals are downtown, which Conway said were most in demand, although a few luxury homes were rented in Cherry Hills and Cherry Creek. The company charges no fee to list the property but does take 35 percent of the gross rental revenue.
With prices ranging from $1,500 per night for a two-bedroom unit to $4,000 per night for a five-bedroom luxury residence, cost may be a real factor. Conway said many of the calls he receives are from people looking for accommodations that run between $200 and $300 a night, comparable to hotels.
Will Roberts, president-elect of the Denver Board of Realtors and co-founder of RentDNC.com, said with about 400 units available and just 15 rented, the company has stopped accepting rental listings. "But people are still giving them to us, at least five or so properties a day."
A search on Craigslist for "DNC" under the Denver section of "apartments/housing for rent" shows 1,317 rentals currently available — including $1,000 for a parking lot next to Invesco Field at Mile High. A search for the same under the "sublets/temporary" section yields an astonishing 3,747 listings — including a "downtown deluxe RV park tent site" for $50 a night and an "exquisite small mansion" three miles from the Pepsi Center for $5,000 a night.
A similar story unfolded four years ago in Boston; residents of Beacon Hill, the North End and other areas of the city rushed to list their homes in hopes of making some easy cash. According to The Boston Globe, many got nothing for their trouble and instead spent money on various sites listing their properties.
"This isn’t the lottery," Conway said. "Lofts are not going for $10,000 a night; that’s just not realistic."
Although RentDNC charges a $49 registration fee to cover "basic expenses," Roberts said the company doesn’t "make money unless the homeowner makes money." Once a property is rented, RentDNC charges a negotiable commission of 20 percent to 30 percent of the rental fee.
Another business looking to capitalize on the DNC circus is The Society of Leisure Enthusiasts, a Colorado-based luxury vacation rental company. After interviewing about 20 people in Washington Park and on the 16th Street Mall, the company decided that offering options to leave town altogether would appeal to many people. (Sorry, Mayor Hickenlooper.)
"We had a pretty consistent response that people are excited for the publicity for the city, but they are not necessarily excited to be living here for that week," said Michael McFaddon, co-founder of The Society. "We’re not in any way trying to scare people; we are just listening to what they were saying."
With a stable of 400 properties throughout Colorado, The Society is promoting a 10 percent discount on vacation rentals during the week of the DNC and a free gas card worth $50. McFaddon says they’ve received a number of inquiries from people interested in a mountain "staycation," especially in resorts along the I-70 corridor.
But cost may be a factor here too. Even with reduced summer rates, luxury rentals in places like Aspen still run upwards of $800 a night while rentals in Breckenridge or Winter Park cost upwards of $500 per night.
McFaddon sees it as "economical" luxury. "It’s value-added luxury. The value of a home versus a luxury hotel is that the cost per head is less."
Cashing in on the DNC is big business; but not as big as many hoped, it seems. Perhaps the best attitude is the one Conway exhibits: "We’re not a pop-up company. We’ve been here before and we’ll be here again. It’s just a great side-business opportunity for us."
Rebecca Cole is the online editor at Rocky Mountain Institute, a non-profit "think-and-do" tank that drives the efficient use of energy and resources. Learn more about RMI's latest initiative, Reinventing Fire, to move the U.S. off fossil fuels by 2050.