Short-term home rentals to be legislated under Tourism Act

We witnessed rumblings regarding the Airbnb industry, and the compliance requirements that the Overstrand Municipality was starting to enforce, late last year. While nothing further has been heard in that regard, there was a recent interview on Radio 702 that discussed government’s plan to regulate the entire short-term rental market.

The Tourism Amendment Bill, which was published on 12 April 2019 for public review and opinion, clearly states that government plans to regulate Airbnb and other home-sharing platforms in South Africa; and that ‘short-term home rentals’ will be legislated under the Tourism Act. The bill makes it clear that this directive will fall under the ambit of the Minister of Tourism, as currently there is no legislation that governs who is responsible for this regulation.

While the bill will empower the Minister of Tourism to determine the ‘thresholds’ regarding these short-term home rentals, there are growing concerns that this will be damaging to the tourism sector.

The thresholds, apparently, will be set to create a “shared economy” among Airbnb hosts, and will potentially control the number of nights that a guest can stay in an Airbnb; or even put a limit on the income an Airbnb host earns. Understandably, there is a lot of dissatisfaction among Airbnb hosts as it can easily be interpreted as a case of government controlling entrepreneurship, and preventing people from earning an income, particularly in holiday destinations such as Hermanus, where tourism is what makes the economy turn – and numerous capable and competent Airbnb hosts supplement their income or pensions in order to survive.

Even though the various online rental platforms have seen impressive growth in the country, local hotels are concerned that establishments listed on these platforms will take away business from established bed-and-breakfast facilities and hotels. The Federated Hospitality Association of South Africa (FEDHASA) is the one entity that called for government to formalise the control of the Airbnb industry, and this is clearly a move to reverse the impact it has had on the formal holiday accommodation sector.

In light of this, a small business lobby group called Sakeliga is considering taking legal action to challenge the new bill. The group’s senior analyst, Gerhard van Onselen, released the following statement: “The bill is ostensibly aimed at promoting the tourism industry, but really the bill is about intervening in the business of small-scale, short-term home rentals and the services offered by companies such as Airbnb. The minister is not going to promote the tourism industry, he is going to artificially drive up prices and interfere in an industry that regulates itself much better than government can.”

As if the Overstrand economy hasn’t endured enough of a bashing in the past year, when a number of businesses in different sectors closed down, this potential, legislative change could have an extremely, negative impact on the local hospitality industry. It is clearly evident that, even though the Overstrand short-term rental market is currently in an over-supply state, there would not be enough accommodation available during peak seasons if it were not for these establishments.

Should this legislation be passed, it would go a long way towards making a mockery of “free-trade” and, in essence, is controlling a traveller’s choice of where to stay and how much to pay for the services and amenities chosen, rather than those which could be forced on him/her by the more formal establishments.

It seems as if the key reasons travellers have chosen to use Airbnb, rather than the traditional accommodation establishments, have been lost over time and the powers that be are focused on making legislative changes to suit the “big players”, who are losing out to the Airbnb market, which has become the flexible and affordable choice of the populace. The fact that the Tourism Business Council of South Africa has stated that hotels in South Africa are losing millions of Rands because tourists are opting for Airbnb instead, is a red flag for a traveller’s freedom of choice.

Five of the key reasons why the Airbnb concept is successful should not be forgotten:

  1. Guests get to live like a local.
  2. Guests have flexibility around check-in or check-out times and cancellation policies.
  3. Guests can enjoy more space for less money.
  4. Guests can benefit from a wide choice of amenities.
  5. Guests can enjoy one-on-one interaction with the owner.

Should it be signed into law, the Tourism Amendment Bill will have a resounding impact on freedom of choice and the ability for holiday destinations like Hermanus to draw a broad range of tourists who, either cannot afford the more formal establishments, or more importantly, want to experience the hospitality of the locals for which this town is renowned.