Western Cape Government pushes back on proposed Airbnb legislation

Hot on the heels of the announcement that the Tourism Amendment Bill’s amendments propose to regulate Airbnbs, Western Cape Minister of Economic Opportunities, Beverley Schäfer, demonstrates strong opposition to the regulation of short-term, home-rental platforms of this nature.

The Western Cape Government will be making submissions “to oppose any regulations which could impact tourism revenue and affect people’s private property rights,” commented Schäfer. Her view is that the Western Cape Government is driving tourism growth and, in order to develop this sector, a sufficient mix of hotel, B&B and home-rental room nights are required in order to accommodate a wide variety of tourists and budgets.

What is most interesting though, is that South African Minister of Tourism, Derek Hanekom, at this year’s African Travel Indaba, stated: “Tourism holds great promise for the development of small businesses. It is when you stay in small bed-and-breakfast establishments or small hotels, that you get to interact with the locals, listen to their stories about the area, and get advice on the best, least-known place to visit on sight-seeing trips”. These are among the many reasons why Airbnb has been successful.

This sentiment is, almost, in direct conflict with the comments made by Blessing Manale, chief director of communications at the Department of Tourism, when he stated that the minister could determine certain so-called “thresholds” for short-term home rentals, which could include a limit on the number of nights guests could stay at an establishment and could, perhaps, even limit the number of guests, due to potentially larger water consumption in an area. The fact that these thresholds could also look at pricing, zoning, how much an establishment can earn and, maybe, even regulating matters such as security does come across as tightening the noose around the necks of Airbnb hosts rather than “developing small business”, as Minister Hanekom stated.

Schäfer further states that we need to stimulate innovation and use disruptors in order to put tourism on steroids in the Western Cape and in her view, any regulations that infringe on people’s property rights, or impact a host’s ability to earn a living, must be rejected outright.

“Over 2 million people have made use of Airbnb alone in this country, and if regulations make it more difficult for travellers to access this kind of accommodation, they will simply vote with their wallets and go elsewhere. We cannot allow this to happen,” said Schäfer. “Regulations could unintentionally impact these businesses and entrepreneurs,” she cautioned.

This proposed change in the regulations is by no means a South African syndrome alone. Globally there are significant amendments being introduced, which are impacting on the freedom previously experienced by hosts. Airbnb’s growth story has been nothing, if not dramatic. From just two bookings in March 2008, the San Francisco start-up today has more than five-million listings in 81 000 cities around the world.

This growth has not gone unnoticed, and the platform has disrupted property markets, pushing up prices for long-term rentals as property owners make accommodation available for short-term lease. As a result, several cities, including New York, Amsterdam, Barcelona, London and Berlin, have moved to restrict Airbnb rentals by setting limits to availability and requiring registration from hosts. If one then includes the numerous other online booking platforms besides Airbnb, such as  Booking.Com, TripAdvisor and the plethora of South African-focused sites including Lekkeslaap, Afristay.com, Roomsforafrica.com, SA-venues.com – and the rest – it does appear as if some form of potentially-restrictive control is inevitable in this burgeoning market.

Most cities internationally, where regulations are already in force, opt for “limitation with restrictions”, which includes limiting the number of short-term rental options available (Barcelona allows for one listing per property owner), or the number of days properties may be rented out (Amsterdam limits rentals to 30 days a year), or only allowing short-term listings on residents’ primary residences (Los Angeles).

The growth of Airbnb in South Africa has, predictably, elicited calls for tighter regulation. But unlike elsewhere, where calls for regulation seem to stem from disruption of the long-term rental market, in South Africa, the focus seems to be on levelling the competitive playing field, which is where most of the resistance is coming in to play.

The potential cost implications to Airbnb hosts could be quite profound, as currently all costs for electricity, water, sanitation and solid waste are at residential rates, and not at commercial tariffs, which is what regulations of this nature could enforce. Furthermore, this would most likely also extend to property rates, where currently, residential rates apply versus commercial rates, which are much higher.

Let us not ignore the inevitable taxation hit that will also come into play. Johan van der Merwe, the finance member on Cape Town’s mayoral committee stated: “Our legislators must work with Airbnb to create legislation that would ensure Airbnb pays tax, but the legislation must be forward-looking and not seek to destroy Airbnb’s success. Airbnb has lowered the costs of doing tourism entrepreneurship and therefore created jobs.”

So the question remains: are legislators trying to increase the drawcard for tourism or will they, potentially, have a negative influence on tourist-accommodation options and stem the effectiveness of entrepreneurship?