Airbnb regulations – the wait continues

While the time is near when large numbers of tourists are expected to visit the Overberg, the wait continues for the planned changes to governmental regulations around The Tourism Amendment Bill and short-term rentals.

It is interesting to note the extent to which Airbnb itself has become a financial force to be reckoned with in the South African accommodation sector, but the potential for it to be negatively impacted is still very real.

A survey conducted by Airbnb, based on host earnings and guest spending for 2018, showed that Airbnb’s estimated direct economic impact in South Africa was about R1.018 billion. A list of the top 30 countries by revenue shows that South Africa entered the list at No. 22, ahead of Denmark, Switzerland, Austria and Argentina, but way behind Australia, Portugal, Greece and Croatia.

The survey was the sum of host earnings, based on internal Airbnb data, and estimated guest spending. The guest spending figures were based on nearly 12 000 responses to a voluntary survey, says Velma Corcoran, Airbnb’s country manager for sub-Saharan Africa. According to her, the organisation is helping to spread tourism benefits to families, communities and local businesses.

“It’s never been easier to travel to, and stay in, South Africa’s smaller towns. Visitors are discovering local hospitality and hidden gems they might otherwise have missed, while supporting new economies and revenue streams that help make local communities stronger,” says Corcoran.

She adds that there has been a significant increase in host earnings on Airbnb in smaller towns. “Mossel Bay, for example, saw a year-on-year increase of more than 80%, and Saldanha Bay saw an increase of almost 60% over the same period. Host earnings in Garden Route towns such as Knysna, Plettenberg Bay and George increased by 48%, 58% and 74% respectively.”

The survey found 84% of hosts recommended restaurants and cafes to guests; 69% recommended cultural activities such as museums and festivals; and 51% said Airbnb had helped them afford their homes.

The downside is that with oversupply and disillusionment, a decline in the number of Airbnb property owners is predicted. Airbnb is on shaky ground in many parts of the world, and it could be a matter of time before the trend loses favour with South African property owners.

There is already an oversupply of these properties in the country, and many owners have been left disillusioned due to the complexities involved in managing this rental system. For these reasons, real estate professionals predicted a decline in the number of properties purchased for Airbnb rental purposes in South Africa this year.

Hermanus is a classic example of how the rise in short-term rentals has made it almost impossible for residents to find long-term rental properties at affordable prices, while in other countries with regulations already in place, contraventions of local by-laws are being tested on a daily basis. Even though there has recently been a slight shift in the number of long-term rental properties available in Hermanus, these are still at the high end of the rental market and not where the real need exists.

The consequence is that there is little rental stock available for permanent residents and long-term rentals rocket. Some permanent residents are forced to live in adjacent towns and travel to work in Hermanus on a daily basis

Some of the regulations in place internationally would be a huge deterrent for South African hosts if they were to be implemented. In Denmark, Danish tax officials and Airbnb have an agreement that will ensure that short-term rental income in Denmark will be automatically reported to the authorities.

In Paris, you can’t rent an apartment for more than 120 days a year but you must first register your apartment with the local authority, which would have immediate tax implications. In London, you can host for a maximum of 90 days in a year, after which listings will become automatically unavailable on the Airbnb site as part of an agreement between Airbnb and the UK officials. Amsterdam has a maximum 30-day limit that a property can be rented out for.

Portugal has implemented more rigorous legislation and since 1 July 2017, properties posted on Airbnb, Booking.Com and other platforms need to be enrolled in the national tourism register, and property owners must fill in a required field with the registration number of their accommodation. The platforms will be subject to sanctions if they market non-registered properties.

Whichever way you look at it, if the SA Government does its homework thoroughly, it could attempt to make life very difficult for short-term rental hosts and this is bound to have a resounding effect on the entire tourist accommodation industry, especially in towns that are primarily tourist destinations, reliant on this source of income to survive and prosper.

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