Business

Airbnb under fire for ‘stealing business’

2019-04-14 15:19

Online accommodation platform Airbnb has come under fire for its rapid growth and for taking away business from established players in the accommodation sector, especially guesthouses and bed and breakfast establishments.

Players in the accommodation sector said the absence of an enforceable and clear national policy aimed at regulating the accommodation industry had resulted in a free-for-all.

This had seen the rapid rise of unregistered accommodation establishments, particularly those listed on Airbnb, taking away business from properly formalised ones.

Airbnb is an online accommodation reservation system. On this site, people can market their properties or spare rooms for rental.

The Federated Hospitality Association of SA (Fedhasa), representing the formal hospitality industry, said the law governing the industry had not lived up to the changing commercial accommodation landscape.

In Nelson Mandela Bay the Port Elizabeth Metro Bed and Breakfast Association (Pembba), a representative of the formal accommodation establishments and with a membership of 100 registered establishments, has called for the regulation of the informal accommodation industry represented by Airbnb.

Pembba’s argument that Airbnb was taking away business from the registered and formalised industry was supported by a report by the Nelson Mandela Bay metro’s economic development, tourism and agriculture committee meeting.

The report revealed that Airbnb raked in more than R6 million in last year’s December period, up almost 65% from December 2017.

“The big reason for this increase could be attributed to the fact that visitors are looking for more affordable accommodation options. The city is looking at how these facilities should be regulated or alternatively at options on how they can also contribute to the development and marketing of the destination,” said the report.

The formal accommodation industry registered an increase of 0.08% in December compared with December 2017.

The 0.08% increase in formal accommodation revenue for December was equal to R5.7 million, the report said.

This meant the formal accommodation sector generated close to R71 million in December.

Anele Qaba, Nelson Mandela Bay metro economic development executive director, said this had led to an “outcry” from the formal accommodation sector, especially guesthouses and bed and breakfast establishments.

“The city must come up with a plan to regulate Airbnb. The tourism industry, which pays taxes in the city is not happy. They are saying the Airbnbs – which is not regulated and can afford to undercut prices since they do not have overheads – are killing the industry,” said Qaba.

“We are not opposed to Airbnb, in fact we support it. However, it is important that this type of business, like any other business in the city, is operated within a regulatory framework,” he said.

Qaba cited examples of San Francisco, which had regulated Airbnb since 2014, Barcelona, Anaheim, adding that other cities such as London, New York and Santa Monica had introduced less strict regulations to protect affordable housing, such as limiting the number of nights and banning the short-term rental of entire houses.

John Sweet, who advertises Port Elizabeth accommodation on Airbnb, said to regulate Airbnb would be anti-free market.

Pembba chairperson Sheena Wilmot said there were about 900 rooms available on Airbnb, but the municipality said there were only 150 registered bed and breakfast establishments.

“There is a massive problem. The playing field must be levelled and that is why we want Airbnb regulated,” said Wilmot.

She said among the numerous problems which Airbnb posed were not complying with parking rules that stipulate there should be one off-street parking bay per room let and that they did not have business public liability insurance cover for their guests.

“We are calling for a guesthouse policy, which covers all aspects of transient accommodation establishments.”

As there was no proper national guideline for the regulation of the informal accommodation industry, which was left to each municipality and provincial government to implement what it saw fit, the Nelson Mandela Bay metro was working out a plan about how to go about regulating the industry that was not contributing to the city’s fiscus.

Regarding the complaint about Airbnb, Lee Zama, Fedhasa chief executive, said: “The regulation of accommodation establishments is not universal in South Africa. Various laws apply at municipal, provincial and national levels.”

“In most cases statutory law has not kept up with the changing commercial accommodation landscape in South Africa. The utilisation of ‘traditional commercial accommodation’ categories is no longer extensive enough to provide for the emerging informal commercial accommodation categories that have been developed in recent years.”

Each of the country’s nine provinces has its own set of rules regarding the informal accommodation industry.

For example in Limpopo, the provincial government had said all businesses across the province, no matter what type, should be registered.

According to the formal accommodation industry regulations, businesses had to apply for a licence if their operation included the sale or supply of meals or if they offered health or entertainment services.

“It is difficult to judge what percentage of Airbnb advertised establishments offer any form of food service. However, some certainly do and they would need to comply,” Fedhasa said.

A Fedhasa document said many, but not all municipalities required accommodation establishments to register or submit an application for a permit to operate. However, this should not be confused with an application for a business licence.

“It is not a legal requirement depending on the structure of the business,” the document said.

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June 16 2019