Airbnbs come under fire for 'killing' Mother City businesses

krycor

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NEWS / 27 DECEMBER 2019, 3:15PM / MARVIN CHARLES


Cape Town – Despite a large influx of tourists to the Mother City over the course of this holiday season, guest house and lodge owners said their businesses are being strangled to death by the Airbnb phenomenon.

Several guest-house owners who spoke to the Cape Argus have all said that the Airbnb industry is hurting their business, and they would be forced to shut down should this continue.


The owner of the Jambo Guesthouse in Green Point, Barry Thomas, said: “We have had a very grim two years. We have a 50% drop in occupancy...

"The main problem is the Airbnb industry. In Sea Point alone there are about 18 Airbnbs.”

Thomas said his establishment had been operating for more than 24 years, and municipal taxes had risen continuously throughout this period.

“We pay a lot of rates and taxes. Airbnbs don’t pay these rates; they don’t pay commercial rates, or have to worry about being compliant. In the meantime, we are suffering and they are making a killing,’ he said.

Airbnb has become the fastest-growing online accommodation platform in the world since it launched in 2009.

It is an online portal that allows people to rent their properties or spare guest rooms.

Much like the dispute that has arisen between ride-sharing app Uber and the metered taxi industry, Airbnb has come under fire from hotels and traditional bed-and-breakfasts.

The owner of the Southern Comfort Guesthouse in Oranjezicht, Maya Bremridge, said: “We feel the industry has taken a huge knock from Airbnbs. It has an impact on everyone; we pay our staff, and if we do not get any bookings it has an impact on [them] and their well-being.

“I do understand that people are using it to pay off their bonds, but sometimes you have to play by the rules. It cannot continue like this into the new year.”

The owner of the Noordhoek Wild Rose Country Lodge, Michael Eecks, said he bought his establishment back in 1996. It is surrounded by beautiful ocean and mountain views.

“It’s getting very bad, our books do not look good. It’s very bad for business at this time. We’ve had to lay off staff and we have no guests at all.

“Airbnbs not being regulated is criminal, and its insane because they are not abiding by the rules,” he said.

Earlier this year, the department of tourism bowed to pressure from the regulated hospitality industry to regulate Airbnbs.

In April, government tabled the Tourism Amendment Bill, which seeks to regulate short-term home rentals in terms of the Tourism Act. The amendment empowers the minister of tourism to lay down “thresholds” for the operation of Airbnbs in South Africa.

These could impose limits on how many nights guests are allowed to stay over, or how much income an Airbnb may earn.

Another aspect of the proposed new regulation is the determination of zones where Airbnbs are allowed to operate.The bill has not yet been passed into legislation.

The Federated Hospitality Association of South Africa (Fedhasa), in conjunction with SA Tourism, the Tourism Business Council of South Africa (TBCSA) and other groups, have called for Airbnbs to be regulated.

Fedhasa chairperson Jeff Rosenberg said: “The major request... is that all accommodation providers should be subjected to the same regulations, which is currently not the case.”

@MarvinCharles17
marvin.charles@inl.co.za

Cape Argus

 

krycor

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I reckon there will likely be limits put in place wrt when it becomes a “business” and should be regulated as such.

That will cut down the perma AirBnB apartments sort of. In the end though community impact can’t be regulated so I don’t see things going back to norm either.

Weirdly since they complying as a business and can use economies of scale.. why not remodel as a AirBnB style and cost? Or is that profit level not good enough?

All AirBnB basically exposed is that there is a MVP segment that is under serviced and trying to force people to use a more premium service won’t result in the same sales levels.
 

garp

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Do they know that they can also list on Airbnb? I've checked some of the mentioned guesthouses websites and their rates are much the same as the surrounding Airbnbs.
 

krycor

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Do they know that they can also list on Airbnb? I've checked some of the mentioned guesthouses websites and their rates are much the same as the surrounding Airbnbs.
In other parts of the country I’ve stayed at BnBs and resorts that dual list. Off peak pricing being the same as AirBnb..
 

Jase

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We pay a lot of rates and taxes. Airbnbs don’t pay these rates; they don’t pay commercial rates, or have to worry about being compliant
I'm not up to speed with taxes etc. when it comes to traditional establishments and AirBnBs but they do have a valid point (if true) wrt to paying more in the form of rates and taxes. Having said that, I am for Airbnbs as a holiday maker purely because the price of accommodation can be flippen expensive when travelling.
 

LazyLion

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Capitalism at work.... adapt or die. Hotels have always been extremely over priced.

It's the same with Taxis versus Uber.

Somebody comes along with the same product or comparable at a fraction of the price, then you realise that there was something wrong with your pricing all along.
 

LazyLion

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Oh, and the argument about them not paying taxes is rubbish, anybody who crosses a tax threshhold is required to report income and pay tax. Remember SARS can see into their bank account, they will know when there is commercial income.
 

agentrfr

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I bleed custard for you

Just join Airbnb so you get at least some business. Then when you compete properly, you'll do better.

The only people that complain about innovation are those complacent few that dont want it
 

Borrels

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I am not clued up on guesthouses. What rates and taxes do they pay over and above the municipal rates and taxes which all home owners pay?
 

LazyLion

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I am not clued up on guesthouses. What rates and taxes do they pay over and above the municipal rates and taxes which all home owners pay?
They are talking about Business Tax as opposed to just Personal Income Tax. But the thing is SARS will know if you are running a personal business through your own personal account, you won't get away with it for very long. You are required to pay tax on it.
 

DreamKing

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not me, I booked (paid) 4 nights guest house and hotel in cape town. :p

none for Airbnbs :D
 

Milano

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Makes no difference in terms of taxation. Entities are either tax compliant or they are not.

Guest houses are referring to having to pay business rates for electricity and water. They could have fought that to begin with.

But then the reality is that a guest house is really in a different sector to an 'AirBnB'. In fact they cannot even get the terminology correct since they do not even understand their own complaint correctly.

A guest house competes with hotels. They should probably have a closer look at how many new hotels have been built during the past two decades. Then they need to look at how to differentiate themselves on a boutique service level.

If they are unable to capture or maintain market share then they need to look at themselves, their target market, service levels, differentiation, pricing competitiveness, marketing, and so forth.

Dinosaurs.
 

jambai

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They are talking about Business Tax as opposed to just Personal Income Tax. But the thing is SARS will know if you are running a personal business through your own personal account, you won't get away with it for very long. You are required to pay tax on it.
I don’t think sars look in your bank account unless they have reason to.
 

Chris_the_Brit

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Oh, and the argument about them not paying taxes is rubbish, anybody who crosses a tax threshhold is required to report income and pay tax. Remember SARS can see into their bank account, they will know when there is commercial income.
You do pay different rates though. People renting out a bedroom in their house will be paying residential tax rates, not business tax rates which are typically far higher.
 
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