Airbnb hits back
Airbnb has released a report arguing that its platform has had little impact on the Cape Town long-term housing market. Instead, it says it has contributed significantly to the city’s economy, reportedly generating R7 billion in income in 2023.
This follows complaints made by city residents who are growing increasingly impatient with the lack of government regulations on Airbnb, as they feel they can no longer afford to live in the city.
Airbnb said that hosts in the Mother City received 700,000 guests in 2023, which earned them nearly R2.5 billion.
This accommodation, made possible by the platform, contributed an estimated R14.4 billion in GDP to the city’s economy and supported 42,000 jobs.
This creates a dilemma for the City of Cape Town.
On the one hand, the report found that short-term rentals generate large amounts of revenue for locals and businesses and help 49% of hosts afford their homes.
On the other, citizens feel they are being priced out of the city as no industry-specific regulations are in place to prevent this.
This occurred in Barcelona, Spain, where citizens protested following years of overtourism, which resulted in rising housing and living costs.
As a result, the city announced that it aims to eliminate all short-term rental listings by 2028 after a partial ban in 2021.
A 2020 study found that rental prices increased by 7% in neighbourhoods with the highest Airbnb activity in Barcelona.
However, Airbnb says that Cape Town’s Airbnb sector has had an insignificant impact on the rental market. It argues rental prices would only decrease by R69 if all Airbnb listings were converted to long-term rentals.
The report notes that active Airbnb listings only comprise 0.9% of formal housing units, although it does not mention short-term rentals relative to the rental market size.
The company has also welcomed the appropriate regulation of short-term rentals for some time and details how it proposes regulators should do this in the report.
“We actually believe regulation, if it’s simple, if it’s appropriate, and if it’s proportionate, can be a really good thing,” Airbnb Middle East and Africa regional lead Velma Corcoran told MyBroadband in a November interview.
The City of Cape Town recently said that regulations applied to short-term rentals are on a land-use basis under the City’s Municipal Planning bylaw.
The report uses New York’s case study to illustrate how overregulating short-term rentals does not decrease rental prices.
Airbnb argued that an analysis of a ban on Airbnb in the American city led to a 3.4% increase in rent during the first eleven months of the law’s implementation.
It says this could suggest that other factors, such as a lack of new construction, could raise rental prices.
The platform argues that South Africa needs the correct tools and data to understand the impact of short-term rentals and effectively regulate them.
The platform advocates for a free national registration platform to provide authorities with the correct data to understand how the industry impacts the rest of the economy.
“We remain committed to work with national and local governments to ensure that Airbnb is good for the communities and stakeholders in South Africa and beyond,” says Airbnb.
“When implemented, regulation should be based on local data and learning from international best practice to ensure that short-term rentals can contribute to responsible, sustainable and inclusive tourism.”
Airbnb signed a memorandum of understanding with the Department of Tourism to collaborate on a national registration system for short-term rentals.
This aims to provide transparency into the short-term rental market and obtain the data needed to develop appropriate regulations.
Following a call for urgent regulation in 2017 by the Federated Hospitality Association of South Africa (FEDHASA), the Department of Tourism revealed its intention to regulate Airbnb and other home-sharing apps in April 2019 through the Tourism Amendment Bill.
It published a green paper on the development and promotion of tourism in South Africa in October 2023, undertaking a policy review process that will inform the regulations in the Bill.
Among the proposals under consideration is to give the Minister of Tourism the power to determine certain thresholds for Airbnb locations in South Africa, including limits on how many nights a customer can book at one location.
Commenting on the green paper in October 2023, FEDHASA warned that the regulations must focus on job creation
It said onerous requirements could hamstring smaller accommodation operators in poorer communities, including those that benefit from being on Airbnb.
“As these platforms are now a substantial part of the tourism sector, we support a balanced approach that protects consumers while encouraging entrepreneurship,” FEDHASA said.
“However, we request a discussion on reasonable regulation aligned with international best practices.”
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