By NEIL HARTNELL
Tribune Business Editor
The “exploding” vacation rental market will likely eat into hotel occupancy rates, a Bahamian realtor predicted yesterday, estimating that 20 per cent of this nation’s stopover visitors are currently using such accommodation.
Arlington (Ali) Capron, principal of RE/MAX Luxury Properties Bahamas, told Tribune Business he was fielding an ever-increasing volume of calls from investors seeking vacation rental-type properties in Abaco and Exuma.
“Because of the explosion of the vacation rental market, people are calling in saying can I get 6,8,9 per cent return on my investment, and which areas will yield this,” Mr Capron told Tribune Business.
“I’m guiding them to those areas. More people are calling about Exuma and Abaco than ever before. The word is getting out that those are the places to be. High net worth individuals speak to each other and are going to do what others are doing.”
He added that private islands and luxury properties in the Exuma islands chain were becoming especially popular, and said: “The volume of calls in that area have definitely increased.
“High net worth individuals want anonymity, to get away from it all. They want seclusion and a place with low density, like Abaco and Exuma. They want to experience a true island lifestyle, they want to feel different and walk the beach by themselves, and not see anyone.”
Mr Capron said the increasing popularity of vacation rentals would completely alter the Bahamian stopover tourism market, both in terms of visitor profile and their preferred accommodation.
He predicted that it would result in fewer tourists opting to stay in hotels, with the demand for a ‘true Bahamian experience’ also attracting developers and second home investors, who will rent out their properties when not in this nation themselves.
“People really want the island experience; to engage themselves in the culture of island living,” Mr Capron told Tribune Business. “They don’t want to go from city to city.
“That’s why people are calling for Abaco, Exuma and Eleuthera, because they can buy a beachfront property for $200,000. A lot of investors are looking for beachfront properties to build vacation rentals and capitalise on the explosion of the vacation rental experience.
“Hotel occupancies are going to diminish as the years go on,” Mr Capron predicted.
“More people will stay in the likes of Airbnb. I would say that 20 per cent of people vacationing are staying in Airbnb-type accommodations, and that number is going to increase annually.”
He added that research had shown the global spend on vacation rental accommodation was set to increase to $180 billion by 2019, and said: “The real estate market is changing.
“People are looking for opportunities that are beachfront, one block from the beach, or with an ocean view - not the city. They’re looking for an island experience where they can paddle a boat, catch fish and snorkel.”
Mr Capron is not the only Bahamian realtor to note the implications of vacation rental growth for both the tourism product and the Government’s tax revenues.
Mario Carey, president and chief executive at Better Homes & Gardens MCR Bahamas, told Tribune Business earlier this year that the Government needed to better regulate the Airbnb market, both to protect its revenue base and ensure there were entrepreneurial opportunities for Bahamians.
He explained then: “Airbnb is going to shift the tourist experience in the Bahamas; in fact, it’s already doing it. Many people are not into the hotel experience any more. A lot of people want to experience the islands; they want to stay in a house and have a cultural experience, and not have to pay for every single meal.
“The Airbnb model is very good for our business, and I think that the Government needs to get a handle on that because they are missing a lot of revenue. They know that hotel revenue is down because the owners of Airbnb aren’t paying room tax, and there is no reason why they should not be able to collect that.
“There has to be a system whereby those persons renting out their homes are paying room tax to the Government,” Mr Carey emphasised.
“The Airbnb business in Harbour Island is explosive. It has always been. There needs to be an understanding of the market, and incentives set to balance the investor’s ability to buy and the Government’s ability to receive revenue.”
While the 10 per cent room/occupancy tax was eliminated at end-2014, the Government is likely to be losing out on other revenue streams as a result of Airbnb’s growth, especially the 7.5 per cent Value-Added Tax (VAT) that replaced it.
Airbnb is an online marketplace and network that enabled homeowners to list/rent short-term stays in their residential properties, with the cost set by the property owner.
Sensing these issues, the Caribbean Tourism Organisation (CTO) had already reached an agreement with Airbnb, in a proactive bid to ward off any problems that may emerge.
Mr Capron, meanwhile, said his newly-launched franchise agreement with RE/MAX was already paying dividends as he “reached out” to luxury property investors.
“I had a RE/MAX agent call me, who had a client coming in on a private jet and who wanted to look at Andros property,” he recalled.
“We’re not advertising yet, and are already starting to get lots of calls. We have a product. We have quality homes at Ocean Club Estates, people want to invest in Albany, Lyford Cay and Old Fort Bay. They’re going to continue to invest in this location and product.”