Vacation rentals ‘explosion’ threat to hotel business


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.”


alfalfa 6 years, 7 months ago

I wonder why the realtors, who probably benefit from Airbnb, in the form of investment properties being purchased by locals and foreigners alike, are going to bat for the hotel industry, which is the one of the highest priced, lowest value industries in the Caribbean. With regards to the government collecting room taxes for these rentals, all for that. But, once again, not the real estate associations bailiwick.


MonkeeDoo 6 years, 7 months ago

I think it is these bragadocious realtors that can't wait to toot their latest real estate sale and think that they can ride along on the success or Airbnb as if they had something to do with it. If they didn't coem with that story they probably would have no story. This idiot Carey needs his head examined about tax the business. Airbnb has given Bahamians of all stripes and economic circumstance an opportunity to participate financially in the country's number one industry. Without asking for one single concession from the government. No crown land, no duty and stamp tax free anything. And there are thousands of them doing this. All of these Hosts and Guests pay all the taxes that are relevant. They pay duty and vat on whatever they consume, Furthermore the little taxi guys and small rental car concerns are also making a buck. Even bicycle rentals. When we realise that this business is booming and the hotels not so much we should think how the government and its numerous and monumental taxes and tarrifs have brought this business to its knees. Not to mention the enormous cost of electrcity. Leave these Bahamian Enterpreneurs alone please.


BLander 6 years, 7 months ago

The issue is that the government failed to consult with the Bahamian real estate brokerages that specialize in vacation rentals prior to repealing the 10% hotel tax. The government failed to grasp the fact that foreign homeowners could not obtain a business license (they are foreign), could not obtain an N.I.B. employer number (because they are foreign) etc. etc. and therefore, when V.A.T. was implemented the second homeowners could not register for V.A.T. now the government (after years) has somewhat rectified the situation but it is too late... It is a catch me if you can attitude. Most rental homes do not generate over $100,000 in gross annual income and therefore are not obligated to register for V.A.T. and those that do choose to rent their houses with offshore brokerages and rental companies; which means The Bahamas does not collect one red cent of tax (really how is the government proposing to "police" this?) In last weeks Tribune the government admitted to losing over 85 million dollars with the repeal of the hotel tax. At least with the hotel tax every single rental was taxed and not just those houses that make over $100,000 in income. @ alfalfa believe me the realtors make nothing from Airbnb, V.R.B.O., etc. they are direct competition to law abiding Bahamian brokerages who pay their V.A.T. and undercut Bahamians every chance they get (because they are not obligated to pay V.A.T.). The government has allowed this to become the wild west and is losing MILLIONS of dollars (by their own admission) in revenue.


stopthehypocrasy 6 years, 7 months ago

What a minute?! Tax vacation rental owners? Are you people nuts?!? Do property owners not already pay property tax? Well most of them anyway. Don't hotels get concessions, such as tax breaks, no real property tax, duty free concessions, etc etc. Ok fine, charge vacation rental owners a room tax, and give them full refunds on all property taxes paid to date, allow them to import whatever they need duty free to fit out and furnish their homes.

Oh and lest we forget, the guests in these vacation rentals are buying groceries and liquor from local businesses, either renting a car or using local taxis and buses to get around, eating at non hotel owned restaurants etc etc. How many hotel guests do you think do that?!?

Get your heads out of you behinds please Mr. Carey and Capron.


alfalfa 6 years, 7 months ago

So, Blander, none of the properties being sold by the Bahamas Real Estate Association, on which they earn a 6% commission, are listed on Airbnb? I know they make nothing directly from Airbnb, but the possibility of properties being used for rental income (via Airbnb), has had to have positively impacted the real estate business. Last years figures were up, and as reported in the press this years year-to-date figures are up as well. The rest of the world is managing this phenomenon, so why can't we?


Sickened 6 years, 7 months ago

This Carey guy would rather 2 or 3 foreign owned hotels get all the tourist dollars rather than support thousands of Bahamians who are renting out their apartments, bedrooms and even couches just to make ends meet? What the hell?


sheeprunner12 6 years, 7 months ago

Foreign white homeowners have been doing this illicit "vacation rentals" business for decades in the Out Islands ......... hell, they even rent out cays for weeks to their friends, family and lovers (like the PLP politicians)


banker 6 years, 7 months ago

It brings up an interesting question. The monies never comes into the country. They advertise in their home town papers, take payment in their hometown. The rental people arrive, and the Bahamian maid is there to give them a key. At the end of the stay, they leave the key for the maid. She cleans up, and gets it ready for the next "guests". That sort of commerce is not taxable since no money ever comes into the country. For all anyone knows, they have friends staying at their vacation home.


Spectator 6 years, 7 months ago

MonkeeDoo is on to something here. Airbnb is a great income opportunity for all Bahamians. To restrict the compeition is not good for the economy. Innovation is key to economic growth.


DWW 6 years, 7 months ago

Look, you are all forgetting that hotels get an immense amount of tax concessions. Many go belly up after a few years, so the governments up with almost no tax at all. Most vacation rental homes change hands every 10 years or so. that's lawyers, painters, bankers, real estate agent who are all making income on the sale every 10 years. And the government makes 10% tax every time it sells. 10% on the sale of the home is much more than a piddly couple of dollars in tax on a weeks rental. This is one area of the Bahamas economy which everyone seems to have an opinion and yet not a single person has any understanding of the topic. If a hotel is failing using the second home owner rental as a scapegoat is cheap and petty. Maybe the hotel should take a look inward and evaluate why the business is failing. perhaps trying to charge 5 star rates on a 2 star hotel without hot water or reliable fast internet is the problem. Not to mention the terrible customer service skills. and I blame the unions.


becks 6 years, 3 months ago

If it wasn't for the second-home vacation rental market the tourism economies of Eleuthera and SW would have collapsed years ago. There's no viable hotel properties on Eleuthera and hasn't been for years! Most of those homeowners make a small profit after expenses on their vacation rentals each year that allow them to recoup the expense of building or buying. There are a few that do make some very large profits annually but most not. Granted the rental income doesn't come directly into the country but eventually alot of it does through the homeowner paying utilities,maids,caretakers,plumbers,gardeners,electricians etc., as well as paying property tax. And don't forget the renters do spend money in the country by renting cars, groceries in local food stores,liquor in local liquor stores, going to clubs,bars,restuarants.


Sign in to comment