The Government was yesterday urged to provide tax incentives to the vacation rental sector, a well-known realtor warning against “extensively burdening” homeowners.
Mario Carey, chairman of Better Homes and Gardens MCR Bahamas Group, said Airbnb’s and other vacation rentals should be entitled to certain tax breaks because they effectively act as hotels.
“If Airbnb’s get real property tax exemption, it would encourage more people to use part of their homes or invest in improvements, and the more interest there is in this sector of the economy, the more we grow the number of Bahamians who are owners and entrepreneurs,” said Mr Carey.
“Banks and government should fully embrace the concept and, at some point, I believe that hotels will start to make design changes to compete with vacation home rentals. Hotels offer advantages that Airbnb’s do not, including restaurants, entertainment, shopping, spas and other resort amenities.
“If they were to expand to include larger privacy areas, individual play areas, kitchenettes, I believe you would see a whole new industry emerge. I truly believe we have barely touched the potential of the Airbnb and short-term vacation rental phenomenon that costs us absolutely nothing to pursue.”
Mr Carey added: “We need to officially recognise this facet because it is a growing and important part of our tourism product, but we cannot burden the homeowner extensively. I believe a one-time health inspection or annual health inspection would be fine; a license, and payment of the fee at the front end directly to Airbnb, would be a reasonable proposition. The Ministry of Tourism already cleared up much of the confusion and we are moving in the right direction.”
Mr Carey said the Bahamas had barely scratched its potential in the short-term home rental market.
“Airbnb is revolutionising the travel market, enabling visitors to live in a home or apartment where they can experience local life. Airbnb’s popularity among families is especially strong. They may be able to enjoy a pool, a back yard where children can play, a patio for friends to come over for a barbeque,” said Mr Carey.
“While it is a great business for the homeowner and a great experience for the visitor, short-term home rentals like listings on Airbnb should also be viewed as a trigger for economic growth. The potential is unlimited with the trickle down effects, and now that the Ministry of Tourism has signed an agreement with Airbnb the uncertainty about taxation, collection and referrals is resolved. That is definitely a step in the right direction that opens many more doors without burdening the homeowner with over-regulation.”
Online booking portals such as Airbnb and HomeAway create new ways for visitors to experience destinations, and are accounting for a larger share of the visitor market. Airbnb now accounts for some 80 million guest arrivals in 191 countries, with $3.5 billion in earnings projected by the year 2020.
The Bahamas currently has between 1,200 and 2,000 Airbnb rentals. Homeowners list their properties on the website, and Airbnb posts availability with photos and comments about the property from those who have stayed there previously. The homeowner cannot remove or alter negative comments, should there be any, without good reason - a feature that adds to the site’s credibility.
Mr Carey said the vacation rental market should boost construction, banking and Bahamian investment.
“Banks should be able to rely on Airbnb revenue, which can be verified, so they can lend to a homeowner who wants to expand or improve their property or build a second home to take advantage of the market,” he added.
“That means new business for banks or other lenders. Meantime, the homeowner is engaging a contractor so that adds jobs to the economy. And that homeowner is growing their income stream. This model has worked extremely well in the Family Islands. In Abaco, it was the model long before Airbnb was even created, and there is a whole rung of the economic ladder that thrives on short-term home rentals.”