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Govt Told: 'Get A Handle' On Vacation Rental Sector

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A Family Island resort operator yesterday urged the Government to "get a handle" on the vacation rental industry and introduce a tax structure to collect the "millions" it is currently forfeiting.

Edwin Mulford, a long-time boutique resort operator on Cat Island, reiterated concerns that the Government is missing out on significant tax revenues related to vacation rentals, given that payments to landlords - locals and foreign - are frequently made outside The Bahamas via the Internet, never touching this nation.

"I think something needs to be done before it's too late," he argued. "If this isn't handled properly, government is setting themselves up for a lot of headache. The problem is policing the situation."

Mr Mulford added that boutique operations such as his were being even more significantly impacted than larger hotels/resorts by Airbnb-type operations.

"The Government must understand the significance of this. It's automatic revenue the Government can get. This is worth a lot of money for government. We're talking millions and millions of dollars where people are renting out their place online and the Government never gets a dime," he said.

The Central Bank of The Bahamas' monthly report for August, released on Monday, said vacation rentals continued to grow in popularity among stopover visitors with average daily room rates (ADR) jumping by 1.8 percent to $319.77. Airbnb bookings increasing 41 percent year-over-year for August.

The Government has said it is seeking to levy VAT on Airbnb-type vacation rentals, but Dionisio D'Aguilar, minister of tourism, previously told Tribune Business it has yet to develop "a working mechanism" for its collection.

Ms Mulford suggested that instead of introducing VAT on vacation rental businesses, the Government should look at an all-inclusive licensing fee based on the number of bedrooms per house, with annual inspections for compliance by local authorities. He added that the Government could consider a separate programme for Bahamians and their bed and breakfast offerings.

"Indicative of the growing popularity of the short-term private rental market, data from AirDNA showed a 41.2 percent increase in booked listings via the Airbnb platform during August for all Bahamas in comparison to the same period in 2017," the Central Bank said in its report.

"These results are also influenced by the fact that more properties are listing on the site each year. In terms of the broad trends in the major markets, the number of listings in Exuma firmed by 54.7 percent, while gains of 37.8 percent, 34.8 percent and 28 percent were noted for New Providence, the Abacos and Grand Bahama, respectively.

"In terms of the key segments, the ADR for the entire place listings rose by 1.8 percent to $319.77, while that of hotel comparable listings fell by 3.1 percent to $132.19."

A report commissioned by the Bahamas-based Organisation for Responsible Governance (ORG) previously identified the vacation rental market as a potential growth opportunity that could boost Bahamian ownership and entrepreneurship in the tourism industry, plus aid economic diversification.

The report, conducted on its behalf by Oxford Economics, the research consultancy, argued that this nation's ability to make greater inroads into the vacation rental market was being impeded by old, impractical laws and regulations.

Apart from the International Persons Landholding Act imposing "especially strict rules" on foreign home owners, the study said all vacation-based properties have to be approved by the Bahamas Investment Authority (BIA).

Data obtained by Oxford Economics showed that the Bahamas had 1,878 properties registered with Airbnb, of which 908 - just under half - were deemed to be active.

The ORG report suggested that "more relaxed investment requirements" for vacation rental home developers could be restricted to specially-designated areas, such as Trade Development Zones (TDZs), located near ports and airports.

Comments

DDK 4 months, 2 weeks ago

This lack of tax collection for private vacation rentals has been in place since the implementation of VAT and the removal of the hotel tax. The hotel type tax was only collected 'here and there' and was not enforced by Government. With the global rise with, initially, VRBO and then AIRBNB and other like internet-based rentals and the resulting decline in traditional hotel bookings, our Government has been reminded over and repeatedly what a huge amount of room tax it and The People are missing out on.

The Prime Minister actually advised the HOA today that he recently met with the Chief of AIRBNB and that a register will be compiled by AIRBNB of those in The Bahamas listing their homes for rental and that the appropriate tax would be collected by AIRBNB and forwarded to The Treasury. This is all well and good, but what about all the other private home vacation rentals? Does a bill not have to be passed to put this taxation into place? Which Ministry and its team of efficient civil servants will actually put this head or room tax into place? How will it be policed? Talk is fine, but it's also cheap. This should have been jumped on quite a few years ago.

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