By NATARIO McKENZIE
Tribune Business Reporter
A Family Island resort operator yesterday suggested the government consider introducing a license fee for vacation rentals based on the number of bedrooms and, possibly, prohibitive zoning.
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 the sector. He argued that payments to landlords - locals and foreign - are frequently made outside The Bahamas via the Internet, never touching this nation, while occupancies at small hotels are being adversely affected.
Mr Mulford warned that the government cannot be seen as being “in bed” with Airbnb alone. “It’s a reflection that they - government - are not capable of monitoring/policing this, and will have fees tacked on. There is also Home Away, trip advisor, VRBO and some others as well as direct bookings from repeat guests,” he added.
“The only solution to control and police this I see is a licensing fee based on bedrooms. Then there is the issue of it hurting the small hotels’ occupancy; mostly on the Family Islands. I don’t have answers for this problem other than to perhaps consider regulating rates per day to mirror hotel rates, and possibly prohibitive zoning, meaning not allowing private rentals within say one mile of an existing hotel.”
Dionisio D’Aguilar, minister of tourism and aviation, in a recent interview with Tribune Business voiced hope VAT could be imposed on Bahamian vacation rentals in the upcoming 2019-2020 budget despite the multiple complexities involved.
He was speaking after Airbnb released data showing that its 1,700 “hosts” in The Bahamas welcomed around 59,000 guests in 2018. These persons stayed for an average of five days and, based on a $7,500 median income received by a “typical host”, the sector injected a total $12.75m into the latter’s hands last year.
The government has long planned to collect VAT from the vacation rental sector but, when asked when this would likely come into effect, Mr D’Aguilar said: “It’s out of my silo. It’s kind of in the silos of the Ministry of Finance. They are trying to work out the complexities of taxing this particular industry.”
KP Turnquest, deputy prime minister, pledged that the government would “not disrupt” the booming vacation rental market as he confirmed the 2019-2020 fiscal year taxation target.
He promised that the Minnis administration will seek to strike a balance between taxation/regulation and allowing the sector, seen as a valuable mechanism for increasing Bahamian ownership in the tourism industry and spreading its economic impact, to continue growing and thriving.
However, Mr Turnquest said it was important that vacation rental owners pay their fair share towards the maintenance of The Bahamas’ infrastructure and public services, much as the resort industry does.
“There are a number of issues,” he told Tribune Business. “One is, yes, if they’re operating that kind of business it is in effect in competition with the hotels without carrying the cost the regular hotels have to carry.
“There is inherent unfairness in that, so we do need to address that from a competition point of view. Second, some of these properties are being afforded exemptions and are classified as private residences, so they’re avoiding things like real property tax, business licence and things that go along with commercial property. There are a combination of factors that we need to understand and get our head around.”
The Central Bank of The Bahamas’ report on January 2019’s economic developments revealed that the vacation rental sector continues to grow at a “double digit” pace year-over-year.
Data from AirDNA, which analyses data from Airbnb vacation rental bookings, disclosed that there was a 37 percent advance in total listed bookings, while those for an entire home and private rooms were ahead by 35 percent and 45 percent, respectively.
The Central Bank said: “Preliminary indicators for the short-term rental market in January were also improved, as data from AirDNA showed a 37 percent advance in total booked listings relative to the same period in 2018, with gains in both entire place bookings (34.9 percent) and private room bookings (44.9 percent).
“Meanwhile, the ADR (average daily room rate) for hotel comparable listings - which is more comparable across periods - firmed by five percent to $142.40. However, the ADR for entire place listings decreased by 1.7 percent to $330.35.”
It continued: “A breakdown of the short-term rental data revealed that the dominant New Providence market noted gains in both the entire place and private room bookings, of 23.7 percent and 25.8 percent, respectively, although increased competition contributed to the decline in the respective ADRs by 9.0 percent and 2.1 percent to $266.46 and $118.18.
“Away from the capital, the majority of the listings relate to the entire place category. In Exuma, the inventory for this segment rose by 43.8 percent, while the associated ADR firmed by 19 percent to $406.
“Similarly, in Abaco and Grand Bahama, entire place listings advanced by 32.7 percent and 50 percent, respectively. Conversely, the ADR for Abaco and Grand Bahama contracted by 26.6 percent to $264.49 and by 5.8 percent to $171.01, placing them at the more affordable end of the spectrum.”