The Tribune

By Fay Simmons

jsimmons@tribunemedia.net

A Cat Island hotelier yesterday admitted the island’s resorts are “struggling to win” the battle for visitors against an ever-expanding vacation rental sector that is dominated by expatriate owners.

The resort manager, speaking on condition of anonymity, blamed the fierce competition with vacation rentals - as well as low airlift accessibility and high ground transportation costs - for the relatively low occupancy rates that the property is currently experiencing.

She said: “We have Airbnb’s in the area, and it’s a battle that we are struggling to win. What we try to do is keep our prices low and continue to advertise. But, as far as the visitors go, they usually come in and go directly to the Airbnbs. You only know when you see them about, or they say they are staying at this place. And it’s sad because the Government does not get any income from the Airbnbs.

“We have two airports, and the one that’s in the north doesn’t allow international flights to fly there so the occupancy is low. The airport is hours away from our hotel, and the ride from there to our hotel is $120. If our northern airport is opened then we think our occupancy will rise.”

The manager argued that most short-term vacation rental properties on Cat Island are owned by expatriates who pay little to no tax to the Government as all bookings and payments are handled offshore outside The Bahamas. As a result, she supports the Department of Inland Revenue’s drive to register all Bahamas-based vacation rental properties as a means to ensure they provide an appropriate standard of accommodation as well as pay due taxes.

She said: “Most of the [AirBnB] owners are expats. Right now, it seems to us that it’s easier for foreigners to build and make a living with rentals than it is for Bahamians. Right now, we are struggling to build our own homes.

“Foreigners build a second home then rent it out. If they are not going to stop then they need to be registered because that’s a way to bring income to the Government and they are competition - a stiff competition - to the hotels. So, they should be registered and pay taxes.

“We have to pay taxes, whether we have income, whether we have guests, and we have to maintain our hotel. How do we get money to maintain and upgrade our hotel? There are more Airbnbs than hotels on the island and they pay nothing.”

The hotelier’s comments back concerns voiced by Kerry Fountain, the Bahamas Out Island Promotion Board’s (BOIPB) executive director, who earlier this week told Tribune Business that hotels must find ways to distinguish themselves from - and offer a competitive advantage over - the rapidly expanding vacation rental market that is increasingly making inroads into their customer base.

“I feel Cat Island should be performing much better. We will be meeting with all hotel stakeholders to determine what the itch is. Based on anecdotal evidence, and based on the proportion of second home vacation rental guests going to Cat Island, we feel people are staying in hotels on their initial visit and coming back to stay in rental properties,” he said.

“If that is true, and it has to be determined, we’ll have to make some adjustments. We’ll have to determine what the competitive advantages are of staying in a hotel versus second home vacation rentals..... Hotels have to dig deeper to differentiate themselves from second home rentals. The demand for vacation rentals is continuing to grow, and they must ask themselves: What comparative advantage do I have as a hotel?’”

Shunda Strachan, the Department of Inland Revenue’s acting comptroller, last week said some 7,500 vacation properties have already registered ahead of the end-April deadline as the Government moves to levy VAT on the rental rate as well as the booking fee paid to platforms such as Airbnb.

She said: “The short-term vacation rental platform that we have launched -and we’re asking anybody in the short-term vacation industry to register on that platform - it’s not so we can tax you. That’s not the goal right now. I don’t want to be deemed disingenuous, but the goal of the platform right now is to gather information.”

Arnette McKenzie, general manager of Hideaways at Palm Bay in Exuma, yesterday said occupancy rates on the island are high as more persons are travelling following the relaxation of COVID-19 restrictions. She also confirmed that the island’s short-term rentals are running at full capacity.

“I think Exuma has been doing good. Every week all the car rentals are booked, the hotels are booked out. You can hardly find a room,” Ms McKenzie said. “They were [competition] but now it seems like we are booked out, even though the Airbnbs take plenty of the business. It’s like everyone is just coming in. Everyone is travelling after COVID.”

Ms McKenzie said the majority of short-term vacation rental owners are expatriates who rent their properties via offshore platforms. She added: “Mostly the winter residents would [rent] out their houses. They come down for the winter season and the rest of the year they rent it out. Lately, Bahamians have been entering the game. Everybody’s been trying to build some.

“With the winter residents, it’s their house. They can say they’re sending friends or family, and while they are probably charging them, everything is done in the US. Everything is paid there. Arrangements are made prior to them coming in.”

Although Ms McKenzie questioned the timing of the Department of Inland Revenue’s decision to register short-term rentals, she agrees that the industry should be fully taxed. “They are trying to do it now at a time when most of the locals are tapping into it, and it’s going to take away from them,” she added. “I think they should be taxed. I mean, it’s been a long time coming because if the hotels are getting taxed the Airbnbs should be taxed.”