DIANE PHILLIPS: A possible solution for Bahamians to benefit in the hospitality industry


Diane Phillips


Created just 15 years ago by two friends who rented out an air mattress on their floor when a major event sucked up all the hotel rooms in San Francisco, Airbnb has turned the short-term vacation industry on its head.

The company’s been valued as high as $113 billion, a figure that rises and falls almost with the tide, and it’s just one of many competitors. Tripping.com boasts eight million listings and HomeToGo claims bragging rights as the world’s largest search engine in the vacation rental marketplace. It’s the mega site that holds all the others in one place and redirects users to a variety of portals - Vacation Rental By Owner (Vrbo), Home Away, Airbnb and others.

In Europe, new sites are emerging and in the luxury market, the history of Luxury Retreats is unequivocally the most fascinating. It was created on a whim by a 17-year-old outside of Montreal who was designing websites in his bedroom when after a family vacation he decided to post one option on the luxury rental site he called Luxury Retreats.

That single listing that grew to four and then into history preceded Airbnb by nearly a decade and now the money-is-no-object site where you can book an over-the-top stay at a fully-staffed private island, opulent mansion or villa has more than 2,000 carefully curated villas in 50 destinations across the globe. The teenager’s vision and his focus on luxury secured a forever spot for him in the annals of hospitality game-changers.

What’s the purpose of all this history when we all know that the short-term rental business is booming, forcing hotels to up their game, reminding travelers that there’s something to be said for someone else making the bed and offering fine dining that you don’t have to prepare yourself?

The purpose is to drive it home and address the principles of the “to tax or not to tax” question.

It is almost hard to believe how large the short-term vacation rental business is in The Bahamas or how fast it has grown. One site promises a choice of 2,800 listings, nearly 1,000 in Nassau and Paradise Island alone. Plug in Cable Beach or Eastern Road and you’d be shocked at the number of pins that pop up with prices ranging from $97 to high four figures per night. Deeper in the middle of the island, prices are even lower.

Despite the reality that The Bahamas has already signed a contract with Airbnb which now reports every rental, making tax collection easier, the debate rages on about whether local homeowners riding the wave of the short-term rental business should be taxed in the same way hotels are in The Bahamas.

There are those who argue that renting a room in the house or a small cottage on the property or even their entire house when they are not occupying it is their way of making a few dollars.

Why begrudge the average Bahamian the little extra revenue when it’s the home they own and they are finally participating in the hospitality industry in a small way?

They point out that they contribute to the economy by improving their home and property, eventually resulting in higher real property tax which is better for the government’s coffers.

They say their overall improvements create better, safer, more desirable neighbourhoods. The few dollars they make, they say, can help pay the bills, lessen the burden on government, let their family live a little better or even help put a child through college. Let them have a little slice of the pie, they beg.

The other side of the argument is just as persuasive.

Hotels invest millions. Why should they be unfairly burdened when the competition, the local homeowner does not have to pay a head or bed tax and they do.

The upfront investment and the ongoing expenses are enough to make anyone wonder why even build or operate a hotel. In many cities in the US it can cost well over $500 per square foot to build so you can double that in The Bahamas, meaning a single 500-square foot room can run half a million dollars.

That’s a lot of room nights to cover the cost of construction before any net profit appears on the bottom line for investors. Hotels collect and pay bed tax, so why shouldn’t those operating a smaller version be required to do the same, they ask.

So once again it’s the big guys against the small fry or, in general, the foreign-owned hotel and the local Bahamian, though many, if not a majority, of the short-term rentals are owned by non-Bahamians, especially in the Family Islands.

Those rentals are impacting housing availability in general throughout The Bahamas and particularly on islands like Eleuthera and Exuma which are enjoying a resurgence of popularity.

The world has suddenly discovered the wonder and magic of Eleuthera and Exuma and developers cannot build fast enough to satisfy the demand.

The problem is that while there has been a decades-long push to attract people back to the islands and now there is the promise of employment, there’s a serious housing shortage.

In Exuma, where one short term rental site promises 586 listings and another nearly 300, there is virtually nowhere available for workers who cannot compete with vacationers to rent. One developer has just had to bring in a 200-foot vessel to create sleeping quarters for willing construction workers.

So what to do to satisfy the cry of the local Bahamian who is making a few extra dollars, balance the need of hotels to face fair competition and throw into the mix the usurping of available rentals, diverting housing that would enable a smoother development process in the Family Islands to the more lucrative short-term rental market?

There is this potential solution, a tax with exemptions. Stipulate a bed tax on all, putting all those who benefit from the vacation business which is the number one driver of the economy, in the same arena, That means that the Ministry of Tourism and the promotion boards including the Out Island Promotion Board allow qualified short-term rental operators to participate in their promotional activities and benefit from their databases.

It makes everyone partners rather than enemies and brings them all together, critically important in times of health-related matters or natural disasters so everyone in the industry is sitting at the same table. Then provide a five-year exemption with an option to reapply for a second similar term from the tax for those properties owned only by Bahamian citizens who can prove citizenship. Foreign-owned properties used for short-term rental income would be taxed just as hotels are.

Just a thought… mine. What is yours?


empathy 8 months ago

Many Bahamians are well aware of the concessions granted to hotel (foreign) investors as well as the history of government funding their staffs’ termination benefits when they exit the country. No; we’re not feeling the guilt of hotels paying the room taxes while a few Bahamians with part time rentals (not listed on Air B&B) reap a few dollars “tax free”. You have outlined a number of benefits that accrue to government and the country so government should thread carefully if and when they decide to interfere with this seasonal emerging market. In many Family Island communities homeowners represent the lion’s share of the rooms available! There are probably ways for Bahamians to contribute a small portion in taxation for these rooms although it may indeed be that their income does not exceed the $50,000 annual threshold government has established for VAT charges/payments in many instances, especially for Bahamian home owners.

Bahamians, or at least many of us, are entrepreneurial by nature. We prefer to own our our business and work for ourselves. This new market of short term home rentals is one step where we can realize that dream…forward, upward, onward…


becks 8 months ago

Bahamians should be exempt of any sort of tax on short-term vacation rentals for at least 5 full years, maybe even 7 or 10 years, upon any implementation of said tax. As for the hotels, they get huge concessions from government so no, I do not concern myself with their noise and neither should you.


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