Should AirBnB be regulated in Clarens? And what is an AirBnB property?
AirBNB legislation in South Africa – What is happening? (Mybroadband.co.za 16 April 2019)
The topic of short term rentals in SA is under discussion at the moment, with government looking into ways of controlling who is allowed to provide accommodation and for how long. This is being driven in part by the formal industry which feels disadvantaged by informal accommodation venues being able to take their business, without being subject to the same requirements in terms of insurance, business rates, health and hygiene certification etc. Have a look at the opening link to get some background on the topic and what is going on right now.
At the recent The Clarens Home Owners Association meeting, the topic of permissions to operate the 68 guesthouses on the Estate was raised, and the following information was supplied about operating a short term rental business in South Africa, and specifically the Free State.
At present the requirements to legally operate a guesthouse include getting permission from the Municipality, from any Housing Association which may have controls over your property, and from neighbours and surrounding residents who may be affected by a business operating in close proximity.
Of course these are officially sanctioned formal operations rather than AirBnB properties, which are different in a number of ways. In trying to work out what the differences are, I dug into arguments from both sides. (Actually, I started off just looking for information, and ended up reading the Government Gazette Amendments themselves. I am older now, and my eyes hurt… also here is a link to document under discussion – https://www.gov.za/sites/default/files/gcis_document/201904/42391gen228.pdf)
Dear South Africa website offers an opportunity for you to have your say about the Amendments by sending reasons comments or suggestions to their campaign (https://dearsouthafrica.co.za/tourism-amendment-bill/) They provide a helpful (if somewhat biased) summary through a link, which is pasted and discussed below.
ISSUES AFFECTING GUESTS
- We fear that Airbnb daily rates will be driven up artificially to align with hotels which we cannot afford.
Clarens already has the dubious achievement of being one of the cheapest golf destinations in South Africa, which isn’t really in keeping with our status as one of the premier destinations in the country. This is largely due to the massive surplus of short-term rentals in the area.
- We prefer to stay in less trafficked areas where hotels are not concentrated.
Clarens is struggling to support the weekend population of visitors, it is hardly “less trafficked” or undersupplied in places to stay
- We choose not to stay in hotels since they are impersonal.
This is a very interesting point of difference between AirBnB places and formal guesthouses. An AirBnb is a dwelling where a host shares their space, welcoming guests and showing them around etc… This is very different to a place that is rented out online, where keys are in a safe lock at the door, and the guests never meet the host or owner.
- We prefer the experience of living like locals when we travel.
Again, renting an entire house out of a rental pool, to be surrounded by other tourists is not living like a local.
- We prefer the support of a host when we travel. For example, she would take us to her local doctor if need be.
Back to point 3. An AirBnB involves active local hosting…
- We enjoy the individuality of Airbnb accommodation and the local knowledge shared by hosts.
- We enjoy the standard of accommodation provided by Airbnb hosts since their competition demands that this is upheld.
The exact same can be said of any business in a competitive environment, and it is ironic that a business model which is based on undercutting formal competition should feel that operating at half price is a symbol of excellence…
- We enjoy repeat business trips and family visits at our favourite Airbnb accommodation and don’t want to be told that the host has reached her ‘threshold’ and we must find somewhere else to stay.
“We want to stay where we like, when we like, no matter what!” Availability is an issue in every accommodation business, and since they are only talking about 100 night limits, this would not affect weekend based business, which is the majority of Clarens.
- We also don’t want to be told that we can only stay for less than 30 days, and not longer than 3 months. This is catastrophic for students, interns and business travellers. Also longer family visits from abroad.
Again, ironic since in Clarens there is a massive shortage of long term accommodation due to the return on investment involved in the weekend business.
- We are concerned about the devoted, most often breadwinner employees who will lose their work if Airbnb is curtailed. What provision will the government make to employ them?
Formal tourism establishments employ many more people in the industry, and there is no mention of provision for them when their jobs are lost…
- This bill will control our freedom of choice and we will need to consider taking holidays, studying or doing business further afield.
Most of the world already regulates tourism, for many reasons including environmental impact on sensitive areas. Residents of the village know what stresses our water, electricity, roads and infrastructure are under, so freedom of choice is controlled by gate fees at parks, limits on numbers etc. This year record numbers of permits were issued to climb Everest, and record numbers of climbers died on the slopes, for example.
- Visas, insufficient direct flights, security and load shedding issues already discourage us.
These issues affect everyone, along with exchange rates, global instability, weather patterns and so much more.
ISSUES AFFECTING HOSTS
Restricting Airbnb hosts to only be permitted a maximum booking period of 3 months (or less) per year, will have dire consequences for them all:
- Many retired persons cannot survive on their pensions, therefore rent out rooms or a portion of their property to meet soaring costs.
The difference between short term rentals and AirBnB is that there is a host who lives on the premises, in this case retired and probably a perfect person to hear about the area from. If you do not live onsite, you are probably not this kind of AirBnB, and may well actually be running a formal guesthouse business.
- Many ladies in the underserved communities, rent out rooms in their homes to afford schooling and food for their children.
- Many hosts with disabilities who cannot work in the formal sector, offer their knowledge, time and accommodation to support their costs.
- Many single parents require the additional income to provide education for their children, and maintain their home.
This is the best thing about AirBnB, in that it does give opportunities for people to supplement their income and even find a way to support themselves in such a high unemployment economy.
- Many local businesses flourish through the additional requirements that guests bring.
The same businesses flourish through the requirements of guests in formal guesthouses…
- All these Airbnb properties employ staff who are most often breadwinners. Thousands of loyal helpers will become unemployed.
Again, the number of positions that will be lost if the formal sector collapses is much higher.
- The massive boost to the economy which Airbnb has brought will be lost for no gain whatsoever.
There is no evidence to suggest that AirBnB has brought any extra spend to the economy of SA, but has redirected towards the hosts mentioned in the first few points, who share their living spaces with tourists, rather than just renting out houses for local holiday makers.
- Guests who can’t afford hotels and dislike them, will choose other countries to visit.
There are so many other options besides hotels, from BnB to self catering, lodges and guest farms that it is misleading to suggest that this will be a factor.
- Airbnb hosts pay tax and VAT on every booking and service fee to the government. This will also be lost.
Nothing will be lost to the govt who collect their tax even more rigorously from formal, registered establishments.
- Rezoning in order to continue is laborious, another cost to the government and unnecessary.
Rezoning of a business is different to operating a shared AirBnB space, and is vital for regulation of trade. If your neighbour decides to open a tavern or a chemical production set up in a residential zone, you have the right to object. Secondly, since you have to pay to be rezoned and then pay business rates for operating, it is an outright lie to suggest that it would be a cost to the government.
- Hosts have installed water management equipment to keep in line, or below the average household water allocation. We proved it in Cape Town!
Formal establishments take water management and alternative power strategies into consideration when starting up, so as to be able to provide everything required. (Alternative lights in guestrooms are a legal requirement in any guesthouse for example)
- Restricting guests from staying longer than 30 days is disastrous for students, interns, travellers working on contract and longer family visits.
Staying longer than 30 days anywhere in Clarens is almost impossible due to the value of weekend based short term rentals
- South Africa needs tourism desperately to float a failing economy, why limit Airbnb’s contribution to that? It is a destructive step to take.
If the formal tourism economy (which does by far the majority of marketing for SA) fails then it will be extremely destructive to the entire country.
- Airbnb properties are self regulated by the platform review system. Those that are not up to standard do not remain open.
Clarens established an Accommodation Association recently to try to deal with unregulated poor quality properties which were felt to bringing down the over all offering of the village. If AirBnB can do a quality assurance guarantee it might be a solution to the grading issues.
- Government does not need to regulate what is already regulated, they need to focus on more critical matters of which there are countless.
The issue is that what is already regulated is not enforced, which means that both the formal sector and the hosting sector are being abused by unscrupulous short-term rentals masquerading as AirBnB to avoid any kind of regulation.
Although the angle taken by Dear South Africa is partisan towards AirBnB, it focusses on the split between them and Hotels. A different approach comes from a Bed and Breakfast in Arkansas and is really worth looking at as an answer from a great sounding hospitality establishment.
AirBnB and the short-term rental business need to come to a point of being able to define what is an informal shared home space with a host, and what is a formal guesthouse, which exists for the specific purpose of accommodating visitors for profit. I for one am very happy to see the locals of Clarens sharing their space, their stories and understanding of our beautiful village with guests, in their own homes and spare rooms. Obviously, if there is a business operating next door in your residential area, that, by law, has to be regulated and zoned according to your local Municipality, HOA or governing body before it is allowed to operate.
This is the point at which clarity is needed, and until it is given there will be many people with unregulated businesses pushing the AirBnB agenda while hiding the obvious difference between supplementary incomes of hosts and investment driven rate of return property management.
In Clarens there are rules regarding franchises, based on the belief that local businesses should profit from local visitors, rather than allowing non local companies to suck the life blood out of a tourism driven economy. It is difficult to see any difference between those franchises and the investors who profit from a village they never visit, taking the money that travels here back to their out of town bank accounts, while assuring us that they are vital to keep visitors coming, even though none of their spend ends up locally.
And in case you still need some direction on how things should be done, here is a link to AirBnB about responsible hosting in the United States – there isn’t one for SA as yet.