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Cape Town worries about proposed limits on Airbnb

By Crystal Orderson, in Cape Town
Posted on Monday, 20 May 2019 21:34

Cape Town is a big tourism draw for South Africa. REUTERS/Mike Hutchings

Cape Town is one the jewels of South Africa's tourism industry renowned for its iconic landmarks, but now there is fear that proposed legislation curtailing Airbnb will hurt the lucrative sector.

The Tourism Department has had to put out fires and say ‘hold on’ – the bill still needs all the stakeholders, including tourism bodies, to submit their comments to ensure that it “strengthens the bill in order to serve the interests of inclusive tourism growth in the country”. Airbnb is the world’s largest home-rental platform, with more than 6m listings. It has disrupted the traditional accommodation sector.

What is being proposed?

  • The government published the Tourism Amendment Bill for public comment in April.
  • It would give the minister of tourism the power to specify various “thresholds” in terms of Airbnb rentals and could include limiting how much money a host can earn and the number of nights that guests can stay.
  • The move has been welcomed by the Federated Hospitality Association of South Africa, which wants to see the government taking a pro-active role in regulating the online platform.

The Economic Factors

South Africa’s Business Day reports:

  • Tourism contributed R136.1bn ($9.5bn), or about 2.9% of the total GDP in 2017;
  • This increased to R412.5bn, or 8.9% of GDP, when “indirect and induced benefits” across a very broad value chain were factored in according to official statistics;
  • Airbnb says : Homeowners using the online platform generated close to R5bn for the Western Cape economy in 2017.

Criticism from Cape Town

The Western Cape Minister of Economic Development Beverley Schäfer has been one of the loudest voices on the issue and she told The Africa Report that the Western Cape government is “strongly opposed to national government’s plans to regulate Airbnb”.

She adds: “Our duty is to protect the tourism industry and we are particularly concerned about the impact regulations or thresholds could have on small businesses, as well as rural and township short-term rentals.”

And Schäfer says there are already laws to ensure some sort of regulation in place. “In the Western Cape, there are some municipalities that already have some degree of regulation, and we believe that any decisions on how best to regulate short-term rentals should be taken at a local government level,” adds Schäfer.

Tourism minister calls for calm

Tourism minister Derek Hanekom is urging people not to jump to conclusions.

In an interview with BDLive Television, he said: “It strengthens various components, it is not only dealing with the so-called shared economy or the short-term rentalst. That’s one small part of it actually. But that seems to be the one that is creating a bit of angst. There is no need for any angst. All it does is enable the minister to regulate these short-term rentals. […] That does not mean killing the Airbnb business but it is about finding a balance between what are concerns expressed by guesthouses and hotels. They say they have to comply with certain rules and short-term rentals or Airbnb accommodations don’t. […] It’s just finding the balance. […] Regulating Airbnb is not unusual: it’s done in Greece, it’s done in Paris, it’s done in London”.

He added that in meetings with Airbnb executives, the company would like a degree of regulation to provide a guarantee of stability for its operations.

Vote with their feet

South Africa has close to 30% unemployment, so Western Cape officials fear the proposed law will make thing worse. “Over two million people have made use of Airbnb alone in this country, and if regulations make it more difficult for travellers to access this kind of accommodation, they will simply vote with their wallets and go elsewhere. We cannot allow this to happen,” minister Schäfer told media.

Airbnb in South Africa has been cautious in their response so far with Velma Corcoran, Airbnb country manager for sub-Saharan Africa, released a statement to Fin24:

  • “For SA to reach its ambitious tourism goals that are key to economic development and job creation for all citizens, it is vital that guests to the country have a wide selection of accommodation and experience options – including home sharing which allows guests to stay in different areas as well as with local hosts who are ambassadors to their country,” said Corcoran.

Divided public opinion

An Airbnb owner and a non-Airbnb owner, who did not want to be named, spoke to The Africa Report.

For legislation: “Yes, it must regulate Airbnb. People do not pay tax. They do not declare their income, and that is not right. You are competition with hotels and do not pay tax […] The South African Revenue Service should regulate.”

Against legislation: “Big business is feeling threatened by online platforms. People are generalising that people are not paying taxes. It is job creation and money is going directly into the country. Local people are being paid for work.”

There’s still a long road ahead

The public has another 30 days to submit comments to the bill. The Tourism Department will also be conducting countrywide workshops. Then parliament will call for public hearings on the matter before the bill is put up for a vote.

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