The Nelson Mandela Bay municipality wants to regulate the lucrative informal accommodation industry, Airbnb, after it raked in more than R6m over the December period.
There was also an increase of 64.8% in the number of people booking into Airbnbs, while the formal accommodation industry saw an increase of only 0.08%.
This had led to an outcry from guesthouses and bed-and-breakfast establishments, economic development boss Anele Qaba said on Tuesday.
Airbnb is a site which allows people to market their properties or spare rooms for rental.
Airbnb charges a 3% commission to hosts for facilitating payments.
Presenting the December 2018 tourism impact report to the economic development portfolio committee, Qaba recommended that the city come up with a plan to regulate Airbnb.
He was, however, unsure exactly how the city would go about doing so.
“There is currently an outcry from the tourism industry that pays taxes across the city.
“[They are saying] that Airbnb itself is actually killing the industry,” Qaba said.
Port Elizabeth Metro Bed and Breakfast Association (Pembba) chair Sheena Wilmot said Airbnb was an issue for bed-and-breakfast establishments.
“It’s a huge problem,” Wilmot said.
“There are over 900 rooms available on Airbnb and if you asked the municipality they would say they have about 100-150 registered B&Bs.
“You can see that the problem is absolutely enormous – people with Airbnb do not have the overheads that registered bed-and-breakfasts have so they undercut the prices.”
She said they had found that occupancy in formalised bed-and-breakfast establishments was down between 20% and 30% since 2016.
“It’s a very big problem. It puts the businesses that are paying their rates, taxes, hospitality fees and salaries under strain.
“This means you are getting businesses that are retrenching people and are not necessarily hiring when someone leaves.
“It has a definite knock-on effect,” Wilmot said.
Pembba represents about 120 bed-and-breakfast establishments in the metro.
Wilmot said that while no bed-and-breakfasts had closed their doors, a few had told her that if nothing was done about regulating Airbnb, they would have to consider their options.
“The municipality needs to make it fair for everybody.
“We just want the municipality to be fair.
“If they don’t want to regulate Airbnb, then they must deregulate the whole industry and not punish people who have gone about this the correct way,” she said.
Qaba, who was responding to concerns about how it would work, said regulating Airbnb was important in the event that something happened to guests and someone needed to be held responsible.
“For any business, it should be regulated,” he said.
“The city has a responsibility to ensure regulation of any business operating [here].
“The authorities must be able to take responsibility, so there needs to be insurance that those people are registered and are known and that they are part of a broader plan.”
Qaba said they were also concerned that people offering accommodation through Airbnb made no economic contribution to the city.
“Are they paying any taxes? Are they paying any dues to the city?
“Once we market the city, are we getting any revenue or do we have people who just make money and do not put anything back into the city?”
He said these were some of the things they would look into when formulating the plan.
“This is still a plan. We can’t say we have a concrete way forward, we need to engage with the tourism industry.
“We know now that the industry and stakeholders in PE have been raising this issue.
“They are saying ‘there are people who are not even registered, they are taking the business away from [us], but we as B&Bs and guesthouses pay money, yet we are losing out’.
“We need to listen to their advice.
“The plan going forward will have to be discussed broadly [in] consultation with the relevant stakeholders.
“At this stage, we can’t say this is what we are going to do but we need to engage about what the problem is.
“Is it possible that it can it be regulated? If yes, how can it be regulated?
“We don’t want to kill it [Airbnb] because it made a killing during the particular season under review,” Qaba said.
The committee was divided on the matter, with the DA warning that it would interfere with the free market. DA councillor Renaldo Gouws said: “This is a concerning item.
“I am seeing words that scare me a little bit and that word is ‘regulation’.
“A lot of the tourists who come to Nelson Mandela Bay are local tourists and they make use of Airbnb.
“The environment that we have created here is business upon itself.
“We must be very careful about trying to regulate this system because as soon as you do that then you interfere with the free market.”
Gouws asked that they be given more clarity on the plan.
“Is this a regulation to get into talks with them to market the city or is it a regulation for them to pay a service fee?”
ANC councillor Mazangwa Dano said he supported regulating Airbnb.
“It’s important that everything is regulated, because everything must be regulated for purposes of accountability with regards to Sars [SA Revenue Service] and other things,” Dano said.
There were about 271,301 overnight visitors to the city in December, an increase of 27.9% compared with the previous year.
The overall direct spend by tourists was an estimated R367m.
Qaba, in his report, wrote that the total tourism contribution to the gross domestic product was in the region of R679.5m for December.