Tax First, Ask Questions Later

Figure 1 Airbnb listings in Saint Lucia (data scraped September 2016).

There are only a handful of regions in the world where the tourism industry plays as large and as influential a role in local economies as it does in the Caribbean. Despite underpinning the economic bases for many of these small islands, the hospitality industry has changed very little since the days when many locals transitioned from agricultural labor to the service sector. That lack of innovation is apparent in much of the legislation that governs the region’s largest foreign currency earner. To be fair, some Caribbean countries are more progressive than others regarding travel legislation, but before we start throwing around phrases like “thought leader” and “innovator”, it’s worth noting that the majority of those legislative revisions have been reactive—driven primarily by alternative travel accommodation providers like Airbnb.com.

To add a bit of perspective, Airbnb commands over 25,000 rooms in its rapidly growing Caribbean portfolio, more than the region’s top two hospitality conglomerates combined. For example, Sunwing Travel Group, who we reported on last week, operates a mixed room/suite/villa portfolio of 12,000. Sandals Resorts International? A little over 5,000. Though it’s arguable that the all-inclusive market and Airbnb’s market represent different traveler segments, that gap is rapidly shrinking. In 2014, Airbnb hosted 20 million guests throughout the Caribbean. The following year, that number doubled to 40 million. From the beginning of the U.S. – Cuba normalization process in early 2015 to March of last year, Airbnb added over 1,000 listings in that country alone.

Presumably, many Caribbean governments have struggled to keep up with that kind of blistering growth. Nonetheless, leading the charge to negotiate on behalf of Airbnb’s local hosts is the Caribbean Hotel & Tourism Association (CHTA), a private-interest group comprised of the very businesses who are losing market share to alternative travel accommodation sites. The group cites a “regional effort to regularize the industry” as its impetus, contrary to what many outsiders perceive as a veiled attempt to strengthen their influence in the region. Most of the sub-regional private interest groups like the Saint Lucia Hotel & Tourism Association (SLHTA) have championed the effort, reflected in a position paper published on Wednesday entitled “The Sharing Economy: Developing our Alternative Accommodation Sector in Saint Lucia”. The paper’s thesis calls for “creating a level playing field”, remarks that were echoed in a press release by SLHTA President Sanovnik Destang, as he referred to companies like Airbnb and VRBO.

In public, it’s clear that the SLHTA’s concerns regarding the online websites focus on ensuring “the welfare of the guests and the hosts”, but it becomes difficult to judge the sincerity of those remarks when considering that many of the Airbnb accommodations available in Saint Lucia are in fact operated by the same hotels represented by the lobby group. The situation appears slightly more contrived when in one instance such groups call for a tax-based regulatory framework to standardize alternative accommodations, but on the other hand, those same advocates of ‘fair play’ are the biggest recipients of tax concessions in the country. Concerns over impartiality are inevitable, so long as the SLHTA continues to formulate policy without the collaboration of the very home-sharers whose wellbeing they claim to be pursuing.

However, while cash-strapped Caribbean policymakers feverishly attempt to tax first, and ask questions later, a lone cry can be heard coming from an unlikely place—Barbados. Richard Sealy, the country’s Minister of Tourism, sought to inject a sense of restraint to the conversation as he stated that: “I know the [Barbados] Ministry of Finance is keen to get tax revenue. But again, before you can tax something you have to find out what it is. It is not simply the case of just saying, ‘all these people are using the Internet to provide accommodation and it is happening outside of the tax net’. Some of these people are normal hotels that are just using it to get business. So, we have to do some analysis and go from there”.

Nevertheless, as Shawn Sullivan—Airbnb’s top brass in the Central American and Caribbean region—continues to make his rounds forging agreement after agreement with tourism officers, it seems that it’s merely a matter of time before it’s our turn at the negotiation table.

Disclosure: Author is an Airbnb host in Saint Lucia.

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