The Tourism Amendment Bill, which proposes reining in the rise of home-sharing apps such as Airbnb, has received backlash from opponents, who argue that the government should let market forces control the short-term home rentals market instead of regulating it.
But the tourism department said the Bill will allow the existing regulatory framework to deal with technological disruption and the “challenges” that come with it — such as unfair competition, a shortage of rental stock and displacement of the poor in cities — and will ensure that all players adhere to the same set of rules.
The Bill, which has been dubbed the Airbnb Bill, was published in early April. It proposes that small business owners using Airbnb or other home-sharing apps be subject to the same regulations applied to formal establishments such as hotels and guesthouses. The Bill will, among other things, create a threshold for short-term rentals that will include limits on how long a guesthouse can operate without registering as an official business and the number of nights a guest can stay in a specific establishment. It will also empower the minister of tourism to regulate the short-term rental industry.
Airbnb is one of the most well- known home-sharing apps globally. According to a report it published late last year, the platform has boosted the South African economy by R8.7-billion and supports more than 22 000 jobs. The platform is most popular in Cape Town with 20 307 active users listing their properties, whereas Johannesburg has only 5 538.
A small business owner, who did not want to be named, said she uses Airbnb to market her short-term property in the Cape Town city centre and is concerned about what regulating the app’s users would mean for her business.
“Regulation is a good thing if done for the right reasons. Currently the Airbnb Bill reads as something that was drawn up by someone who really does not understand the platform or even the industry.
“I think the Airbnb Bill is largely a result of the hotel industry being bitter that business is being taken away from them, in the same way traditional cab companies have pushed back against Uber,” she added.
“Hotels have long been overcharging customers for an impersonal, expensive experience which often leaves people feeling they have been taken advantage of, which is why customers are all too happy to find alternatives. Instead of trying to squash competition, hotels should adapt to what today’s traveller wants.”
The small business owner bought her flat in 2017 and, in February this year, she bought another flat in the same area. She said she hopes her good grading will help her survive what is to come.
“I hope the excellent ratings and reviews I have built up over time will help keep my Airbnb afloat despite any challenges faced as a result of the Bill. It also remains to be seen how effectively it would be enforced.”
Sakeliga, a nonprofit organisation that lobbies for free markets and a favourable business climate, said it is opposing the Bill because it will get in the way of fair trade. The organisation said government should not intervene in a way that will negatively affect short-term rentals.
Regulations hold costs and trade-offs, said Sakeliga’s analyst, Gerhard van Onselen.
“In South Africa’s case, we think that the regulatory burden on business must be kept as low as possible to grow the economy.
“The kind of regulation the South African department of tourism apparently has in mind seems to be particularly onerous and counterproductive.”
But the tourism department insists that this law is needed. The department’s spokesperson, Blessing Manale, said the Bill seeks to promote fairness in the sector where the growth of platforms such as Airbnb has resulted in an increase of shared homes, holiday homes and investment properties being rented to tourists or visitors on a short-term basis.
“Existing regulatory frameworks do not address the challenges brought about by technological evolution, particularly the sharing economy. Challenges range from possible unfair competition to consumer protection, shortage of rental stock and displacement of the poor in cities, overcrowding and nuisance by visitors in local areas. This phenomenon has left governments globally grappling for comprehensive responses,” he said.
To both protect consumers and to enable proper town planning and fair payment of rates and utilities, accommodation businesses are regulated in a number of ways, including with business or special zoning.
“Many good, small accommodation businesses comply with all these laws and regulations, while some shared economy, short-term rentals that are traded for most of the year, sometimes with a number of rooms to rent, do not comply with any regulations or laws,” said Manale.
If the Bill comes into law, South Africa will join cities such as Paris, Barcelona, Santa Monica, Amsterdam, Berlin, London, San Francisco and New York, which have policies regulating users of the app.
Van Onselen said that if government goes ahead with the Bill, “it should do so carefully considering the economic cost and benefit’’.
The change in consumer behaviour is a fair signal that the industry may need to innovate and adapt, he said.
“Many industries have undergone disruptions in the past and the appropriate response is an entrepreneurial response,” he added.
But members of the Federated Hospitality Association of Southern Africa (Fedhasa), a national trade association for the hospitality industry, have complained that Airbnb users have an unfair advantage because they do not have to comply with the same rules formal hotels do, such as having the necessary and relevant licences and insurance certificates.
Fedhasa, which supports the Bill, said it “will seek to address all of our members’ concerns and ensure that all accommodation establishments will compete with entities that are compliant with South African legislation. We believe that it is vital that all accommodation establishments have the necessary certificates and licences with which to function.”
The chief executive of the Tourism Business Council South Africa, Tshifhiwa Tshivhengwa, said the Bill will “equal the playing field”.
He argued that many visitors are coming to the country without paying tax because they “are staying in establishments that do not collect anything”.
Tshegofatso Mathe is an Adamela Trust business reporter at the Mail & Guardian