Tuesday, August 16, 2016

AIRBNB – The largest HOTEL CHAIN IN THE WORLD that does not own any hotels!

Sri Lanka is JUST waking up to the existence of Airbnb, which is a tourist accommodation site on the internet, that is sufficiently sophisticated that those seeking relatively low cost accommodation on their visits are able to sift through the alternatives, to make a determination on the likelihood of acceptability for the price offered, and make a visit, to a place they may not have otherwise gone to.

There are hundreds of locations listed on Airbnb in Sri Lanka with 99% not being registered to provide tourist accommodation. Of the hundreds of places, ONLY a few are currently receiving guests, and that is mainly in large cities like Colombo and Kandy where accommodation is scarce, and expensive.

Usually payment is made via credit card upon making the confirmed booking, and a 20% fee is deducted before the balance is paid DIRECT into the provider’s bank account. You can imagine with over 250,000 rooms being taken daily, how much revenue this organization must be making on a daily basis, with money coming in daily, and they are then able to rapidly expand the service throughout the world.

The problem now is that authorities in various areas are made aware of potential revenue that is NOT being raised from these sources, and are trying to regulate this service. For example, if I live in an expensive apartment complex, and my next door apartment is always being let out on Airbnb, the strangers coming and going next door, from all over the world, at all times of the day and night, maybe a real problem! In fact it may be a nuisance, and my quality of life may deteriorate, just because the person owning the next door apartment wants to make some money, renting his apartment this way.

So what do I do? Complain to the authorities that a residence is being USED ILLEGALLY as a business. (NO different to brothels being operated in luxury flats)

It is then up to both the local government & the apartment management to regulate this activity. Apartment management can set up CONDO RULES that prohibit Airbnb usage, and insist on minimum rental periods if apartments are rented out. Local authorities on the other hand may insist on licensing these places for a standard or variable fee, so that some kind of tax, hopefully not more than 2% of the gross rental value is charged, so it will NOT act as a deterrent, but permit some kind of regulation, and policing, to safeguard other residents in the area from inconvenience and disturbance. Just look at Colombo today, and you find tourists emerging from registered and unregistered accommodation everywhere!

www.airbnb.com says on its website, “book homes from local hosts from 191+ countries and experience a place like you live there!”

Many people who have vacation homes in vacation hotspots, now use this facility to justify owing a vacation home, which they only use say for 60 days of the year, and so on days one does NOT occupy, you can put it out on airbnb for letting to all comers. They can therefore cover the cost of ownership, a superb way to own!

Of course you may have heard how some people have trashed homes by using this facility, so you would have to have your own security or servants to ensure that the house is being carefully used. Further the owner can comment on the guest after the visit to identify the good and bad guests, thereby attempting ONLY to let to people with a good track record of using airbnb. In similar vein the guests can also comment on the service and accommodation, warts and all, so that readers looking at reviews will know what to look for, and make informed decisions on the potential accommodation, prior to booking much like the reviews of hotels that we have become used to on various hotel booking sites.

As usual, our authorities will look at this when they finally wake up that there is in fact such a facility where 1,000 + places are listed, and try to squeeze some revenue from all 1000, even if about half have been listed, but have yet to see any guests take them, as they neither have reviews, nor have any bookings or blocked out dates, when going to see availability, a good indication of there being NO demand.

I just hope that once the Colombo Municipality wakes up to this phenomenon, they know the meaning of common sense!

They will be made aware of this by the very hotels who are losing business JUST because there are alternatives, and possibly better accommodation available for a cheaper cost. The CMC then, will suddenly make unreasonable demands on hosts, try to tax guests, and kill the goose that also lays golden eggs, as you have now opened an OPPORTUNITY for tourists who DO NOT WANT TO USE hotels, to use alternative accommodation  and may even encourage greater spending locally on food, restaurants etc, 

If they were staying at expensive hotels, it is often the overseas tour operator who makes most of the money, as the room that retails for US$200 is sold to them by the hotel at US$50, and of the US$100 per day equivalent airbnb room charges, only US$20 goes to airbnb and the local host gets the rest, helping both the economy and giving a tourist better value for money, that may see a repeat visit, and perhaps even a longer visit! 

It may also pump more spending money into the local economy, benefing Sri Lanka overall. This is therefore an appeal for the local govt. NOT TO BE GREEDY, when you finally wake up to it! Learn the pros and cons, study this phenomenon and look at Country first in making decisions, which should encourage this form of accommodation that will provide value addition directly to the people and perhaps also improve the quality of housing stock as a by-product of this new travel experience!  


Anonymous said...

Should the Govt. encourage people having rooms in their home to rent to foreigners? The answer to that lies in our Tourism emphasis. If we want high value tourists then we should only have 5 star hotels and boutique hotels and do away with the eye sore huge coastal hotels that Southern Spain and Thailand have, and be a point of difference.

No encouragement is needed, as our enterprising entrepreneurs are quite capable of building an addition or upgrading a room in a home to a level that can withstand tourist occupation, and give them an extra income source for a family, with the benefit going direct to the small business as well as local businesses that will obtain their custom.

Broadly this concept is a plus to the economy, not a minus. The advantages outweigh the disadvantages, and stopping backpackers with no money is not by banning airbnb, but discouraging a sub-culture of sex and drugs.

Anonymous said...

One of the downsides of Airbnb in popular cities, where people prefer to give short lets than rent to long term renters who work in the City, denying the City of a vibrant affordable housing environment!