For Smarter Regulation of Airbnb in Africa

Hotels in South Africa are asking government to regulate Airbnb. They do think – allowing the hospitality platform to operate without regulations will eat into their business opportunities. DStv did ask for the same thing – regulation – against Netflix. Taxi owners did ask for the same element – regulation – against Uber. It is part of the new normal: get the technology portals out so that the old parties could continue!

Major entities in the hospitality industry in South Africa have called for government to step in an regulate Airbnb, according to a City Press report.

Airbnb has seen impressive growth in South Africa, and local hotels are concerned that the unregistered accommodation establishments listed on the platform are taking away business from established bed-and-breakfasts and hotels.

The Federated Hospitality Association of SA (Fedhasa) called for government to crack down on Airbnb, and smaller organisations have echoed this call.

The Port Elizabeth Metro Bed and Breakfast Association (Pembba) added that Airbnb brought in over R6 million in Nelson Mandela Bay last year, 65% up on the previous period.

The fact is that even if government regulates these digital platforms, the trajectory will not change because these platforms operate on near-zero marginal cost where the providers bear all the costs. The man that has a room to rent in Airbnb carries all the costs: no renter, Airbnb loses nothing! Largely, unless you ban it, no hotel can match that pricing because the man can always price lower than hotel chains as its cost model is more competitive. Airbnb will live on anything that comes to it because its cost is close to zero.

So, the shout for regulation will not change anything unless the hotels want to ban Airbnb in the nation. Doing that will be unfortunate since Airbnb provides income-earning opportunities to many citizens of South Africa who have rights to free enterprise as the hotels. By October 2018, South African Airbnb providers had made real money from Airbnb since it launched in the country in 2008. So, this cannot be structured for the hotels to be the sole winners. Others are indeed making money from South African tourism with their properties: “Findings released during Airbnb’s Africa Travel Summit found that South African Airbnb hosts have earned over R4 billion [$290 million] since the platform was founded in 2008, the Sunday Times reports.”

Regulation must be designed to support the South African tax base, leaving markets to decide who wins – hotels or Airbnb providers. So, charge Airbnb hosts the same tax rate you charge hotels and collect all the fees proportionately to track the hotels’. Once you do those, allow market forces to do the job. It is very possible we may not even need hotels in the future, and if that happens, let it be. But do not stunt Airbnb through arbitrary ban. Be fair and let customers decide the winners.

Why Airbnb Struggles In Nigeria

LinkedIn Comment on Feed

The good news about these stuffs (Airbnb, Uber Facebook etc )is that my House, Cars, Phones/laptops etc which could have just been liabilities can be transformed into Assets and bring incomes.
Since what they do solely is to close the gaps between potential services suppliers and services buyers, they play role of income redistribution.

Government area of interest should be on Tax generation and security/safety of the citizen (host and the guest).

Meanwhile Investment of companies in the Hotels, Printing and Logistics businesses needed to be protected because of the fact the established business are real employers of labour. I will suggest that Government therefore put higher Taxes on both Airbnb and the host to save the economy.
Since Airbnb operate at near zero cost, they can always operate at profit. Let them pay higher Tax. The host bears the cost.

The big players are on the receiving ends because of their huge operating costs and admin cost which make their cost high.

The game has already entered Printing business in Nigeria. The software company makes money from the buyer and also charge the printer for using their platform. It is challenging!

Another Comment

The only confusion here is that the Hotels Associations have not told us what exactly needs to be regulated: pricing or business model? It’s a different thing asking the government to save your dying business, in that case – you have the right to do so; but also note that you cannot always get what you ask for.

If we believe in free enterprise, both hotels operators and Airbnb providers are out there to make money, the only thing government should care about, aside from safety is how much comes in as taxes; anything else is more or less a harassment.

Lobbying is fundamental part of political governance, so as Hoteliers lobby the government, the Airbnb providers should also lobby; no one has a superior argument, it’s all about how you see it.

Again, we will always need the big hotels, for various purposes, beyond lodging, you cannot have big conferences or functions in Airbnb provider’s apartment; so the hotels will always be there. Since hoteliers cannot compete in bed and breakfast prices with Airbnb providers; they should reinvent their business model and shift more attention elsewhere.

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