Adrian Loveridge Column – What is Airbnb?

Despite all the current challenges, according to news agency Reuters,

San Francisco based home sharing giant, Airbnb, is scheduled to launch an Initial Public Offering (IPO) possibly in this December.

Pundits have widely speculated that it could achieve a company valuation of more than a mind boggling US$30 billion, citing the justification was to take ‘advantage of the unexpected sharp recovery in its business after the Covid-19 pandemic roiled the travel industry’.

If the prediction materializes, it will become one of the largest and most anticipated of all U.S. stock market listings during 2020.

The company said in July ‘that customers had booked more than 1 million nights in a single day for the first time since 3rd March’.

Vrbo, one of Airbnb’s biggest competitors, owned by travel conglomerate, Expedia Group, appeared to confirm this optimism, by reporting that they had returned to bookings growth in June.

Therefore now may be an opportune time for Airbnb to access the public capital it most likely ‘desperately needs’, while investors may be enticed to buy the IPO based on improving trends.

Airbnb’s chief executive officer, Brian Chesky, has publicly stated ‘we’re going to keep our options open’ regarding the listing, despite writing a letter to employees in May ‘that its business had been hard-hit and revenue for the year was expected to be less than half of what the company earned in 2019’.

Announcing at the same time that Airbnb was letting go nearly 1,900 staff members or a quarter of its workforce worldwide.

No-one can doubt the phenomenal growth of Airbnb from its humble origins in 2007 when the initial three partners rented out a spare apartment loft space with inflatable air mattresses serving as beds, until it currently boasts representation in 191 countries across the globe.

Quite remarkable when you consider the United Nations lists of total of 193 member states worldwide.

Speculation has remained rife for years on what the overall Airbnb influence, negative or positive, has been on the traditional hotel and other accommodation sectors across all major markets.

The much respected Smith Travel Research performed a study across 13 global markets and their conclusion may have surprising reading for some.

  • Airbnb occupancy was the highest in markets where hotels had high occupancy.
  • Hotel occupancy was significantly higher than Airbnb occupancy.
  • Airbnb guests typically stayed longer than the average hotel guest, with roughly half of Airbnb room nights coming from trips of seven nights or longer.
  • Airbnb’ share of business travel was substantially smaller than its share of leisure travel.
  • Hotel average daily rates (ADR) were generally higher than Airbnb rates.

Experts commonly agree that any real comparison is viewed a bit like apples and oranges, but if you look across our region, despite the emergence of Airbnb, annual average hotel occupancy has remained fairly stagnant for a decade.

This is, perhaps, an area where a great deal more evaluation is needed and while our Government has the use of a greatly underutilized abundance of salaried civil servants, they may consider it a suitable time to research and produce more accurate local results that could prove invaluable in effective marketing strategies.

The Adrian Loveridge Column – Rise of Airbnb

It seems almost incomprehensible that a simple impromptu idea fashioned just ten years ago, has grown into a company that is now estimated at being worth US$31 billion or a higher valuation than Expedia, Hilton or American Airlines.

From the conception days of buying three air mattresses to place on the floor in a loft room to help offset their rental property in San Francisco, the three founders, Brian Chesky, Joe Gebbia and Nathan Clecharczyk are now holding shares, which individually the pundits estimate are presently worth US$3.7 billion.

The company of course is Airbnb.

Despite these staggering figures Airbnb earned ‘just’ US$100 million last year from US$2.6 billion in revenues or a return of around 4 per cent. According to Forbes its larger publicly traded competitors have margins of about 27 per cent.

The concept is a really simple one, connecting people who have vacant homes and apartments with people wanting to rent them. However, not content with accommodation only, the company has diversified into selling guided tours with Experiences and helping with restaurant reservations through its partnership with Resy.

Airbnb’s Chief Executive Officer (CEO) Brian Chesky’s plan, such as it is, is to draw loosely on Amazon for inspiration, turning Airbnb into an everything store, but for travellers. Chesky hopes that a billion people will use Airbnb by 2028 (only another ten years away) which represents a giant leap from the roughly 400 million people who have stayed in an Airbnb registered property in the decade since start-up.

With 100 million people who have already stayed in an Airbnb so far this year, that stated objective does not sound too far-fetched.

What many forget is that Airbnb was not an overnight success story.

Originally called Air Bed and Breakfast, 12 months after the concept was implemented, the founding trio, were only taking 10 to 20 reservations a day. So they turned to seven so called ‘angel investors’. In return they received five rejections and two ignored emails. The ‘ask’ at that time was for 10 per cent of the company for US$150,000, which would now be worth an estimated US$3 billion at perceived market value.

Apparently the biggest single obstacle, in the early days, was that potential renters were not comfortable inviting strangers that they had met on the internet to stay in their homes. Or as co-founder, Joe Gebbia, so accurately articulated ‘ it was a real battle to figure how you can cross this bias that was working against us, that strangers equal danger’ adding ‘it’s something that we’ve all been taught since we were kids’.

They began staying with Airbnb hosts to learn what needed to be done, built out a peer review system so people could rate each other, added round-the-clock customer service and dramatically improved the quality of the website linked images.

The company now has over 5 million property listings and on one single night during August this year, a mind boggling 3.5 million guests stayed at one of those listings.

As the outside competition grows, creating a negative impact on Airbnb’s accommodation supply problem, the speculation mounts in financial circles, exactly when the company will be taken public.

The Adrian Loveridge Column – Online Booking Agents Are the Disruptors

It’s now almost impossible to comprehend that only 25 years ago, Online Travel Agencies (OTA’s) did not exist. Today these third party booking platforms dominate the entire travel industry in almost every aspect of supply and service.

Of the various entities that stand out is the Expedia Group, originally founded as a division of Microsoft in October 1996 before being spun off in 1999 and then ‘acquired’ by a number of successive entities over the subsequent years. While the name Expedia is instantly recognizable for many, the group is made up of a large number of associated and owned companies all playing their part in the overall success of core business including Travelscape, Vacationspot, Classic Custom Vacations, Hotwire, Car Rentals.com, Cruise Ship Centers, Egencia, SilverRail, Hotels.com, Trivago, Wotif, Travelocity, Orbitz, Egencia, Cheap Tickets, Traveldoo and Home Away.

The company’s mission statement is ‘Expedia Group drives incremental demand and direct bookings to travel suppliers, provides advertisers the opportunity to reach a highly valuable audience of travel consumers, powers travel bookings for some of the world’s leading consumer brands and gives travel agents direct access to one of the broadest selections of travel products and services anywhere’.

HomeAway which Expedia acquired in 2015 for US$3.9 billion is one of the main rivals to Airbnb and according to sources boasts over one million alternative lodging listings across 190 countries.

Interestingly, HomeAway has recorded the largest growth of any of the many corporate divisions in recent times, reflecting the overall demand for alternative accommodation experiences and the increasing trend by consumers trying to secure better value for money.

In reality this means they have a product that covers every possible holiday accommodation requirement spanning over every conceivable market demand.

As one of Expedia’s own staff recently and graphically explained was that while Expedia offers the big box, or larger hotel choices, you can also book a self catering option or intimate bed and breakfast property within the same or associated company.

It is probably one of the best examples of a truly integrated corporation or as they artistically describe it on their website ‘the world’s travel platform’.

More recently, a new division called Local Expert has entered the market offering 25,000 plus activities in over 1,000 destinations involving over 4,000 worldwide local partners, allowing holiday makers to research and book various attractions and activities prior to arrival.

Their massive marketing and promotion machine highlights our tourism offerings to a level of exposure that individual partners could seldom dream of experiencing in paid advertising.

The Expedia Group currently has a trading value of US$16.84 billion.

How important are they to our tourism sector?

Well, according to media reporting they are ‘The single largest producer of business to the island (Barbados) for all markets combined’, so would it not be foolhardy not to work constructively with them?

The Adrian Loveridge Column – Local Hotelier Sounds Off on FLOW ad Ask a Question of Airbnb

Seemingly never far from controversy or hoisting its own petard, Airbnb has recently claimed that it has generated US$6.5 billion for restaurants around the world in the last 12 months.

Across the 10 European cities cited in the report, including London, Paris, Berlin and Barcelona, guests have spent more than Euro 2.5 billion, Euro 700 million more than the previous 12 months.

It’s a pretty bold statement, apparently made without any substantial evidence to support it.

In London alone, guests (Airbnb) have spent GB Pounds 522 million in local restaurants since September 2016, GB Pounds 79 million up on the previous period.

According to Airbnb, its guests are spending an average of US$40 – $100 per night in restaurants.

Almost half (43 per cent) of this spending is in the neighbourhood in which they are staying.

Let’s assume for a moment that the figures quoted are even remotely credible and can be supported with facts, does this relate to increased spending in our restaurants on Barbados, with the quoted 16,000 Airbnb guests who came to our shores last year?

I sincerely hope that our restaurateurs will let their views be known and if they have benefited from the chanted Airbnb claim, either individually or through the trade body, notably the Barbados Hotel and Tourism Association (BHTA).

Perhaps a simple straw poll could give our planners and policymakers some more insight to the Airbnb effect and the true contribution it is making?

I would like to move slight away from tourism in this part of the column, but not too far, as sustained communication plays a critical part in the sector’s survival and growth.

Last week, hundreds and possibly thousands of land line subscribers were denied use of their paid service for at least a large part of the working day. This meant not only voice communication by access to the widely used Skype.

Tardily, the virtual monopoly provider eventually posted an advisory on their Facebook page, but the vast majority were left trying to report the faults on the 1 800 ‘Customer Service’ number which remained ‘busy’ or simply rang and rang unanswered for hours.

Most consumers fully understand that things can go wrong, but given this company’s appalling history of poor customer service across decades, despite their distinct trading advantages and a record of extracting above competitive rates, why is it they simply are not be able to get it right after so long in business?

Compound the frequent loss of service with months of challenges while they try and correct ongoing problems with their payment portal and you are left to wonder why our supposed regulatory authority, the Fair Trading Commission, has not been more proactive in ensuring the company provides us consistently with what we are paying for.

What is also particularly aggravating is that named senior managers within this company, entrusted (and presumably paid) with the responsibility of ensuring consistent service delivery feel no compulsion to respond to consumer emails.

Maybe they think posting a delayed advisory is enough to calm long suffering disenchanted consumers, but in other developed countries, financial compensation would be demanded and forthcoming. So why do they believe they can get away with it here?

Perhaps it is long overdue that the many individuals and businesses who are financially disadvantaged by this poor service consider taking a collective class action lawsuit against the company to force them into finally addressing and remedying the issues.

The Adrian Loveridge Column – Airbnb Should Be Taxed Like Other Businesses in the Sector

According to various media reports the controversial alternative home renting portal, Airbnb has already signed over 300 regulatory tax collecting agreements worldwide.

Bearing in mind the cash strapped situation our Government finds itself and the recent imposition of yet more taxes, which according to private sector spokespersons have further dampened spending and any hope of stimulating the economy, it is difficult to understand why our politicians have been so reluctant to follow the lead of these 300 other countries or territories.

Among the latest to sign-up and agree to collect tax contributions is the Mexican state of Quintana Roo which include the tourism popular beach destinations of Cancun, Playa Del Carmen and the Riviera Maya. Airbnb claims 73,000 listings in Mexico which includes 6,200 hosts representing 10,000 rooms in this particular state.

The regulation sets a 3 per cent state lodging tax, the first in Latin America, on all Airbnb facilities taking effect on 1st October 2017. Between the 6,000 plus offerings in Riviera Maya and another 4,000 in Cancun and Isla Mujeres, state authorities report that 270,000 tourists stay in Airbnb locations each year in Quintana Roo for an average of five nights in groups of three persons.

This latest regulation is the second to be implemented in the country after an identical agreement was signed with the capital, Mexico City, in July. The National and Bloomberg reported ‘that this new Airbnb levy equals what Mexico City hotels pay in taxes’.

We have some pretty big numbers in Mexico’ said Nathan Blecharczyk, Airbnb’s co-founder and chief strategy officer, who has a quoted personal net worth of US$3.8 billion, reported The National.

Home-sharing is very popular there, (Mexico) and the local Government is excited about the benefits we can bring’.

So to repeat the question I raised earlier, why is our administration so reluctant to follow the example of over 300 other largely tourism driven destinations to generate taxes which could help reduce the country’s crippling debt, while at the same time being so agreeable to granting unilateral tax concessions to singular players who have yet to add a single new additional room to Barbados and compound this by selling off other taxpayers assets at below market prices to others?

What is particularly irksome is that while this tiny minority of people are benefitting from the majority’s efforts and fiscal contribution, they are avoiding (and some may say evading) taxes that the rest of us are forced to pay in increasingly burgeoning amounts.

This, while at the same time that our outstanding (over 4 years) due and payable VAT returns remain unpaid, which in effect is propping up those paying little or insignificant amounts of taxes. In our own case, tens of thousands of Dollars are owed, without beneficial interest or penalties and it is difficult to imagine, it’s just our small business that is being victimised.

This can hardly be an exemplary model for encouraging small businesses to survive or possibly flourish. Government must finally understand that the only way we can hope to emerge intact from our current perilous financial position, is to assist practically those who could make all the positive difference.

The Adrian Loveridge Column – Airbnb Push

Adrian Loveridge

I must admit that after hearing the phrase Memorandum of Understanding (MoU) after the still to be fully explained 3S SRL (road widening project), then more recently the companies associated with the Barbados Sandals development, CPH Property Holdings and Grand Cass Management, not of course forgetting the Cahill saga, it is perhaps no wonder that many of us have developed a natural concern over these arrangement’s. It seems they are an extraordinary easy vehicle for elected Governments to keep the populous and taxpayers, in at least partial darkness.

Much discussed Airbnb have signed a number of MoU’s and one of the most recent was with the World Bank which largely- the words of a recent TravelMole article- ‘effectively washed its hands of tourism in the couple of decades ago after it assisted countries to develop high density mass tourism as a condition of aid in the 1970’s and 1980’s’. Destinations that attracted World Bank treatment then included Tunisia, Bali, Morocco, Kenya and The Gambia. The bank still has some US$4 billion of hotel investments left over from their ‘heavy-duty tourism development years’.

It now appears it is changing its objectives and together Airbnb and the World Bank will examine ways in which emerging destinations use new technology and platforms which include Airbnb ‘to create economic opportunities for communities that have not traditionally benefited from tourism and hospitality’.

Initially pilot projects will begin with India and Sri Lanka, but I sincerely hope that combined efforts will not be restricted to the giants in tourism and small developing states like Barbados and elsewhere within the Caribbean.

Resulting from the just concluded ‘Tourism Knowledge Exchange 2017: Delivering on Inclusion through Tourism’ the consensus was that ‘sustainable tourism is no longer a niche market but as a core contributor to the Sustainable Development Goals (SDGs).

Personally I view this as a critical factor in our next step in further developing tourism on Barbados. Frankly we have so much more to do if we have any real hope of maintaining a desirable, often called iconic destination. I hope that Airbnb will use this amazing opportunity to play its part in making our myriad of accommodation offerings and the destination more sustainable. Over the years I have lobbied, seemingly in vain, to develop rural tourism and create ‘centre’s’ of employment outside the traditional beach, city and urban areas. I still feel there is an untapped significant market for a small group of Plantation Inns, rather like St. Kitts and Nevis have developed so well. And whether these are created and put into use by a single owner or owners or undertaken by a group of likeminded Airbnb type co-operative partners, each vested with a financial interest, it really does not matter. Airbnb, with its overall size and influence could also play a much more significant part in areas like re-cycling and help us become a model of sustainability.

At least to me, this would negate the views in some quarters that tax avoidance and regulation are not the main concerns, but that they really want to be a responsible committed tourism partner.

The Adrian Loveridge Column – Airbnb Participants Possibly Violating Mortgage Agreement

Adrian Loveridge

According to a recent UK Telegraph newspaper article, almost 80,000 British home owners are earning income by renting part or all of their homes through Airbnb – ‘and this number is doubling by the year’.

The popularity of the short term rentals website was boosted further in last April’s budget when the Chancellor of the Exchequer gave a GB Pounds 1,000 tax break for people who make money out of their property. This will result in many Airbnb landlords escaping tax altogether, but apparently copious numbers of these seem unaware that this sideline rental business could lead to trouble with their mortgage lender, insurer, freeholder or local authority.

Under the heading Risks to your mortgage, the publication points out ‘Home owners letting a property directly, run the risk of invalidating the terms of their mortgage, meaning that in a worst-case scenario a lender could ask for full repayment’. The head of residential property at leading law firm, Slater and Gordon, clearly articulated that ‘Often a mortgage arrangement won’t allow you to sublet the property – so depending on the terms of the mortgage you run the risk that your mortgage company would take action’.

Bearing in mind the extra-ordinary growth of short term rental in this ‘sharing economy’ Airbnb type accommodation offering on Barbados, I believe that our banks, financial institutions, insurers and all lenders offering mortgages have a moral obligation to jointly spell out the rules.

I have recently seen whole houses being offered on websites like Airbnb, so where is the fine line of acceptance by the lender?

Certainly in Britain, there appears to be no doubt. Shawn Church of money broker firm, Private Finance stated ‘If you’re letting the entire house property, that is likely to be in breach of standard mortgage terms, and you should get the consent of the mortgage lender’. It also brings the validity of the insurance into question and whether or not that property is properly covered, if it is being used for a purpose outside normal lending criteria and being occupied by persons other than the borrower.

In fairness to Airbnb, they do offer ‘host protection insurance’, but it is currently only available in 15 countries which does not include Barbados. Did the recently signed MOU (memorandum of understanding) between the Caribbean Tourism Organisation and Airbnb take this into account?

So exactly how does the person(s) staying in a Airbnb property know if they are adequately covered by insurance including critical areas like public liability?

What research and ongoing monitoring has, or is being done by our locally based insurance companies?

Britain also has laws and regulations which are intended not to disadvantage those people genuinely trying to purchase their first home, including a requirement that anyone who lets their house out for more than 90 nights a year, requires special planning permission, which is partly intended to deter property speculation.

The Telegraph quotes that 33,715 properties are available through Airbnb in London, with more than half being entire houses or flats and 65 per cent of which are available for more than 90 nights a year, which seems to make an absolute nonsense out of self regulation.

The Adrian Loveridge Column – Level Playing Field Required to Encourage Greater Sector Investment

Adrian Loveridge

Adrian Loveridge

Sometimes it is fascinating how numbers can be used to create what at best is a false impression and at worse what can simply be described as ‘fake news’.

In one media report a Government spokesperson is boasting of the increase one property on the South coast has made to recent arrival numbers. The fact that seems to be lost is that this hotel currently has just 280 rooms, the exact same number that both of the previous operators managed. Even achieving at year round average occupancy level of 85 per cent that remains a maximum of 25,636 guests based on two persons per room and an overall 7 night stay, whoever is operating the hotel.

To achieve this re-branding, Government extended extraordinary unilateral tax concessions previously unknown on Barbados and despite all the rhetoric these are still not available in the identical format to any other organisation, anywhere!

Yes when additional rooms under construction are completed and online ready for occupation, this could and probably will make a positive difference to arrival numbers and attracting additional airlift.

Then go to another section of the media and, if the reporting is accurate, where on a recent visit by the Public Policy Head in Latin America and the Caribbean for Airbnb, Shawn Sullivan, stated that that company accommodated some ‘16,000 visitors’ on Barbados last year which represented around 2 per cent of all long stay arrivals. He also said that there were around ‘1,100 Barbadian homeowners’ Airnb host properties on Barbados, so it is logical to conclude that this amounts to far more actual rooms than the single property previously mentioned.

So what is the difference? Well first of all the taxpayer and I suspect our current administration is not privy to the audited accounts of the branded south coast hotel and has no idea what proportion of its revenue actually comes to Barbados at all. As the vast majority of its consumables are imported free of taxes and duties, this again is an unknown local benefit.

To be fair Government also has little or no evidence of the net financial contribution that the eleven hundred plus Airbnb lodging options make to the economy, but there is a massive disparity.

Almost without exception the Airbnb properties would not have benefitted from any tax concessions due to the scale of their average size and number of rooms. This makes most, if not all of them in-eligible for duty free local or imported items necessary for their operation.

Therefore it is perfectly reasonable to conclude that more of the Airbnb earnings are spent locally and that Government obtains and retains a higher level of fiscal benefit in proportion to their turnover.

As a three decade operator of a small hotel, I am not advocating for a millisecond that Airbnb and similar accommodation offerings are given the same unique preferential concessions as granted to the single hotel in Christ Church.

But if there is ever going to be anything close to a level playing field to encourage greater sector investment, so that we as a country can maximise our tourism earning potential, this situation has to be addressed.

The Adrian Loveridge Column – Call to Remove VAT On Accommodation and Breakfast to Spur Growth

Adrian Loveridge

Adrian Loveridge

The Government of Argentina has taken the bold move to remove, with immediate effect, the 21 per cent VAT (value added tax) on accommodation and breakfast, where included in a package element on hotel stays for foreign tourists. There are of course conditions. To qualify, payment must be made by a foreign credit or debit card and the name, address, residency and passport or ID number supplied. If bookings are made by travel agencies or tour operators, they will need to provide this information on behalf of their clients.

According to their Tourism Minister, Gustovo Santos, it is estimated that it will cost the administration around US$38 million annually, but the projected additional 95,000 visitors that it could attract will generate around US$70 million.

He added that ‘the measure emphasised the importance of tourism to the Argentine economy and the need for a simple, direct and automatic mechanism to reimburse VAT to foreign tourists to improve the competitiveness of the Argentine tourism industry’.

Already the decision has had an almost immediate effect of increasing airlift into Argentina with a new code sharing agreement signed between the national carrier Aerolineas Argentinas and Air Europe making new routes a reality and opening up greater parts of Europe.

Dynamic fast growing low cost carrier, Norwegian Air has formed a new holding company Norwegian Air Argentina S.A with plans to position between six and ten B737-800 and B737 Max 8 aircraft in three cities including Buenos Aires, Cordoba and possibly Mendoza. The idea is to feed into the long haul routes with a Gatwick/Buenos Aires service planned for a November 2017 start-up.

The Max 8 variant which Norwegian will operate has a range of 3,515 nautical miles giving almost infinite two city connecting possibilities. The airline has learnt from their Gatwick transatlantic flights that around 20 – 30 per cent of passengers have transferred there, mainly from Scandinavia, so they clearly are looking at the bolster potential.

The anticipated increased number of visitors to Argentina will also drive additional hotel and accommodation plant construction, restaurant patronage, car rental and all the other requirements they will bring including generating thousands of new jobs.

Whether our Government is brave and bold enough to follow the Argentina example remains to be seen, helping offset our reputation as a high cost destination and grow new markets, but a 21 per cent decrease in the accommodation portion cost of a holiday certainly sounds compelling, especially if it can be offset by a greater spend and occupancy overall.

Currently many of our registered hotels enjoy a reduced room rate of VAT at 7.5 per cent, but there has been increased pressure by the non-traditional accommodation sector including what many consider the hundreds and possibly thousands of alternative lodging options like those offered by Airbnb and alike, to garner equal benefit.

I can understand their point, but with privilege comes responsibility and perhaps this presents an opportunity of embracing companies like Airbnb and their vast resources, to finally have a minimum standard of licensing for every accommodation provider. The trade-off could be modelled on the proposal made by Airbnb last month with Costa Rica, where the sharing economy platform has offered to collect sales taxes on behalf of Government from the stated 5,500 Airbnb hosts it represents in that country ‘according to company data’.

The Adrian Loveridge Column – Airbnb Strikes Strategic Alliance with Resy

Adrian Loveridge

Adrian Loveridge

Airbnb has taken yet another step in its quest to broaden its influence beyond accommodations, according to a recent article in the industry news source, TravelMole. It has led a US$13 million funding round in the dining booking app Resy Network Inc, which values that company at around US$70 million, not bad for a business that was only founded in July 2014 from US$2 million in seed funding and currently employs only about 30 persons.

Resy currently lists around 1,000 restaurants in 50 US cities and handles reservations via a real-time cloud-based system for around 1.5 million diners each month. With the interest expressed by Airbnb, it is inconceivable that the concept would not be taken globally within the foreseeable future and considering our culinary offerings on Barbados, it just might be prudent to become involved as a destination, in the early expansion stages.

Airbnb had already agreed a strategic partnership in November 2016 as parts of its ‘Trips’ expansion into activities and the collaboration will see a restaurant booking option added to the existing Airbnb platform.

It the words of Airbnb’s Chief Executive Officer (CEO), Brian Chesky, ‘Many of our most-treasured travel memories come from experiencing the local food. Helping people find and book incredible local restaurants is a key part of us moving beyond just accommodation to focus on the whole trip. We cannot think of a better partner that Resy to help make this possible’.

Resy CEO, Ben Leventhal, added ‘Resy and Airbnb share a vision for how people experience local venues. We’re committed to building a product that allows anyone, anywhere, anytime, to live like a local.’

So from a consumer viewpoint, what is the attraction of booking through the Resy portal? To quote its own website ‘Resy is re-inventing hospitality using technology. That means you get the best booking experience and reservation selection anywhere. Short story, if you want that booth on Friday night at 8pm, then that’s what you get. No begging, no wait-and-see, no phone calls. Two taps and the table is yours. The best restaurants in the world use Resy to take reservations. Grab a seat, because not all reservations are created equal’.

Clearly with dining out, literally eating up a substantial proportion of a holidaymakers budget, I can see the appeal in wanting to secure the best table position possible, especially as in many cases of our restaurants boast enticing ocean views. While, there must be inherent costs to the individual restaurant partners, being part of this form of marketing just might open up and stimulate new avenues of business and awareness.

Many industry observers view this further Airbnb involvement in Resy as merely the tip of the iceberg. What next? Tours, attractions, activities, car rental, the world is their oyster and it seems only logical that other areas of the tourism product will be fully investigated and exploited soon.

The Adrian Loveridge Column – Airbnb and the TAX Conundrum

Adrian Loveridge

Adrian Loveridge

What can only be described as a battle royal to bring the ‘home sharing platform’ Airbnb into line with the traditional compliant taxpaying alternative accommodation providers is intensifying in the United States. In a recent report by AllTheRooms it is estimated that about US$440 million in tax would be payable if Airbnb had collection agreements with all 50 of the US states. The tax for one state alone, New York, is estimated at US$110 million based on revenue generated by Airbnb bookings. This is more than double the next highest tax bill in Hawaii at US$51 million.

These figures are based on the standard hotel tax rates currently collected in each municipality.

While New York Governor Andrew Cuomo has signed into law a bill that’s steps up enforcement against Airbnb hosts who violate short-term rental statues, the company is fighting back with a second law suit within four months against New York and officials of the city and state. Airbnb alleges, among other things, that the law violates its hosts’ rights to free speech and is ambiguous about whether Airbnb or its hosts would be liable for any violations.

It is clear that the Governor has some support, one travel trade publication recently highlighted a large sign as you entered a residential tower block in that city which boldly advised ‘Airbnb – renting is illegal in this building. If you rented through Airbnb you must leave this building or you will be escorted out by the police’.

For those of you unfamiliar with the website AllTheRooms.com, it searches many of the established accommodation platforms like booking.com, Expedia, Groupon, Hotwire, Jetsetter plus Airbnb, but also includes lesser known sites like Couchsurfing.

To put this in perspective, I put ‘Barbados’ into the search engine for two persons staying one week from 21st November and up popped a staggering 6,615 accommodation choices, or a mind boggling 40 lodging options per square mile.

Its mission statement boasts ‘Every room – Everywhere’ and from ‘Couch to castle – we’ve got your spot’ and perhaps most blatant of all ‘bringing you every room on the planet’.

This is the reality of doing business today and the question still remains, just how much longer Barbados as a destination can continue not to reap the full benefits of a level playing field tax collection?

While individual states within the US may eventually find ways of extracting proportional and comparable taxes from Airbnb, we simply lack the lobbying ability and frankly the creditability within the Caribbean to achieve those goals.

When Governments’ grant unilateral tax concessions to a single tourism player, which is then further negatively impacted by the majority of the generated revenue from that property remaining offshore, what moral argument can it raise or object to, when smaller players are simply trying creative ways to pay their bills?

It is really similar to why we failed so dismally to persuade the British authorities to eliminate the Advanced Passenger Duty (APD). How could you challenge the imposition of the tax, when at the same you were levying 17.5 per cent VAT on air travel, when that figure in many cases was higher than the APD? Would ‘we’ have been happier if the Brits imposed their 20 per cent VAT rate on all outgoing air fares, substantially increasing the cost of travelling to Barbados?

The Adrian Loveridge Column – Bed and Breakfast Pose a Risk

AirBNBIt was of course almost inevitable, but hopefully it will send a very strong message to our tourism planners and policymakers that if we portray ourselves as an ‘iconic’ or ‘aspirational’ destination that there are responsibilities that could arise with the perceived status.

After the collapse of a balcony at an Airbnb property in the southern English coastal town of Brighton which resulted in two men and two women being hospitalized with serious leg and arm injuries when they fell from the first floor flat into the basement, all sorts of questions are now being asked. These include the Chairman of the Association of British Travel Agents (ABTA), Noel Josephides, who questioned ‘did the host have a public liability policy which covered for the fact that the property was being rented’ and he queried ‘whether Airbnb has a duty to check the policy’.

Adding ‘if the host was a leaseholder, did he/she need permission from the freeholder before renting the property? If there was a mortgage on the property, then do the terms of the mortgage permit sub-letting? Does Airbnb have a duty to check such details and has the host followed Airbnb instructions’ he asked.

This is yet another enormously grey area with Britain, or maybe just England, leaving the European Union with Brexit. Currently existing EU laws embrace tour operators and what their obligations clearly are. This will all go out the window with Brexit, when the United Kingdom, or what may be left of it, is forced to draft and implement new legislation.

In the Brighton case, Airbnb has removed the property from its listing while ‘it investigates the incident’. But what does that statement mean in reality?

Will they have to hire impartial experts to fully investigate and what will be their obligations having taken a percentage of the accommodation element?

According to their website, Airbnb states that ‘it provides protection insurance against guests injuring themselves or damaging a property, which is automatically included in every hosts account’. But what is that level of cover, who will ensure that it is adequate and applied satisfactorily without forcing the consumer to employ expensive legal counsel?

Tour operators, hotels and even small Bed and Breakfast owners are tightly regulated, but there is currently no requirement for private properties rented on sharing sites like Airbnb to be inspected for health and safety issues. An Airbnb spokesperson stated ‘there have been more than 80 million guest arrivals on Airbnb and problems for hosts and guests are extremely rare’.

Personally, I do not find this statement very assuring and with such important issues do not feel voluntary self regulation is the answer.

While not wanting to single out this company, as there are many other similar operations. You only have to look at how HomeAway has partnered with UEFA Euro2016 (www.homeaway.co.uk/lp/euro2016/ to see another example of widespread non-traditional private lodging usage.

If we wish to project our destination reputation and with such a high percentage of unregulated accommodation providers, perhaps we can start by partnering with our insurance companies to find a simple way of ensuring every lodging option posts proof of public liability cover on individual websites and FB pages.

The Adrian Loveridge Column – A More Rustic Tourism Product to Add Value

Villa NovaI still find it remarkable that after so many years that such an exceptional property, like Villa Nova remains unsold and empty. Yes of course it has its geographical challenges competing with what is perceived as the traditional form of tourism accommodation, but when you have only 24 or so rooms to fill, there are always creative ways of marketing the product.

And anyone really studying what is known of our myriad of accommodation offerings will soon realise that it has changed dramatically in the last twenty years. Not that long ago, the CEO of Marriott hotel group boasted that they planned to add 30,000 rooms within that next year. The co-founder and CEO of Airbnb, Brian Chesky, countered hours later by stating ‘we will add that in the next two weeks’. Last week Airbnb announced that they were divesting into other areas of tourism by offering tours and sporting activities alongside accommodation. Prior to 2008 no-one had heard of Airbnb, but now they have over 1.5 million lodging listings in 34,000 cities across 191 countries, including hundreds of properties on Barbados. Nathan Blecharczyk, the Chief Technology Officer at Airbnb and rated by Forbes, as one of world’s youngest billionaires at the tender age of 32 years, stated ‘we’re thinking beyond accommodation’.

Adding ‘there was a demand from travellers for personal connections while travelling’ and the company ‘is looking at paring hosts and guests for tours, playing sport and other activities’. ‘But connecting with real people having a good time, that’s something not currently available in the professionalized world of hospitality’.

Several years ago while escorting our walking tours around the island I was dismayed by the number of former plantation houses falling into disrepair and in some cases dereliction. My idea at that time was to try and encourage the owners, either current or future, to turn them into a small chain of Plantation Inns, with around 12 rooms per property. It would have created rural employment centres, requiring gardeners, security officers, driver’s for beach shuttles, maids, chef’s and serving personnel among others.

Clearly our visitors are craving more ‘real’ experiences and while it is seemingly impossible to compete with the mass market mega resorts and low cost destinations, we can offer unique niches as in this case, rather similar to the plantation inns like The Hermitage, Montpelier, Nisbet and Ottley’s on the islands of Nevis and St. Kitts.

We seem, as a destination, to be missing a lot of what could prove invaluable information and data about our visitors and exactly where they all stay. While the subject of re-designing our airport landing cards has been discussed ‘ad infinitum’ and even if this is done there is no absolute guarantee that we can garner all the facts needed to make intelligent marketing decisions. But surely it would help and the statistics gleaned could better assist the entire industry spend their limited promotional budgets more productively.

Getting Hitched to Technology to Woo Tourists

Adrian Loveridge - Hotelier

Adrian Loveridge – Hotelier

If I had mentioned the name Airbnb a few months ago, I wonder, hand-on-heart, how many people could claim that they knew much about the company. Perhaps hardly surprisingly, as not that long ago it sold novelty cereal boxes to stay afloat to now emerge as a major threat to the hotel industry and ‘close to becoming one of the world’s most valuable startups’. If quoted plans materialise, private-equity firm TPG and boutique investment advisors, Dragoneer Investment Group, who are already in advanced talks will raise capital to put a value on what has been described as ‘the upstart home-rental site’ of US$10 billion. Mutual funds are being sourced through the strategic research platforms of entities including T Rowe Price Group and Fidelity and are also in discussion to join the group.

To put that it context, the combined share worth of Airbnb would equate to US$2 billion more than the entire InterContinental hotel chain. Last month Airbnb reported ‘that reservations were growing fastest in more exotic locations including Barbados, Marrakesh, the Bahamas and Greek islands’. It demonstrates graphically that travel was one of the first industries to be transformed by ecommerce during the first dotcom explosion.

Quoting from the Financial Times, ‘Airbnb’s rise has been meteoric. Founded in 2008 by roommates who rented out beds to help pay for their San Francisco loft, the company said at the end of last year that it had hosted more than 11 million guests in 34,000 cities and 192 countries around the world’.

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