Tax First, Ask Ques­tions Later

The Star (St. Lucia) - - BUSINESS - By Chris­tian Wayne

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 agri­cul­ture la­bor to the ser­vice sec­tor. That lack of in­no­va­tion is ap­par­ent in much of the leg­is­la­tion that gov­erns the sin­gle most im­por­tant in­dus­try to the re­gion. To be fair, some Caribbean coun­tries are more pro­gres­sive than oth­ers re­gard­ing travel leg­is­la­tion, but be­fore we start throw­ing around phrases like “tough 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

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 travel 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 pri­vatein­ter­est 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 its 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 tiny coun­tries like Saint Lu­cia, 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.

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

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