Tourism, mu­sic and the dig­i­tal dis­rup­tors

Some in the in­dus­try op­pose the plat­form, but not SA Tourism

Sunday Times - - Business Times - By PEARL BOSHOMANE TSOTETSI boshomanep@sun­day­times.co.za

● The Guga Sthebe build­ing in Langa, Cape Town, is painted in bright colours and pat­terns, an eye-catch­ing breather from the muted tones that dom­i­nate the town­ship.

That venue — used as an arts and cul­ture cen­tre — played host last month to Airbnb’s two-day Africa Travel Sum­mit, which was at­tended by var­i­ous play­ers in the travel and tourism sec­tor.

Why host the sum­mit in Langa? Be­cause, as the com­pany’s head of global pol­icy and pub­lic af­fairs Chris Le­hane said, it char­ac­terised Airbnb’s aim to push so-called “in­clu­sive tourism”. And Cape Town is the most pop­u­lar South African des­ti­na­tion on Airbnb.

Dur­ing the sum­mit, the peer-to-peer ac­com­mo­da­tion com­pany re­leased a glow­ing re­port ti­tled “Airbnb in SA: The Pos­i­tive Im­pact of Healthy Tourism”.

Mil­lions of rands flow­ing in

Some of the key find­ings of the re­port, based on in­de­pen­dent anal­y­sis by lo­cal con­sul­tancy Gen­e­sis An­a­lyt­ics, were that since Airbnb was founded in 2008, peo­ple across Africa have earned more than $400m (about R5.8bn) from host­ing guests through the plat­form, with hosts in SA hav­ing earned $260m.

The re­port also states that two mil­lion guests ar­rived through Airbnb list­ings over that pe­riod.

The re­port says that be­tween June 2017 and May 2018, “host and guest ac­tiv­ity … gen­er­ated an es­ti­mated R8.7bn in eco­nomic im­pact” in SA.

It says “a sig­nif­i­cant ma­jor­ity — 65% — of hosts on Airbnb in SA are women, and hosts across the coun­try are us­ing their ex­tra in­come from host­ing to make ends meet and oth­er­wise af­ford to stay in their homes”.

If you looked only at the re­port, you might not re­alise that Airbnb has met fierce op­po­si­tion from var­i­ous stake­hold­ers in tourism and hospi­tal­ity across the world.

Ja­pan, for in­stance, re­cently barred hosts from rent­ing out their prop­er­ties for more than 180 days a year.

In SA, there have been calls for the ser­vice to be reg­u­lated, most promi­nently from the Tourism Busi­ness Coun­cil of SA.

Wary of change

Le­hane com­ments: “When elec­tric­ity was first in­tro­duced in New York in the 1880s, there was real op­po­si­tion. Peo­ple thought that light was gonna make the city less safe … Then the folks who con­trolled the gas lamp in­dus­try passed laws to ac­tu­ally ban elec­tric­ity. And it took about 20 years for peo­ple to adopt [elec­tric­ity].

“From to­day’s per­spec­tive, that seems a lit­tle crazy, but at the time every­one had to

You’re in­ter­sect­ing with gov­ern­ments, which tend to look at old so­lu­tions Chris Le­hane

Head of global pol­icy, Airbnb

fig­ure it out. Any time you have these ‘new things’, by def­i­ni­tion you’re in­ter­sect­ing with gov­ern­ments, which tend to look at old so­lu­tions for a new thing. You have in­dus­try op­po­si­tion, be­cause they’re look­ing at it from a com­pet­i­tive per­spec­tive.”

But in SA, the San Fran­cisco gi­ant is still op­er­at­ing freely, some­thing that could change soon.

The com­pany be­gan en­gag­ing with the govern­ment two years ago. Those talks have been in­ter­rupted by per­son­nel changes on the South African side, but Le­hane said Airbnb had started again to “es­tab­lish those re­la­tion­ships”.

Co-op­er­a­tion is a no-brainer

These in­clude close ties with SA Tourism, which part­nered with the com­pany for the travel sum­mit.

The CEO of SA Tourism, Sisa Nt­shona, said: “It would def­i­nitely be to our dis­ad­van­tage if we [didn’t] play or col­lab­o­rate with the world’s largest ac­com­mo­da­tion plat­form.”

He said SA Tourism also wanted in­clu­sive tourism. “Mean­ing how do we in­clude in the value chain the small, emerg­ing, typ­i­cally in­vis­i­ble play­ers? By part­ner­ing with Airbnb we give ac­cess to a small player in the ru­ral East­ern Cape or KwaZulu-Natal to be vis­i­ble to a tourist from Ja­pan who is look­ing for a home-stay ex­pe­ri­ence in SA.”

Home, or busi­ness?

Nt­shona said rather than reg­u­la­tion, the fo­cus should be on “stan­dard­i­s­a­tion”: “The key thing is mak­ing sure that Airbnb plays on the same com­pet­i­tive terms as other es­tab­lished or­gan­i­sa­tions.

“For ex­am­ple, if I have a home that is listed on Airbnb, it moves from be­ing a home, but now be­comes a busi­ness. So the rates and taxes that I pay can­not be res­i­den­tial but be­come com­mer­cial.”

Like­wise, if a house­keeper is em­ployed by a fam­ily who con­vert their home into Airbnb ac­com­mo­da­tion, the em­ployee is now work­ing in the hospi­tal­ity in­dus­try.

“There­fore we’ve got to make sure that the wages [and] the terms of em­ploy­ment are also con­sum­mate with what’s hap­pen­ing in the hospi­tal­ity in­dus­try … We’re re­ally look­ing at lev­el­ling the play­ing field so there’s no ex­ploita­tion of peo­ple, places or even rates and taxes.”

When it comes to the labour mar­ket, the Airbnb re­port stated that the plat­form sup­ports more than 22,000 jobs “across the broader South African econ­omy”.

Ac­cord­ing to a 2016 depart­ment of labour re­port on the hospi­tal­ity in­dus­try, the travel and tourism sec­tor di­rectly em­ployed about 679,500 peo­ple in 2014.

That num­ber in­creased in 2016 to 686,596 jobs (or 4.4% of to­tal em­ploy­ment), ac­cord­ing to Stats SA’s 2014–2016 Tourism Satel­lite Ac­count (TSA) re­port, re­leased in March this year.

Re­gard­ing em­ploy­ment num­bers, the TSA re­port said “SA does not have a di­rect mea­sure of tourism em­ploy­ment”. This makes it dif­fi­cult to es­tab­lish more pre­cisely Airbnb’s im­pact on SA’s labour mar­ket.

Fast-grow­ing sec­tor

Stats SA’s 2016 tourist ac­com­mo­da­tion re­port (re­leased last year) looked at the yearon-year growth of dif­fer­ent types of ac­com­mo­da­tion. The fastest-grow­ing was “other” (un­der which Airbnb would fall), which in De­cem­ber 2015 ex­pe­ri­enced growth of 31.6% from Novem­ber 2015, com­pared with the ho­tel sec­tor (in sec­ond place), which had growth of 13.2% over the same pe­riod.

Aside from of­ten be­ing cheaper than ho­tels, an ad­van­tage that Airbnb has over its com­pe­ti­tion are the “ex­pe­ri­ences”, in which your host is also es­sen­tially your tour guide.

Nt­shona believes that it would ben­e­fit tra­di­tional ac­com­mo­da­tion providers to evolve their busi­ness model to com­pete ef­fec­tively.

“Dis­rup­tion is good. Those tra­di­tional busi­nesses need to evolve in or­der to make them­selves rel­e­vant to the needs of the mod­ern-day cus­tomer. There’s no way that a ho­tel can con­tinue to ser­vice in the same model as it did 100 years ago.”

Has there been re­sis­tance within the hospi­tal­ity and tourism sec­tors to SA Tourism’s em­brace of Airbnb?

Ab­so­lutely, Nt­shona said. “It’s about choice. We should in no way box peo­ple in and say, ‘You will do the fol­low­ing.’ We should also in no way box busi­nesses to say, ‘You will look like this.’ Choices are driven by con­sumer needs, and as long as we have a big enough spread of choices we can be com­pet­i­tive and a des­ti­na­tion for tourism.”

Pic­ture: Esa Alexan­der

Cape Town’s At­lantic seaboard is the most pop­u­lar des­ti­na­tion in SA for Airbnb vis­i­tors.

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