Shar­ing econ­omy EX­PLOITS LOOP­HOLES

EX­PLO­SION IN SHORT-TERM RENTALS CAUSES PROB­LEMS FOR HO­TELS, RE­DUCES TAX REV­ENUES

The Nation - - FRONT PAGE - NOPHAKHUN LIMSAMARNPHUN

LE­GAL LOOP­HOLES and lax reg­u­la­tion of the ho­tel busi­ness have led to a large num­ber of un­li­censed ho­tel op­er­a­tors and un­reg­is­tered guests in ma­jor tourist des­ti­na­tions in Thai­land, ac­cord­ing to govern­ment and pri­vate sec­tor of­fi­cials.

In ad­di­tion, the widely-pop­u­lar shar­ing econ­omy has prompted new gen­er­a­tions of prop­erty own­ers, con­sumers and hol­i­day­mak­ers to use on­line and mo­bile plat­forms to rent out their units or to book hol­i­day rentals and other forms of ac­com­mo­da­tion.

Su­pawan Tanomkieatipume, pres­i­dent of the Thai Ho­tels As­so­ci­a­tion, said the shar­ing econ­omy could not be stopped, be­cause more and more con­sumers pre­ferred to use these plat­forms rather than con­tin­u­ing to use the ser­vices of tra­di­tional ho­tels.

How­ever, she said, many ho­tel op­er­a­tors have also adopted the new tech­nol­ogy be­hind the shar­ing econ­omy and var­i­ous on­line plat­forms to ac­com­mo­date con­sumer be­hav­iour changes.

“We’re not dis­crim­i­nat­ing against on­line shar­ing and other plat­forms but we hope all the par­ties con­cerned abide by the law,” said Su­pawan.

The govern­ment is sup­posed to en­sure that ac­com­mo­da­tion own­ers reg­is­ter their guests prop­erly and fol­low other reg­u­la­tions on safety, as well as for­ward­ing their guests’ iden­ti­ties to im­mi­gra­tion au­thor­i­ties, she said. In ad­di­tion, they are re­quired to pay lo­cal and other taxes as li­censed ho­tel op­er­a­tors do.

So far, the govern­ment has been lax on en­forc­ing these reg­u­la­tions while the num­ber of con­do­minium and other pri­vately owned ac­com­mo­da­tion units serv­ing tourists and other guests con­tin­ues to sky­rocket.

At present, the In­te­rior Min­istry and lo­cal govern­ment agen­cies have ju­ris­dic­tion over ho­tel and other ren­tal ac­com­mo­da­tion op­er­a­tors.

Tourism and Sports Min­is­ter Weerasak Kow­surat says cur­rent Thai ho­tel law al­lows in­di­vid­ual prop­erty own­ers a max­i­mum of four ren­tal rooms that can ac­com­mo­date a max­i­mum of 20 guests. They can op­er­ate like a ho­tel or other ac­com­mo­da­tion providers with­out hav­ing to reg­is­ter as op­er­a­tors.

This is seen as a le­gal loop­hole and has led to a fast-grow­ing num­ber of condo and apart­ment units be­ing rented to tourists, es­pe­cially in Bangkok and other pop­u­lar tourist des­ti­na­tions, as on­line book­ing and shar­ing plat­forms ex­pe­ri­ence phe­nom­e­nal growth, in­clud­ing Airbnb, Book­ing.com and Agoda.

Airbnb and Book­ing.com rep­re­sen­ta­tives could not be reached for com­ment.

Crit­ics have said un­reg­u­lated ac­com­mo­da­tion op­er­a­tors have con­trib­uted to the rise of visa over­stay­ers and cross-bor­der crim­i­nals us­ing the coun­try as a hid­ing out­post.

Ac­cord­ing to Su­pawan, Thai­land has about 300,000 to 400,000 li­censed ho­tel rooms but the ac­tual num­ber of ho­tel rooms and other rentals be­ing used is thought to be dou­ble those fig­ures.

A huge but largely un­known num­ber of ho­tels and other forms of ac­com­mo­da­tion are nei­ther reg­is­tered nor pay­ing taxes prop­erly, said Su­pawan.

This has neg­a­tively af­fected law-abid­ing hote­liers due to the wide­spread un­fair com­pe­ti­tion.

“We have re­ported this sit­u­a­tion to the govern­ment which is los­ing a lot of tax rev­enues from these un­reg­is­tered ho­tel and ac­com­mo­da­tion providers,” she said.

Re­gard­ing Airbnb and sim­i­lar pri­vate ren­tal ac­com­mo­da­tion ser­vices, a court in Prachuap Khiri Khan province has ruled that rent­ing out condo units to tourists is not le­gal.

Udom Srimaha-chota, vice pres­i­dent of the THA and a ho­tel owner in the tourist re­sort of Hua Hin in Prachuap Khiri Khan, re­cently sub­mit­ted a let­ter to the province’s gover­nor, urg­ing lo­cal au­thor­i­ties to take le­gal ac­tion against those turn­ing their condo units and other pri­vate prop­er­ties into daily tourist ac­com­mo­da­tion.

Udom said some condo projects in Hua Hin and other nearby re­sort towns were also al­low­ing tourists to stay in their un­sold rooms and charged them on a daily ba­sis, in vi­o­la­tion of the ho­tel busi­ness law.

The un­reg­u­lated ser­vice, says Udom, has led to safety, se­cu­rity and other prob­lems for tourism and other au­thor­i­ties, since guests are not prop­erly reg­is­tered with lo­cal and im­mi­gra­tion au­thor­i­ties. There is also no proper tax col­lec­tion.

Many on­line and other ad­ver­tise­ments pro­mote condo units and apart­ment rooms as tourist ac­com­mo­da­tion in Hua Hin with­out hav­ing the proper li­censes, Udom added.

On the shar­ing econ­omy, Weerasak said the fast-grow­ing trend among tourists to use on­line plat­forms such as Airbnb for ac­com­mo­da­tion had mul­ti­ple con­se­quences.

In his opin­ion, the shar­ing econ­omy was sup­posed to en­able peo­ple with sur­plus ac­com­mo­da­tion to rent it out but this was be­ing widely abused.

“For ex­am­ple, you may rent out a room at your own house to guests but this has turned into a com­mer­cial ac­tiv­ity for many peo­ple who buy or in­vest in mul­ti­ple condo units and rent them out to tourists on a daily ba­sis, just like ho­tels,” he said.

He ad­mit­ted that there were le­gal loop­holes in the Thai ho­tel busi­ness law, in­clud­ing an al­lowance for land­lords to not need a ho­tel li­cence un­less they had more than four rooms or guests ex­ceed­ing a to­tal of 20.

In re­sponse to this trend, au­thor­i­ties have en­cour­aged un­li­censed op­er­a­tors to re­port their guests to au­thor­i­ties, but en­force­ment of this has not been strict.

Weerasak also noted that li­censed ho­tel op­er­a­tors had faced un­fair com­pe­ti­tion from these op­er­a­tors, who should be re­quired to re­port the names of their guests to im­mi­gra­tion of­fi­cials as well as pay lo­cal govern­ment fees and taxes.

Fur­ther­more, said Weerasak, there was also the mat­ter of pro­tect­ing other con­do­minium res­i­dents, in par­tic­u­lar the neigh­bours of units be­ing rented out daily, whose qual­ity of life was neg­a­tively af­fected by the ac­tiv­i­ties and be­hav­iour of guests and tourists stay­ing at the same build­ing.

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