New Tourism Bill has far-reaching consequences – Sakeliga

Organisation explains how AirBnB, hotel and tourism industry will be affected

This is how the Tourism Bill will affect the AirBnB, hotel and tourism industry in SA

13 May 2019

The new Tourism Amendment Bill, the so-called AirBnB Bill, at first glance does not appear to be drastic, but it has far-reaching consequences for entrepreneurs who rent out rooms in their homes, the business organisation Sakeliga said today. The Bill, inter alia, empowers the minister to prescribe the number of guests home owners may accommodate in a specific area, the number of nights quests may be received and even the rates that may be charged.

According to Gerhard van Onselen, senior analyst at Sakeliga, the organisation is, on both economic and legal grounds, sceptical about the merits of this interference in the tourism industry. Short-term home lessors might also not have easy access to the means and information necessary to take part in the official process of commenting on the Bill. “For this reason, Sakeliga will be hosting input conferences in Cape Town and Pretoria on 16 and 23 May, respectively, to inform short-term lessors about the content and scope of the Bill. We also have introduced an information and comment platform where role-players in the industry can give their inputs. Eventually, Sakeliga will submit comprehensive comment on the Bill on behalf of short-term lessors and other role-players in the industry.” Comments on the Bill have to be submitted to the relevant minister before 11 June 2019.

Van Onselen says that further increases in the government-imposed regulatory compliance burden in South Africa, including on small businesses owners in the short-term home rental market, are ill-advised. “South Africa’s economy already has to deal with heavy and costly state interference in various sectors. Expensive and unnecessary compliance burdens eventually come down to fewer economic opportunities for all.”

Van Onselen is not convinced about the argument that the Bill is supposed to level the playing field between incumbent and new tourism hospitality players: “Government shouldn’t level the playing field by making it equally difficult for everyone, but rather by making it equally easy. Generating more dubious regulatory barriers and red tape are not the way to go. Such conduct runs counter to the deregulation and market liberalisation desperately needed in this country. If the regulatory burden for incumbents are a problem, then we should revisit that, not instinctively increase it for small entrepreneurs who make ends meet by periodically renting out rooms in their homes.

The provisions in the Tourism Amendment Bill are loosely defined and delegate too much arbitrary regulatory authority to the minister. From a rule of law point of view it detracts from the principle of legality. Moreover, it sets government on a path that stifles an industry precisely when it makes big strides in technological innovation, like the development of market-based, consumer-side quality regulation.”

The regulations which could eventually result from the Bill will increase the cost of AirBnb type hosting and cap the income opportunities of property owners in the short-term rental industry. These property owners are, often, people already struggling to make ends meet. Government should not arbitrarily prioritise the needs of one group of businesses owners, simply because they are already established, over another in this way.

The Bill does not only affect short-term lessors but also consumers.

Excessive regulation will eventually be most harmful to the consumer. At present, short-term home leasing services offer a convenient and low-cost possibility for people in need of accommodation. It is even advantageous to people who do not use this kind of accommodation, because it results in healthy competition throughout the entire sector as far as pricing and customer service are concerned. In short – if this amendment is passed, it is likely to result in more expensive and less pleasant accommodation,” Van Onselen says.

Short-term advantages for larger role-players are outweighed by long-term damage
Although it may appear at first glance that the amendment could be beneficial to larger businesses in the industry, there is good reason to believe that, in the long run, it will be to the detriment of all. “If, however, short-term leasing services are given an opportunity to apply self-regulation, it will create a precedent that ultimately also could be used to revise improper regulation in other parts of the accommodation industry. However, the opposite also applies – if excessive ministerial intervention is allowed in this instance, it will strengthen government’s hand in further intervention in the established hospitality businesses at a time when existing regulation should itself actually be reconsidered,” Van Onselen concludes.

Issued by Gerhard van Onselen, Senior Analyst, Sakeliga, 13 May 2019