Letter of the Day | Airbnb requires regulations, not taxation

THE EDITOR, Madam:

As Jamaica continues to navigate the complexities of its tourism industry, one sector has emerged as a vital contributor to the local economy: Airbnb. While large hotels dominate the landscape, Airbnb has proven to be a game-changer for Jamaican nationals and the economy as a whole.

A significant advantage of Airbnb is its substantial flow-through revenue to the local economy, estimated at approximately 90 per cent. In contrast, hotels have a flow-through rate of around 15 per cent. This disparity highlights the considerable economic benefits that Airbnb brings to Jamaican communities. Moreover, most Airbnb properties are owned by Jamaican nationals, ensuring that the revenue generated remains within the country.

In contrast, many hotels are owned by foreign entities, resulting in a significant portion of the profits being repatriated abroad. This has led to calls from large hotels for the government to regulate and tax Airbnb, potentially stifling the growth of this vital sector. It appears that these hotels are attempting to replicate the strategies that have led to the decline of locally owned businesses in Jamaican malls.

For Jamaicans, Airbnb represents a crucial opportunity to tap into the tourism dollar. With salaries in the tourism industry being relatively low compared to international standards, Airbnb provides a much-needed avenue for locals to earn a decent income. The retention rate of earnings in the hotel industry is also alarmingly low, with a significant portion of revenue being used to import goods and services.

VITAL COMPONENT

The profitability of hotels in Jamaica is noteworthy, with some of the highest profit margins globally. This is largely due to low labour costs, averaging 13 per cent compared to the worldwide average of 25 per cent. Furthermore, approximately 40 per cent of the money paid by guests is sent to foreign hotel companies, which expect to make a profit of around 30 per cent. This results in a dual profit stream for these companies, both before and after the money reaches Jamaica.

Given these dynamics, it’s clear that Airbnb requires regulations, not taxation. Implementing excessive taxes would likely stifle the growth of this sector, ultimately harming the local economy. Instead, the Government should focus on creating a fair regulatory framework that supports the continued growth of Airbnb and its contributions to Jamaica’s economic development.

In conclusion, Airbnb has become a vital component of Jamaica’s tourism industry, providing significant economic benefits to local communities. As the Government navigates the complexities of tourism development, it’s essential to recognise the importance of Airbnb and ensure that policies support its continued growth and contribution to the local economy.

JOHN MCINTOSH

Tourism Hospitality professional