A neighbour from two roads down came over to chat. I was working on my little lagoon fishing boat, a single-engine dinghy for four passengers. He lives in Stellenbosch, where he settled into very comfortable retirement after decades as a bean counter to the lung cancer trade. Of course, he does not personally condone smoking, see? It is a terrible habit best left to the young and gullible.
Anyway, it transpires that he recently purchased an apartment in Hermanus to add to his holiday home in Eastcliff and two small, adjacent dwellings in Onrus. He explained that as a man of means, there are many opportunities to pick up bargains during these desperate times. Besides, he is on a mission from Mammon: short-term letting via AirBnB not only provides for the upkeep, rates and taxes on his little property empire, it also pays for the family’s annual overseas holidays! The income is easy and tax free, spread into foreign bank accounts in his kids’ names. The kids live in Europe, naturally, but AirBnB even provides banking and card facilities for those without such familial conveniences. You should get in the game, he evangelised.
I did a quick survey amongst acquaintances who actively partake in the informal, short-term letting market. Some of them find the income handy, but like Stellenbosch Man, none of them are exactly poor or desperate. A fair number are professionals or corporate executives, others are comfortably retired or reasonably well-off divorcees.
So right there is the first fallacy to be skewered: the AirBnB industry long ago moved on from the couch-surfing days, when the activity was all about renting out the dark spare bedroom after ouma died. Neither has the market exactly rushed to the fabled township gogo who is renting out a bedroom in her shack to starry-eyed Scandinavians.
Scan the chocolate-on-the-pillow, secure-parking and room-with-a-view advertisements on AirBnB and it is quite obvious that the main beneficiaries are predominantly white, middle-class homeowners chasing down second or even third incomes. The nature of the activity is enticing precisely because it offers easy income at low barriers to entry for those of means, especially being informal (for which one should read unregulated). In addition, only a certified naïf will accept that any of this income is declared and taxes paid; where it is then only after a host of convenient home-improvement deductions.
Another bright red, oily fish is that the formal sector is against AirBnB as a competitor. Au contraire. Most small hotels and formal guesthouses use AirBnB and the many other online marketing channels to advertise their own product. AirBnB itself has now moved into the formal hotel industry, too.
No, AirBnB is not the problem. The argument is all about the extraordinary cost of compliance forced upon the formally-regulated industry. These input costs range from business, industry and tax registration processes and levies, to building planning and compliance enforcement around everything from evacuation plans to parking, fire, health and safety compliance, liability insurance, tourism grading requirements, bed night levies, and much, much more.
One stand-out issue concerns employment equity and remuneration. It is perfectly clear that informal providers make use of domestic servants and gardeners, often for much longer hours and demanding more effort than what such workers had been subject to before. The wage rates for domestic workers – a definition which becomes ludicrous when servicing and cleaning rooms or apartments in a for-profit business – is only 68% of that of workers in the formal sector…
Add to this mix higher (non-residential) levies for everything from rates to water and electricity, and it is clear that the formal sector cannot compete on price with an equivalent offering from AirBnB. Also, let no one claim that this is not solely about price. That German tourist who would rather pay more to stay with “real” people in their dingy spare bedroom, instead of with “real” people in their beautiful formal, compliant guest house? That guy is figment personified.
Recent rumblings by our incompetent government about regulating the industry, are unfortunately barking up the wrong trees. The issue is not the First World problem of locals being driven out of town centres due to high rentals and property values. Well, not yet, anyway. It is also not about oversupply. It is all about the cost of compliance which renders an uneven playing field on which existing small businesses have to compete. Much as it is being painted, this is not a battle between Tsogo Sun and the small guy, this is between small hotels and guest houses, mostly with hard-working fully-invested small entrepreneurs behind them.
Either regulate everyone, perhaps with scaled nuances on the size and format of each property, or let it be a free for all. Where should the line be drawn? The damage to brand SA as a travel destination remains the same whether an American tourist family died in a fire at an unregulated guest house, or at a formal, regulated one; all that changes is the risk of it actually occurring at the latter in the first place.
I shared with Stellenbosch Man my intention to start offering whale watching and great white shark adventures on my dingy, out of the New Harbour. He grinned conspiratorially, until he spied my determination. “But it will be a disaster!” he proclaimed. “This boat is not safe, and besides, you can’t just take unsuspecting tourists out to sea, you need a special permit!”
Oh, how we laughed. Then conversation turned to how badly Hermanus needs Uber.