Business organisation Sakeliga has instructed its legal team to object to a new bill that could seriously harm small-scale, short-term home rental businesses in South Africa enabled by online services such as AirBnB.
Sakeliga’s steps come after last Friday’s publication of the Tourism Amendment Bill (2019), and certain acknowledgements by Blessing Manale, chief director of communications at the Department of Tourism. Mr Manale is reported to have admitted the Department has its sights set on small scale home owners who rent out their homes with the aid of services such as AirBnB.
According to Gerhard van Onselen, senior analyst at Sakeliga: “The bill is ostensibly aimed at promoting the tourism industry, but really the bill is about intervening in the business of small-scale, short-term home rentals and the services offered by companies like AirBnB. The Minister is not going to promote the tourism industry, he is going to artificially drive up prices and interfere in an industry that regulates itself much better than government can.”
“An increased supply of short-term rental units results in healthy competition. Market innovations help to weed out of poor service providers. At best, government is reinventing the wheel, and – at worst – it’s letting the air of the tourism industry’s tires.”
Sakeliga legal analyst, Daniel du Plessis, explains, “The Bill sees to amend section 7 of the Tourism Act to expand the Minister’s regulatory powers to also include a number of limits and threshold imposed on short-term home renters. Despite the potential infringement of these thresholds on ownership rights, they may well be entirely superfluous.”
“In the first instance, it is not entirely clear that such regulation would be necessary in this sector. Market innovations are producing its own solutions to concerns over sub-standard short-term rental accommodation. Innovations in mutual ratings provide rental consumers with rich information on offerings. Moreover, short-term rental providers and clients, both, are rated, which leads to a higher trust marketplace,” says Van Onselen.
According to Sakeliga these regulations may have knock-on effects on the rest of South African tourism, and Government should consider the impact carefully and thoroughly before implementing it.
“It is important to remember that accommodation is just one part of tourism in South Africa. If Government accidentally retards or hampers the market for accommodation it may spill-over to cost other establishments and attractions clients and visitors. Walking back the counterproductive visa-requirements was an expensive lesson for Government – and the tourism industry had to foot the bill. Let’s not hamper the industry again,” Du Plessis continues.
Ultimately, it is Sakeliga’s position that it would be best for Government to first consider the ways in which technology now fulfills the role which statutory rules and central rating systems would typically have played in the past. Investing a little trust in new market innovations is likely to lead to large dividends for the sector.
“Considering the dire state of South Africa’s fiscus and state-controlled institutions, it is very clear that the public cannot afford to waste tax money on building increasingly superfluous government bureaucracies and functions. If Government wants these regulations, it should first demonstrate a tangible need and the likely benefit considering the cost,” Van Onselen concluded.