September 3, 2014

Dear Sir,

Your articles today and yesterday on homeowners renting their properties to visitors through websites like www.airbnb.com and www.vrbo.com explain the legal position very well, but omit some of the positive aspects of this growing area of property rentals.

For many homeowners who have seen rents plummet or have been unable to rent their properties at all due to the recession, this has been a positive way to generate income, maintain their properties and, in a not insignificant way, improve Bermuda’s tourism offering.

For hotels, this approach may be threatening because it creates competitors who do not stagger under the same overheads and burdens of regulation that they must endure. It is hard not to sympathise with them.

For governments, in Bermuda and around the world, these rentals are seen as a chance to scoop up additional tax revenue.

Most properties being rented in this way do not fall foul of the law requiring that properties offering accommodation to six people or more must be licensed and must pay taxes. But that’s not the main point.

The main point is that these properties are not hotels in the traditional sense. They are self-catering units available to rent to anyone who needs short term accommodation — tourists, new residents and people who need a short term stay for all kinds of reasons.

They offer an affordable alternative to people who want to vacation in Bermuda but are deterred by hotel room prices ranging from $200 to $700 a night before buying three meals a day in restaurants. This is especially true for extended families with two or more children plus granny. They could very well pay $3,000 or more for just three nights in a hotel and hundreds of dollars a day for meals.

Instead, short term rentals mean these visitors can afford to come to Bermuda, often for a week or more, where they spend money in grocery stores, on public transport, at cycle liveries, in restaurants and in Bermuda’s shops. All of this creates jobs and incomes for all Bermudians, and not just the landlord, who is often just glad to have a way to pay land tax and the mortgage.

Taxing this form of accommodation will drive rental prices up and some landlords out — an unwise business decision at the best of times and a suicidal one in the current economic era.

These kinds of websites represent a new form of disruptive technology and the answer is not to try to tax it out of existence (which won’t work anyway) but to embrace the change and recognise it for what it is — a means of bringing new visitors to Bermuda who would otherwise be unable to afford us.

Those who fear these properties may offer a sub-standard form of accommodation need not worry. The websites’ review systems mean landlords who offer a good service will be rewarded with positive reviews and those who do not will have to withdraw from the market if they don’t improve.

The Government’s best option in this case is to ease the burden of regulation on all tourism accommodations, not to kill one of the few green shoots of growth we are seeing in 2014.

VRBO OPERATOR

Pembroke