Webinar on

New Business Models – Commonly known as The Sharing EconomyWednesday, November 20, 2019

Hotel Sector PerspectiveFrank J. Comito

CEO and Director GeneralCaribbean Hotel and Tourism Association

The Exploding Vacation Home Rental Industry:Understand the Drivers….

• Consumer Driven – cost…choices…new experiences• Technology Enabled • Fueled by the Great Recession and Entrepreneurial

Spirit• More People Want in on the Action….Piece of the Pie

Growing Non-stop in the Caribbean….

Sharing Economy: Consumer Driven

Sharing Economy: The Evolution

Consumers Want Choices….My Dog Won’t Have It Any Other Way

Let’s Understand the Motivations….

of travelers want to explore a specific neighborhood79%

of travelers want to “live like a local”91%

of Airbnb properties are outside the main hotel districts74%

Challenges Presented by the Sharing Economy:

• Governments Need to Level the Playing Field with Hotels• Taxation• Standards • Data and Reporting• Complaints and Dispute Resolution• Destination Reputation

Opportunities….

• Opportunity for Greater Local Ownership of Tourism Industry

• Opportunity to Capture New Markets and Broaden Destination Market Appeal

• New Factor to Generate Airlift • Opportunity to Strengthen Linkages and Community

Tourism• Opportunity for Hotels to Assess Market Shift and Adapt

It Should Be Understood, While There Are Upsides….

The Economic Impact of a Visitor Staying in a Shared Economy Accommodation is Far Below That from A Hotel Stay…• Per Visitor Spend is Estimated at 1/4• Tax Revenue Realized is Far Lower• Multiplier Effect Far Lower• Significant Difference in Employment Generated

Word of Caution to Governments: Don’t Jeopardize Hotel’s Viability….It’s Your Mainstay

Sharing Economy: Opportunity or Threat?

Leveling the Playing Field

CHTA Developed a Resource Guide for Public-Private Sector

1. Identified Key Issues, Impact Regionally and Globally

2. Offer Solutions and Approaches for National Hotel and Tourism Associations and Governments to Consider for Regulating and Regularizing this Emerging Industry

3. Set the Stage for Engaging the Emerging Sector

Typical Hotel Licensing Requirements and Hotel-Related Taxes in the Caribbean

Typical Standards for Vacation Home Rental Providers

Typically legally required to meet building code and safety regulations applicable to residential properties

Hosting platforms like Airbnb have hospitality standards beyond those required for residential use which generally address:

o Property and Liability Insuranceo Cleanliness - General guidelines are recommended.o Safety – General guidelines are recommended.o Cancellation Policies and Security Deposits – Requirements are

established to provide transparency to protect guests and home owner.o Truth in Advertising – To ensure the online listings of offerings and

amenities are aligned with what is provided to the guest.

In Many DestinationsHotels Are Contributing to the Greater Good

Hotels, Hotel Associations, Industry Enhancement FundsContribute Significantly to:

• Marketing• Airlift Support• Research• Education and Training• Beautification and Product Improvements• Emergency and Restoration Support After Crisis

Recommendations to Caribbean Tourism Stakeholders

• Destinations throughout the region are presented with a unique opportunity to help regularize and engage the sharing economy.

• National Hotel and Tourism Associations, Boards and Ministries of Tourism can serve as catalysts in bringing together public and private sector stakeholders to:• Review and Modify Existing Laws and Regulations on Taxes, Health

and Safety Requirements, and Standards

Recommendations to Caribbean Tourism Stakeholders

Continued…Engage All Relevant Stakeholders, including:

• Ministry of Finance or Related Government Area• Ministry of Tourism or Related Government Area• Hotel Licensing Department or related area• National Hotel and Tourism Association or Related Area• Real-Estate Association Representative with Short-Term Vacation

Home Rental Property Management Expertise• Owner of an Existing Short-Term Vacation Home Rental Property• Hosting Platform Company (Note: Airbnb is a willing partner re

taxation, but will likely resist regulatory requirements)

Turning a Threat to Opportunity

If You Can’t Beat Them…..Hoteliers Can Benefit by….1. Offering Services and Facilities to Host Property Clients

• Spa Offers• F&B• Fitness and Wellness Facilities and Programs• Entertainment

• Day Passes2. Offering Services to Nearby Host Properties

• Housekeeping• Grounds Maintenance• Laundry Services

3. Offering Appropriate Accommodation Offerings Thru Sharing Economy Platforms

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Sharing Economy Survey of Caribbean National Hotel & Tourism AssociationsConducted by CHTA March, 2017

Results Based Upon 18 Responding Jurisdictions

Q1: Have you, as a private sector entity or your national government, signed an MOU or similar agreement with a ‘sharing economy’ company (e.g. –

AirBnB, Uber, FlipKey, Home-Away)?

Q2: Does your government currently have legislation, licenses or regulations in place for short term rental accommodations (not for hotels, timeshares, or other accommodations traditionally regulated) to establish policy regarding

the ‘sharing economy’ business model?

Q3: Is your government working on developing legislation, licenses or regulations for short term rental accommodations to establish policy

regarding the ‘sharing economy’ business model?

• Answered: 18 Skipped: 0

Q4: Do the legislation, licenses or regulations address issues of standardization and taxation?

• Answered: 18 Skipped

Q5: How involved have you been, as a private sector entity, in the process of developing the legislation, licenses or regulations that are in place or being

developed?

• Answered: 18 Skipped: 0

Estimation of Annual Occupancy-Related Tax Revenue from Vacation Home Rental Industry in Caribbean

So What’s the Occupancy-Related Revenue Opportunity for Governments in the Caribbean from the VHR Industry?

Assuming: 80,000 Properties25 Percent Annual Occupancy (provided by subsector)@ ADR of $200 (conservative)= 20,000 Occupied Accommodations Per Night= 7,300,000 Annual Occupied Room Nights= $1,460,000,000 US$ in Annual Accommodations RevenueX 12 Percent Tax= $175,200,000 in Potential Tax Revenue

Opportunities for Greater Engagement and Collaboration

• Public and Private Sectors• Destination Improvement• Community Tourism• Capacity Building – Host Property Owners/Operators• Crisis Readiness and Response• Airlift Development• Marketing and PR

Webinar on

New Business Models – Commonly known as The Sharing EconomyWednesday, November 20, 2019

Hotel Sector PerspectiveFrank J. Comito

CEO and Director GeneralCaribbean Hotel and Tourism Association

THANK YOU!