There is no doubt that Airbnb is a company that has well and truly shook up the hospitality industry, including vacation home rentals. Operating in 65,000 cities in 191 countries, the accommodation marketplace has more than 3 million listings worldwide. It’s no wonder they’re often seen as the Uber of hospitality when it comes to finding turnkey vacation rentals.
Yet, as with all success stories, the rise of Airbnb hasn’t been without its fair share of backlash. A lack of regulation when it comes to hotel and tourist taxes has left local governments and hotel associations disgruntled to say the least. Airbnb is now attempting to rectify the situation by making it easier for hosts and guests to pay the necessary amount of taxes on vacation homes.
As of June 1st of this year, Airbnb will begin collection of 3% lodging tax on behalf of all vacation home rental hosts who own real estate in Mexico City. This is a monumental step forward for the company, as it represents the first of such moves within the region of Latin America. However, it seems that they had little choice as the Mexico tourism market has grown vastly in the last 2 years. Airbnb saw business triple in Mexico City alone in 2016, which now represents one of the company’s fastest growing destinations. Moreover, more than 1.5 million visits were booked within Airbnb Mexico from June 2016 to May 2017. The boom in Airbnb’s popularity in Mexico has increased fears of tax avoidance and a bias towards hosting instead of traditional lodgings.
Commenting on the increase of bookings and rise in Mexico tourism, Airbnb’s co-founder and chief strategy officer Nathan Blecharczyk has stated, “We have some pretty big numbers in Mexico. Home-sharing is very popular there, and the local government is excited about the benefits we can bring.”
With regards to the benefits mentioned, Blecharczyk is referring to the new 3% tax to be remitted on vacation home rentals to the Mexican government. Airbnb is hoping this offering will help to settle disputes raised by local hotel associations. The issues revolve around fees incurred by licenses, permits and taxes that Airbnb is largely exempt from.
The Mexico City Hotel Association has already commented on the newly implemented regulations by referring to them as "positive". However, the association’s director, Alberto Albarran has stated that, “We still have to pay licenses, permits, social security, income taxes, have fire alarms, seismic alarms and payroll, just to name a few...There are still many challenges.”
Despite the somewhat unsatisfied response, Airbnb is also remaining positive, with Blecharczyk making it clear that, “We want to strike the right balance between the governments and our users. If there are concerns, we can work together.”
Airbnb has become an indispensable tool for those who own real estate in Mexico to earn extra income. From 2015-2016, guest bookings increased by 189% in Mexico as a whole. Vacation home rentals are also a vital aspect of the Mexico tourism industry in places such as the Riviera Maya. While the platform directly benefits hosts, the new regulations regarding tax will also greatly benefit local governments, hopefully keeping everyone happy.
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