New businesses are not unlike baby turtles journeying from the nest on the beach to the safety of the open sea: They are extremely vulnerable in their infancy.
In regard to turtle hatchlings, Cayman Islands environmental officials are continually pushing proactive protective measures to maximize the reptiles’ chance of reaching the ocean and, eventually, maturity. (For example, “turtle-friendly” lighting, mapping and monitoring of nesting sites, etc.)
But when it comes to nascent entrepreneurial efforts – and here we are speaking specifically about “peer-to-peer rental services” such as Airbnb properties – our government’s actions seem, not to nurture, but to impede.
Before hosting a single paid guest, property owners who wish to take in visitors must undergo a licensing process involving three separate inspections from three separate entities (Department of Environmental Health, Cayman Islands Fire Service and Department of Tourism) – that can take up to 90 days. They must repeat the process every year, paying government $250 for an experience that is anything but pleasurable. The penalty for noncompliance is a fine of $100 per guest, per day.
On top of that, licensed proprietors must pay 13 percent of their revenue to government each month! Ironically, while the “business” side of the business is almost wholly conducted online, that 13 percent tax must be remitted to government by mail or in person. (It’s like making a car payment by Pony Express.)
Similarly, officials recently handicapped an “Uber-like” ride-share service that would have introduced competition into the local taxi industry. This looks far more like protectionism than market-based capitalism.
Both of those lines of businesses are part of the so-called “sharing economy,” where online technology connects people who need something (e.g., a car ride, or a place to stay) with people who have something (e.g., a car or a house). Such ventures help satisfy demand in the marketplace, but, equally importantly, provide outlets for entrepreneurship and avenues to improve an individual’s earning potential.
Focusing on short-term rentals, allowing people in Cayman to use their homes as “bed-and-breakfasts” has the potential to boost immediately the number of units in our country’s “room inventory,” with a disproportionately positive impact in areas outside the main Seven Mile Beach corridor … for example, West Bay, Bodden Town, East End, North Side and, perhaps most of all, the Sister Islands.
The Airbnb concept appears tailor-made for Cayman Brac, which seems trapped in hospitality purgatory, with scant space at the island’s few resorts, but overall demand not large enough to support new large hotel projects. (Exhibit A: The now-vacant Alexander Hotel.) Adding “one room at a time” to the Brac seems a viable and sensible strategy.
In general, peer-to-peer rental services attract “mid-range” tourists to Cayman (as opposed to “high-end” guests at The Ritz-Carlton or Kimpton, or “day visitors” hopping on and off cruise ships). Additionally, Airbnb-type properties can potentially provide visitors with close (and desirable) encounters with “real Caymanians.”
Largely without government’s intervention or “assistance,” many local homeowners are already monetizing their largest assets. Last year, the owners of Cayman’s 470 Airbnb properties earned a combined $3.8 million. We applaud them.
Instead of encouraging this burgeoning industry in every way possible, government has imposed a heavy-handed regulatory burden, as well as helped itself to a confiscatory 13 percent of their relatively meager revenue.
If this government is, as it claims to be, “of and for the people,” it needs to re-examine what its regulatory policies are doing to the very people it purports to represent.