As Cayman Islands tourism figures keep breaking records, it is encouraging to see local homeowners getting in on the action, with hundreds of people hosting guests who book through online services such as Airbnb.
As the Compass reports today, the islands’ 340 Airbnb hosts accommodated 14,600 guests last year. That is a significant increase over the previous year’s figures of 270 property owners and 8,600 guests as was reported by the popular peer-to-peer rental service last July.
Peer-to-peer housing rentals are an efficient way for our islands comfortably to accommodate increasing numbers of overnight visitors. In the short term, it’s certainly simpler and faster than building or expanding a traditional hotel – and involves significantly less in the way of capital investment.
At an industry level, peer-to-peer rental services are both competitors and complements to Cayman’s established hotels, resorts and tourist-oriented condominiums. Private accommodations that are advertised online tend to attract different types of travelers than the luxury-minded stayover visitors that have typically been drawn to Cayman – for example, a traveler who may be on a tighter budget, or someone who prefers a more home-like setting to the traditional “resort experience.”
It is unlikely that travelers seeking luxury and exclusivity will cancel their Ritz-Carlton reservations to save a few dollars. The management at the Kimpton, Marriott and Westin hotels, etc., can also be confident in the strength of their market demographics. Others in the industry – from taxi drivers to restaurateurs to tour guides – benefit from the extra visitors (and extra wallets) lured by alternative accommodations.
Airbnb and similar platforms generate new capacity for incoming tourists, produce demand from new segments of the tourism market, and, just as significantly, encourage the creation of a new breed of local entrepreneurs. At a 2018 seminar sponsored by the Department of Tourism, Airbnb policy associate Rachel DeLevie-Orey reported that Cayman’s Airbnb hosts had earned a combined $3.8 million the previous year. That is a sizeable amount, particularly for people who might treat the hosting experience as a “side job,” or who are activating otherwise-dormant properties.
The success of the peer-to-peer rental model in Cayman has not arisen without conflict. Readers may recall government’s initial reaction to its “discovery” of Airbnb-like services, predictably consisting of knee-jerk regulation, red tape impositions and comically old-fashioned requirements. For example, Airbnb owners are expected to mail or hand-deliver 13 percent of their revenue to government – which ironically has been unable to receive the payments online.
In addition to the significant 13 percent room tax, peer-to-peer renters still must suffer through an onerous and costly annual licensing process that involves, at last count, three separate inspections from three government entities. That gauntlet may or may not be appropriate for a hotelier who hosts hundreds of guests at a time and employs an army of staff to provide various services. It certainly is too much to ask of a grandmother in Savannah who lets out her single-family home, or a young person in West Bay renting out a single spare bedroom.
It is reasonable to mandate that any tourist-oriented rentals meet thresholds for health and safety, but excessive and disproportionate regulation can swiftly suffocate fledging sectors of small economies. Keep in mind that the attractiveness of the peer-to-peer rental model is founded upon affordability and ease of transaction for both buyers and sellers.