Panama and the Hotel Industry versus AirBnB, Technology, Hospitality Taxes, and Clandestine Bookings

[Bud]

It appears that the Panamanian government is much aware of AirBnB and is trying to figure out how to manage (control) its impact on tax compliance.

Here is a reference that caused this post: http://www.centralamericadata.com/en/article/main/Panama_Hotels_vs_AirBnB_War_Continues.

When I started typing the title for this post, I was intending to use "Panama and AirBnB", but then while reflecting on the content of the referenced article the 'and' word didn't seem to convey the proper posture. Note that the subject in the web link used the word 'war', but it inferred that the hotel industry is the main party behind this interest. My guess is that it is both the hotel industry and the government taxing authorities.

While we don't participate in AirBnB, we are aware that several Boqueteños do use it. Further it seems to be a big boon for tourism as well as a good source of revenue/cost savings for those who do use it. This has to be a tough nut to crack for all governments, not just Panama.

There seems a parallel between AirBnB (etc.) and Uber (etc.) v the hotel industries, the taxi cartels, and the governments around the world when considering how technology moves forward much more quickly than those impacted by the advancing technology.

So much for my intellectual curiosity this morning. Have a great day. 

[Moderator_02]

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Clandestine rentals mop up tourists, hit hotels

Posted on July 19, 2017 in Panama, Panama, Panama

Post Views: 531

APARTMENT owners who do not pay taxes on “clandestine”  tourist rentals account for 20 percent of   visitor room occupancy  in Panama City according to figures from the Comptroller General.

Hotels in the capital of Panama had a total o f 10,488 rooms available in May 2017, of which 5,798  (55.3%) were unoccupied.

Gustavo Him administrator of the Tourism Authority says that one of the main causes of the low hotel occupancy is the boom in ‘clandestine lodging’ in the country reports La Estrella.

According to Him, ‘clandestine accommodation’ accounts for approximately 20% of the country’s occupation. If this percentage was added to 44.7% of hotel occupancy in  May, there would be a different scenario for the hotels, he said.

“Many of the tourists who visit Panama are not using the hotels, but the clandestine rental s, which do not pay taxes,” added the administrator of the Tourism Authority.

Hoteliers point out that in addition to paying taxes they provide employment for thousands of citizens and are major purchasers of local supplies.

Him announced that the Government is making efforts to achieve a minimum of 70% of hotel occupancy by the end of 2017 and the beginning of 2018.

“It would be an optimum performance for the investments that hoteliers have,” he said.

According to Him, this translates to 2.6 million visitors in 2017 and  2.8 million in 2018 rising to three million in 2019. “That is the expectation and goal of the Government and the ATP, and are numbers that go hand in hand with the needs of the room market.”
Hotel vacancy has been continuously increasing for six years, according to statistics compiled by the Office of the Comptroller General.

 Climbing vacancies
In 2010, hotel vacancy in Panama City reached one of its lowest points, when it stood at 33%. In 2011, it increased to 35%; In 2012, it rose to 41%; And in 2014, to 44%. The vacancy  rate  in 2015  was 48% and in 2016, a disastrous  52%.

In the first five months of 2017, average hotel vacancy stood at 51%, similar to the results for 2016.

The level of vacancies in the capital could also be associated with an oversupply of rooms, which was generated by the tax incentives that past governments granted to the tourism industry.

In 2008, before tax incentives were eliminated, there was a tide’ of new projects totaling around $5 billion approved by the Tourism Authority of Panama at the time.

Among the benefits that the government granted for  the development of hotel projects in Panama City and other urban sites of the country was the exemption of the income tax for twenty years and the exemption of the import tax of the products associated with the hotel.

 

http://www.newsroompanama.com/news/panama/clandestine-rentals-mop-tourists-hit-hotels

[Moderator_02]

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Airbnb to Pay Taxes in Panama

The company has proposed to the government that a tax collection scheme be implemented for property owners that rent out rooms to tourists using its web platform.

Thursday, July 20, 2017

Airbnb's idea is to establish a system similar to the one recently implemented in Puerto Rico, where the company signed an agreement with the government to collect taxes on rentals from homeowners. 

See: "Boom in Vacation Rentals"

Gustavo Him, head of the Tourism Authority, told Prensa.com: "... "We could be interested in a similar agreement, but first we want to consult with the private sector. That does not mean that we should ask businessmen for permission, but we are not going to do anything behind the back of the hotel industry, much less anything that harms the industry."

The proposal put forward by Airbnb, which through its platform offers about 3,200 properties for rent in Panama, comes at a crucial moment for the local hotel sector, which has failed to raise the occupancy rate above 50% in recent years.

Airbnb is also in negotiations with authorities at the Ministry of Finance of Costa Rica, who at the end of last year proposed implementing a system to collect taxes.

 

http://www.centralamericadata.com/en/article/main/Airbnb_to_Pay_Taxes_in_Panama

[Twin Wolf Technology Group]

I find this topic of particular interest.   I have used AirBnB for a few years with various experiences (both good and bad).   We are also planning to host for AirBnB  in the near future.

I was in Panama when hotel occupancy rates were at record highs and had prices to match.   What is not pointed out in the above articles is the explosive rate at which large hotels were being built  in 2010, 2011 without any thought as to how they would be filled.   The hotel industry and Panama brought much of this on themselves with greed and poor planning.    Panama approved new construction of hotel after hotel thinking they would all be rich with hotel rates sky high.   At the time, many of us were asking where all the people would come from to fill them as many of them had plans to add casinos as part of their operations.   In my opinion, while AirBnB certainly takes a piece of the hotel pie, you have to expect the consumer to start looking for other alternatives when rates are outrageously high.   Why pay $100, $200, or $300 a night in a hotel when you can get an AirBnB with all the amenities of home for a quarter of that price?    I know clients that booked into the Marriott Hotel in 2009 for almost $400 a night.   Now you can get that same room for $100 or less.

I am happy to read that AirBnB is taking a proactive approach and making deals and collect taxes.   That seems fair all the way around.   As for the tears from the hotel industry, greed got you.   Don't blame AirBnB.   In many ways it is no different that the taxis and Uber.   Better service for less money.   Step up your game and quit crying about the competition.  I just wish Uber was as proactive and honest as AirBnB appears to be.

Thanks for the articles Bud.

[Brundageba]

A friend from Hawaii was coming to visit here in Panama.  (She uses the service AirBnB in Hawaii to rent out her units there.  She has had good experiences with them.)  That said, she went to the site and booked a hotel in Santa Catalina through them and as well a guided trip to Coiba.  Fortunately she wrote to us and shared her "deal" on the hotel and excursion.   She was being totally ripped off with ridiculous prices on both the hotel and as well the Coiba excursion.  So we wrote to friends who live there in Santa Catalina and asked about this fellow working through the AirBnB site .   Turns out he's a non-Panamanian resident surfer-tourist using this AirBnB site to make a few bucks to reside and surf there .  She cancelled her reservations and we hooked her up with a hotel and a trusted excursion service .   She had a great experience.  The only conclusion we could come to was how AirBnB screens their "employees" who earn a % off the rentals they promote.  Apparently not well.

Alison

[Penny]

I rent my spare bedroom(s) thru AirBnB and have had wonderful experiences meeting some great people -- some of whom are now full-time Boquete residents. The basic way you would screen potential hosts is to read the reviews. Every guest is asked to write a review of the host and the accommodations. This weeds out the bad ones fast. Of course, if you are the first guest to book, you don't have much to go on.

[Brundageba]

The fellow on the coast books for more than one hotel and as well excursions.  Fees he charges through AirBnB are way higher than if you were to book independently.  I suppose if you were not into getting information from independent options you might not be aware you were being bilked and have a good time writing a good review.  The fellow is listed through the AirBnB as having residency credentials but from what I have gathered from those in the know in the town, it is doubtful he is residing and working legally.

[Moderator_02]

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Tax holiday for tourist rentals may end

Posted on July 23, 2017 in Panama

 

Balboa Ave, favored by tourist renters

Post Views: 417

THE TAX-FREE  ride of Panama apartment  owners  renting to tourists may be coming to an end  with  a proposal put forward by Airbnb.

the company has proposed to the government that a tax collection scheme be implemented for property owners using its web platform.

Airbnb’s idea is to establish a system similar to the one recently implemented in Puerto Rico, where the company signed an agreement with the government to collect taxes on rentals from homeowners reports CentralAmericaData

Gustavo Him, head of Panama’s Tourism Authority, told Prensa.com: “… “We could be interested in a similar agreement, but first we want to consult with the private sector. That does not mean that we should ask businessmen for permission, but we are not going to do anything behind the back of the hotel industry, much less anything that harms the industry.”

The proposal put forward by Airbnb, which through its platform offers about 3,200 properties for rent in Panama, comes at a crucial moment for the local hotel sector, which has failed to raise the occupancy rate above 50% in recent years.

Airbnb is also in negotiations with authorities at the Ministry of Finance of Costa Rica, who at the end of last year proposed implementing a system to collect taxes.

 

http://www.newsroompanama.com/news/panama/tax-holiday-tourist-rentals-may-end

[Moderator_02]

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Airbnb ready to collect Panama  lodging tax

Posted on February 17, 2018 in Panama, Panama

 

INCREASING the tourist flow

Post Views: 243

 

Airbnb The San Francisco based internet platform is ready to collect the 10% lodging tax on apartment rentals to tourists in exchange for the dropping of the  45 days minimum stay rule.

The agreement could bring to an end the long battle between the government, the hotel industry and property owners.

Last year, some 2,200 owners in Panama registered in Airbnb collected $7.2 million through the rental of about 3,800 properties distributed throughout the country reports La Prensa.

Shawn Sullivan, Airbnb representative for Central America and the Caribbean, indicated that they are willing to sign an agreement with the Government to collect the lodging tax of 10%, which is also paid by the hotels, but with conditions.

Among the requests of the company, which earns 15% of the final value of each rental, is the elimination of Article 21 of Law 80 of 2012, which prohibits the rental of properties to tourists  purposes for less than 45 days, as well as the protection of the data of the owners of the properties registered in the platform.

Sullivan said that in countries with which they have signed similar agreements tourism has grown between 20% and 30%.

Armando Rodríguez, president of the Panamanian Hotel Association, told La Prensa that Airbnb must comply with market rules if it wants to operate legally in the country, the main concern of hoteliers is to attract more tourists.

Last year 54,000 customers entered the country  while in Costa Rica the figure reached 380,000.

“Panama has the potential to attract more tourists, but we must increase the promotion, “said Rodriguez.

 

http://www.newsroompanama.com/travel/panama-2/airbnb-ready-collect-panama-lodging-tax

[Moderator_02]

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Airbnb, Taxes and Tourism

The company would be willing to charge the lodging tax in Panama if the restrictions on the rental of real estate for tourism purposes were eliminated, and if the data on property owners was protected.

Monday, February 19, 2018

These are the conditions that representatives of the property rental platform proposed to the Panamanian government to begin negotiating the possible collection of the 10% lodging tax, also paid by hotels, in order to formalize their operation in the country.

In 2017, the 2,200 property owners in Panama registered with the website generated earnings of $7.2 million for the rental of 3,800 properties throughout the country.

See: "Boom in Vacation Rentals"

AirBnb.com representative for Central America and the Caribbean, Shawn Sullivan, told Prensa.com that " ... they are willing to sign an agreement with the Government to collect the 10% lodging tax, which is also paid by hotels, but under certain conditions."

Among the requests of the company are the " ... elimination of Article 21 of Law 80 of 2012, which prohibits the rental of properties for tourism purposes for less than 45 days, as well as protection of the data of the owners of the properties registered with the platform."

According to Sullivan, in other countries where similar agreements have been reached with governments, tourism has grown between 20% and 30%.

 

https://www.centralamericadata.com/en/article/main/Airbnb_Taxes_and_Tourism

[Moderator_02]

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Threats to "Traditional" tourism

Given the growing use of its vacation rental platform in Panama, Airbnb plans to offer other services such as ticket purchase, tours and paperwork management for tourists.

Monday, March 25, 2019

Airbnb executives reported that between 2017 and 2018, the number of visitors who demanded their services increased by 65%. This situation contrasts with the decrease in hotel occupancy registered in recent years in Panama.

According to figures from the General Comptroller of the Republic, during 2018 hotels in Panama City reported a daily average occupancy of 4,602 rooms, 7% less than that recorded in 2017.

See "Panama: Hotel Occupancy Down 7%"

Carlos Muñoz, Airbnb's campaign, public policy and communications manager for the Caribbean and Central America, explained to Martesfinanciero.com that "... as in other destinations, the company seeks to encourage people linked to it to offer on the platform proposed services such as tours or special tours of a culinary, photographic, dance, cultural, sports and theatrical nature. In Panama City, for example, it has hosts who offer photographic tours, salsa classes or visits to the terraces of the Old Town."

Also see "New Attempt to Regulate Airbnb"

Muñoz added that "... the future of Airbnb is to become a platform where users can make all the arrangements for their trip. From planning, buying tickets, finding and booking accommodations, tours and living the whole experience."

Currently the accommodation platform offers in the country 5,300 hosting sites.

 

https://www.centralamericadata.com/en/article/main/Threats_to_Traditional_tourism

[Moderator_02]

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Airbnb wants new Panama deal, including paying taxes

Posted 15/11/2019

Airbnb  wants to change legislation that currently allows the platform to cover only the interior saying its growth will attract more tourists and visitors to the country.

Carlos Muñoz, general manager of Public Policies for Central America and the Caribbean, said: "There is a prohibition of short accommodations such as the Airbnb model in the capital city  We are looking for is to eliminate that prohibition to enter strongly to invest in Panama with promotional and tourist campaigns "Muñoz said. 

In 2018, the platform attracted more than 90,000 thousand guests to Panama and generated more than 5,300 advertisements to promote lodging and tourism locations in the isthmus.

"We want to be partners of the country so that through our platform more tourists can reach Panama. Those who use Airbnb are tourists who are looking for new, authentic and different experiences, so we are not competition for hotels” Muñoz said.

He explained that 67% of the guests of the platform are between 30 and 59 years old and 61% of visitors come from North America. While around 30,000 Panamanians have used the platform on their trips abroad.

The most popular destinations in Panama via Airbnb are Bocas del Toro, Río Hato, Boquete, Chiriquí and Gorgona beach.

Muñoz said that one of the things they want to promote in Panama is to reach agreements with the Government in this case with the General Directorate of Revenue to pay taxes and contribute even more to the local economy.

Adding that  the platform already has tax agreements in more than 400 jurisdictions

 

https://www.newsroompanama.com/travel/airbnb-wants-new-panama-deal-including-paying-taxes

[Moderator_02]

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Airbnb Seeks Space in Panama City

Because the legislation currently does not allow the collaborative hosting economy platform to operate in the country's capital, the company expressed an interest in working with the authorities to remove the ban.

Friday, November 15, 2019

For now, the platform only offers the public accommodation in the interior of the country, the most popular destinations being Bocas del Toro, Río Hato, Boquete, Chiriquí and Playa Gorgona.

You may be interested in "Threats to 'Traditional' tourism"

Carlos Muñoz, Airbnb's general manager of Public Policies for Central America and the Caribbean, told Prensa.com that they want "... to work with the authorities to allow them to transform local legislation and authorize the operation of the lodging platform in Panama City, because it is currently limited to the interior of the country."

Muñoz added that "... There is a ban on short accommodations like the Airbnb model in the capital city, outside of Panama City, lodging is perfectly allowed and what we are looking for is to eliminate that ban in order to forcefully invest in Panama with promotional and tourist campaigns."

Also see "New Attempt to Regulate Airbnb"

At the beginning of the year, Airbnb executives reported that between 2017 and 2018 the number of visitors who demanded its services in Panama increased by 65%. This situation contrasts with the decline in hotel occupancy recorded in recent years in Panama.

 

https://www.centralamericadata.com/en/article/main/Airbnb_Seeks_Space_in_Panama_City