The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas was yesterday urged to adopt “a more aggressive strategy” towards the vacation rental market, given its potential for increasing local tourism industry ownership and developing Family Island economies.

Matt Aubry, the Organisation for Responsible Governance’s (ORG) executive director, told Tribune Business that its recently-published economic research showed vacation rentals “could blossom as low-hanging economic growth” if handled correctly.

Pointing out that the Bahamas already has “the greatest offering” of Airbnb properties compared to Caribbean rivals, Mr Aubry said the study, conducted for ORG by the Oxford Economics consultancy, had show ‘what could be’ if regulations were eased and the correct policies implemented.

Dan Levine, practice leader at Oxford Economics, said focusing on vacation rentals “seems the perfect strategy” given the Bahamas’ strong competitive attractions for this market.

Referring to the interviews that Oxford Economics conducted on the sector for its study, Mr Levine said: “There were definitely quite a few competitive advantages the Bahamas has in this space....

“In the course of the interviews, it became clear this was an opportunity to move development away from Nassau to other parts of the country.

“On many levels, it seems the perfect strategy for the country to take a more aggressive stance towards.”

Oxford Economics’ study for ORG, which analysed the impact of a 50 per cent increase upon current vacation rental activity, found this would grow stopover tourists by 8,350 annually, and generate $13 million in additional visitor spending.

Excluding 50 per cent of that $13 million from its analysis, as that represented lease costs, the ORG study said: “The full economic impact - direct, indirect, and induced - of additional spending by these new tourists is estimated at $9.8 million of additional GDP and 225 new jobs.

“The sectors most affected are community, social and personal services, which receives 35 per cent of the GDP impact and 50 per cent of the jobs impact, and hotels and restaurants, which receive 23 per cent of the GDP and 18 per cent of the jobs impact.”

Mr Aubry, meanwhile, said the vacation rental market provided an opportunity to “empower” Bahamians and increase local ownership of the tourism.

He added that by diversifying development and activity away from Nassau, the overcrowding that has afflicted New Providence for decades could also be eased.

“This is one of those spaces that really speaks to how we can empower Bahamians to a more active, and stronger, part of the tourism product from an ownership standpoint,” Mr Aubry told Tribune Business, “and how we can foster the residual benefits to drive local products into the tourism supply chain.

“When you look at the data, the Bahamas by and large has the greatest offering of beds and rooms. It also has a relatively low yield with turnaround. A lot of people are offering this, but don’t necessarily have the capacity.

“If we start to drive this, and pay more attention to it, it could blossom as low hanging fruit in terms of economic growth.”

Data obtained by Oxford Economics showed that the Bahamas had 1,878 properties registered with Airbnb, of which 908 - just under half - were deemed to be active.

Highlighting the vacation rental market’s growth and economic potential for the Bahamas, the ORG report showed these numbers were between eight to three times’ higher than comparable Airbnb data for Bermuda, the Cayman Islands and Turks & Caicos.

The Bahamas’ mean occupancy rate was lower than Bermuda’s and Cayman’s, at 38 per cent and 22 per cent, respectively, but higher than Turks & Caicos’s 16 per cent.

When it came to yield, the Bahamas’ mean Airbnb nightly rate of $306 was higher than Bermuda and Cayman’s, but lower than Turks & Caicos’s. This nation’s guest ratings were also in line with its regional rivals.

Mr Aubry said an “easing of regulations, and policies that support moving to the Family Islands”, are required if the Bahamas is to maximise the benefits from the fast-growing vacation rental market.

Prominent Bahamian realtors, such as Mario Carey, have already urged the Government to get a better regulatory grip on the vacation rental market, warning that it is losing potentially valuable tax revenues.

However, Mr Aubry said existing government policies and regulations were effectively driving second homeowners not to declare that they were using their properties for vacation rental purposes - thereby denying the Public Treasury valuable tax revenues.

“The way the policies are, they’re incentivising people to buy a home without declaring the purpose of the property,” he told Tribune Business.

“It creates problems of oversight and access to capital from the banks. If we look at this market, there are so many properties that are not being fully utilised.”

The Oxford Economics study suggested that old, impractical laws and regulations were impeding both growth and regulation in the vacation rental market, as it treated investors in these properties like their mega resort counterparts.

All vacation-based properties have to be approved by the Bahamas Investment Authority (BIA), and the report said: “While vacation home owners and foreign owners can overcome these hurdles, this comes at a cost in terms of time and money.

“In the view of interviewees, most of the complexity reflects laws that are designed with mega-resorts in mind. For example, if the owner is not the primary occupant, then the applicant must present detailed business plans that address issues such as how many people will be employed, traffic issues, etc. For the vacation home rental market, this is not a practical approach.”

The ORG report called for vacation rental owners and investors to be treated as a new ‘investor category’, with faster approvals granted in return for tax and regulatory compliance.

It also suggested restricting vacation rental home development to specially-designated areas, such as Trade Development Zones (TDZs), until the Government perfected its policy approach to the sector.

Mr Aubry said he had personally witnessed the growth of the Bahamas’ vacation rental market, with two of the four properties in his townhouse row now used for such purposes.

And Tribune Business has also witnessed more tourists than normal walking to and from, and shopping at, the Super Value store at Winton compared to previous year.

Arlington (Ali) Capron, principal of RE/MAX Luxury Properties Bahamas, recently predicted that the vacation rental market will likely eat into hotel occupancy rates, estimating that 20 per cent of this nation’s stopover visitors are currently using such accommodation.

He said visitors were increasingly seeking a more authentic, personalised vacation experience that was intertwined with Bahamian culture.