Lodging groups denounce shortcomings of bill to regulate short-term rentals
By The Star Staff
The presidents of the Paradores & Small Inns Association of Puerto Rico and the Bed & Breakfast Association accused lawmakers of damaging House Bill 1557 (HB 1557) to benefit short-term rentals to the detriment of hotels and hostels.
They asked lawmakers to rework HB 1557 -- which sought to register and regulate short-term rentals, better known as “the Airbnbs” -- responsibly taking into account the use of best practices already implemented and tested in other tourist destinations.
“We believe that HB 1557, at its inception, was a step in the right direction, but it has been severely damaged, with last-minute amendments to benefit short-term rental digital platforms such as Airbnb, and is intended to put the business of hosting short-term rentals above our laws and regulations,” stressed Xavier A. Ramírez Rodríguez, president of the Paradores & Small Inns Association.
Ramírez said HB 1557 does not categorize short-term rentals as a commercial operation, does not address the main problems that affect condominiums and residential communities, does not fix the problem of permit and tax evasion by professional hosts of short-term rentals, does not consider the proliferation of illegal hotels located throughout Puerto Rico, and seeks to limit the intervention of municipalities and regulatory agencies on the island.
The Paradores Association, as it is widely known, said HB 1557 prevents regulatory agencies from inspecting short-term rentals but calls for the Puerto Rico Tourism Company (PRTC) to promote them, which the group said is absurd and substantially distances itself from the mission and quality and safety protocols of the PRTC.
“Certainly, short-term rentals are important for the development and growth of tourism and facilitate the dispersion of tourism on the island; but they are a commercial activity, and must comply with all current and applicable laws, regulations and ordinances, and they must contribute equitably to maintaining the infrastructure and public services they use to operate and expand their businesses,” said Eddie Ramírez, president of the Bed & Breakfast Association.
“My family and I operate a five-room bed & breakfast in Old San Juan, and multiple permits, licenses, insurance, and operating fees are required for me, while in the city, there are dozens of buildings with multiple unregistered short-term rentals that contribute nothing and operate without consequences,” Ramírez added.
Ramírez said the mandatory registration of all short-term rentals is key to the success of the regulation. He criticized HB 1557’s focus on short-term rentals marketed by digital platforms such as Airbnb and Vrbo, ignoring the changes occurring in the short-term rental segment. In the United States, digital platforms represent less than 40% of rentals. Still, online travel agents, such as Booking.com, account for about 28%, and the sector’s movement is toward direct reservations, which has already reached about 22% of income, making it difficult to control the payment of a room tax.
He revealed that fewer than 6,000 short-term rentals are registered in the Tourism Company. At the same time, various reliable studies indicate that there are more than 30,000 short-term rental rooms, concentrated in cities of high tourist interest. Discover Puerto Rico reported sales of over $1.3 billion in 2021 and 2022, with an additional 14% increase expected in 2023.
“Puerto Rico needs and deserves an adequate and balanced regulation for the commercial segment of the short-term rental,” Ramírez said. “HB 1557 should be amended to close the tax evasion gates of the commercial segment of short-term rentals, which exceeds $125 million annually, including nearly $20 million in room tax. We have even recommended that our legislators use and adapt the legislation of the Virgin Islands or other North American jurisdictions, which are much more advanced and robust than what is proposed in HB 1557.”