The Cancun Hotels’ Association along with the Center for Investigation in Tourism Competition (Cicotur) agree that vacation rentals have an unfair advantage over hotels. This, due to the fact that these homes that advertise their unfilled rooms or entire facilities through platforms like Airbnb, don’t pay the right taxes in accordance with the commercial activities that they are engaging in. In short, this is essentially the same issue that taxis have with Uber and other ride-sharing platforms, just translated to the hospitality business.
Homeowners that rent out their properties through platforms like Airbnb are not legally required to pay, for example, the amount of property taxes that a hotel would. Of course, they still have to pay their regular property tax, but the taxes that hotels pay are greater due to their classification as an actual business entity. Francisco Madrid Flores, director of Cicotur, also mentioned that properties being rented out on these platforms don’t pay their employees accordingly.
Madrid Flores has a particular issue with renters omitting social security payments for their employees. In doing so, they are essentially not providing their employees with the full legal benefits that they should be entitled to. Madrid Flores had this to say on the issue,
“Each unit on average features two rooms which means the vacation rental industry offers an additional 40 thousand rooms (this number takes into account vacation rentals in Cancun, the Riviera Maya region, and Cozumel). We want to highlight the fact that in operating through the two main vacation rental platforms these owners don’t contribute to society through taxation in the way that they would if they were operating in the formal manner.”
Evening Out The Playing Field
Francisco Madrid Flores would go on to mention that the lack of entrance barriers to the hospitality industry through platforms like Airbnb had allowed an unchecked growth of the sector. This was, in his view, a clear sign of unfair competition. Ultimately this affects the hotels in the region directly as they are having to do everything by the book.
With this formal statement now out there it’s clear that both Cicotur, and the Hotels Association of Cancun, Puerto Morelos, and Isla Mujeres are set to lobby, for stricter regulations. Both of these organizations have a presence within local politics in a way that Airbnb, and other platforms don’t necessarily have. An upcoming conflict between these organizations and Airbnb users may be on the horizon. Just as has been the case with the ride-sharing platforms and the local Taxi drivers unions that we’ve previously mentioned.
How The Prices For Vacation Rentals Could Potentially Go Up
At this point any changes to the prices of vacation rentals in Cancun or anywhere in Mexico are hypothetical, since there’s been no mandate to charge extra taxes to homeowners using platforms like Airbnb to rent out their homes. Having said this, the Mexican government does have a track record of increasing taxation on people who use online platforms to sell all kinds of services. This has been made possible through the rather recent Fintech law in Mexico which essentially broadens the reach of the Mexican authorities to tax online gains.
People in remote work platforms for example are now required to provide their tax ID number on the platform or face heftier fees to the Mexican government for their usage. If something like this would take place with Airbnb users, the problem is that any fee that is imposed on homeowners of these vacation rentals will most likely be paid by the final customer. The Hotels Association is arguing that their interest is to even out the playing field, but the bottom line is that tourists are likely the ones who will end up paying the price for the fair playing field.
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