Hotels face stiff competition from Airbnb

Airbnb, an international marketplace for rental accommodation, is fast growing in popularity in comparison to the traditional hotels model. The platform allows ordinary people to rent out extra space in their homes to visitors and tourists. The platform is growing in popularity in Rwanda with over 300 Kigali residents putting up their houses and apartments for rent on the platform. This is up from about 170 homes a year ago. The properties on offer on the platform are, usually way cheaper compared to hotels. While the cheapest hotel accommodation currently stands at $70 (about Rwf50,000), the properties advertised on Airbnb go for as low as $25 per night. This has caused some hotel operators to express fear that they could be subject to unfair competition. Among the concerns of a section of hotel owners is that as a platform that is neither taxed nor regulated, Airbnb is cheaper. This makes it hard for hotels to compete, they say. The Chamber of Tourism at Private Sector Federation has previously expressed concern over the innovation, saying that beyond unfair competition, it might have consequences on the image of Rwanda’s hotel sector in the event that tourists and visitors receive poor services. Nsengi Barakabuye, the Chairperson of the Hoteliers Association, told The New Times that at the moment it would be easy to argue that Airbnb was posing unfair competition. He, however, said that they are keen to have an informed point of view by gathering data on the new business model on aspects such as visitor traffic and turnover so as to engage in consultations adequately. A Kigali hotel manager who requested anonymity said that it remains hard for them to compete against Airbnb registered homes as they are not subject to any regulatory requirements. “We are required to meet a lot of regulatory requirements most of which cause us to incur costs, which are reflected on pricing. Most hotels were investments based on the projections of the expected growth in the hotel sector based on government’s promise,” he said. The concerns come at a time when Rwanda Development Board (RDB) is calling on hospitality and tourism establishments in the country to apply for licensing and grading. This is in compliance with the 2014 tourism law, which was passed by cabinet and gazetted in October 2016. As of June this year, the number of licensed hotel operators in the country had increased to 212, up from 67 in October last year, according to RDB figures. RDB Head of Communications and Marketing, Sunny Ntayombya, told The New Times that with Airbnb being a new model in Rwanda, they are in consultation with various stakeholders to map out regulation. “Airbnb is a new concept in Rwanda. We are working with all the various stakeholders to see how to best ensure that the Airbnb market in Rwanda is safe, secure and in line with our tourism goals,” he said. Abdoul Murangwa, one of those who have put up their houses for rent on the platform, said that from his experience, clients prefer the platform options to hotels as it is cheaper and often flexible to clients’ requests and needs. This flexibility is not often common among hotels and established operators who often cite their standard policies. editorial@newtimes.co.rw

News

Hotels face stiff competition from Airbnb