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PRHTA ‘disappointed’ with changes to short-term rental regulation bill

Proposed amendments recognizing STRs as a commercial activity were not included in House Bill 1557.

The Puerto Rico Hotel and Tourism Association (PRHTA) expressed its “disappointment” over the changes made to House Bill 1557, intended to create the “Act to Regulate Short-Term Rentals in Puerto Rico.”

PRHTA Chair Miguel Vega said the amendments proposed by the PRHTA, which included the recognition of short-term rentals (STRs) as a commercial activity, were not included.

“On June 6, 2024, the Senate Education, Tourism and Culture Commission presented a positive report on the bill. However, it’s evident that essential changes proposed by our industry and by several communities affected by the lack of adequate regulation of short-term rentals weren’t incorporated,” Vega explained.

“The PRHTA defended the position of our members, reflected in the proposed amendments, especially regarding recognizing STRs as a commercial activity,” he said. “Unfortunately, the commission did not listen to the demands of the communities and the tourism industry, leaving those who are directly affected unprotected. Therefore, the PRHTA asks senators to vote against House Bill 1557.”

House Bill 1557 was introduced in November 2022, with the first round of public hearings held in February and May 2023. Since then, it has moved from the House, which passed it in June 2023, to the Senate for a vote. However, that legislative body referred it to the Senate’s Education, Tourism and Culture Commission, which held a new set of hearings in April 2024. A second report with amendments was released last week, and the bill has been submitted to the Senate floor for a vote.

Puerto Rico does not currently have a regulatory framework in place for STRs, although several towns, like the Municipality of San Juan, have established their own regulations not only to regulate the sector but also to generate funds through required permits and licenses.

In the past, the PRHTA had noted that, “in other jurisdictions, STRs already register as a business activity, obtain licenses to operate, insurance policies, fire safety certifications and maintain an emergency contact. Why are these same requirements not applied in Puerto Rico? Why are more demands placed on a six-room bed and breakfast than on a STR operation with 15, 20 or 50 units?”

The Puerto Rico Permit Management Office (OGPe, in Spanish) defended in public hearings the classification of STRs as a commercial activity more than a year ago, the trade group stated.

The organization further noted that House Bill 1557 does not specify how the approximately $125 million that the government lost in 2023, nor the $29 million from the housing tax, will be recouped.

This creates a budgetary problem, as it aims to reduce 3% of the 7% Room Tax to allocate it to the municipalities. A reduction to the existing room tax affects the fiscal plan, so it will not be approved by the Financial Oversight and Management Board for Puerto Rico, the PRHTA stated.

The organization proposed increasing the Room Tax for the STR’s to 11% and allocating 3% of that total to the municipalities, but the commission did not accept this amendment.

Vega also called for strengthening the bill by including an express prohibition against illegal hotels. For the PRHTA, any building with more than six units must meet the same requirements as a hostel or bed and breakfast. Otherwise, in addition to representing an unfair competitive advantage, it becomes an illegal hotel, it stated.

Regarding the physical presence of platforms such as Airbnb and VRBO, Vega said it is a minimum requirement to protect Puerto Rico’s “quality as a tourist destination.”

“It’s essential to have a person who responds directly to the platforms physically in Puerto Rico to attend to any emergency in the accommodation,” he said. “In the age of social media, a bad experience, like a broken air conditioner or a burst pipe, doesn’t stay between the customer and the platform; It can reach tens of thousands of potential visitors.”

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This story was written by our staff based on a press release.

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