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Small inns, B&B owners back San Juan’s proposed STR regulation

Several tourism leaders and entrepreneurs heading Puerto Rico’s small inns and bed & breakfasts expressed their support the Municipal Ordinance that the town of San Juan is proposing to register and regulate the more than 4,600 independent short-term rental accommodations (STRs) established in the city.

“We studied Ordinance No. 26, and it’s quite comprehensive. The municipalities with high tourism activity have recognized that most of these STRs represent commercial activities, with significant sales, and they must be subject to the same requirements, permits, licenses, patents, insurance, property tax, safety and security standards, and the healthy community coexistence required of any business, including mobile and micro businesses,” said Xavier A. Ramírez, president of the Puerto Rican Small Inns Owners Association.

Puerto Rico’s Municipal Code (Act 107-2020) empowers municipalities to implement the most appropriate measures to regulate all businesses within their jurisdiction while ensuring that all contribute equitably to maintain the infrastructure and the public services they provide to their constituents and are used for this commercial activity.

“Definitely, we support the approval of this Municipal Ordinance, which will complement the current regulations, while addressing the most important gaps caused by these STRs businesses; and will help control the accelerated displacement of family homes that we are experiencing in San Juan, by establishing a mandatory registry, along with other requirements successfully implemented in many cities within the United States,” said Eddie Ramírez, president of the Bed & Breakfasts Association.

In mid-November, San Juan Mayor Miguel Romero announced plans to regulate STRs in the city by creating a registry and charging license fees that could generate some $1.6 million for the municipality’s coffers, as News is my Business reported.

Meanwhile, the small inn owners said they have studied the development of STRs for 10 years and favor the shared and collaborative economy, while acknowledging that STR’s commercial investors “have expanded out of control, causing serious hardship for residential communities and municipalities.”

The group anticipates that eventually, Puerto Rico’s Treasury, Fire, and Property Tax departments will intervene with this segment, as has happened in hundreds of cities around the world.

“Conservative estimates reflect that, on the island, the STRs inventory is at between 25,000 and 30,000 keys, 85% are complete accommodations, dedicated 100% of the time as an STR. More than 70% are managed by professional hosts, and many represent illegal hotels,” said Tomás Ramírez, treasurer of the Puerto Rican Small Inns Owners Association.

He also said from 2019 to 2022 the STRs generated income exceeded $1.4 billion, and the loss of uncollected taxes and regulatory fees exceeded $300 million. For this reason, the Association “has consistently recommended their mandatory registration with the Tourism Company and the municipality where they are located, as the first step toward effective supervision, and the mitigation of the already known quality, safety, and security gaps.”

The tourism representatives recognize that the STRs help to spread tourism activity to the 78 municipalities, and they are here to stay. But they also agree that during the past eight years the Legislature has ignored claims from the residential communities and the recommendations to oblige the STRs to comply with the current regulatory framework.

STRs are marketed simultaneously through seven business models, including digital platforms such as Airbnb, Vrbo, and Join a Join.

“Certainly, the collaborative agreements with the digital platforms have proven to be very important, but it excludes about 35% of the rentals’ revenues. Throughout the United States, it has been demonstrated that the keys to ensuring compliance are, the registration by their owners, and the scrutiny by the municipalities where they are located,” Xavier Ramírez said.

Last month, Carlos Muñoz, Airbnb’s director of Public Policy for Central America and the Caribbean, issued a statement saying that while the platform “understands the concerns of the municipality of San Juan, [we] believe they should be addressed through a single statewide regulation.”

“Airbnb is committed to working with the Puerto Rico legislature in its effort to develop a clear and uniform set of rules that will benefit all stakeholders, including all 78 municipalities,” he said.

“A uniform and inclusive regulation across the island will enable compliance for short-term rentals and help Boricuas be part of the tourism economy in a simple and organized manner, thus continuing to generate a positive economic impact for the government and for all communities,” he said.

Since 2017, Airbnb has collected, retained, and paid more than $50 million in Occupancy Tax (Room Tax) in Puerto Rico.

“Likewise, the short-term rental marketplace has proven to have a positive impact for the entire Island, not only for Puerto Rican hosts who share their spaces but for all other sectors of the community in these recessionary times,” Muñoz said.

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

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