Boom in Vacation Rentals Hurts Hotels

Hotel owners are complaining of unfair competition from apartment owners who rent their properties for tourism at low prices.

Thursday, April 18, 2013

Hoteliers in Panama believe that competition is not fair because these property owners do not pay tourist tax and work illegally.

Although there is a law that prohibits renting apartments to tourists for less than 45 days and which is punishable with a fine $50,000 for repeat offenders, apartment owners who have failed to sell their properties see in the vacation rentals a way to recover their investment.

"On the Internet you can find hosting offers for less than $80 per day, in exclusive areas of the city such as San Francisco, Paitilla and Punta Pacifica, while city hotels offer rates ranging from $99 to $130 on average", reported Prensa.com.

According to Ernesto Orillac, Deputy Administrator of the Tourism Authority of Panama (ATP), "there is a security issue. The people who rent these apartments pay cash and it is not known what their movements in the country are. " He said that they would hire more inspectors to intensify operations, due to the impact of this activity on the hotel sector.



More on this topic

Costa Rica: Vacation Rentals Must Pay Taxes

January 2017

The new law against tax fraud obliges anyone renting houses and flats for less than 30 days to register and pay sales and income taxes.

Services of renting houses, apartments and condominiums for periods less of than one month must pay sales and income taxes, and those who carry out such activities must register as taxpayers of the two taxes, in order to not be subject to fines.

The (Already Lost?) War Against Vacation Rentals

April 2014

The trend of renting out non-hotel accommodation for a few days is global, and it will grow even more in the next 5 years, so regulating it will be a better solution than banning it.

In Central America Panama is the country where the phenomenon of Holiday Rentals shows the highest growth, despite a law prohibiting it.

Holiday Rentals in Panama Affects Hoteliers

September 2013

Renting apartments for tourism is the apparent culprit for hotel occupancy in Panama City falling by 10% in the last year.

Apartment owners have increased their sales despite the existence of a law banning tourists renting for less than 45 days.

Prensa.com reports: "Hotel owner Jaime Campuzano recognizes that three-bedroom apartments are being offered for $60 a day, which hotels prices can not compete with."

Vacation Rental On The Rise

November 2010

Tourists are renting more and more houses for leisure purposes, competing strongly with the traditional hotel industry.

Vacation rental is defined as the renting of villas, houses, apartments or country estates for a few days or weeks, and is growing fast around the world. Central America is no exception to this phenomenon, which suits especially families or small groups.

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