Vacation Rentals and AirBnB are Having a Negative Effect on Hotel Occupancy in Costa Rica

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The “low season” for the hotels in Costa Rica begins in May and usually continues through November, reaching a low peak in the month of September.

According to a survey carried out by Costa Rica’s Hotel Chamber between May 2 -31 and answered by 76 hotels distributed around the country, the expectation of occupation was of 51% in May which represents 16% less than the average occupation of 66.67% that hoteliers reported during the month of April.

The average occupation in the month of March reached a 75.4%, which indicates the numbers were moving south in April; yet there is an increase in the arrival of foreign tourists to the country during the last five years according to data by the Costa Rica Tourism Board.

What appears to be a contradiction obeys, according to Flora Ayub from the Costa Rica Hotel Chamber, to the growing offer of vacation rentals, which promote through different Internet platforms including AirBnB and which represent in one way or another an unfair competition to tax paying hotels because this condominiums or houses pay residential water and electricity fees and they are not subject to the same tax payments as established hotels.

Ayub recognized that progress was made at the beginning of the year when the tax collection agency (Ministerio de Hacienda) confirmed that by law those who rent their houses, apartments and condominiums for periods shorter than a month must pay sales and income taxes, the problem right now is enforcing the law.

The end of June and the first weeks of July have a minor increase in occupation because of the school vacations, but despite offers and promotions created by the hotels to attract tourists during the low season the behavior remains the same.

The creativity in what hotels offer, especially when it comes to food and cultural activities play an important role as a differentiating factor and could be used as a tool to attract more clients during the low season months.

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