Developing new tourism
Will Airbnb be able to double tourist arrival India?
Brian Chesky, CEO of Airbnb met the Indian Prime Minister in April 2017, to discuss the plans of Airbnb to attract more travelers from its community, to double the inbound travellers to India from the present figure of eight million.
Sounds exciting! For a billion dollar hospitality industry, with five main stakeholders, namely, the Government, Tourism & Hospitality Industry, Homeowners, Travelers and Airbnb, this issue draws significance. In fact, he hopes to create millions of host entrepreneurs over the next few years. Airbnb set its footprint in India in June 2016, with 18000 listings across 100 cities of the country- the number as it stands now. He aims to exploit India's spiritual, heritage and ritualistic treasures to double the number of inbound travelers. He anticipates that India will become one of the largest communities worldwide in the next 10 years, as family traditions in Indian communities coupled with the idea of the "Incredible Indian" tradition, contributes to make India truly magical.
There is a need to compare the Airbnb market in India with that of the already existing "Incredible India Bed and Breakfast scheme, 2006, of Government of India".
Concept and Regulations for BnBs in India
With the advent of Commonwealth Games in India in 2010, the acute shortage of budget accommodation was strongly felt. To cope with this shortage, coupled with an objective to accommodate foreign guests in an Indian family in exchange of culture, and also to help guests acquaint themselves with authentic local cuisines in breakfast with the host, BnB Scheme was started with the criterion that the owner should stay in the house comprising of BnB rooms.
The regulations for registering BnBs in India require compliance of various municipal and local police laws due to obvious reasons, such as- risk of safety and security of the guests, restriction of commercial activities in residential areas and registration by the owner with FRRO, if a foreigner stays in a paid room.
Incentives for BnB owners
BnB properties are levied property tax, electricity, and water taxes at domestic rates while commercial properties are levied at higher rates
There is no applicability of "Luxury Tax" up to a tariff limit levied by state governments.
Service tax under the Central Act is exempted, as it is treated as 'hospitality' rather than 'service' to a tourist.
Thus, the tariff of a room of BnB is about 30 per cent less in comparison to a commercial hotel providing similar facilities.
Obstacles for authentic BnB's
It is true that Indian BnBs are unable to get viable business despite registration, primarily because of the inability of individual owners to spend on publicity and early absence of aggregators of BnBs. On the other hand, there are large unregistered BnBs mushrooming in Indian cities which flout laws and pose great security risk to their vicinity.
Some other online 'budget room' aggregators entered in the business to provide hosted accommodation, but they were neither able to meet requirements of foreign or domestic budget tourists neither were they able to provide viable business to authentic BnBs. The net result is that the objective of creating hosted Indian BnBs remains unfulfilled as only a few incoming guests are able to enjoy the luxury of intermingling with their hosts.
In his book, "Branding India, An incredible story", Mr. Amitabh Kant - CEO, NITI Aayog, mentioned that Ministry of Tourism intends to promote BnBs in India, but it could not be taken further. Attempts are being made by central and state governments to increase the number of authentic BnBs, and to incentivise aggregators, but there has not been a reasonable success so far.
Present Airbnb Scenario
As of now, Airbnb does not make it mandatory for owners with spare rooms to be registered with central or state authorities. Even non-hosted properties in residential areas are permitted to be listed on Airbnb, though such BnBs are often unsafe and illegal. In case of any mishap, only the property owner is running a risk while Airbnb will go scot free.
With this scenario in view, we realize as to why Brian Chesky had said that there are some issues with the Indian Government which need to be sorted out to enhance business in the country.
Authority's role in increasing Airbnbs in India:
Central and state tourism departments should undertake the mandate of aggregating and marketing BnB seriously by facilitating booking on its official website.
Authorities need to ensure that the incentives meant for authentic BnB owners are not eaten away by unscrupulous house owners and room providers.
Provide incentives to Airbnb and other aggregators to bring spare rooms owners in the ambit of legal provisions.
Role of Brian Chesky:
Assist Government Agencies to achieve its objective of 'guest enjoying the hospitality of host' rather than being 'just a room number'.
Motivate its Indian entrepreneurs to comply with regulations of BnBs as laid down by Authorities.
Chesky may be expecting the government to allow Airbnb listings to be treated as authentic BnBs without registration and in absence of interference of the local police, municipal authorities and other concerned players. Also, Chesky may expect that Airbnb's listing of even vacant properties be treated as regular, though it does not gel with the Doctrine of hosted BnB rooms.
Are these expectations in line with the objectives of Atithi Devo Bhava? I doubt. Can the government oblige Airbnb? I doubt.
(The author is former Managing Director of Delhi Tourism and Transport Development Corporation, and former Secretary of Andaman and Nicobar Islands. The views are strictly personal.)