Guesthouse owners fear amended Rates Bill

The amended Rates Bill has caused panic among guesthouse and B&B owners across South Africa. It aims to ensure all establishments that ‘accommodate persons other than the owner for gain’ will pay commercial rates, almost double the amount of residential rates. Deputy Minister Yunus Carrim explains: “The intention is to ensure that guesthouses, bed-and-breakfast establishments, small hotels and the like pay commercial rates.”

According to Lyndsay Jackson, gm Guest House Accommodation of South Africa (Ghasa), the amended bill will have a very negative impact on the already overburdened tourism industry. “However they do it, owners will have to find some way of covering this additional cost. Already, they have so many other additional expenses that most outsiders don’t know about: SABC TV licences; public liability insurance; higher running costs such as electricity, water; staff; marketing; …” She says the situation is already dire for many of these owners. “Most had to drop rates to attract an ever-decreasing influx of travellers. Either way, they’re caught between a rock and a hard place.”

Cape Town guesthouse owner, Mark Blagus, says the amended bill will drastically affect his business. He says the industry is already struggling to stay afloat, so any additional cost will have a huge effect and put enormous pressure on accommodation rates. He says he had to drop his rates by half compared with last year just to stay open. Putting up rates to absorb additional costs is just not an option. Knysna guesthouse owner, Cecil Harding, agrees that the additional cost will be crippling and says he will need to look into how to absorb these costs.

Some guesthouses have been paying the commercial rates since 2005, says Peter Cumberlege, Fedhasa’s legislative consultant. He says the amendment won’t have a huge impact as numerous guesthouses have been paying commercial rates for the past years, for which they have received rebates. Brett Dungan, director Rooms 4 U, agrees and says: “For those that don’t already pay commercial rates, the amended Bill will obviously have a huge impact. But, it will basically just level the playing field.”

A full rebate has never been on the cards for Pam Meara, owner of Dolphin’s Playground in Plettenberg Bay, however. She says she has been paying commercial rates for the past couple of years but has never received a full rebate. The new amendment to the Bill has caused quite a lot of uncertainty, she says, as she can’t imagine having to pay even more. A guesthouse owner in Durban, who preferred to remain anonymous, says the Ekurhuleni Municipality has also been charging commercial rates for the past four years. He says the commercial rates have pushed a lot of people to operate guesthouses illegally. “None of these municipalities has the means to police the guesthouses, which is problematic and is penalising guesthouses that play by the rules.”