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Alfredo Lopes talks about Hotel conversion: exit or threat to the formal market?

Financial crisis, market slowdown after major events on the world calendar, excess supply, lack of investment in promotion and a fateful two years of pandemic. In recent years, the hotel sector in Rio has experienced a rollercoaster ride in the market. We doubled the supply of rooms from 30 thousand to 60 thousand to host the World Cup and the Olympics and, afterwards, we were affected by a series of obstacles that led many accommodation companies to throw in the towel.

Today the hotel industry scenario is balanced with an offer of around 45 thousand rooms – around 15 thousand fewer – and the volume of developments has plummeted in the pandemic scenario. Alternatively, closed hotels have begun a movement to transform into homes and offices. Hotel Glória, in the neighborhood of the same name; Hotel Paissandu, in Flamengo; Everest in Ipanema, Praia Linda, in Barra da Tijuca; and Intercontinental, in São Conrado, were the first to opt for reconversion. In the Center, demand is great, motivated by Reviver Centro, a project by Rio City Hall to attract new residents and stimulate the urban, social and economic recovery of the region through a series of tax and building incentives. Recently closed, the Praia Ipanema hotel should follow the same path.

We are in favor of giving unused buildings a purpose. Nobody would like to have hotels closed for 40 years, as happened with Nacional, with the risk of being invaded. So, it could be good for the city of Rio, even from the point of view of urban planning. This guarantees the maintenance of jobs and tax collection. It's smarter than having a building closed and dying. But it is necessary to clearly define the rules that these units must follow. The new activity needs to be very well regulated.

The hotel industry already faces a similar obstacle to the practice of booking apartments through accommodation apps. A study from March this year, prepared by the Fecomércio RJ Research Institute, points out that, although they still prioritize formal accommodation options – 64.4% prefer hotels and 20.7% choose inns on their trips –, reservations via platforms already represent almost 20% of demand (17.7%), which represents a threat to the formal hotel sector.

The position of the hotel industry is very clear and the matter has not been debated recently, including in the courts. The sector is not against any form of seasonal rental, sale of daily rentals in residential developments or via hosting platforms. The demand is for tax equality. In the case of digital platforms, for example, the sale of apartments does not contribute to ISS, does not pay commercial IPTU quotas and does not generate formal jobs, charges that are heavily affected by hotels. Other than that, the hotel industry follows a series of regulatory standards and endless inspections by public bodies.

We are talking about a sector that is a major contributor to public coffers, which generates thousands of formal jobs and with regulatory standards that guarantee greater security, avoiding situations such as prostitution, trafficking and even sexual abuse against minors, which are facilitated in alternative accommodations. It is only fair that legal requirements follow the same parameters required of hotels, which, as a rule, share the national guest registration form with the Ministry of Tourism.

One of the issues faced by governments in relation to Airbnb and other short-term rental platforms is the difficulty in monitoring and ensuring compliance with tax obligations by hosts. Rentals made through these platforms are often not declared or taxed properly, resulting in a loss of revenue for the government.

In Brazil, under the mistaken argument that platform rentals would fall under the Rental Law, in the form of seasonal rentals, the provision of this service is not provided for in the Tourism Law and the dispute has been under discussion for more than a decade. in justice, without conclusion.

The inclusion of the activity in the General Tourism Law, with its due obligations and inspections, is an old request from the hotel industry due to the similarity in the provision of services and the need for taxation.

Faced with these challenges, many countries have sought to implement regulations, and this is the path we believe we must follow in Brazil. This includes requiring hosts to register, imposing specific taxes on bookings made through these platforms, and imposing limits on the number of days a property can be rented on a short-term basis.

Both in the reconversion scenario and in that of hosting platforms, the path is to equate legal and tax obligations. The resolution involves the commitment of governments to invest in regulation and, also, not to continue to remain silent in the face of a movement that has been growing in a disorderly manner.

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