Airbnb’s Rising Dominance on Aruba: A Boon for Tourism but a Bane for the Local Economy and Housing Market

ORANJESTAD – A recent study presented by Minister Geoffrey Wever and the Economisch Bureau Amsterdam has cast a spotlight on the significant impact of Airbnb on the small Caribbean island of Aruba. Although the vacation home rental (VHR) platform has brought considerable economic contributions to the island, the study also highlighted several negative impacts that have raised concerns among stakeholders.

The VHR sector in Aruba has grown extensively, offering more rooms than the traditional hotel sector. With over four thousand VHRs against a stock of approximately 39 thousand homes, the sector has seen a surge in tourism income. However, this growth has resulted in increased pressure on the housing market as investors, rather than the general public, supply these VHRs.

One of the most significant impacts identified by the study is the sharp increase in housing prices. As more homeowners opt to rent their properties to tourists, the number of homes available for long-term rental decreases. This reduction in supply has led to an increase in housing prices, making it more difficult for locals to find affordable housing.

The study also pointed out Airbnb’s potential contribution to income inequality. The benefits of the platform are disproportionately enjoyed by those who are already wealthy, exacerbating economic inequality. The majority of Airbnb listings are owned by people with multiple properties, further widening the gap between the wealthy and those less privileged.

Local businesses, too, are feeling the pinch. The study found that for every 1% increase in Airbnb listings in a city, there was a 0.42% decrease in revenue for local businesses. Visitors who stay in Airbnb rentals are less likely to spend money at local restaurants and shops, impacting the local economy.

Airbnb’s impact on the hospitality industry is another area of concern. While data suggests that Airbnb has not significantly harmed the hotel industry, the platform’s hosts do not face the same level of regulation and overheads as traditional hotels. This creates an uneven playing field, and the loss of revenue and jobs in the hospitality sector could have a significant impact on local economies.

Lastly, the study highlighted the misuse of subsidies and policies. Airbnb owners in Aruba are taking advantage of subsidies and policies intended for residents, not businesses. This misuse can lead to losses for government and utility companies and create an unfair advantage over residents and other businesses. It can also undermine the sustainability of local economies and communities, leading to calls for greater regulation and oversight of Airbnb and similar platforms.

In the wake of these findings, Minister Wever emphasized the importance of engaging stakeholders in the creation and implementation of comprehensive management strategies. The minister expressed his gratitude to all stakeholders and the Departamento di Asuntonan Economico, Comercio y Industria for their participation and collaboration in the study.

The findings of the study will help the government formulate comprehensive management strategies that consider both the economic and sustainable perspectives. As the government works towards policy development, Minister Wever reassured stakeholders that their input is crucial to ensuring that the policy is widely supported and inclusive.

Aruba Tourist Channel