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Is business of Airbnb, Booking.com and other online tourism giants threatened in Bulgaria?

Will the world giants in the field of online bookings such as Airbnb, Booking.com, Expedia and Facebook give up their business in Bulgaria? They have just created a large database of owners of places for short-term accommodation and the authorities have decided to regulate their business and introduce rules and regulations in that field. 

Two Bulgarian MPs – Valeri Simeonov from the National Front for Salvation of Bulgaria and Menda Stoyanova from GERB proposed amendments to the Tourism Act, which envisage that all persons who want to rent part of their properties through an online platform should register them first. Valeri Simeonov and Menda Stoyanova’s idea is to legalize the activity of the owners of nearly 10,000 apartments in Bulgaria who rent them for short periods through the abovementioned internet platforms. The turnover of this activity is to the tune of nearly EUR 1.7 million per year. One third of these accommodation facilities are located in Bulgaria’s capital Sofia where the average occupancy stands at 56% and the average revenues per flat reach EUR 465. These accommodation facilities are rented by individuals and companies. They did not have any obligations to the state authorities and did not have to declare their properties. Moreover, their revenues were not subject to taxation. 

Now, with the amendments proposed to the Bulgarian Tourism Act that have to be adopted together with the 2020 state budget, things are changing and this business will be legalized. Initially, the authorities were planning to rate these accommodation facilities with starts like the hotels in this country and place them in the National Tourism Register. Later, the authorities abandoned their idea to rate these places with stars under the pressure of the public opinion and representatives of the tourism business. Now, the owners of such places for short-term accommodation will need to register only, work with the public administration and pay the due taxes, fees, etc. 

The tourism sector reacted cautiously to the planned amendments. Some representatives came to the conclusion that the new changes aimed at regulating this business will eventually destroy it. Others warned that the owners of these accommodation facilities would have problems with the state and the municipal administration that may hamper their business. All activities that generate revenues must be taxable. However, we should be very careful with the activities subject to regulations. Our market is overregulated, the Chairperson of the Association of Bulgarian Tour Operators and Travel Agents Daniela Stoeva commented.

The MPs who proposed these amendments contend that the users of these tourist services and the online booking platforms will not be affected. Only some less active lessors may leave the market of these services. These people should pay taxes like everyone else. We are neither planning to place additional administrative burden on the business, nor stop any online booking platforms operate on the Bulgarian tourism market, MP Menda Stoyanova explained.

The amendments are not based on any economic analysis of the effects on the people who own such apartments and on tourism as a whole. Many tourists visiting Sofia are low-budget people and they prefer platforms such as Airbnb. If we ban these platforms, such people will not visit the Bulgarian capital anymore. The flights to Sofia will cease as well and the whole tourism sector will lose, Boris Pavlov, Manager of Airbnb Flat Manager contends.

Whatever the consequences of the proposed legislative measures, the large platforms for online booking of tourist accommodation will obviously not leave their business in a country that attracts nearly 9 million foreign tourists per year (more than its own population) and where tourism sector forms 13% of the gross domestic product.

English version: Kostadin Atanasov

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