Far from responding to the need for more beds for tourists in the Commonwealth, the CNMI government views illegal bed-and-breakfast places as wily operators who make a quick buck while skirting paying taxes—to the detriment of hotel operators who do pay the occupancy tax.
The Commonwealth government is now cracking down on these operators, with Gov. Ralph DLG Torres forming a special task force composed of different government agencies to aggressively go out to enforce regulations, especially on illegal B&Bs.
Torres did acknowledge that these B&Bs still deserve due process.
“It’s a long process…They [have to be] given due process and, if found not abiding by the law, are given fines,” he said. “… It doesn’t happen overnight, wherein we just go in and bust them.”
Torres said the government’s focus right now is empowering enforcement agencies such as the Department of Public Safety, Department of Fire and Emergency Medical Services, Department of Finance, and Department of Commerce to make sure these B&Bs have valid business licenses and adhere to building codes, among others.
According to a study on B&B activity in the CNMI in 2017, there are about 340 Airbnb listings posted on its website. This is composed of 53 percent entire homes, 39 percent private rooms, and 8 percent shared rooms.
The study also shows that there are 110 active hosts that typically earn $7,200 annually, putting total host earnings in the CNMI at $1.5 million. There was a total of 12,900 inbound guest arrivals that used B&Bs in the CNMI, staying for an average of 3.3 days per guest.
The Top 6 regions by guests come from Asia with 11,600, North America with 720, Europe with 140, Australia with 120 and Latin America with 10. The Top 6 countries by guest arrivals were Koreans with 6,500, China with 4,400, U.S. with 700, Hong Kong with 500, Japan with 130, and Guam with 70.
This growing number of B&B are welcomed by the Hotel Association of the Northern Mariana Islands and the Marianas Visitors Authority, provided that these B&B’s charge customers a 15-percent tax on top of the room rate. This is called the hotel occupancy tax.
In an earlier interview, MVA managing director Chris Concepcion said that MVA is funded wholly from from the hotel occupancy tax and, if this is not paid, they lose out.
“That’s why our position is, we like the concept and we think there is a need for it because there are not a lot of hotel rooms but they should comply with the tax laws and it’s only fair,” he said.
“I like the free independent travelers. They look for those kinds of experiences and I do [believe] B&B experience should be a positive one. It allows the community to benefit. Just pay the proper tax. The collection of the occupancy tax has been established in the CNMI a long, long time ago. It should be applied and enforced,” he added.
Last November, Gloria Cavanagh, president of the Hotel Association of the Northern Mariana Islands, said the non-availability of rooms in hotels does not give a reason for unregistered guesthouses and B&Bs to operate illegally and is no reason not to enforce tax laws.
Saipan Tribune talked to Cavanagh last week and she is relieved that the government is finally doing everything it can to enforce the laws on B&B’s.
“We actually feel very hopeful now that something is being done. We were going to start a new task force to try to push things along but since the [Torres] administration and Cabinet members bought into this, then we should be seeing more enforcement,” she said.
“So far, it looks really good based on…meetings we had this week. Labor is meticulously checking the required reports; they are actually going into these properties and trying to get them to come into compliance,” she said.
According to Josh Tyquiengco, public information officer of Guam Visitors Bureau, they are facing similar challenges in terms of the proliferation of B&B’s in Guam.
“As part of their many duties, Guam’s Department of Revenue and Taxation ensures that businesses are properly licensed and, just like any other business on Guam, anyone that lists on Airbnb needs a business license and must clear with agencies like the Guam Fire Department, Department of Public Works, and others to make sure it is operating safely and legally,” he said.
“With the bed-and-breakfast and short-term vacation rentals, the GVB is helping Departmentof Revenue and Tax to create fact sheets and presentations that can be disseminated to the community to educate people on laws that were passed and the appropriate ways to run a bed-and-breakfast and short-term vacation rentals,” he added.
Tyquiengco said that GVB is in talks with Airbnb to implement laws that is required of every host listed on Airbnb.
“There was a Guam law that was passed that allows Airbnb to collect a hotel occupancy tax and turn the money over to the Department of Revenue and Taxation for the Tourist Attraction Fund. Revenue & Tax is currently working with Airbnb to implement this law,” he said.
The hotel occupancy rates in Guam are still healthy, however, he said. “We are seeing a rise in vacation rentals and bed-and-breakfast establishments. It’s especially popular with Korean visitors. …We will continue to monitor the situation, as this is a new development to the island,” he added.
In June last year, Torres asked the help of CNMI government agencies to help assess the island’s infrastructure and capacity to accommodate the rapid increase in its number of visitors that went to a point of suspending new international flights into the CNMI for 60 days.