New city ordinance would make it easier to prosecute owners of informal short-term rentals

Mar 4, 2018 | 17 comments

A proposed city ordinance that would crack down on unlicensed, short-term rentals has the votes in the municipal council to become law, its supporters say.

A Cuenca apartment advertised on the Airbnb website.

Cuenca’s hotel and hostal owners, sponsors of the legislation, blame most of a 12 percent decline in occupancy rate since 2017 on informal short-term rentals, including more than 150 advertised on the popular Airbnb website.

“We believe that about 10 percent of tourists, most of them foreigners, are staying in these rentals and that takes business away from legal hoteliers,” says Patricio Miller, president of the Azuay Chamber of Tourism. Although current laws and ordinances prohibit unlicensed short-term rentals, he claims enforcement has been lax. “The new ordinance will provide the resources to go after the offenders, especially those who work on the internet.”

Miller says there are approximately 350 short-term unlicensed rentals in Cuenca, most of them advertised on rental websites. He believes that 150 to 200 of them are owned by foreign residents.

The Azuay Hotel Association says that occupancy has dropped from 65 percent to 53 percent in the first two months of 2018 compared with the same period in 2017. “Business is down because of unfair competition from property owners who do not pay taxes and who are not subject to the same rules that hotels operate under,” he says.

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Property owners who rent on Airbnb and other rental websites disagree. “We don’t affect on the hotels and it’s not fair that we should have the same rules as hotels,” says Esteban Morales, who owns a rental property near the Alejandro Serrano Aguilar stadium. “Most of my guests are not interested in staying in hotels and prefer to be in a private home.”

Like other rental owners, he says he doesn’t mind paying taxes on his rental income but does not agree that he should be regulated like hotels. “Usually, I only have one guest a month, and sometimes none at all,” he says.

The Cuenca office of Ecuador’s Internal Revenue Service (SRI) says it has fined several informal rental owners in recent months who operate their business on the internet.

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