A.T.A.: Hotels and STVRs are an integral part of the offering.
ORANJESTAD – Recently, the Minister of Tourism, Transport and labor, Mr. Wendrick Cicilia, together with the Aruba Tourism Authority and the Aruba Tax Department (DIMP), held a meeting to discuss Short-Term Vacation Rentals (STVR).
This discussion has been ongoing for years, and it is time to explore what more the government can do and how best to achieve a practical, efficient, and fair solution for all involved. Within the discussion, there is a government component that strives for a "fair share"—tourists seeking alternative accommodations and homeowners investing in Aruba's economy.
The government recognizes that many residents are taking advantage of this business opportunity, which supports this. It also acknowledges that many foreigners are purchasing these properties, which requires regulations and improved management to ensure these investors pay all taxes and revenues correctly for Aruba. The ATA did an analysis and believes that the Aruban government loses between 60 and 70 million florins annually due to the so-called tourist tax. This doesn't even include other taxes such as the environmental tax and the BBO (Turnover Tax).
Short-term vacation rentals (STVR) are not unique to Aruba but rather a global phenomenon.
Other countries and cities have noticed significant growth in the supply of short-term vacation rentals. These can be apartments, houses, or condominiums that can be rented for a full year or just a few months. They have a unique dynamic that differs from the hotels and accommodations we've seen so far. Aruba has experienced impressive growth in this category. It is estimated that there are approximately 5,500 to 6,000 accommodations or units that can be categorized as short-term vacation rentals, including apartments.
An analysis of the figures from 2015, the period in which Venezuelans came to Aruba to withdraw dollars, shows a growth in the number of people staying in apartments that year. In that year, 33% of visitors to Aruba stayed in a vacation home. Looking at the figures for 2024, the same percentage remained (33%). In terms of total accommodations and choice, the percentage has remained the same, but this category of accommodations has grown. It is imperative to note that hotel accommodations also grew. These include St. Regis, Embassy Suites, JOIA Iberostar, and Secrets since 2015. It is possible to study the growth in the number of hotels and vacation homes, which led to an increase in the Aruba room market over the past ten years.
Examining other factors in this industry, we can also see that the cost of vacation rentals increased recently compared to 2019, to the pre-pandemic era. Last year, guests paid an average of $282 for a vacation rental. Looking at AHATA's figures from last year, it's striking that the average price guests paid for a hotel room was $70 higher than at STVR. This category includes budget and luxury accommodations. Occupancy rates are also an interesting comparison. Throughout the year, hotel occupancy rates vary between 75% and 80%. Short-term vacation rentals usually have an occupancy rate of around 55% to 60%. Not all accommodations are open all year; others are only open for a few months at a time. "Balance is important to us. So STVR has a right to exist. We must offer this, but it shouldn't dominate the accommodation market," the Tourism Authority stated.
The Aruban government is also observing the phenomenon of certain neighborhoods changing from residential areas for families to tourist areas with guests changing weekly for short-term vacation rentals. While living in a neighborhood where tourists and locals mingle isn't necessarily a bad thing, everything needs to be regulated and balanced. Regulations must be in place to prevent some neighborhoods from expanding into this category of accommodation, while other neighborhoods that do offer opportunities do so rightly. For example, downtown Oranjestad and downtown San Nicolas. These kinds of opportunities can revitalize some neighborhoods that could benefit from them.
Meanwhile, the ATA also met with the Minister of Tourism to further develop the proposals on this topic and will continue discussions with, among others, the Ministry of Finance and the relevant parties.