4th Convention - 2018

The Director of Tourism of the Consell d'Eivissa, Vicente Torres 'Benet', remembered the recent victims of the floods in Mallorca. He pointed out that the congress is growing in content and speakers every year, which is why the Consell will continue to give it its full support. From his point of view, tourist housing is essential for a tourist destination, although they have been forced to set a ceiling on the number of places available within the framework of the new Balearic legislation. He said that the Regional Ministry of Tourism is working on the new Tourism Intervention Plan (PIAT) with the aim of regulating and legislating the sector better and providing solutions to the problems of housing and irregular tourist accommodation.

The President of the Tourist Housing Association (AVAT), José Antonio Llano, stressed that there has been a radical change in the tourism sector in recent years, finally including the long-awaited regulation of tourist housing. The sector in Ibiza believes that a congress like this is important for regulation and indicates the new challenges facing the sector, such as the coexistence of all accommodation offers. Finally, Llano called for the sector to offer a product of the highest quality to visitors.

The area manager of Banc Sabadell, Óscar Prohens, thanked the possibility of participating as a sponsor of the event and pointed out that tourism is going through times of constant change and highlighted the consolidation of tourist accommodation operators (owners and marketers) in the economic market.

The Mayor of Santa Eulària des Riu, Vicent Marí, fully supported the continuity of an event of such interest for the island's tourism sector. He also pointed out the difficulty of having different administrations with competences in the matter: the State Law of Urban Leases, the autonomous tourism legislation, the island's tourism ordinance and town planning by the town councils. In his opinion, it is essential not to mix residential and tourist uses in order to avoid problems between residents and tourists. Finally, he stressed the need for clearer and simpler legislation.

The Secretary of State for Tourism, Bel Oliver, opened the Congress and hoped that the conference would be of benefit to all attendees. For her, Spain has a challenge with its tourism because of the impact it has on society. The matter is of great legal difficulty, although she affirmed that the government wants to address the issue. She highlighted the sectoral conference held in June with the Autonomous Communities to address the issue. This sectoral conference was followed by a working group in September in which the Autonomous Communities asked the government for legislative changes in order to be able to better develop their competences. Thus, the government is working on amendments to the Law on Urban Leases, the Law on Horizontal Property and the Law on Information Society Services. On the other hand, Oliver advanced that the Government will create a single state register of tourist homes and called for the help of the autonomous communities to achieve two main objectives, legal security and to improve the quality of the tourist offer.

*Presentation 1 - The Administration and the Housing Accommodation Landscape

The first round table, led by the Director of Tourism of the Consell d'Eivissa, Vicente Torres, began with the intervention of Luis Gordillo, professor at the University of Deusto, who began his presentation by differentiating between the two existing traditions in law: Roman-Germanic and Anglo-Saxon. In Spain, we are part of the former, which means that the administrations are interventionist, in addition to a complex institutional structure in which, according to Gordillo, there is a lack of federal loyalty on the part of the autonomous communities. Thus, in his opinion, the Autonomous Communities have gone too far in their regulation. For example, the prohibitions in the statutes of homeowners' associations are not proportional and clash with property rights. If there are noisy tourists, they should be sanctioned. For Gordillo, if it is regulated with so many limitations, the right to property or freedom of enterprise may be violated. There is a regulatory boom in Spain and it is essential that the administrations collaborate loyally.

Carmen Lence, Doctor in Law and advisor to the Ombudsman, pointed out that we are facing a complex panorama, a real challenge for administrative coordination and for legislators, where they must combine various conflicting rights. The Internet makes it possible to open up the accommodation network to the world, but in order to be able to legislate properly, it is essential to know the numbers of the phenomenon. In his opinion, obliging registration does not limit rights; moreover, the European Union's Services Directive reduced bureaucracy with responsible declarations but did not eliminate the obligation to register. For Lence, the phenomenon of tourist housing compromises the structure of cities as we know them. He recalled that in 2014 the first complaints arrived at the Ombudsman's office, mainly about coexistence. The Ombudsman recommended that the authorities clarify the regulations.

Joaquin López Vallés, Director of the Promotion Department of the National Commission for Markets and Competition (CNMC), pointed out that this body is there to protect citizens and consumers. Internet hosting platforms are a recent phenomenon that experienced strong growth in 2012-13. In his opinion, digitalisation is positive because consumers and providers can find each other more easily, asymmetric information is reduced, and there is a lot of information available (images, reviews, etc.) Spain has experienced strong tourism growth in recent years, as several competing countries have experienced problems. This has led to Spain going from 52 to 80 million visitors in the last few years. First the Autonomous Communities regulated the phenomenon of home-stay accommodation and then some cities. The CNMC considers that the regulations have led to price increases and unjustified barriers to entry, which is why they have taken some regulations to court. In their opinion, restrictions (quantitative restrictions, moratoriums, clausus numbers, number of rooms, obligatory registrations, bathrooms, square metres of rooms, etc.), if disproportionate, oblige the CNMC to act. Administrations can regulate in the face of problems but they must prove that there are problems (congestion, noise, inflated housing market) and that with the proposed regulation the intervention is favourable to citizens.

Lucía Prats, Delegate in Ibiza of the Institut Balear de la Vivenda (IBAVI) pointed out that tourist housing has participated in a combination of factors that have caused a housing problem for residents and seasonal workers. It is clear that it is a very complex problem that the Balearic Government, through the Housing Law of 2018, has tried to put a regulatory and punitive framework against real estate speculation. He also recalled that subsidised housing (VPO) is barely 0.6% of the available on the Balearic market, a very low percentage to which the Administration will try to find a solution.

*Presentation 2 - Legislative Challenges of Staying in Homes

The second round table, led by Carmen Ferrer, Councillor for Tourism of the Santa Eulària des Riu Town Council, began with the intervention of Juan Franch Fluxà, Professor at the University of the Balearic Islands (UIB) and scientific coordinator of the congress, who remarked that the sector is at a crossroads, in a truly problematic situation on a legislative level following the modification of the Urban Leases Law (LAU). Not to mention the obvious externalities caused by this phenomenon in more sensitive areas such as certain cities and islands. For Franch, the Autonomous Communities have regulated with fear, excluding part of the offer. The courts are giving reason to this supply by eliminating certain requirements that are considered excessive. The pending challenges that will have to be faced imminently are fundamentally legislative (through adequate regulation by all the administrations) and social (with the need to seek a difficult consensus). According to Franch, the Declaraciones Responsables de Inicio de Actividad Turística (DRIAT) are a barrier to market access, and he also pointed out that the administrations cannot control all the existing offer and that this must be adjusted.

The Director General of Tourism of the Balearic Islands, Antoni Sansó, pointed out that there is an open political debate on the issue but in the autonomous community of the Balearic Islands there is a regulation that, like it or not, has to be complied with. The 2017 modification opened up the possibility of zoning by town councils and island councils. There are difficulties in the fight against illegal supply, as it is necessary to demonstrate the commercialisation of the product and the system is very protective. Sansó defended the fact that formulas such as prices per square or the numerus clausus are completely legal and justified. Finally, he reviewed the history of tourism regulations in the Balearic Islands since the 1990s.

José Antonio Bonache, spokesperson for the Spanish Association of Digital Platforms for Temporary Rentals, agreed that the phenomenon has skyrocketed in recent years and that the Association, which he represents, has approved a decalogue of measures that includes maintaining an open dialogue with the administrations, participation in legislative debates and contributing to quality tourism in tourist destinations. According to Bonache, holiday homes generate €7.5 billion in the Balearic Islands, it is a transversal sector that mobilises the local economy. Bonache considered that taxes such as the eco-tax could alleviate the externalities left by the phenomenon in tourist destinations. Finally, he advocated easy mediation between neighbours and owners of tourist homes in order to resolve problems of coexistence.

Eliseo M. Martínez, lawyer and partner at Ius Aequitas, reviewed various regional regulations and how, in his opinion, they often clash with the right to property.

Finally, Juan Calvo, Doctor in Biology and Environmental Consultant, wanted to highlight the environmental factor (waste, water, purification, etc.) as one of the most evident externalities of tourism, which is even more noticeable in island areas with limited resources. Tourism growth in Ibiza has been significant and has not been accompanied by public policies. In terms of visitor numbers, August 1997 is April 2016 and the platforms have clearly contributed to this boom. According to him, we need to break out of the vicious urbanism-water-energy circle and regulate the use of the natural resources available to us as efficiently as possible.

*Presentation 3 - Collaboration between administration and platforms: convenience or necessity?

The third round table, led by Gloria Corral, Eivissa Town Councillor for Tourism, began with a talk by Esther Paniagua, a journalist specialising in the digital economy. Paniagua argued that the misnamed collaborative economy has allowed more accommodation to be offered to consumers and has also made it easier for many owners to offer their products. He stated that the traditional sectors see any platform as a threat and defended that the digital economy represents an increase in the GDP of national economies. On the other hand, in his opinion, holiday housing is a marginal cause of the housing problem, the main one being the scarce supply of social housing. All this has led to excessive over-regulation in the area of tourist housing, the EU has called for lower barriers to entry and reduced fragmentation of the single market, but has also pointed out that platforms must act responsibly at the destination.

Sergi Marí, Manager of Tourism, Trade and Markets of Barcelona City Council, defended that Barcelona City Council had to act in response to a social problem that was presented to it, as citizens were complaining and demonstrating. The city council has carried out a multilateral dialogue with the aim of regulating with as much information as possible. In his view, there is a clear market failure that leads to negative externalities in the destination (changes in the urban landscape, loss of identity) and also to the establishment of an oligopoly. In his opinion, identity is a key factor in tourism sustainability, so the negotiation with the platforms started with the request for the requirement of a tourism register. Some platforms helped, others not so much, so they had to triple the number of inspection staff to deal with the thousands of complaints that existed. Airbnb has finally joined the Barcelona negotiating table and provides the required information on its properties. Before there were some 6,000 illegal ads and now there are barely a hundred, which means that the regulation is good. For Marí it is clear that the EU understands that requiring a registration number does not harm the internal market.

Vicent Torres, Director of Tourism of the Consell d'Eivissa, recalled that the Administration had an easier dialogue with the traditional tour operators than with the platforms. According to Torres, the latter know that they do not comply with the regulations, but they put all possible obstacles in the way of local regulations. The market has undergone a very rapid evolution, which has made it difficult for the Consell to manage the phenomenon. The platforms are necessary, they should not be demonised, but so far they only understand sanctions. Torres defended a collaboration between all the operators and the administration, in his opinion that in the end a great agreement will be reached that benefits all parties.

Roberto San Esteban, tourism marketer and member of the Board of Directors of AVAT, stressed that the World Tourism Organisation (WTO) predicts that by 2030 the number of tourists will double, so we must all make an effort to channel this phenomenon in a safe environment. He pointed out that the administration is always trailing behind and is not able to control the economy generated by the commercialisation of tourism. He wondered where the platforms are located, what taxes they pay and where they pay them, what insurance they have and what obligations they have to their clients and to the administration. On the other hand, San Esteban also acknowledged that the platforms are a very important marketing channel for local agencies but demanded a level playing field.


*Presentation 4 - Security Issues, Scams, Malpractice

The fourth and last round table of the first day of the Congress was led by Clive Heathcote, Vice President of AVAT, and began with the intervention of Ramón Roca, Island Director of the State Administration in Eivissa and Formentera. Roca stressed that cybercrime is growing in the Balearic Islands and affects all groups involved in tourist rental (customers, marketers, owners, administration). Roca outlined the problems faced by the different operators:

• Threats for clients: false booking portals, unauthorised intermediaries, payment scams, illegal housing, false or inaccurate information....

Threats to marketers and owners: identity theft, online blackmail (ransomware), fake brokering, copying of content, non-paying marketing channels, fake bookings, fake reviews...

• Threats to the administration: fraudulent or illegal offers, legal offers without requirements, misuse of the property by clients...

Finally, Roca offered a series of recommendations: have an up-to-date operating system and antivirus, separate computer equipment for leisure and business, be very careful with the use of email and the cloud, change passwords frequently, be wary of bargains, look for the maximum information,... In any case, if there are suspicions, go to the police, cancel cards, communicate with customers, etc.

Simón Planells, Doctor in Economics and Master in Public Economics, pointed out the different types of crime that exist. For him, crime is one more externality of tourism. Mass tourism acts as a pull factor for crime. In his opinion, as many preventive measures as possible should be put in place in homes (alarm, security room, dogs), and marketing should be as transparent as possible (credit cards, Paypal). Preventive measures are also important for the promotion of the destination.

Miquel Quetglas, Major of the Palma Local Police and doctorate student in tourism at the UIB, presented the prevention programme for the elderly in Playa de Palma as a successful model for a specific destination. In his opinion, the sector suffers from over-regulation, although for example the 'Gag Law' did not regulate the actions of tourists. For practical purposes, removing tourists from a property is not possible as it is considered a home. The regional tourism law left undefined issues and Quetglas recommended taking photos of the property and having the client sign what is there. Finally, he proposed to modify the law so that the tourist pays the sanctions immediately (as in traffic sanctions).

19 October 2018 (day 2)

*Lecture 5 - Lobbying Times: A Constant Struggle

The fifth round table and first of the second day of the Congress was led by the Mayor of Sant Josep de sa Talaia, Josep Marí Ribas, and began with the intervention of Mateo Silos, Chief Economist of Ofwat London. Silos argued that public administrations should only regulate a sector if there are market failures. Citing Stiegler, regulation is a response to interest groups that seek to maximise their profit. Thus, interest groups organise themselves to obtain a regulation favourable to their interests (taxi sector, AEDE tax, etc.). Operators seek to limit entry by reducing competition. This, according to Silos, leads to a discrediting of market capitalism. On the question of tourist accommodation, regulation is not justified on the grounds of general interest, as it is harmful to consumers. For Silos, the Autonomous Communities have regulated in favour of the hotel lobby. In order to prevent the influence of lobbies to regulate against consumers, there are various measures such as: greater transparency, accountability, improved possibilities for consumers to act, or greater institutional contestability. In Silos' view, the CNMC board is captured by politicians and should be more aligned with consumers.

Lawyer Nahiara Cardona ('Legal solutions for all') presented the problem of renting in Ibiza. According to her, the problem has worsened in recent years due to illegal tourist rentals, bad experiences of landlords, a strong increase in foreign investment and an economic boom on the island. The association led by Cardona intends to denounce those cases of irregular rentals of which it is aware, and also calls for the necessary changes to the laws that prevent the administrations from acting correctly. This problem is generating a high social cost, with many problems for families and for people who come to work on the island. Cardona believes that the stock of social housing for rent should be substantially increased, and he also reflected on the importance of decreasing, as infinite growth is impossible.

Pablo Gago, Global Chief Strategy and Innovation Officer of Room Mate, pointed out that with the emergence of the tourist housing phenomenon, his company decided to join in and set up the Bemate service for travellers, offering homes and flats. In his opinion, it is important to legislate in order to avoid a future tourism problem. He advocated healthy competition between the various operators. Gago pointed out that, in general, regulation is quite bad and argued that the best thing is clear regulation so that everyone knows where they stand.

The President of Fevitur, Tolo Gomila, recalled that in the face of the exponential growth of the offer in new marketing channels, the Central Government, in the modification of the Law on Urban Leases in 2013, referred the matter to the Autonomous Communities. This represented a major regulatory challenge against which hoteliers tried to defend themselves. In this regard, he recalled the phenomenon of the emergence of low cost airlines. For Gomila, tourist homes are well valued by tourists; approximately 7% of the total number of homes in the Balearic Islands go to the tourist market. In this sense, he said that the expenditure of tourists in tourist housing is 23% higher than that of those staying in hotels. The problem lies in the fiscal opacity of the sector. On the issue of housing, the President of Fevitur criticised the lack of public investment in housing and the fact that the wage policy has led to a loss of income for the citizens of the Balearic Islands. He also pointed out that 36% of sales in Mallorca are to foreigners. Finally, he said that it is a serious mistake to demonise homeowners when what needs to be done is to give them legal security.

*Presentation 6 - Legal and economic experiences in other destinations

The sixth round table of the Congress was led by José Antonio Ferragut, Councillor for Tourism of the Town Hall of Sant Antoni de Portmany, and began with the intervention of Enrique Benítez, the Mayor of Sant Josep de sa Talaia, Josep Marí Ribas, and began with the intervention of the Economist and Councillor of the Andalusian Chamber of Accounts, Enrique Benítez, who explained that in Andalusia tourism is not a problem, which is why there is a desire to grow even more. In the province of Malaga there are already more places registered in tourist accommodation than in hotels. In Andalusia, 60% of the bedplaces are in tourist accommodation. Benítez wanted to offer 5 critical measures to deal with the phenomenon:

1. Regulation. Information asymmetry of the participants, incompatibility of horizontal and vertical zoning. The current regulation could be much improved.
2. The rehabilitation of buildings for tourist use.
3. Loss of identity of tourist destinations.
4. The impact on long-term rentals.
5. Local financing (eco-taxes).

Benítez ended his speech by stressing the importance of workers linked to the tourism sector having adequate salaries in order to combat the negative externalities that the phenomenon offers.

Joaquín López Vallés, Director of the Promotion Department of the CNMC, wanted to point out that his organisation understands that regulation must comply with the principles of necessity and proportionality. The regulatory disparity in the Autonomous Communities responds to the fact that there are different solutions to different problems. It is true that there are more differences at the local level than at the regional level on some occasions. For the CNMC, the justification for the regulations must be:

• Competitive
• Planning (fight against intrusiveness, promotion of quality, professionalisation of the sector).
• Market failures (externalities, nuisances, housing problems).

Restrictions to competition must be very well justified and the administrations have put in place various types of restrictions:
Restrictions on competition:

• Restrictions on the number of tourist dwellings (quotas, no renting of rooms, requirements for dwellings).
• Disincentives to market entry (licences, registration, minimum equipment, telephone assistance, etc.).
• Limitations to compete (minimum and maximum stays, when hotels do not have such limitations).

Public administrations have to take each situation into account when regulating.

Sergi Marí, Manager of Tourism, Trade and Markets of Barcelona City Council, highlighted the importance of stakeholders and the need for their participation in achieving adequate regulation. Tourism is a complex phenomenon with obvious social and environmental costs, and all stakeholders must contribute to the destination. Marí explained the Action Plan carried out in Barcelona, which includes a zoning of the city. Sustainability requires that workers in the tourism sector have a professional career.

*Presentation 7 - Zoning and administrative intervention: instrument or error?

The seventh round table of the Congress was led by Jaime Marí, Councillor for Tourism of the Sant Joan de Labritja Town Council, and began with the intervention of Eduardo Rodríguez Laplaza, Magistrate of the Contentious-Administrative Chamber of the High Court of Justice of Catalonia, who pointed out that urban planning can be analysed by the courts. Urban planning can regulate uses and can classify land as long as it follows legitimate objectives and they have to be justified. Rodríguez Laplaza pointed out some rulings of the TSJC that analyse the permitted uses of urban estates. Specifically, in the case of Badalona, this court approved a simple zoning that reserves the use of tourist housing in a portion of the municipality that is not coastal. On the other hand, Rodríguez Laplaza pointed out that the so-called collaborative economy is nothing more than an activity, so it is logical for the administration to regulate this activity via responsible declarations or similar.

The advisor to the National Commission for Markets and Competition, Pilar Canedo, stated that tourism is a phenomenon in extraordinary demand by society and that, for this reason, consumers must be protected. Regulations must obey reasons of imperative general interest, there are many assessments that administrations must make and justify when approving their rules. Tourism has become more democratic, society is different and new challenges are being faced. Regulations are always behind schedule. From his point of view, hotel lobbies are behind the campaigns against tourist accommodation, especially attacking it because of the lack of taxation. According to the CNMC, the principles of good regulation are: necessity, proportionality and non-discrimination. The CNMC observes dangers of "cartelisation", so if there are no barriers to entry, the market will be regulated. Zoning in many cases generates the maximum barrier to entry, creating an oligopoly and preventing the improvement of those already in the market.

Luis Falcón, consultant at InAtlas, pointed out that the phenomenon must be measured in order to take the right measures. In the Canary Islands there are powerful plans that can reform island and municipal urban plans. Falcón acknowledged that tourist housing generates externalities in the price of rent but also in the evolution of hotel prices. For him, in terms of the impact on public space, it is not possible to differentiate between tourists in tourist housing and tourists in hotels. He also stated that the phenomenon of gentrification is not caused by tourist housing, it is a natural urban evolution that has already occurred on other occasions. He criticised the fact that there are other factors apart from tourist housing that also explain the increase in prices; studies and data are lacking. He agreed with the other speakers, recognising that administrations can be discretionary and establish quotas by zones as long as they can justify it.

Pau Mir, a lawyer specialising in urban planning law, pointed out that there is an extraordinary use of property rights, so it is logical for the administration to regulate this extraordinary use. The urban planning of a city is a political decision, so focusing only on competitiveness is a reductionist vision. Plans always interfere with property rights. The Court of Justice of the European Union has said that zoning is possible, it is a valid instrument, even the best we have. It is normal to limit the excesses of free competition. Mir acknowledged that zoning must be highly motivated, proportional and non-discriminatory. The use of tourist housing is not residential, it is economic and should be treated as such. The activity tends towards professionalisation. Finally, the administrations can approve changes in the urban use of tourist housing.

Enrique Ramos, Councillor for Sustainable Urban Planning, Housing and City Projects of the City Council of San Sebastian stated that we are experiencing an anomalous tourist situation. He briefly explained the history of tourism in the city of San Sebastian, with an initial phase in the 1920s, a major crisis between the 1970s and 2000s due to ETA terrorism, followed by a gradual recovery. Until 2015 there was a desire to grow in terms of tourism, it was not a matter of concern, but in 2016 San Sebastian became European City of Culture and the definitive end of ETA took place. This produced a tourist explosion, a rise in prices, a rapid distortion of the city's situation, as well as a notable increase in illegal supply. The primary use of housing is residential, tourist housing is a tertiary activity. There were imbalances depending on the neighbourhood. For this reason, the City Council made a zoning, justified from an urbanistic point of view: Zone 1 saturated, no more flats. Zone 2 flats with certain characteristics, first floor, total 250 m2 and no flats underneath + 1 flat every 6. Zone 3 350 m2 and 2 flats every 6. A register was approved and an increase in inspection work, with more dedicated staff (including police). A map of legalised flats is also available.

*Presentation 8 - Taxation and taxation of holiday homes

The eighth and last round table of the Congress was led by Maria Àngels Marí, Secretary General of PIMEEF, and began with the intervention of Vicente Arbona, Administrator of the AEAT in Ibiza and Formentera, who reported on the new tax model, the 179 model where the obligation to report falls on the intermediary. This model is already approved, it will start this year 2018, so in January 2019 all the data of 2018 will be reported and then it will be done quarterly. It doesn't matter where the owner is, as the informative fact is produced in Spain. Platforms will be the most affected. The information to be included is: owner of the property, assignor if different, identification of the property by cadastral reference, identification of the tenants (at least 1), amount of the assignment, days of occupation, payment method, etc. At the same time, the landlord has to keep data on the tenants in accordance with public safety regulations.

María Antonia Truyols, Director of the Tax Agency of the Balearic Islands (ATIB), pointed out that the regional and state tax administrations are constantly collaborating. She also reported that some 200 million euros have been collected with the Sustainable Tourism tax. He pointed out that it is a very easy tax to manage as 98% of tourist homes are tax simplification. The number of beds and the number of days that the property is offered (not necessarily occupied) must be reported. At the time, there was a register and a payment letter, the easiest system for the administration and for the citizens. This tax is 100% telematic.

Meritxell Yus, from Cuatrecases Barcelona, emphasised how to pay VAT on tourist housing. If it is a rental property, it is exempt, but if it is a property with hotel services (reception and continuous attention, cleaning, change of linen, food services) it is billed at 10%. And, finally, if the property is rented for subletting, it is taxed at 21%.

Rocío Garnacho, Professor at the Universitat de les Illes Balears, pointed out that in the IRPF taxation it makes no difference whether the rental is for tourism or for the purpose of habitual residence. On the other hand, in the Economic Activities Tax (IAE), it is exempt in most cases.