Category Archives: Opinion

May 3, 2017

Why your Italian Airbnb is about to cost more

Italy has finally made a move against Airbnb and come June of 2017, things are going to change.

It’s difficult to really get a fixed number to asses the impact Airbnb has had in Italy’s major tourist destinations, because Airbnb hasn’t been sharing it, but the city of Rome, just as an example, has about 4,000 legally registered guesthouses and vacation rental apartments, whereas a search on Airbnb shows well over 12,000 results.

Despite having unlocked lots of amazing, well priced places to stay, the illegality it has promoted matters, and here’s why:

- Italy has strict anti-terrorist laws that requires all accommodation owners to register their guests with the police.  So far this has helped police to track anyone, visitors and residents alike, who are staying somewhere other than their primary residence.  Accommodation providers that aren’t registered with the city, and thus illegal, have no way (and no reason) to register their guests, which undermines the efforts of law enforcement.

- Tourist tax.  Almost all major Italian cities now enforce a tourist tax, which is collected by the accommodation provider and then paid to the city.  Those that are illegal have no way (and again, no reason) to collect this, so a huge amount of money that’s needed for the upkeep and maintenance of cities that are heavily trafficked by tourists, goes unpaid.  Or worse, the accommodation providers collect the money from tourists, but then pocket it.

- Taxes.  Yes, no one likes to pay them.  But taxes do pay for the police, hospitals, firemen, and everything else that we hope is working well when we need it.

- Everything else under the table.  If you’re illegal, you can’t hire staff legally, can’t pay sales tax.  Essentially any services you hire out will be paid as an individual without the same contributions that businesses make that pays health insurance, unemployment, pensions – all the benefits that people rely on.

The new law and what it does:

- Packaged as a tax break, it gives the option to any private individual renting real estate for under 30 days to pay a flat 21% tax instead of the normal income tax that starts at 23% and goes up depending on one’s income.

- Obligates intermediaries, including on-line sites that collect payment from the guest, specifically Airbnb, to withhold the 21% and pay it directly to the tax authorities on behalf of the accommodation provider.

- Obligates the same intermediaries to report to the tax authorities all rentals taking place.

- Owners who don’t wish to pay the flat rate will have the amounts paid on their behalf put on credit toward whatever else they owe.

- This new law goes into effect as of June 2017.  The tax authority has 90 days to inform the public and other parties concerned how the reporting and payments will be done.

What we can expect:

Whatever the number of illegal properties are, those who are illegal cannot pay their taxes, either purposefully or because to do so would shed light on their own illegality.  Those people, as of June 2017, are going to see their takings drop 21%, which will surely force them to increase their prices, or to close down entirely for risk of getting fined for not having the proper authorisation.  Either way – we expect either the market will shrink, which will push prices up, or the market will remain the same size, but prices will increase to compensate.  Intermediates are also obligated to report (though it hasn’t been released how) all the details of each rental transaction.  This will mean the tax police will have detailed records of all Airbnb hosts, and those that are operating without authorisation will be easily identifiable.

Airbnb has been known to push back legally at legislation that can potentially hurt their revenues, so it’s possible that this law will be contested.  However, they’ve also recently made peace with San Francisco and NY, two of its biggest markets, by dropping lawsuits.

December 5, 2016

Italy’s 2016 Referendum – what does it mean and what you need to know

Yesterday I voted for the first time in an Italian election as an Italian citizen.  I’d been researching the issue, and asking everyone I know for their opinions, for months, and the truth is, I can’t think of a worse issue to have as my first time.  Were this first time sex, it would be the equivalent of doing it in the backseat of a car with someone you don’t even really like – memorable, but disappointing.

However, I was quoted by a journalist friend about how I voted, and why, for The Guardian newspaper (which definitely didn’t happen after my first sexual encounter).

For those who haven’t yet recovered from the US elections and didn’t even begin to sort through what this was all about, I’ll give a very brief, Cliff-Notes version – basically just what you need to know so that you can have an opinion about it at a dinner party, and know what it might mean for the future of Italy, the future of the EU, and how that might effect anyone who wants to come here on vacation.

WHAT WAS THE REFERENDUM ABOUT?

The question asked to Italian citizens on the ballot was essentially (and forgive my terrible, literal translation):

Do you approve the constitutional law concerning the provision for exceeding the equal bicameralism, a reduction of the number of members of parliament, containment of costs of institutions, the suppression of the CNEL and the revision of Title V of the Second part of the Constitution?  Yes / No

In my own words, it was about reducing the size of the senate and changing their power so that laws would be quicker to pass and governments couldn’t be ousted as easily.  In addition, the Provinces would be abolished as well as an organization called CNEL, all of which would have saved taxpayers X amount of money.

Sounds good, right?  Smaller, cheaper, and more stable government is hard to turn down!

The first bit of messiness was that Renzi, the Prime Minister, originally said that if he couldn’t get these reforms to pass, he would step down as PM.  For many, that made a “No” vote the equivalent of “Out with Renzi”.  He then took back that statement, and in the back and forth, the issue became for many people, the equivalent of  a “Yes” vote meaning “Renzi stays”.

After Trump’s victory, the foreign press called this a potential ‘Third Act’ in the Brexit/Trump/Italexit saga.  Many also feared that Italy, looming on the brink of a serious banking crisis, would be in such a state of uncertainty were Renzi to step down, that the EU would be in turmoil if we delivered a “No” vote.  The foreign press also speculated further about how the only party that would come to power post-Renzi was the 5-Star movement, which has been on the record as being anti-EU (even though they’re also on the record for being pro-EU).

HERE’S SOME OTHER THINGS THAT THE ISSUE BECAME ABOUT:

- If Renzi steps down, that will leave a space that could only be filled by the 5-Star (antiestablishment) movement which could then lead to referendum on leaving the EU alla Brexit – which could be bad.  Or good!

- If Renzi steps down, that could force the President of the Republic to create a technocratic government to tide us over until the next elections in 2018 – which could be bad.  Or good.

- The far right sees a “No” vote as the same kind of “No” that the UK delivered and the same kind of “No” that the US voted (against Clinton and the establishment), which would then pave the way for more Salvini/Putin/Le Pen/Trump right wing extremists.  Which would certainly be bad.  Unless you’re into that, in which case it would be good.

So a vote on constitutional reform, involving the size and cost of the Senate, turned into a vote either for or against the PM, a vote for or against the EU, a vote for or against Populism and the Establishment (which, in this case, we don’t really know if it’s Renzi and his proposal or saying no to Renzi and his proposal).

WHAT WAS IT REALLY ABOUT?

Those who broke down the actual text of what was proposed (myself included) found the following issues of concern:

- The remaining senators would not be elected directly by the people. They would be appointed by other politicians.

- The remaining senators would also hold a second public office, so would have to divide their time between the two jobs, and incur higher costs in getting to/from Rome to complete their duties as senators therefore reducing the potential savings.

- The senators would have legal immunity, which could lead to all kinds of corruption (and just, why?).

- No salaries would be cut, therefore making the issue of saving money no longer at the center of the argument.

- The process by which a law becomes a law, instead of following the current, slow, yet single procedure, would follow 10-13 different procedures (the actual number not 100% agreed on) that, if disputed, would end up in the constitutional courts to be disputed to death, which means that there’s no guarantee that laws will be any easier to pass then they are now.

- That governments would be more stable, but also more powerful, and that could be good (if the government is good) or it could be REALLY bad (if the government is bad).

- For some reason they also threw in there that the number of signatures needed to bring a public vote forward would be much higher than it currently is, which just had no place getting squeezed into this.

WHAT HAPPENED?

Well, we know what happened.  Italy voted “No” about 60 to 40, and Renzi immediately stated he would turn in his resignation the following day.

WHAT HAPPENS NEXT?

Good question.  It’s doubtful we’ll hold early elections, so the President will have to form a government that will last from now until 2018.  In the meantime, that means nothing’s changed at all. The laws, and the process by which they become laws, has stayed the same.  Today, and tomorrow, Italy will have the same problems that it had yesterday and the day before.

For the tourist, this might mean that the Euro will fall against the dollar a bit, which could make your trip cheaper.  Otherwise, you can plan that Italy is going to be the same dichotomous, beautifully messy, chaotic and confusing place that it was and might always be.

But if you really want to understand Italy, just watch this oldie but goodie:

April 20, 2016

Why You Should Avoid Illegal Rentals

Here at Cross-Pollinate we’re always happy to pass along travel tips and suggestions that are useful and enlightening.  When we started in 2000, hotel-alternatives were small fry and we, as well as others, were able to offer cheaper, more personal accommodations without creating ripples in the travel world or among local residents.

That is no longer the case.  Vacation rentals and home sharing is huge business now, and with big business comes big problems.  Because we believe an informed traveler is a happy traveler, we’d like to weigh in on the controversy surrounding legal vs. illegal rentals.

What is an illegal rental?

This can vary from city to city, but most major tourist destinations and dense urban centers have regulations that govern private room or apartment renting.  Basically any room, apartment or house that rents space without respecting these regulations is not legal.  Add to that the issues of taxes on income, hotel/occupancy taxes, and under the table employment – which are abuses of the systems we all depend on, made by both illegal and legal rentals.  Those who are technically authorized to rent their places might still fall foul of the law by choice or necessity, but those who aren’t authorized at all to be renting their properties are surely incapable or unwilling to abide by other laws that are all connected.

The situation, in a nutshell:

With the onslaught of vacation rentals flooding the market (mostly stemming from the enormous venture capital of Airbnb), online marketplaces are making it easy for guests to connect with hosts who conveniently, but illegally, are monetizing the extra space in their private homes.  This isn’t new, but it had previously operated in the shadows to the degree that most governments felt wasn’t worth going after.

Over the last 8 years, an influx of “shared housing” has created underground economies that are putting the squeeze on legitimate vacation property owners, while creating housing shortages that are driving up long-term rental prices.  In response to this trend, many cities like Paris, Barcelona, Berlin, San Francisco, New York and Santa Monica are starting to crack down, putting oversight and regulatory enforcement programs in place, or battling to have existing laws respected with cooperation from the sites who list them.

Why should you care?

The burden of the law shouldn’t be on the buyer, and in some cases even the residents themselves aren’t clear about what they can and can’t do legally, let alone travelers.  So it’s unlikely and unreasonable to imagine that a traveler can do due diligence and determine if a rental is legal or illegal, and if legal, to what degree.  Simply put, it’s not your responsibility to know or to care.

But with that said, we’ve seen some patterns of behavior that affect the traveler by those who aren’t professionals.  Whether illegal or legal, someone who depends on the reputation and longevity of their business will make different decisions than someone who rents casually or when they feel like it.  People who are concerned with the consequences will take more care than those who are either unaware of the consequences or simply don’t care.

Here are some practical reasons why we believe you should avoid illegal rentals when traveling:

  • Cancellations. Booking an illegal rental puts you at risk of being stranded without a place to stay if a property owner is forced to comply with the law and removes their rental from the market.  I’m sorry to say that this happens all the time, and we’re often contacted by travelers who’ve had their accommodation “fall through” at the last minute.  By the time this happens, there’s usually little else available and often the price is higher than it was originally.
  • Safety. Hosts who circumvent the rental permit process are also less likely to follow fire safety regulations, building codes and/or have the required insurance coverage for public lodging establishments.  If you don’t care about the law and preventing disasters, you really don’t care much about the people they might happen to.
  • Scams. Statistics show that of the millions of vacation accommodations published online, about 10% of them are fraudulent ads. Many victims pay deposits for properties that don’t exist or arrive to find them occupied by the ‘real’ owners.
  • The Backlash. The short-term rental boom is turning quiet neighborhoods into noisy tourists havens and apartment buildings into defacto hotels.  Understandably, this creates bad blood between neighbors (long-term vs. short-term) and guests are often on the receiving end of that anger. Encounters in the lobby or elevator with residents can be uncomfortable, to say the least.
How to avoid illegal rentals?
That’s a tough question, as there is no single standard anywhere.  One would have to research the laws in each city to get an idea of what’s allowed and what’s not.  Even for us, an agency that knows, more or less, the laws in the cities we operate, we have no way of being 100% sure if a company is legal or not.  We do, however, make sure that owners are renting on an ongoing basis and take it seriously – filtering out anyone who shows any signs to the contrary (for example, we won’t even work with people who are unresponsive to emails).

The upside of apartment rentals in general is that they tend to be more affordable than traditional hotels, B&Bs and vacation accommodations – especially important for budget travelers.  Airbnb grew to its impressive size by creating a large portfolio of cheap options.  But as with all things, you get what you pay for: the savings you’re being offered is normally because a corner was cut somewhere else.  On a large scale, as it is now, this can have a huge negative impact on neighborhoods, economies and your trip.

Saving money is great, but if your precious holiday time is ruined, you may be throwing away a lot more in the end.  It really comes down to one question: Do the benefits of an illegal rental outweigh the risks?

Below are just some of the rules and regulations for the European cities that Cross-Pollinate has properties in:

  • In Rome, Florence and Venice. All rentals must be authorized by the city and guests must be registered on arrival by the property owners/manage with the police department, as well as collecting a city tourist tax, which varies city by city.
  • To have a holiday rental in Barcelona, an owner must obtain a license of occupancy (the number needs to be displayed in all advertising), comply with the same health and safety laws as hotels, and collect a Catalan tourist tax (per person, per night).
  • In Paris, the law states that a flat must 1) be registered as a commercial property or 2) be the host’s primary residence.  Owners who take one property off the rental market to residents must purchase a second property to “balance things out”.  There is also a tourist tax to be paid to the city.
  • Lisbon insists that owners register their property at the local tax office.
  • Istanbul allows unrestricted short-term rentals and holiday rental-friendly London lets owners rent their homes for up to 90 days a year without obtaining a permit.

 

November 12, 2014

Understanding Italian Strikes

Another general strike in Italy has been announced for this Friday, November 14th, that will affect almost all forms of travel and public transport throughout the country.  Such a strike seems like a crippling affair when reported by English news sources, one with the potential to ruin plans and strand travelers.  However, as with everything else in the Bel Paese, strikes are not the same as they are “back home” and the amount of fear and panic they induce is mostly unnecessary.

So how do strikes really work here?  Well, strikes work pretty much the way other stuff works here – that is to say, not very well.  In the US, a strike means the negotiations have failed and the result is a total shutdown until an accord can be reached.  The threat of a strike is powerful because if a strike comes there’s guaranteed to be serious losses.  It’s the end of the line.  And if the strike was ultimately carried out half-assed, then it would undermine the threat of future strikes.

Here that’s not the case.  Here, they are optional.  They’re flexible.  It means, maybe the bus will run, and maybe it won’t.

To understand strikes you have to understand Italian unions.  They operate with or without the support of the people they are calling to strike.  They are essentially independent entities who lobby government for laws that govern workers rights and will affect different categories of employment, but they don’t require employees to join the union in certain sectors to lobby for them.

When you see news about strikes, what you’re seeing is not a notice from organized workers themselves, whose collective voice is being expressed by a union official.  Instead, it’s the union which is calling the workers of that sector to strike – and whether they do or not is up to them.

I get up and I go on strike

A few important things to note, to get a better grasp of how severe a strike can be:

- the trains to the airport from Termini station, such as the Leonardo Express, cannot be affected by strikes.  This is guaranteed by law.

- often, the Freccie, or high speed trains, cannot be affected by strikes – only the regional ones.

- for public transportation, the buses and metro are obligated to run for a few hours that are crucial to get people to and from work – around 8-9am and from 5-6pm.

- workers don’t have to notify employers that they intend to strike, and can’t be reprimanded legally for participating, so companies have to operate in the grey area of not knowing how much a strike will affect them either.

To sum up: a transport strike doesn’t mean that there won’t be buses or that you won’t be able to get where you’re going. It means there will be delays and you can expect to waste some time and have to be a bit flexible and easy going about it.

But, wait, that’s what it’s always like here, isn’t it?

Updated news about the actual hours and the companies/unions involved can be found at this Italian website which is fairly easy to decipher and updated regularly:  http://www.mit.gov.it/mit/site.php?p=scioperi

March 10, 2014

Wake Up and Smell the Coffee

by Steven Brenner

Thanks to the invasion of Starbucks, the worldwide thirst for coffee is higher than it’s ever been, despite the fact that their coffee sucks and is totally overpriced.  Coffee consumption and cafe culture has been around Europe for centuries, around North America for decades, and is now spreading into Asia.  It’s an enormous industry, over 2 billion cups of the stuff consumed PER DAY worldwide,  yet the division of these billions of dollars is completely screwed, with huge wealth being created at the sale and immense poverty forced on those at the origin.

I’m not an expert on economics or world history or agriculture, but what I’ve seen with my own eyes makes me question why these growers, who control this powerful commodity, are so poor?  And when you start to really examine the politics behind it, and just how artificial the whole thing seems, I have to wonder why poverty exists at all and how is it all connected.

I know, heavy stuff, but that’s the way we roll in the MB house!  We travel, we try to see things and form opinions about them from direct experience.  We take tours with people who are passionate and informative about their life’s work, and try to make the world a classroom for us and for our kids.

We were in Boquete, Panama, the mountainous interior part of the country, home to some of the world’s most valuable and prestigious coffee – the Geisha.  When grown at the right elevation, a few growers get such high rankings for this coffee that it is only sold at auction to the highest bidder.  We’d signed up for a tour at the Finca Dos Jefes coffee plantation, an organic coffee farm owned and run by an American expat named Richard Lipner and were amazed at what we saw and heard – eye opening, heart breaking injustices – hard not to think about every morning when you sit down, open your computer, and take a sip of a cappuccino.

Some basics:  coffee is an ancient drink with almost magical properties.  It’s made from little cherries that only grow between the Tropic of Cancer and the Tropic of Capricorn, in 70 countries.   There’s an organization that was set up in the last century to protect the prices, probably helping to stabilize some countries by putting a floor on what other, more desperate countries can charge.  That was when there was a possibility of a coffee abundance.  Now, if anything, there’s a shortage.  And yet, despite the high demand, the farmers are barely able to stay afloat.

The cherries are grown, picked when ripe, usually by hand, then they are either dried outside on mesh beds, or a load of water is wasted and contaminated to remove the sticky “mucilage” around the bean.  There’s a fermentation process and a roasting process – which can be an art form itself, and a variety of ways to brew it (in my opinion, the moka is the best).

If you want to learn all about how coffee is grown and roasted, you can take a tour with Rich in Boquete.  But I don’t want to dwell on the details of coffee itself.  I want to dwell on poverty – because coffee and poverty, at least in Panama, seem to go together.

Around Boquete, cherry pickers make about 5-7 USD a day when it’s cherry picking season.  This is the lowest of lowly work, and almost entirely delegated to the indigenous people who were displaced in the early 1900′s when the French came to build the canal. Eventually, after having their land taken and getting pushed up almost into Costa Rica, they were then given a batch of wild land as an Indian reservation where they currently live.  They have no infrastructure, and thus, no way to get an education (unless you walk 10-20 miles to school in the rain) and lift themselves out of poverty.  Between the poor Panamanian (which by North American standards is quite poor already), and this lower caste of Indian who picks coffee cherries, you go so far down the ladder of “wealth” that there’s about zero chance of any of these people making it on to the ladder, let along climbing up it.

Here’s an example of living quarters for a family of 10.

Note the absence of windows and no ventilation.

Cooking on a concrete slab and dealing with the smoke.   These people actually aren’t the worse off.

Here’s a make-shift home where about 30 people live.  When it rains (which is often) their home is continually destroyed.

Like I said, I’m no expert and I don’t claim to know why the world is the way it is, but I do have to try to string some basics together, to understand what I’m seeing, and to respond to my kids who ask innocently why these people can’t build a bigger house; why they can’t get better jobs; why they can’t just leave.

As I travel more, and especially as I travel with my kids, I find that the more I learn about the world and our interconnectedness, the more I can’t untangle it all.

I don’t know if capitalism can work without cheap labor, or whether an alternative to capitalism could be an improvement.  I don’t know why rich countries can’t coordinate with impoverished ones more fairly, nor am I naive enough to think that simply paying people more will truly solve their problems – it can help, at times, but money, after all, isn’t the same as wealth.  The problem is political, economical, and the power play between them.

What I do know is that it’s 3:45 pm and I’ve just had an espresso, a fair-trade coffee from Nicaragua.  I know that, like it or not, I’m connected to those farmers, even as I leave to go get my youngest daughter from school.