Airbnb projects that Indonesian hosts will rake in $91 million in revenue this year through its accommodation booking app. (Reuters Photo/Yuya Shino)

Indonesian Hosts Set to Earn $91m This Year as Airbnb Ensures Revenues Stay Local

BY :DION BISARA & TABITA DIELA

NOVEMBER 24, 2017

Jakarta. Online-based hospitality service Airbnb projects that Indonesian hosts will rake in $91 million in revenue this year through its accommodation booking application, amid rapid growth in the number of guests using the service.

The app, which became available in Indonesia in 2012, allows subscribers to benefit from the rapid growth in Indonesia's $100 billion hospitality industry – one of the sectors the government focuses on to boost economic growth in the country.

"Hospitality is intrinsic to Indonesian culture and we continue to grow in Indonesia and around the world, because tourists want unique, adventurous and local experiences when they travel," Mich Goh, Airbnb's head of public policy in Southeast Asia, said in a recent email to the Jakarta Globe.

The company currently lists 43,700 hosts across the archipelago and it has seen 881,000 inbound guest arrivals over the past 12 months, up 72 percent from the same period last year.

"In the past year, a typical host in Indonesia earned $2,100, with total host earnings of $84.6 million," Goh said. She added that, based on Airbnb bookings, hosts will earn a total of around $91 million this year.

Travelers using the service are mainly from Jakarta, Singapore, Melbourne, London and Sydney. They spend 3.7 nights per guest on average. Hosts, who are typically young, with an average age of 38, can expect to host 25 nights on average per year, Airbnb data shows.

"Home sharing also helps distribute the benefits of tourism beyond typical travel hotspots, enabling diverse communities to benefit from tourism and hospitality," Goh said.

Tax

However, foreign online-based accommodation booking services, such as Airbnb and Agoda, have found themselves on the defensive over the past few weeks after local hotel operators accused them of dodging tax and undermining the profit margins of traditional hotel operators.

But Airbnb said that it contributes by helping local communities generate more income.

"Airbnb hosts keep 97 percent of the money they charge to rent their spare space. What's more, Airbnb is driving increased footfall and tourist spending to local neighborhoods, meaning that the overwhelming majority of money generated by the Airbnb platform stays within the local community," Goh said.

Goh added that Airbnb has also ensured hosts and guests pay their fair share of taxes.

"We're working with policy makers around the world to expand our program and find a proper way to collect fair tax revenue from our host community. Indonesia is no exception, and we look forward to working with the government towards this goal," Goh said.

Yunirwansyah, regulation director at the Directorate General of Taxes, said commissions on foreign hotel booking services are subject to a tax rate of up to 20 percent.

"Usually, they want to receive their commission in full, so the tax is paid by the local [hotel or host partner]," he said.

Still, Yunirwansyah said it would be fair if foreign booking services established permanent business entities in Indonesia, so they can also pay corporate income tax in the country.

The government previously succeeded in pressing technology giant Google to book its advertising revenue through a local entity and pay corporate income tax in Indonesia.

When asked about a local entity and corporate tax, Goh said the company follows the rules and pays all the tax they owe around the world.

"Corporate tax is a tax on profit and Airbnb is a young company investing heavily in our future," she added.

Future Policy

Communication and Information Technology Minister Rudiantara said he has received a request from the local hotel association to block Airbnb's services, but that the ministry has yet to decide on the matter.

"It's not digital technology that changes it all, but our mindset to look for new ways and better processes," he told reporters.

Rudiantara said his ministry and the Ministry of Tourism will discuss the matter to formulate policies on online-based home-sharing services.

Airbnb said it is eager to work with the government to develop the local tourism industry.

"We look forward to working with the Indonesian government towards responsible and sustainable rules that allow home-sharing to thrive, to Indonesia's immediate and long-term benefit," Goh said.

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