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Jamaica is intensifying its efforts to address the rapid and unregulated expansion of short-term rental platforms such as AirBnb, which have significantly disrupted the traditional hotel industry and posed risks to the country’s economic stability. 

As these rentals continue to grow unchecked, they create an uneven playing field by operating outside existing regulatory and taxation frameworks, depriving hotels and the government of critical revenue. This alarming trend threatens not only the financial health of small and medium-sized hotels but also the broader sustainability of Jamaica’s vital tourism sector.

As such, urgent policy reform and enforcement are being examined to restore balance and protect the nation’s economic future. The rapid expansion of short-term rental platforms is creating a significant challenge for traditional hotels in Kingston and across the Caribbean. 

Industry leaders say these platforms are diverting up to 30% of business away from small and medium-sized hotel operators, threatening the financial viability of an already competitive hospitality sector.

Airbnb particularly challenging in Kingston

It is being reported that in the capital city of Kingston, this issue has become particularly acute for smaller hotel operators. The Jamaica Hotel and Tourist Association (JHTA), Kingston chapter Chairman, Christopher Jarrett, says the current market conditions are unfair and unregulated. 

He told Travel and Tour World (TTW) that unlike hotels that must strictly comply with a range of regulations including fire safety, health standards, and taxation, short-term rental operators often function without oversight or accountability to regulatory bodies like the Jamaica Tourist Board (JTB) or the Tourism Product Development Company (TPDCo).

This lack of regulation means that many short-term rentals benefit from lower operating costs, allowing them to undercut traditional hotels on pricing with Jarrett emphasising that this disparity leaves many small hotels struggling to compete, as they face the dual pressures of compliance costs and shrinking market share.

Immediate past president of the Caribbean Hotel and Tourism Association (CHTA), Nicola Madden-Greig is echoing similar sentiments, noting that “short-term rentals have evolved beyond casual, informal arrangements involving spare rooms. Today, entire properties are being marketed aggressively on these platforms, transforming the sector into a serious commercial competitor to traditional lodging.”

Regional challenge unfolding

The surge in short-term rentals is not unique to Jamaica as Managing Director of Tourism Analytics, James Hepple explains this trend is accelerating throughout the Caribbean region. Countries popular with tourists have seen an influx of short-term rental listings, from large homes to multi-unit properties, putting further pressure on conventional hotels. 

TTW reports that while some governments in the region have entered into agreements with platforms like Airbnb to facilitate tax collection, the system is far from perfect, while Hepple highlights a significant “grey area,” as authorities often lack visibility into which properties are operating legally and submitting appropriate tax payments. This ambiguity undermines efforts to create a level playing field between traditional hotels and short-term rental operators.

Hepple points to a workforce retention crisis across the Caribbean hospitality industry following the COVID-19 pandemic. With labour shortages and rising wage demands, traditional hotels face mounting operational challenges. By contrast, short-term rentals require minimal staffing, further tilting the balance in their favour.

Taxation complexities

Taxation remains a critical point of contention as traditional hotels contribute to tourism revenue through established mechanisms, such as Jamaica’s Tourism Enhancement Fund (TEF), which channels funds into marketing, product development, and infrastructure improvements. Short-term rentals, however, often fall outside these formal tax frameworks.

Some Caribbean countries, including Bonaire and Curaçao, have successfully adopted per-visitor tourism taxes that capture revenue from all types of accommodation providers, irrespective of their business model. This approach, TTW says, ensures fairer tax collection and redistributes tourism-generated income more equitably.

However, Jamaica’s reliance on the TEF complicates the adoption of similar reforms. The TEF’s structure and legislative framework make expanding tax collection to short-term rentals a complex process that requires policy revisions and stakeholder cooperation.

Despite these challenges, industry leaders like Jarrett say action is essential. If left unaddressed, the unchecked growth of short-term rentals risks destabilising the hotel industry and reducing the funds available for national tourism development.

Stiff competition happening

 The competition for guests is set to intensify with the imminent arrival of new mixed-use developments that blur the lines between traditional hotels and short-term rentals. One such project, Different Properties Jamaica Limited in Kingston, is poised to launch a condo hotel model, combining hotel services with short-term rental opportunities.

This model allows individual investors to purchase shares or units in the property, enjoying financial returns without managing daily operations. The promotional materials highlight how owners can capitalise on the hospitality market’s growth while the management team handles bookings, maintenance, and guest services.

While this innovation may appeal to investors and travellers seeking flexible accommodation options, it further complicates the regulatory landscape. Authorities and industry stakeholders face the challenge of integrating these hybrid properties into existing tourism and tax frameworks to ensure fairness and sustainability.