One of the biggest causes of the gray economy in tourism is unregistered private accommodation services. This issue became even more obvious when foreign online platforms, like Booking, began advertising such entities, essentially giving them easier access to service users.

The problem with these platforms lies in the fact that they allow advertising of unregistered private accommodations, whose owners do not engage in hospitality activities in accordance with regulations, thus effectively avoiding tax obligations on their income.

On the other hand, Booking does not accept any responsibility for verifying the legality of private accommodation providers in the country where the service is provided.

To clarify, unregistered entities are those who provide accommodation services without prior registration in the appropriate registry, operate in facilities that require categorization but lack a categorization certificate, and those who are not registered in the Central Information System – eTourist.

Which Regulations Are Potentially Being Violated in This Case?

Article 7 of the Advertising Law (Official Gazette of the RS no. 6/2016 and 52/2019 – other law) prohibits advertising activities if it is legally required that the activity advertised can only be carried out based on a permit or another act from a state authority.

This is precisely stipulated in the Tourism Law (Official Gazette of the RS no. 17/2019) and the Hospitality Law (Official Gazette of the RS no. 17/2019), which regulate the obligation to register, i.e., record hospitality providers and hospitality facilities.

However, the current regulations do not provide a way to sanction entities not registered in the Republic of Serbia that engage in such advertising, like Booking, whose headquarter is in Amsterdam, Netherlands.

How Can a Solution for This Problem Be Found?

Representatives from the Ministry of Tourism of the Republic of Serbia have held several meetings with representatives from Booking, where they proposed mandatory use of a unique identification number for registered providers from the eTourist register (“JID“) that providers would give when concluding advertising contracts with the platform.

However, Booking did not agree to this condition and expressed a willingness only to conduct informational or educational discussions with entities wishing to advertise on the platform. Booking also stated that one form of regulation already exists through the acceptance of the platform’s general terms of use, where the provider confirms their legal right to rent out the accommodation.

Practice in Other Countries

Many countries in Europe and beyond have also faced issues with the operation of these platforms.

An example is Turkey, which conducted a lengthy legal battle with Booking and succeeded in obtaining compensation due to non-compliance with local regulations, as well as for unfair competition. The company also temporarily ceased operations in Turkey, sending a clear message that aligning platform operations with national regulations is essential.

Conclusion: The Future of Private Accommodation Advertising Platforms in Serbia

The issue with Booking in Serbia highlights the expansion of the gray economy in the private accommodation sector, where many advertisers operate without registration and categorization in national systems.

However, this issue is merely a consequence of a larger problem: the inefficiency of domestic legal mechanisms in sanctioning unregistered entities. The shortcomings in regulation and oversight in the tourism sector should not be addressed by shifting the burden of control onto private entities like online platforms, especially when there are no effective mechanisms to oversee their operations.

On the other hand, these online platforms can serve as a starting point for monitoring entities advertising through these platforms, given that they are a systematic database of private accommodation service providers. In this way, these platforms would serve as a kind of auxiliary tool for the competent inspectors of the Republic of Serbia.

By strengthening inspection oversight and, above all, collaborating with foreign platforms, the Republic of Serbia could better control the private accommodation market and consequently reduce the gray economy in tourism.

Whether further talks with Booking will continue remains to be seen.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.