Hotel owners in France have launched a legal action against 50 chambre d'hôte businesses, which they accuse of operating illegally.

The case has been brought by the Union des Métiers et des Industries Hôtelières (UMIH), the main association of hotel owners, who have been involved in a long standing crusade against chambres d'hôtes.

The UHIH claim there are between 100,000 and 150,000 chambres d'hôtes who do not play by the rules, figures which they do not substantiate.

The current cases have been brought against owners in ten departments of France: Ardèche, Ariège, Dordogne, Bouches-du-Rhône, Gers, Gironde, Morbihan, Pas-de-Calais and Pyrénées-Orientales.

The association states that this action will be followed by similar steps right across the country.

Twenty-five of the cases concern a complaint of ‘unfair competition’, on the basis that the association considers many chambre d'hôte owners do not respect the rules on the limitation of this type of activity.

Under the regulations, a chambre d'hôte cannot contain more than five revenue earning bedrooms, nor accommodate more than fifteen persons. A greater number then it must be classified as a hotel, and operate under different, more stringent access, fire and security regulations.

In addition, there are other requirements to which chambre d'hôte owners must adhere, notably concerning the provision of food and drink.

Despite these rules, the association produced evidence from the internet of owners advertising as many as twelve bedrooms, together with restaurant and bar services.

The association also considers that a great deal of this activity is clandestine, and that, as a result, tax obligations were not being met.

So the second axis of the claim is to seek an injunction obliging twenty-five chambre d'hôte owners to register their business with the business registration authority, in compliance with the regulatory requirements.

If the activity is not business registered then the owners are not obliged to pay the full panoply of social security contributions, giving them a substantial competitive advantage.

The level of social security contributions on a guest house business does vary by type of tax status, but can be as much as 45% of net profits. For those registered as an auto-entrepreneur or micro-entreprise it is a lower percentage level of actual turnover.

However, the business registration requirements of chambre d'hôte owners still remains a little uncertain, as their legal business status has never been properly established.

Since 2011 a greater level of clarity has emerged, for those who run a chambre d'hôte as their main professional activity are required to register it as a business. If their net profits exceeds €4,814 per annum (2013) they are also required to pay social security contributions. However, if registered as an auto-entrepreneur, social security contributions are payable whatever the level of profit.

Even if not business registered, and run as a complementary activity, owners remain liable for social charges (prélèvements sociaux) of 15.5% on the net rental income.

As part of their campaign, the association met with the French Minister of Small Businesses and Tourism, Sylvia Pinel, who assured them that the government did recognise that there was a problem, and that she has set up a working group to report on the matter by the end of the year.

In the meantime, the Minister promised to write to all préfets and regional and general councils, with a request that they ensure the regulations concerning the operation of tourist accommodation are enforced.