Airbnb: threat or opportunity?

Published: 
March 2018

It’s blamed for pushing up property prices and squeezing out locals, yet Airbnb and similar platforms could offer potential community and economic benefits too. Should Australia follow American cities and regulate short-term rentals?

In residential areas throughout Australia, there is a new type of tenant on the block. Residents in apartment buildings find strangers dragging suitcases down the corridors, people in quiet streets compete for parking spaces with the new arrivals or protest about noise from the ‘party house’ next door.

Airbnb tourists are becoming known as ‘nuisance neighbours’, and in popular locations like Brisbane, Melbourne and Byron Bay they are being blamed for squeezing out locals, pushing up prices and exacerbating the housing crisis.

Hoteliers are also unhappy, and complain they are exposed to unfair competition by ‘amateurs’ who don’t have to pay tourism taxes or comply with the same safety regulations.

According to tourism expert Professor Sara Dolnicar, home-sharing models have been around for a long time, but it is the sheer scale of adoption in recent years that has attracted so much attention.

“Airbnb’s platform design gave the masses the confidence to rent their spaces out to strangers,” she says. “Suddenly everyone with a spare house or room wants to earn a bit of pocket money by renting it out. Airbnb has brought many opportunities, but the wide uptake has also created some challenges.”

Not surprisingly, some destinations are clamping down – typically popular tourist destinations which were already facing housing challenges before Airbnb entered the market. Rather than targeting people who are renting out a spare room in the home they live in, those destinations typically restrict entire home rentals to a number of nights a year, and impose tourism taxes and fees.

New York was one of the first cities to do so. In 2015, it was Airbnb’s largest market with 25,000 active hosts. After it banned entire home rentals of less than 30 days the following year, the number of hosts dropped to 300. The state also imposed taxes on them, which Airbnb now collects on its behalf.

In San Francisco, Airbnb fought an unsuccessful legal battle to block the city’s decision to force hosts to register. It now supplies the authorities with their names and addresses.

Amsterdam spends €1 million a year scraping digital records to identify illegally advertised apartments, while Berlin – which has some of the toughest rules in Europe – bans short-term entire home rentals without a permit. Few permits are granted and residents are encouraged to report suspicious short-term lets.

The question is, should Australian cities follow suit? Many are currently in the process of regulating short-term lettings. According to Sara, Australia is fortunate in being able to assess what has worked and what has failed in other countries. She believes the key to optimal regulation is to acknowledge both the risks and the benefits associated with peer-to-peer accommodation.

She says: “If an elderly couple in Toowoomba rents out a spare room for $10 a night is that really a problem? Does it really need to be regulated? Or do the benefits outweigh the risks in this case? The couple earns a bit of pocket money and enjoys the company of the visitors and the local café has some extra business.

“The tourism tax the council misses out on is minimal. I would argue that’s a case where over regulation would lead to unintended consequences. It would prevent something from happening which, overall, is positive for the community.

“However, in other instances such as downtown areas of major cities with high tourism demand and an existing housing crisis, the situation may be quite different and regulations may be required. Just as there is a huge range of accommodation options on offer, so the circumstances at each location vary widely. Each case should be judged on its merits and it is important that regulators do not throw out the baby with the bathwater.”    

As regulators continue to debate the issue, peer-to-peer platforms have already expanded their services. With the launch of Experiences, Airbnb is now offering everything from surfing, sailing and stunt lessons to cookery classes and guided tours.

“As soon as a platform is working effectively and there is a sufficient pool of buyers and sellers, it can sell everything a traveller needs, including seats on planes, tours and travel insurance. Successful platforms have the potential to become one-stop travel shops,” adds Sara.

But while public and media attention is firmly focused on the negative effects, she believes the potential benefits are often ignored.  Peer-to-peer networks can strengthen rural economies by opening up opportunities for enterprise. Short-term lets create a need for cleaners, gardeners, laundry and maintenance services and there are even specialist providers who photograph the property and handle listings on the hosts’ behalf.

Accommodation networks can also make up for infrastructure gaps. In Slovenia for example, one of the fastest growing destinations in Europe, hotels are mostly state owned and poorly maintained and there are no new ones being built. Peer-to-peer accommodation fills this critical infrastructure gap, allowing the tourism industry to grow.

Even in well-established tourist destinations, accommodation networks can play a valuable role in supporting major events by quickly ramping up the supply of beds to cater for increased visitor numbers. They can also be used to provide shelter in response to unexpected events and emergencies – a decentralised approach to disaster relief which can be activated with the click of a button.

“The key issue is how to harvest peer-to-peer accommodation networks for the benefit of a destination and a nation while minimising potentially negative side effects,” says Sara.

“Slovenia shows how peer-to-peer networks can assist with a major structural problem that is difficult to solve in any other way. Certainly, we could do more to exploit the opportunities they offer.

“Why don’t we partner with them to plan for disaster relief? Or to bring events and festivals to rural and regional Australia? Why don’t we work together to facilitate cultural understanding by supporting Aboriginal communities opening up their amazing spaces to respectful visitors? Of course we need to tackle the threats these platforms bring, but we should also be looking to harness the benefits.”