Airbnb beds down in NSW

The regulation of short term holiday letting has been an increasing hot topic around the world, with the Silicon Valley darling, Airbnb, at the centre of the fight. In fact, many of Airbnb’s recent efforts have been concentrated on meeting and fighting local government regulations. Results of a NSW Government inquiry into the adequacy of the regulation of short term holiday letting in NSW were finally released overnight, after almost 18 months.

The inquiry was designed to look at: the current situation in NSW and comparison of that with other jurisdictions; the differences between traditional accommodation providers and online platforms; the growth of short term and online letting, and the changing character of the market; the economic impacts of short term letting on local and the state economies; and regulatory issues posed by short term letting, including customer safety, land use planning and neighbourhood amenity, as well as licensing and taxation.

While it is not exactly surprising, the NSW Government welcomed the final report of the Parliamentary inquiry and accepted many of its recommendations. The response from the Government was clear: short term holiday letting is a great opportunity for consumers and providers, broadening the economic benefits of tourism. While an important part of the tourism landscape now, the practice had in fact been carried out for years without planning approvals or incident.

The response from the Government was clear: short term holiday letting is a great opportunity for consumers and providers, broadening the economic benefits of tourism.

The NSW Government has adopted a light regulatory touch, agreeing to: implement a whole of government framework; align principles for regulating traditional accommodation operators and short term holiday letting; and utilise the strong compliance system already in place under the Environment Planning and Assessment Act 1979. Interestingly, short term letting of rooms where the landlord or host is present, or where the property is the principal residence, have been exempt from regulations.

The NSW Government has also agreed to provide clarity and guidance to local councils, who will be responsible for communications to landowners and strata bodies. This includes reviewing all aspects of short term letting in a period of three to five years if current provisions have failed to resolve.

The other darling of Silicon Valley, Uber, faced similar issues when it first began, fighting legislation and outcry from taxi companies. However, for Uber there was a true opening. Taxi companies in most parts of the world suffered – rightly in most cases – from poor consumer perceptions; they tended to monopolies and often had governments in their pockets.

Airbnb from the start was more of a homely alternative, but almost inevitably has morphed in many cases into something very different from its original roots. One argument promoted by the NSW Tourism Accommodation Australia (TAA) for these changes is that “the sector has become increasingly dominated by commercial operators with multiple properties that involve no sharing. They contribute little to taxes or jobs, and bypass many health, safety and development regulations.”

In New Zealand, Airbnb recently announced that it had over 20,000 listings. Sydney alone has passed that number, and is ranked as one of the top 10 Airbnb cities in the world (although this varies seasonally). In 2016, an Airbnb report identified that there were more than 26,000 listings across NSW alone, and some 18,000 of those were in Sydney – doubling from the previous year. A summary compiled by listings.csv.gz showed that in early Apr-2017 there were over 24,000 listings in Sydney – up by 30% again.

Distribution of Airbnb listings in Sydney (Homes or apartments; green shows shared accommodation).


Red dots indicate where 60%+ of listings are of entire home.

The sheer volume of available accommodation, via Airbnb and any short term holiday letting business, is putting pressure on the hotel industry – which is definitely feeling the effects of Airbnb’s offering.

One thing that is especially hurting the industry is that the average length of an Airbnb stay in Sydney is five nights, a big multiplier. The New York Times recently cited minutes from a meeting of the American Hotel and Lodging Association, which showed the organisation had engaged in a “multipronged, national campaign approach at the local, state and federal level” to limit Airbnb’s expansion. A multitude of campaigns were introduced which lobbied government officials and financed studies showing Airbnb hosts are running hotels out of residential buildings without the same regulatory standards as the hotel industry.

The pushback from the hotel industry in NSW, and especially in Sydney, is a little more muted than the rest of the world, due to an undersupply of room nights available to travellers. The Flight Centre Group have advised that their research shows strong demand during the latter half of 2016, in Sydney, Melbourne and Auckland. They expect this to continue in these metro hot spots, causing demand to outstrip supply in some cases during peak periods.

The loudest opposition to short term holiday letting in NSW is coming mainly from strata bodies, residents and perhaps possible tenants/buyers. The Owners Corporation Network has created a campaign titled “Our Strata Community, Our Choice”, which believes apartment owners have lost control of who stays in their building. Many strata bodies around Sydney have thrown their support behind the campaign.

The NSW Community Group, Neighbours Not Strangers, stated (20-Apr-2017), “there is little-to-no acknowledgement of the impact that the loss (Airbnb alone) of 41,000+ homes across NSW is having on rental and property prices. Thousands of our homes already let short term, with thousands more to come if Short term Letting Operators are blessed with this Government’s ‘green light’, most definitely means thousands more tenant evictions, the mass-yet-silent displacement of so many of our essential workers, and a growing number of Homeless across our State.”

Regardless of personal opinion of this decision, Airbnb is now ingrained in the tourism industry and remains an important part of the offering for guests visiting Australia and NSW in particular. Partnerships with key organisations continue to assist in building Airbnb’s network and brand, including Qantas and Jetstar – they have both ruffled the feathers of their hotel partners by teaming up with Airbnb within the past six months to offer frequent flyer points and vouchers for stays.