IS A $1M FINE THE ANSWER TO AIRBNB THREAT?

Written on the 13 August 2015 by Jenna Rathbone

IS A $1M FINE THE ANSWER TO AIRBNB THREAT?

HOME owners who illegally use their properties as tourist accommodation should be fined a minimum of $1 million, according to the Accommodation Association of Australia (AAA), although most local hotel operators aren't willing to enter the debate.

The AAA says investment growth in tourism accommodation development is at risk because of the emergence of platforms for residential properties to be used for tourism accommodation. 

This includes Airbnb, a website that allows tourists to rent out residential rooms with a choice of more than 1.5 million listings in 35,000 cities and 190 countries.

However, Gold Coast hotel operators don't seem concerned by the new competition. Most of those approached by Business News Australia were not prepared to comment on the record, but many said it was not hurting business.

"I don't believe it has an impact on us whatsoever," says one spokesman.

However, Hotel Grand Chancellor general manager Peter Yared, who was the only hotel operator to speak on record and agree with AAA, says this problem has been growing at an epidemic rate for the past 10 years.

"They run a residential apartment like a hotel but they don't have the tax implications or the rates and all the different levy's that we pay - they aren't the same and it isn't a level playing field," says Yared.

The AAA has made a fresh call for consistent taxation rules to apply to all companies which are operating in Australia's accommodation industry.

"In addition, the association supports each residential property which is being used for tourism accommodation illegally should be handed a fine of not less than $1 million," says CEO Richard Munro.

"This would assist with ensuring consumer safety, as well as vitally important investment in tourism accommodation infrastructure in Australia."

Yared agrees that the regulations need to be changed so that they can no longer operate unless they abide by the same rules and regulations that a traditional hotel must operate under.

"A million dollars is quite high but I agree there needs to be some sort of fine or their rates and utilities should increase and be paid in the same proportion that we have to pay," says Yared.

"And that will stop them because most of the time it is worked out on land value and land size and a lot of these properties are on similar sized land that a hotel is on.  If you apply the same rates then the rates are going to be astronomical."

The AAA adds that Tourism Research Australia's Tourism Investment Monitor 2015 has identified a total value of $8.5 billion in tourist accommodation development, with $1.1 billion of this being new.

"On the face of it, this is great news," says Munro.

"But in the background, our industry is being undermined by unregulated, non-compliant and often illegal accommodation which puts the benefits and long-term viability of that investment at risk.

"Our industry is on the precipice of potentially experiencing substantial growth and increasing the substantial contribution to the Australian economy it already makes."

Munro says this growth will not be realised unless there is a level playing field for all businesses in the accommodation industry.


Author: Jenna Rathbone
About: Jenna Rathbone is a Queensland-based journalist who writes on a range of issues including business and property affairs and social issues.
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