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How Airbnb is changing our regions

How Airbnb

Local councils need more policy options and resources to address the impacts of accommodation sharing platforms. Ruth Berry details recent research.

Peer-to-peer rental platforms such as Airbnb have opened up a wide variety of affordable options for families and groups wanting self-contained properties.

Globally, Airbnb’s entry to the travel market in 2008 has significantly altered perceptions of what constitutes holiday and business accommodation.

Many Kiwi property owners have benefited from the introduction of this easy peer-to-peer shared property economy.

Yet new evidence from Building Better Homes, Towns and Cities (BBHTC) National Science Challenge suggests that for long-term residents living in towns that have a high concentration of Airbnbs, there are negative impacts, alongside the benefits for both residents and the region.

Meanwhile, local authorities are finding it difficult to quantify the scale of short-term rentals.

And they are finding it hard to manage and regulate for the short-term rental market in the face of growing concern about its impacts from the local communities.

The rise of peer-to-peer short-term rental platforms has brought economic benefits to some. But where do those benefits flow? Are the beneficiaries contributing to the provision of amenities and services used by their guests? Is there a level playing field for accommodation providers? Are short-term rentals disrupting local housing markets? And are they forcing long-term residents out and preventing new residents from moving in?

Globally, it has been argued that Airbnb has created a new category of rental housing – short-term rentals.

These are categorised as disruptive to housing markets because the only change needed is to displace a long-term rental tenant to enable this transition.

BBHTC researchers Malcolm Campbell, Hamish McNair, Michael Mackay and Harvey Perkins analysed Airbnb and census data to understand and visualise the distribution and concentration of Airbnb listings in New Zealand.

Disrupting the regions

It’s no surprise that the evidence reveals the towns most impacted are the South Island’s scenic hot spots.

The two New Zealand towns with the highest concentration of Airbnbs are Wanaka and Queenstown (Queenstown Hill, Lake Hayes South, Sunshine Bay).

This is in line with overseas Airbnb tourist hotspots.

Airbnb’s impact is most keenly felt in these regions because not only do they now have a high density of short-term rentals, but the lack of long-term rental housing has forced those who were once committed residents to shift from the region and has discouraged workers from moving to some areas.

The evidence supports the view that in these regions especially, Airbnb has led to a shortage of long-term rental housing, both for long-time residents and seasonal workers.

The data also supports the perception that in areas that once housed long-term residents, there is now a disproportionate number of tourists.

For example, the research shows Queenstown Hill now has 204 Airbnb listings per 1000 residents.

Airbnb hosts and properties

BBHTC analysis seems to support the assertation that Airbnb is disrupting housing markets, with data indicating that there is a trend towards offering entire properties for rent through Airbnb rather than spare rooms in owner/renter-occupied homes.

This finding is supported by another study conducted by the University of Canterbury Business School and ChristchurchNZ for Tourism Industry Aotearoa.

The UC Business School study included interviews with a range of Airbnb hosts, accommodation industry leaders and formal accommodation providers in Canterbury.

The research identified three different types of Airbnb hosts:

• Professional hosts (who overlap in character and interest with formal accommodation providers);

• Semi-professional hosts (mainly owners of investment properties); and

• Casual hosts (who offer rooms in their home).

Professional and semi-professional hosts are most likely to offer self-contained properties for the exclusive use of their guests. Generally, these hosts have no personal interaction with guests, utilise lock-boxes for guest access and do not live on site.

Professional hosts interviewed had been utilising Airbnb for the longest period and had often been engaged in short-term accommodation businesses prior to the advent of Airbnb.

Like it or not, short-term peer-to-peer accommodation sharing is here to stay.

Semi-professional hosts interviewed often noted that they use Airbnb to pay off investment properties, suggesting that it is this group who are the main drivers of the loss of long-term rentals to short-term accommodation.

Many real estate agents are also actively promoting the use of investment properties. A search of TradeMe property listings for sale in early October identified more than 270 properties from the Far North to Invercargill promoting Airbnb potential. Sample statements include:

• “A great little rental option / or ideal Airbnb.”

• “This sought-after position is GOLD, just two minutes’ walk to Queenstown’s CBD, restaurants and cafés, all that make life in the city exciting… Set up already as an Airbnb.”

• “New homes nearby are letting for the holiday season up to $800 per night on Airbnb.”

• “Brand-new Airbnb apartments in Hamilton, built by Assured Property. High Yield – Fully Managed.”
Some listings also suggest that switching from long-term to short-term rental would be advantageous.

• “The home is currently rented by a long-term, mature tenant who is happy to stay… within a stone’s throw from Carters Beach and the vast array of other West Coast attractions, this would be a great earner as an Airbnb.”

• “Currently rented until February 2020… From there, there is the possibility of Airbnb for an even higher return.”

• “The return could be increased by taking advantage of the ever-growing short-term rental market, more investors are seeing higher returns renting on Airbnb etc and with the events of the future (America’s Cup) you may well find this a more attractive option. Our vendor has a very creative, unique style which has attracted strong interest on the short-term market in other apartments he has owned.”

Big challenges ahead for local authorities

Like it or not, short-term peer-to-peer accommodation sharing is here to stay.

Many local councils have been proactive in setting rules for short-term visitor accommodation and rentals in district plans.

But it is also clear that local councils need more policy options and resources to create reasonable and balanced approaches to addressing the impacts of accommodation sharing platforms.

A key missing resource is efficient and effective ways of identifying properties or rating units that are engaging in accommodation sharing and the nature of accommodation sharing stock.

A quick comparison between the number of listings on common accommodation sharing platforms and those registered as providing short-term visitor accommodation shows that many properties are not registered.

This leads to the conclusion that enabling legislation at a national level, such as an amendment to the Statistics Act 1975, is required to compel registration or provision of information and provide for the application of fines or penalties for the failure to provide information.

The UC Business School study supported these conclusions, with semi-professional Airbnb hosts suggesting that it was unreasonable to ask them to comply with commercial regulations.

They did not perceive themselves as offering a product similar to the formal accommodation sector and therefore should not be bound by similar regulations. Their perception was that compliance may not make their businesses viable.

Casual hosts are less concerned about future regulation and their reservations are more concerned with the practicality and appropriateness of meeting more commercially orientated aspects of the Building Code such as accessibility requirements.

If these perceptions hold true, the introduction of compulsory registration may deliver some quick wins in both reintroducing housing stock to the rental market.

It may also ensure a level playing field for accommodation providers contributing towards the provision of infrastructure and amenities to support high-quality visitor experiences.

• Ruth Berry is challenge director for the Building Better Homes, Towns and Cities (BBHTC) National Science Challenge.

This article was first published in the November 2019 issue of NZ Local Government Magazine.

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