The Impact of Airbnb on WA’s Tourism Industry

BCEC’s Feature report, The Impact of Airbnb on WA’s Tourism Industry, was launched on Friday 6 October 2017.

The report examines the growth and impact of Airbnb in Western Australia, highlighting the potential in opening up new tourism opportunities in the State, as well as the need for policy settings in governing the sharing economy.

The report works to close the existing knowledge gap on the economic impact of Airbnb and offers a range of potential policy responses that have already been trialled elsewhere; ranging from banning short-term residential leases and restricting the number of leasing days allowed, to a more proactive approach of governments signing agreements with Airbnb.

See highlights from the launch event

A BCEC-funded project, the report was led by Associate Professor Christof Pforr and co-investigators Dr Michael Volgger from the School of Marketing and Dr Kylie Coulson from the School of Accounting at Curtin University

In opening the event, BCEC Director Professor Alan Duncan, said the tourism sector remains a strong economic contributor to Western Australia.

“In light of the State’s slowing resource sector, it is essential we look to diversify our economy, and tourism provides one such opportunity for us to seize.”

“However, we must balance this growth with the protection of consumers. Any unregulated industry is dangerous, and this report provides policy recommendations that I urge our government representatives and policy-makers to heed.

Launching the report, Associate Professor Pforr highlighted Airbnb as one of the most disruptive developments in tourism of the past decade.

“Airbnb is becoming an increasingly visible reality for the State’s tourism sector with about 8000 listings and 6000 hosts. Today, about 25 per cent of WA’s room capacity is provided via the online platform with about six per cent of WA’s international overnight visitor stays generated by Airbnb last year,” Associate Professor Pforr said.

Co-investigator Dr Volgger navigated through BCEC’s new interactive electronic report providing a comprehensive overview of the growth, and impact of Airbnb on WA’s tourism industry.

Dr Volgger said Airbnb holidaymakers and guests differed from traditional WA visitors on some features, including the locations they were visiting from, who they travelled with and where they visited while here.

“The perceived concerns include neighbourhood amenity issues, the need for monitoring and information, safety and liability, tax avoidance and impacts on investment models.”

“Many of the tourism stakeholders interviewed based their opinions about Airbnb mainly on anecdotal information. However, the overwhelming feedback was that they are seeking clear rules that govern the sharing economy based on factual evidence,” he said.

Associate Professor Pforr said the report provided a suite of potential policy responses as a guide for decision-makers, based on nine international case studies from London, New York, San Francisco, Barcelona, Rome, Berlin, Hong Kong, Amsterdam and Singapore.

Mr Evan Hall, Chief Executive Officer of Tourism Council WA commended the authors of the report and said while there has been extensive research in the tourism space, this report is of great value and is a credible piece of research that can be used to inform good policy.

“The sharing economy is part of the landscape. It’s not going away nor is it something that the tourism industry is afraid of or opposed to. The challenge is ensuring we have the right policy settings in place to strengthen the State’s tourism industry,” Mr Hall said.

“What we are now seeing with Airbnb and other sharing economy platforms is a real progression from what was originally designed to share accommodation into what is now a commercial enterprise. It is progressing, and the challenge is that Airbnb can now be described as a tax irregularity loop hole.”

“We need to have a level playing field. This should not be read as we want more regulation for Airbnb; this could equally be read as we want less regulation for commercial accommodation.”

Ms Allison Manners, Managing Director of Beach Stays Australia said she has been in the short-term rental industry for almost a decade and said the industry has been disrupted enormously in terms of accommodation and tourism as a whole.

“There is substantial growth in Airbnb supply and demand in WA and what is important to consider is that consumer drives the demand. We must always bear this in mind when we’re thinking of policy responses,” Ms Manners said.

“We need to have a range of choice to enable the consumer to make a decision based on the purpose of their stay, and that purpose can change for the same customer each time. On one visit they may require an Airbnb-style accommodation and on another visit they may require a hotel style accommodation.”

“By restricting or limiting one choice of that accommodation spectre, I believe that we impact our economy from a tourism viewpoint, and we disable the potential growth that could occur as a result of limiting the range of choice.”

Mr Bradley Woods, Australian Hotels Association Chief Executive highlighted the concerns around the Airbnb phenomenon, discussing the importance of having a regulated market in the interest of public safety.

Mr Wood used Uber as an analogy to explain the level of regulation required for sharing platforms to operate safely.

“To operate with Uber you require a driver’s license, a registered vehicle and third party liability insurance. While some Airbnb accommodations are meeting requirements to ensure public safety, many do not. It would be interesting to see whether people would stay in that market if they realised how unregulated it is and the subsequent risks to their safety,” Mr Woods said.

“But consumers are still put at risk and placed into unlicensed, unregulated and potentially uninsured premises that don’t meet the Australian Building Codes Standards for short-stay accommodation including codes which adhere to fire and emergency services.”

Mr Hall went on to explain that the report highlights the time is right for the Western Australian government and local councils to address the issue before it becomes out of control and unmanageable.

“In particular, we have the opportunity to develop state-wide planning guidelines to assist local governments in understanding how to manage Airbnb and short-stay accommodation which would certainly be the most efficient and effective regulatory pathway,” Mr Woods said.

In closing the event, Mr Chris Butterfield, Regional Manager, Business & Commercial Banking WA at Bankwest highlighted the role the BCEC plays in providing research that looks into the sustainability of Western Australia and the wellbeing of WA households.

“The BCEC is renowned for the quality, depth and integrity of reports across the full spectrum including education, health, social and economic policy. And today’s report is another valuable and important addition to the suite of reports released by the Centre,” Mr Butterfield said.

“There is an obvious correlation between the ethos of both Bankwest and the Bankwest Curtin Economics Centre – both entities working towards enhancing the prosperity of Western Australians.”

Coverage of the report can be read on ABC, The West Australian, Business News, WAToday, Community News, or hear Dr Volgger discussing the report findings with 6PR’s Darren de Mello.