Four years ago Julie Lawson set up a business in Port Douglas, north Queensland, offering property owners who wanted to rent their house out on Airbnb a guest “meet-and-greet” service. She started with four properties and expected it to stay small-scale – a semi-retirement plan.
But after discovering a strong demand for her services, Bees Knees Holiday Rental and Property Services quickly expanded. Even throughout the closed-borders period of the pandemic, the number of places Lawson managed doubled. Partly because a “lot of properties were bought by southerners, which we’ve taken on for them”, she says.
Today Bees Knees manages nearly 40 Airbnb properties in the Port Douglas area, and Lawson offers everything an absent Airbnb landlord can’t – from property maintenance to passing on travel tips to guests. She employs an assistant and contracts out work to local cleaners, a linen hire company, an electrician, an air-conditioning servicer, a plumber, and two maintenance workers. She places regular orders for tea, coffee and other household products. “We try and keep everything local,” she says.
But now she’s struggling to find staff who can afford to live close enough to help look after the properties.
Airbnb arrived in Australia in 2012, and, since then, millions of international and domestic travellers have booked stays through the platform. It has brought with it a series of profound shifts; from a new willingness to do business with strangers over the internet and sleep in someone else’s bed, to giving anyone the ability to live like a local in someone else’s town. But it has also raised questions about the benefits of booming short-term accommodation, when locals have nowhere to live.
The rise of “micro entrepreneurs”, like Lawson, is one outcome of this decade’s meteoric rise of digital platforms including Uber, Airtasker and Airbnb – known as the sharing economy – according to Dr Thomas Sigler, an economic and urban geographer from the University of Queensland. “I think a lot of people vilify Airbnb and similar companies and think of them as exploitative … but there’s also the idea that it does empower people,” he says.
Hundreds of thousands of Australian property owners have earned money on the platform. Research by Sigler and his colleagues at UQ shows that between 2016 and 2019, nearly 350,000 properties were listed at least once, with an average growth in listings of 2.43% a month. But the closed borders of the pandemic, Sigler says, slashed listings.
Last year Prof Sara Dolnicar, a UQ tourism researcher, forecast that “coronavirus had disrupted the disrupter” – that property investors would put their properties on the long-term market “and never return to Airbnb”.
Now, she says: “I was wrong. Where money can be made, everybody is flocking back into the short-term market.”
Airbnb has fundamentally changed how and where we travel. We make the bookings ourselves, rely on guest reviews instead of hotel star ratings, and collect keys not for a single room with a mini bar, but an entire house with bedrooms, a kitchen, even a lightly stocked pantry.
According to Nicole Gurran, a professor of urban and regional planning at University of Sydney, the company’s “phenomenal marketing campaign” has transformed the “geography” of tourism. While once we looked for accommodation in well-established tourist zones, now the market is almost infinite.
“It means any home in an attractive destination can be transformed into tourist accommodation overnight, as opposed to the time and the cost and the regulatory approvals that traditional tourism accommodation like hotels have faced,” Gurran says.
Residential neighbourhoods and villages are now accessible destinations – with the promise of a more “authentic” travel experience.
“With the idea that you go to a tourist destination and live where the locals live, I dare say Airbnb has sold us a product we didn’t know we were looking for,” says Gurran, whose (pre-pandemic) research demonstrated the extraordinary inroads Airbnb has made into popular destinations. For example, in Byron Bay, 17.6% of the entire housing stock is listed on Airbnb – equivalent to nearly half the town’s rental accommodation. “The irony is that locals can now barely live in many of those places,” she says.
From couch surfing to management companies
Airbnb has moved a long way from its original premise of the airbed in a spare room. (It was founded in 2008, after two flatmates in San Francisco rented out an air mattress on their living-room floor.) “What people fell in love with initially was very close to couch surfing,” Dolnicar says. “It was very personal, it was very connected, it was very local. Now that is not the case. Now it is just another accommodation provider.”
Sigler’s analysis of Australian data shows that listings of entire homes has grown at a faster rate than shared accommodation, suggesting that it’s becoming more “professionalised” and that “increasingly, management companies rather than individuals are leasing properties full-time”. By definition, however, ‘entire home listings’ does not necessarily mean a property is leased year-round on Airbnb, and can include self-contained sections of larger properties.
New research, as yet unpublished, by Sigler and his colleagues into the difference in rental return on short-term versus long-term rentals in Brisbane and the Sunshine Coast shows why Airbnb is an attractive option for landlords; short-term rentals attract a relatively higher premium, one that increases when a property is larger and close to a city centre or beach.
Gurran says according to data from the independent data scraping service Inside Airbnb, the proportion of homes listed on Airbnb that are permanently reserved for holiday accommodation – as opposed to being hosted accommodation, in a home someone usually lives in – is more than a third.
Susan Wheeldon, Airbnb manager for Australia and New Zealand, notes that the majority of properties are not listed year-round but rather on “an ad-hoc basis to help meet [hosts’] mortgage repayments, pay bills or save for their retirement”.
Trish Burt, who runs Neighbours not Strangers, a lobby group that opposes short-term letting in residential areas, says she is in contact with people from all over Australia who face “a living hell” residing alongside holiday rentals: “You have no idea who is in your building, you have people mingling in corridors, you have people coming home drunk trying to get into your apartment, and you have people forced out of their living arrangements all together.”
According to Gurran, attempts to regulate the rise of Airbnb are widespread: “You look at New York, San Francisco, Dublin, Byron, Mornington … they have all had similar issues in terms of it consuming local housing stock and disturbing local residents … but all these jurisdictions have been forced into separate legal battles.” These are not legal battles that Airbnb always needs to fight, as they are frequently waged by property owners. In one case, the Gold Coast council was sued by a company that owned 70 properties after the council tried to increase rates on holiday lets.
Right across Australia, though, driven primarily by local councils faced with growing housing insecurity and complaints from locals, attempts are under way to regulate short-term rentals. Brisbane city council has increased rates on these properties, and Broome shire council is requiring them to register with local authorities. The New South Wales government has introduced a state planning policy that overrides local planning controls. It mandates a code of conduct and fire safety, and, in greater Sydney, limits unhosted listings to 180 days a year. Everywhere else in the state has no limits on the length of time a property can be rented out as an Airbnb, unless an exemption is granted. Byron Bay is negotiating for a 90-day cap.
Burt says the NSW regulation will not address the primary issue of housing supply, and that the system prioritises investors over those who need a home: “The system has been flipped on its head.”
‘It’s snuck into all the residential areas’
In Port Douglas, where tourists are returning in droves, Lawson is having to put a cap on the amount of business she can take on. “We can’t get cleaners, because they’ve got nowhere to live,” she says. For the guests she does host, she has to warn them to book in early to local restaurants – many of which are operating on reduced hours, because the dire lack of permanent housing in the region means they can’t get staff.
Photograph: Westend61/Getty Images
‘It’s disastrous – it really is,’ says the mayor, Michael Kerr, of the housing situation in Douglas shire. The rental vacancy rate is now 0.4%, the lowest it’s been in more than 15 years, and local businesses are not able to take full advantage of the return of the tourist trade. “We’re now in a really difficult place where we just don’t have the accommodation for staff any more.”
Kerr, like many in the shire, places part of the blame on Airbnb. “We’ve got a lot of tourism areas within our planning scheme where Airbnb is absolutely welcome. Yeah, there’s no issue there at all. But it’s snuck into all the residential areas as well, which has become a real problem. These houses were built with the intention of housing employees.”
Experts agree that the reasons for the severe housing-supply shortage being experienced across Australia are complex – differing from region to region – and Airbnb is just one factor.
But according to Gurran, the experience of Covid has starkly illustrated the impact of short-term rentals. Closed borders meant the demand for short-term accommodation evaporated and housing stock returned to the long-term rental market. Now that borders are open and stock is flooding back to the short-term market, rental vacancy rates in many areas are plunging.
A study by the University of Sydney into the impact of short-term rentals in Tasmania found that in Hobart, 47% of Airbnb short-term rental properties had a long-term rental market history. It found the removal of just 195 houses from the private rental market can move the rental vacancy rate from 2% to a perilous 1%.
In regional areas, especially those impacted by shocks like bushfires that destroyed housing stock, it is even more acute. In Eurobodalla, on the south coast of NSW, where hundreds of homes were destroyed over the summer of 2019-20 and the rental vacancy rate is now at 1%, the mayor has written to about 8,000 holiday home owners in the shire asking them to rent their houses out long-term to combat a housing crisis he called “a social disaster of epic proportions”.
In that market, says Gurran, “anything taken out for tourism is going to bite”.
Airbnb’s Wheeldon says housing affordability is “a complex issue with a range of contributing factors such as population movements, the supply of new homes, the ratio of public housing, interest rates and broader economic conditions”. And “short-term rentals generally comprise a tiny proportion of the overall property market … and also play an incredibly important role in growing Australia’s economy and creating jobs”.
Sigler agrees that Airbnb is not the sole cause of the housing crunch. But crunch or no, he says it will continue, in part because many people simply like using it.
“It’s like Uber and taxis, right?” he says. “Taxi drivers don’t like Uber but I think taxi drivers have realised that Uber is the future. So you can tax Ubers through the nose but people aren’t going to go back to taxis. They don’t want to have to call someone and talk to somebody to get a dispatcher … it’s the exact same analogy with Airbnb.
“It’s not going away.”
