Hotels vs. Airbnb: Industry leaders at odds over who should pay accommodation levy

London, UK - July 31, 2018: The buttons of the travel app Airbnb, surrounded by Amazon, ebay, News and other apps on the screen of an iPhone.

A proposed short-term holiday rental levy in NSW has been welcomed by short-term rental market leaders, provided the tax is applied to all tourism accommodation, including hotels.

But the call from leaders at Airbnb and Stayz has come at odds with leaders from Accommodation Australia (AA), who have called on the NSW Government to exclude hotels from the levy.

The proposed levy is aimed at tackling NSW’s housing crisis, with groups such as Shelter NSW urging the Government to also cap the number of holiday rental homes in specific areas that have become inundated with short-term rentals.

However, Expedia, which owns Stayz, said that short-term rentals had nothing to do with current housing pressures, while Airbnb admitted there was some relationship between the growth in rent and the proportion of properties used as short-term accommodation, according to the Sydney Morning Herald.

Both companies made formal submission to the NSW Government’s review of short-term rentals recently. Expedia supported a tax “of a sensible quantum and targeted towards the areas where the contribution has maximum positive impact … in recognition of the impact that the sector has on the provision of local and state government services,” while Airbnb backed a “sustainable tourism levy at an appropriate rate” for “social and affordable housing projects”. It did not explicitly state an appropriate rate here, but in a separate release suggested 3-5 per cent, per the Herald.

AA CEO Michael Johnson said the issue was one of fairness, with regulated accommodation providers like hotels providing thousands of jobs and playing no role in the current housing crisis.

Michael Johnson and former NSW Premier Gladys Berejiklian

“Accommodation hotels do not contribute to the removal of housing stock from the long-term rental market and, therefore, should not be levied with a tax to address rising rental costs,” Johnson said.

Johnson said hotels and regulated commercial accommodation providers already comply with a range of compliance costs such as increased land tax, payroll tax, Workcover levies and insurances, staff wages, food safety, fire safety and building compliance such as disability access and egress.

“By contrast, other types of short-term rental accommodation have very little regulatory costs and the number of properties taken out of the rental market just keeps rising – particularly in regional areas where it is a real problem for our potential hotel workers to find their own accommodation,” he said.

The Victorian Government has introduced a 7.5 per cent levy on short-term rentals for 2025, which it said would approximately $70 million per year, a number expected to be surpassed considerably in NSW.

Accommodation Australia NSW general manager Stacey McBride said the Victorian Government’s recent decision, which excludes hotels, supported AA’s position.

“There is no evidence to suggest accommodation hotels place meaningful pressure on the broader housing market or the long-term rental price,” she said.

“To put it simply, to bring in a new levy upon hotels would be both unfounded and unfair. It would make NSW less attractive for major events and conferences organisers. Why give the other states and territories a competitive edge – for once, NSW should follow Victoria’s lead.”

The NSW Government’s review on the short-term levy policy ended last week and it is currently considering its response.

Featured Image: The buttons of Airbnb, surrounded by Amazon, ebay, News and other apps on the screen of an iPhone – iStock/stockcam

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