BNB Submission 81 11th January 2019 Ref: Submission for Inquiry into Unregulated Accommodation Committee, As below, please find my submission into the impact of the unregulated short‐stay accommodation sector. INTRODUCTION 1. Property Description ‐ The hotel operates a 158 room 4 star accommodation hotel and restaurant. The room types include a. 88 Deluxe entry rooms b. 62 Executive Suites c. 8 x 3‐bedroom townhouses (each individually leased from the individual owners) 2. Staff Employed ‐ 40 direct employees with gross payroll turnover $1.78 mil ‐ Contracted housekeeping contractor employing approx. 15 staff ($750,000) 3. Trainees / Apprentices ‐ The hotel has one current apprentice, and has around four apprentice chefs qualified over the last ten years ‐ The hotel has also undertaken school‐based trainees ‐ Assisted with school based “work – experience” ‐ Assisted with graduate program “industry placements” ‐ Assisted with disability inclusion programs in conjunction with Durham Road School and various community groups. 4. Associated suppliers ‐ The hotel would support over 100 local contractors and suppliers THE GROWTH OF THE UNREGULATED SHORT STAY ACCOMMODATION ‐ In conjunction with a continual review of this emerging sector, latest data shows that there are 11,500 Airbnb listings, when in 2016 there were 5,425 listings. ‐ 69% of these units are either full homes or apartments. ‐ Assuming that each owner of these Airbnb’s, owns their own accommodation and land tax applies to these assets, the value of land tax that should be imposed on units operated as a commercial premise would approximately be ($330 x 69% x 11,500) $2,618,000. Intercity Belmont Pty Ltd T/as Country Comfort Perth (ABN 77 049 551 014) 249‐263 Great Eastern Highway, Belmont, WA 6104 PH+61 (8) 94780888 Fax +61 (8) 94780800 E: [email protected] BNB Submission 81 IMPACT ON HOTEL OCCUPANCY Over the last four years, the hotel has undertaken several large refurbishments and has calculated occupancy and ADR for the hotel and townhouses on the units available (less out of order rooms) Since 2016, the hotel has seen the greatest impact of Airbnb on the townhouse inventory where the market has been flooded with unregulated competitors. Since 2016, the hotel has reduced inventory from 11 to 8 townhouses as the market becomes harder for the hotel to compete. The below tables reflect the change in occupancy over this time between the townhouses and the hotel. It does not include the revenue losses from the hotel reducing inventory or the change in ADR$ achieved. The calculation is based on “if the townhouses ran at the same occupancy as the hotel, what would the be the additional revenues achieved?” The figure would be approximately $760,000 over the 2016, 2017 and 2018 calendar years. (which excludes revenues from townhouses that were released when their leases renewals were not extended) Total Townhouse Rms Avl Rms Sold Total Rev ADR$ Occ% 2015 3,989 2,428 765,579 $ 315.31 61% 2016 3,938 2,137 652,505 $ 305.34 54% 2017 3,980 2,323 639,054 $ 275.10 58% 2018 3,011 1,782 488,306 $ 274.02 59% Hotel Operation Rms Avl Rms Sold Total Rev ADR$ Occ% 2015 50,132 36,387 6,301,213 $ 173.17 73% 2016 54,943 41,445 6,332,439 $ 152.79 75% 2017 54,161 45,258 6,388,904 $ 141.17 84% 2018 52,403 45,641 6,045,775 $ 132.46 87% Townhouse occupancy cost compared to hotel 2015 12% 467.3112 $ 147,349.12 2016 21% 833.5406 $ 254,510.71 2017 25% 1002.767 $ 275,859.64 2018 28% 840.4653 $ 230,305.42 $ 908,024.90 Intercity Belmont Pty Ltd T/as Country Comfort Perth (ABN 77 049 551 014) 249‐263 Great Eastern Highway, Belmont, WA 6104 PH+61 (8) 94780888 Fax +61 (8) 94780800 E: [email protected] BNB Submission 81 IMPACT ON THE PERTH ACCOMMODATION SECTOR IN LINE WITH HOTEL GROWTH 2016 – 1,145 new rooms – Capital Cost $693 Million 2017 – 529 rooms – Capital Cost $219 million 2018 – 964 rooms – Capital cost $394.5 million Total increase over three years 2,638 rooms $1.3065 billion In review of the figures provided by the AHA, Airbnb has increased from 5,425 listings to 11,500 since 2016. This represent an increase of 6,075 listings At the same tame (as per the AHA Intelligence Report), the following increases in hotel accommodation and capital expenditure was undertaken to ensure the Perth Tourism Accommodation Sector remained competitive nationally and internationally as a key tourist and commercial destination. Growth in Airbnb listings represented a 230% increase in listing compared to new hotel inventory. With a large majority of Airbnb clients staying for leisure rather than corporate business, there has been a evident decrease in ADR$ achieved over the typical leisure nights of Friday & Saturday in particular. In TAA members bulletin 10 January 2019, Visitor numbers for hotels, motels & resorts increased 8.52% YE September 2018, where Airbnb type rentals increased by 16.64% nationally. This shows that the unregulated market is increasing at double the rate of the traditional regulated accommodation market. NEGATIVE IMPACTS of AIRBNB As stated in the Deloitte Report 2016, Economic Effects of Airbnb in Australia (Airbnb Australia 2017). Whilst it highlighted alleged benefits to Tourism within in Australia, the report did not address the Industry’s key concerns with the operation of Airbnb as stated. Issues, including a. Anti‐Social behaviour b. Building wear & tear c. Degrading of amenities and capital values d. Drivers of cost differential between hotel and Airbnb listings e. The regulation difference between hotel and Airbnb listings With a simplistic view of the economics effects of Airbnb on Australia, the report is severely flawed in the fact that it has not provided any economic cost derived from the expansion in Airbnb within Australia ‐ Correct Taxation on revenues derived from Airbnb ‐ Avoidance of commercial taxation consideration for residences that are used as a commercial enterprise rather than a domestic dwelling ‐ Social impact and costs associated with Airbnb on surrounding units / dwellings Intercity Belmont Pty Ltd T/as Country Comfort Perth (ABN 77 049 551 014) 249‐263 Great Eastern Highway, Belmont, WA 6104 PH+61 (8) 94780888 Fax +61 (8) 94780800 E: [email protected] BNB Submission 81 Intercity Belmont Pty Ltd T/as Country Comfort Perth (ABN 77 049 551 014) 249‐263 Great Eastern Highway, Belmont, WA 6104 PH+61 (8) 94780888 Fax +61 (8) 94780800 E: [email protected] BNB Submission 81 Supply / Demand Growth Considerations Airbnb – increase in units since 2016 at 69% for full dwellings represents an increase of an additional 1,529,988 unregulated room nights available per year in WA. New hotel rooms since 2016 – 2,638 – represents an increase of 962,870 room nights Combined, available hotel rooms and full dwellings have increased by 2,492,858 available room nights over the last 3 years. In 2017, Perth Airport recorded 13.7 million passengers – a Decrease of 0.9%. With supply growth far outpacing demand growth, the industry is requesting greater regulation to protect the long‐ term viability and employment surrounding the Western Australian regulated accommodation sector Intercity Belmont Pty Ltd T/as Country Comfort Perth (ABN 77 049 551 014) 249‐263 Great Eastern Highway, Belmont, WA 6104 PH+61 (8) 94780888 Fax +61 (8) 94780800 E: [email protected] BNB Submission 81 Intercity Belmont Pty Ltd T/as Country Comfort Perth (ABN 77 049 551 014) 249‐263 Great Eastern Highway, Belmont, WA 6104 PH+61 (8) 94780888 Fax +61 (8) 94780800 E: [email protected] BNB Submission 81 Review of the Bankwest Curtain Economic Centre Impact of AirBnb in Western Australia (Apr 2017) In April 2017, the report was published identifying many key areas of concern raised by the tourism, financial and social impacts derived by Airbnb. Two of the keys concluding remarks in relation to regulation and stakeholder concerns are added below for further consideration under the adoption of policy to regulate the short term letting market. Concluding remarks on the multiple case study analysis Overall, the analysis indicates that most of the case study cities try to deal with Airbnb in terms of existing regulations in the fields of tourism and the rental property market. While these regulative and legislative frameworks might need to be adapted, it is rather rare that cities consider the sharing economy or Airbnb specifically as phenomena in their own right. Most of the cities that have been reviewed for this report seem to adopt a middle ground in terms of restrictiveness by trying to avoid a complete prohibition of the phenomenon on the one hand and limiting potentially adverse effects and unfair competition on the other. This is often done by defining a clear line between private and commercial realms of operation. This line is usually drawn by referring to caps on maximum time of short‐term rental per year, maximum prices and to the maximum number of sublet short‐term units per owner. In more and more instances, Airbnb has agreed to automatically ban properties from their platform that do not obey to a city’s imposed limits. Cities that take a more restrictive approach limit permission to the type of properties, to licenced providers and/or to owners in residence (partly requiring their physical co‐presence). Intercity Belmont Pty Ltd T/as Country Comfort Perth (ABN 77 049 551 014) 249‐263 Great Eastern Highway, Belmont, WA 6104 PH+61 (8) 94780888 Fax +61 (8) 94780800 E: [email protected] BNB Submission 81 Concluding remarks on the analysis of stakeholder perceptions Overall, stakeholders who participated in this study had a mixed attitude towards Airbnb, which was seen as adding a competitive element to the current market place that potentially could open up additional opportunities for tourism in WA but might also constitute a threat to the conventional accommodation sector.