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Online House Rentals … Boon or Boondoggle?

Jane Mackersey01 June 2018

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Today Airbnb, along with other websites that offer holiday house or bach rental, make up a huge portion of the accommodation market. 

A few years ago, there were only a handful of properties in Havelock North available on Airbnb. For a two-night stay for two guests there have been approximately 200-300 options over summer and a similar number for Hastings and Napier with some overlaps. That’s conservatively 600+ rooms, on one website. Six hundred rooms is the equivalent of 15 x 40 room hotels! To put that in perspective, we currently have 19 hotels officially in Hawke’s Bay. 

“Why should we be concerned?” you may ask. “What’s the harm?”

Justifications such as “I’m just making a little bit of extra money” … “I’m just small scale” … “It’s easier doing short term rental than long term as we have greater control of our property” … “We help bring more visitors and tourists to our region” are often touted.

Perhaps all valid reasons to the owners of the property. 

But I suggest we stand back and look at the bigger picture. This type of informal, unregulated accommodation can have significant consequences for our communities and our economy.

Short-term rental impacts by pushing up the price of available long-term rental properties, as it generates greater competition for fewer properties. 

Families are competing to buy against investors looking to purchase a holiday home for short term rental. Urban holiday homes are now a trend. 

Coupled with our region’s low availability of sections to purchase to build, this can stagnate our growth.

Short-term rental preference can impact on housing for workers. It is a barrier to local businesses trying to recruit staff and the initiative to tempt businesses to relocate here, if no houses are available, or what is available is deemed too expensive.

When short-term rental accommodation dominates a street or an area it can impact on the neighbourhood. You lose the sense of community that exists with permanent residents looking out for each other. Crime can increase, with properties vacant for periods of time becoming the norm. 

The population becomes transient, with fewer permanent residents taking care and responsibility for their neighbourhood and town. 

Short-term rental accommodation directly competes with traditional accommodation providers for guests. 

The informal accommodation sector is unregulated and hence it can be cheaper, with no or lower compliance costs, creating an unequal playing field for conventional accommodation such as hotels, motels, backpackers and holiday parks. 

If you provide commercial accommodation as a business – with your head above the parapet – you are required to provide disabled access, quota of carparks to rooms, ACC levies, commercial insurance, commercial rates, health & safety plans. The building standard is to a different code: you are required to have fire doors, fire walls, hard-wired fire alarms, Building Warrant of Fitness, regular inspections. A commercial SKY TV licence is much higher, etc. These business costs do add to the price of the room. 

Those renting their homes short term as visitor accommodation do not have to comply to all the above regulations. At the very least, if accepting money for your home, should there not be some kind of WOF inspection to check current fire alarms, insulation to the same standard as long-term rentals now demand, and commercial insurance?

Traditional accommodation – if forced to maintain the costs incurred and pressed to lower pricing to match cheaper unregulated options – may no longer be profitable. We are told visitor numbers are increasing in Hawke’s Bay, an additional 470,000 visitor nights in the past three years and visitor spending hitting a high of $630 millon in 2017. Yet hotel occupancy in our region was down this year over previous years for the crucial summer months. Where are these visitors staying?

Add to this the trend of motels housing overseas seasonal workers (RSE) and social welfare clients, and we have effectively removed a significant portion of the motel stock from available tourism accommodation.

If larger motels and hotels in the region close, then larger touring or sporting groups looking to come for an event, or medium to large conferences, may not consider Hawke’s Bay for lack of large scale accommodation.

Motels, hotel and accommodation providers that embrace being part of the tourism industry provide data to NZ Statistics monthly on guest numbers, guest arrivals, overseas guests or NZ, length of stay, etc. Most of the recent wave in the past three years of short term renters do NOT report to Statistics NZ. This means the data collected is incomplete, inaccurate and unreliable. As for the freedom camping tourists that buy a converted car or van, freedom camp, then sell on departing, we don’t gather data on their movements either. We really have a poor overview of our tourist industry that is our biggest earner. 

Tourism is our biggest industry in New Zealand. However, accommodation with potential for a cash economy to operate is not healthy for our economy.

If all short-term accommodation providers do not register as a business, with the bank account they provide to Airbnb etc linked to their IRD number, there is room for ‘creativity’. 

As with most things, one change or shift may not seem important, yet invariably there’s a domino effect.

This trend towards short-term versus long-term rental will definitely have an impact. The trick is to recognise and identify what those flow-on effects may be in the early stages and take action before we have an even bigger problem on our hands.

The demand for visitor /tourist accommodation may well be on the increase. But I ask: Is unregulated short-term home rentals the best solution? This is part of the wider discussion of valuing the product that is New Zealand and that discussion needs to be held with the tourism sector, councils and government, including IRD. 

Jane Mackersey is the owner of Ribbonwood Cottages and president of Havelock North Business Association.

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Jane Mackersey01 June 2018

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