New economic modelling reveals WA economy could lose almost $100M a year

The evaporation of more than a million booking nights a year, and a potential $96 million hit to Western Australia’s economy could result from a proposed 60 night cap on unhosted short-term rental accommodation, according to new data-driven modelling. Conducted by Deep End Services, and commissioned by Airbnb, the economic research represents the first major analysis of the rules being proposed in Western Australia – a framework that would be the strictest in the nation. 

The report found:

‘Limiting STRA in WA will have negative and unintended consequences.’

The proposed 60 night cap on unhosted short-term rental accommodation would result in the potential loss of almost $100 million to the WA economy with $25 million disappearing from regional WA. That would be coupled with an impact on 900 jobs – many of which are in regional WA, in addition to:

• 1.02 million visitor nights not being booked.
• An estimated regulatory burden of up to $37 million.
• The strong likelihood that overall tourism numbers will decline, with potential for domestic and international visitors being encouraged to choose other destinations over WA.

‘Increasing exemption limit to 180 nights would reduce potential impacts by 80 percent.’

Whilst there would still be impacts to the Western Australian economy, outcomes would be less severe. 

• Scenario analysis shows that the potential unintended economic impacts from properties affected by the policy would be significantly reduced if the exemption limit was increased to 180 nights. However, WA would still face:
  • A  potential loss of $18 million to the state’s economy (compared with $96 million under the proposed 60 night cap).
  • An impact on 173 jobs (compared to potentially 900 jobs lost under the proposed 60 night cap).
  • Estimated $21 million loss in guest spend ($113 million under the proposed 60 night cap).
• This would still be a far better outcome for the state’s visitor economy when compared to the proposed 60 night cap. However, given there would still be associated economic impacts, Airbnb recommends the implementation of an ‘opt-in’ days cap, where the cap can be applied based on local needs and cannot be reduced below 180 days.

‘No connection between STRA and wider housing pressures can be established’

The report also includes an analysis of the impact of STRA on housing affordability and availability. It shows that:

• The overall number of STRA properties “is simply too small” to have widespread impact.
• There is little relationship between the emergence of STRA and pressures on the long-term rental market.
• Trends in rental availability / price correlate more strongly with wider economic trends.

‘Traditional accommodation continues to grow and perform strongly in WA.’ 

• Growth in the STRA sector has not had a significant adverse impact on the traditional accommodation sector, with new projects being built, and with competition varying across the state.

Given the above analysis, Airbnb is calling for a statewide system in which unhosted short-term rental accommodation can operate for 365 days a year without development approval, with an ‘opt-in’ days cap for local councils to address local needs (provided the caps cannot be reduced below 180 days). 

STR’s role in creating a resilient and diverse tourism economy

Short-term rental accommodation makes a large contribution to Western Australia’s economy, and a critical role in the visitor economy, contributing $315 million in guest spending, $265 million in value added to the economy and 2,535 jobs.

In 2019, almost 2.8 million visitor nights were spent at Airbnb listings in Western Australia. Airbnb also helps spread visitor dollars across all corners of the state: $64 million in spending outside of the Perth region and $97 million generated for the economy in regional WA.

In December 2021, the WA government proposed a 60 night cap for unhosted short term rental accommodation – which if introduced, would make it the harshest in the country, and among the harshest in the world. 

These rules would severely damage the ability of everyday Western Australians to make ends meet and combat costs of living through hosting, while also hurting guests, local businesses and communities by reducing choice, availability, and affordability of accommodation, especially in regional areas.

We believe the Western Australian Government is genuinely committed to doing the right thing by locals and implementing rules that deliver positive outcomes – however, this modelling shows the current proposal would have the exact opposite effect.

Airbnb acknowledges the strong leadership that the Government has shown in welcoming guests back to Western Australia and rejuvenating the visitor economy, including through initiatives such as direct flights between Perth and Rome, support for major events and through regional assistance.

Neither Airbnb nor our Host community is opposed to short-term rentals being regulated. We welcome rules that are fair, sensible and strike a balance so that everyone can enjoy the benefits of tourism, and are sympathetic to the changing ways people are living and working given the rise of flexible and hybrid work arrangements. 

This new research clearly spells out the potential negative and unintended consequences of these proposals, which would have a major impact on everyday Western Australians. 

A potential $100 million hit to the WA economy, along with the loss of almost a thousand jobs,   would be a devastating blow to the state that could undo much of the excellent work the Government has so far been doing to rebuild and grow tourism at a critical time. 

Communities right across Western Australia risk being left behind as both locals and interstate travellers search for a diverse range of accommodation to make their family budgets stretch further, placing an emphasis on choice, affordability and family-friendly amenities. 

Western Australia is home to some of the most stunning destinations in the nation – but it risks becoming uncompetitive and losing travellers to other states with more balanced rules that allow for a more diverse and affordable range of accommodation. 

Now travel has returned to WA, it’s important the state is competitive and able to make the most of the economic benefits of tourism, while also ensuring locals still have a broad range of affordable accommodation options.

These proposals will make Western Australians who share their homes worse off, make family holidays more expensive, and cost jobs. That’s why we’re proposing sensible, balanced rules that allow everyone in WA to share in the benefits of tourism.

Airbnb is keen to play a part in helping to provide meaningful solutions and tackle the issue of housing supply and affordability, in collaboration with a broad range of stakeholders. While short term rentals generally comprise a tiny proportion of the overall property market, we’re keen to keep finding ways that we can make a positive contribution to this important issue. 

There is room to improve the initial proposal from the Government, and the modelling and research provides clear guidance on appropriate amendments.”

Susan Wheeldon, Country Manager for Airbnb in Australia and New Zealand

Housing affordability is a challenging and complicated issue – and last month Airbnb proposed a range of measures that can help build stronger communities. You can read more here.

What Airbnb and its Host community are advocating for:

1. A statewide framework (instead of 139 councils with differing rules) that would ensure fair, clear and consistent outcomes for Hosts, guests and the broader WA community.

• This would guarantee a consistent approach to home sharing across the state and achieve greater certainty for Hosts and guests.

2. A statewide system for unhosted accommodation with certain opt-in provisions to address local needs, where appropriate.

• The proposed 60 day cap would severely limit opportunities for Western Australians to make extra income or subsidise their own travel. 
• Instead, we propose a statewide system in which unhosted accommodation can operate for 365 days a year without development approval, and an ‘opt-in’ days cap for local councils to address local needs (provided the caps cannot be reduced below 180 days). 

3. In principle support for a statewide registration scheme for short-term rentals. 

• We believe that registration should be a streamlined system for Hosts that participate in the home sharing industry that isn’t burdensome or costly.
• An easy, accessible, online, and affordable scheme managed centrally by the state government, implemented alongside a code of conduct and treats homes sharers who list on and offline the same.
• This will enable the Government to paint a clear picture of home sharing across the state and understand the contribution of our industry to the visitor economy. 

4. A mandatory, statewide and industry-wide code of conduct applicable to guests, Hosts and premises to manage complaints and disruptive behaviour that may occur in the community.

• The Government’s failure to consult on a mandatory statewide code of conduct is a missed opportunity. A fair and enforceable code for guests, Hosts and premises would establish clear expectations for community standards, and establish a transparent framework for reporting, managing and monitoring complaints.

5. We welcome the exemption for hosted accommodation 

• We support the right of Hosts to share the underutilised spaces in their homes, whether in a house, unit, granny flat or townhouse. 
• Hosted accommodation is a low-impact form of accommodation since the Host resides on site and is available to efficiently deal with issues.