Taxing tourism Businesses hit out at accommodation newbies
Commercial operators are crying foul. Amanda Cropp reports.
Nelson’s Shelbourne Villa bed and breakfast owners Wayne and Val Ballantyne are looking forward to a bumper summer season, but they worry about the impact of Airbnb and rental holiday homes if the tourism boom slackens off.
‘‘When the business cycle for tourism turns - which it will at some point - then we will see a bit more pain then,’’ says Wayne Ballantyne.
He believes Airbnb and holiday home owners are currently getting a free ride, reaping the rewards of spending on regional tourism promotion without paying for it.
By comparison, hotels, motels, holiday parks, backpackers and bed and breakfast operators face fire, health and safety, and other compliance costs; as well as paying higher local authority rates charged to business premises.
‘‘All those guys are outside that. They’re paying residential rates and getting commercial benefits, so that’s the bogyman for me.’’
The accommodation landscape has undoubtedly changed markedly with Airbnb listings more than doubling to 17,000-plus in the past year.
Then there are the thousands of holiday homes to let - more than 10,000 alone on the holiday houses.co.nz website run by Trade Me.
At the same time, local authorities are spending millions from rates on regional tourism promotion.
Bookings impact
Rachael Shadbolt, general manager accommodation for Hospitality New Zealand, says the rise in online booking has opened up holiday home rentals to international visitors, who previously tended to stick with commercial accommodation options.
It is hard to track the market share of Airbnb and holiday home rentals because they are not captured by the official commercial accommodation monitor.
In August, the monthly tally of stays in short term commercial accommodation with a turnover of at least $30,000 a year, covered just over 3000 motels, hotels, backpackers, and holiday parks.
Shadbolt says fairness is a real issue. ‘‘If someone is making a really good living off a holiday house rental, they are clearly benefiting from the marketing in the region, so they should be contributing back to that pool.’’
Last year, 62 councils responding to a local government survey, reported investing more than $53 million annually in regional tourism promotion and i-Sites.
Levelling the playing field
The Queenstown Lakes District Council is one of the few local authorities to try and recoup those costs from holiday home rentals and Airbnb operators via a differential rate that is 20 to 30 per cent more than the regular residential rates.
It has 169 homestays and 511 holiday homes registered on its books.
John Gilbertson is the administrator for a group of 37 Nelson moteliers who have repeatedly asked both the Nelson City and Tasman District Councils to introduce a ‘‘bach tax’’ to level the playing field.
His overheards include a monthly Sky TV bill of $580 and he also pays business rates for electricity and water.
Gilbertson says private rental holiday properties are already causing parking problems in hill suburbs, and the fact they are not included in the commercial accommodation monitor skews tourism forecasts and associated budgeting.
In its response, the Tasman District Council admitted the difference in rates and building design compliance put commercial accommodation providers at a disadvantage.
While it would intervene if commercial use was causing a nuisance, any change in approach to rates would have a high cost, and if a house retained its domestic appearance and character, ‘‘staff have tended to not get involved.
High enforcement costs
Tourism consultant David Hammond says maintaining an accurate database of holiday home and Airbnb rentals is hugely expensive, and made more difficult by the fact that some owners are leaving their full street addresses off websites to avoid being ‘‘pinged’’ by local authorities.
Hammond, the former Thames Coromandel District Council chief executive, says the council looked at introducing a bach tax and calculated how much it would raise versus the cost of administration.
‘‘You still end up in the black but there’s quite an incredible cost to continually update those properties.’’
Hammond says the equity argument is valid, but he believes everybody in a district should contribute to tourism costs ‘‘because everybody benefits in some way from the flow on of prosperity coming through their community.’’
Economic benefits
Trade Me does not support the idea of holiday home owners who rent out their properties having to pay higher rates to help cover the cost of tourism promotion.
Spokesman Logan Mudge says if the rules got too onerous plenty of bach owners put off by the red tape would just pull out of the market.
‘‘We think that would put the squeeze on areas such as Coromandel, where existing motels do not have sufficient rooms to deal with the busiest periods of the year.’’
The average house listed on the holiday houses website was rented for 60 nights a year, and most people made a gross rental before taxes, maintenance, improvements and so on of just $12,000 per annum, says Mudge.
New Zealand Airbnb manager Sam McDonagh argues hosts give an economic boost to communities and businesses that wouldn’t otherwise benefit from the tourist dollar.
‘‘Three quarters of our listings are outside the traditional hotel areas, so guests experience New Zealand’s diverse neighbourhoods outside hotspots.’’
McDonagh says hosts here earned an average of $3900 a year. Airbnb reminded them to pay tax on that income which often helped pay off mortgages.
Leslie Preston, who manages 1400 holiday homes through Bachcare, says it’s nonsense to suggest they were not paying their fair share of rates because they remained unoccupied for much of the year so were not using local services such as water and sewage.
Analysis of Coromandel region rates last year showed on a per person basis, holiday homes were paying 40 per cent more on average than motels.
Key facts about Airbnb
Airbnb has 2.5 million listings in 191 countries and 34,000 cities
New Zealand listings have doubled in the past year to more than 17,000
Almost half of all Kiwi Airbnb hosts are over the age of 50
Top five international users are from Sydney, Melbourne, London, Singapore and Brisbane.