From The President

Red Tape... We’re Strangled By It!

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Every incoming Government - State or Federal - comes in with a mantra of reducing red tape for business. And then they all proceed to increase it.

The growth of regulation and compliance in our industry remains a constant and exhausting battle.

Hotel operators are frustrated and overwhelmed by the uncoordinated approach taken by too many local, state and federal agencies, none of whom seem capable of even speaking to each other.

Many new obligations have left us not only bewildered but result in us having to pay the cost of mopping up unintended consequences. So often, our smallest family operators have been asked to have a back office rivalling the size of BHP or Santos.

The realities of running a small business mean you are knee deep in operations all day. Once the kids have been put to bed, and tomorrow’s school lunches made, you do your payroll, pay your accounts, and familiarise yourself with the latest round of regulations.

In isolation, the Federal Government’s new Food safety standards (3.3.2A for those who enjoy bureaucratic speak) seems a reasonable impost. But we already have heavy compliance obligations with local and state governments. With this new layer of obligation, what is being removed? Were these new training obligations crafted in full knowledge of what hotels already are required to do?

Last month, Fair Work officials from Victoria came to Adelaide for three days and raided (and I use that term accurately) a series of western suburbs hotels and restaurants. Bemused owners, managers and staff were left wondering what they had done wrong, not realising the raids were merely random. Really? That is the most effective manner for all to go about running our businesses?

The Malinauskas State Labor Government came to office with a mantra of being business-friendly. Their two budgets to date have supported that mantra, with no new taxes, a focus on the labour shortage and a strong appetite for events.

But what is very business unfriendly is the ever-changing landscape around our compliance obligations in liquor and gaming. These are two heavily regulated products, and we totally accept a need for strong compliance. However, the goalposts keep moving and our members - especially our smaller members are struggling to keep up.

For example, the onerous obligations recently added around loyalty customers does very little to support the mantra of a businessfriendly Government.

During Covid, we become accustomed to Government’s controlling our businesses. As challenging as it was back then, we accepted we were living in unparalleled times and banded together to protect our communities.

Rather than have a peaceful reset after Covid, Governments are now forming an appetite to unreasonably remain in our businesses.

That appetite does nothing for productivity or business confidence. It simply sends a message that doing business is getting harder and harder.

AIRBNB AND THE LABOUR SHORTAGE.

Over the top red tape and regulation always places an unfair and costly burden on our small and family operations. But one area seemingly devoid of those problems remains Airbnb. Airbnb in Australia avoids the regulations applied in most other parts of the world.

The housing crisis is both a social and economic issue in this country, and it is a major barrier for recruiting staff from interstate or overseas.

Airbnb is not just Mum & Dad operators renting out the teenager’s room for a few days, or a house whilst the owners are enjoying a month of sun in their caravan in July. In South Australia, more than 1,700 full homes are listed for short-term rental; that is 1700 homes not offering a roof over a family’s heads.

According to Air DNA Data:

• 63% of all Air B&B listings are entire homes or apartments

• half of those available for periods greater than 90 days.

That is a significant amount of stock taken out of the housing market. Houses that can accommodate the chef in Port Lincoln, the front office manager in Whyalla or the assistant manager in the city.

In Australia, over 18 months, Airbnb listing have increased by 25%!

With 166,000 listings, Australia ranks as 10th largest globally.

Before the pandemic, the listings in Australia topped over 300,000, only one-quarter of which were “hosted” accommodation where the owner was on site.

The decisions being taken by apartment and house owners to offer their properties for shortterm rather than long-term rental are having a concerning impact on housing availability, both in the cities and regions. Not unlike many other digital-platform-driven markets, unfettered growth has led to consequences far exceeding the initial intent. In the case of Airbnb, Stayz and other similar listings, the original concept of letting out a spare room or couch in a hosted environment has been overwhelmed by property owners who are seeking a higher rental income. These people are choosing to list their vacant houses and apartments on digital platforms, rather than making the properties available for longterm rental.

Even the chief executive and founder of Airbnb Brian Chesky was recently quoted as saying “it wasn’t about empty homes, it was about people staying with each other… the values got ‘watered down’ ... if I could do it over again, I would hold to those values.”

Commercial accommodation providers operate in a highly regulated business environment, with a raft of related compliance costs – increased land tax, commercial Council rates, payroll tax, Workcover levies and insurances, staff wages, food safety, fire safety and building compliance – for example, disability access and egress.

By contrast, short-term rental accommodation in Australia has very little regulation in most jurisdictions and generally owners only pay residential-level council rates. A home or apartment can be transformed into a tourist accommodation “overnight”. For many properties in tourist areas, occupancy needs only to be as low as 35% for there to be a greater financial incentive for landlords to choose short-term over long-term rental. This is a gross under-utilisation of the accommodation amenity from a community perspective, and at a time of high housing rental costs and low availability, it is adding to the difficulties.

In addition, as short-term accommodation is often concentrated in higher tourist areas, the reduction in rental stock has exacerbated the difficulties for staff working in tourism areas being able to find rental accommodation. More broadly, the lack of rental properties across most regions of Australia is limiting the attractiveness of people migrating to take up important skilled positions or for people wishing to relocate to take up work.

GLOBAL SOLUTION

So what do London, Amsterdam, Paris, San Francisco, Barcelona, Berlin, Hong Kong, New York have in common? They have regulatory structures to manage Airbnb in these international cities.

Many restrict Airbnb properties to a maximum of 90 days a year.

A report by the Australian Housing and Research Institute supports this regulated level, stating “it represents a period of time thought to be the maximum period long term occupants could vacate their property without having to seek alternative long-term accommodation themselves”.

53% of Airbnb owners or property managers operate more than one property. A staggering 29.5 % operate more than 10.

Airbnb owns no hotels, builds no hotels, employs no one, trains no one! The largest Airbnb ‘host’ lists 77 entire houses and apartments in SA and generates earnings over $1.5m million per annum. It’s time they started contributing to South Australia like the rest of us.

It's time to seek a nationwide cap of 90 - 120 days for unhosted accommodation, with State and Territory Governments either imposing themselves, or enabling local governments to impose, caps below 120 at a level that reflects local tourism and rental circumstances

Property owners who seek to exceed the cap should apply for DA approval and be subject to commercial regulation, as hotels are required to do.

Restricting Airbnb to its core values would be a great boost to our housing crisis and the labour shortage in this State.