Is Airbnb strangling regional towns? A new Aussie competitor weighs in

Short-term holiday rentals are not the only reason businesses in regional Australia are struggling to find staff, Heartful founder Jen Clark says, as locals fear platforms like Airbnb are pricing workers out of rental accommodation.

As the summer holiday season approaches, tourism hotspots are preparing for an influx of visitors, and elevated earnings for the businesses dependent on those tourists.

But as rental vacancies plummet nationwide, some regions say short-term holiday rentals are further depleting available housing stock, making it extremely difficult for residents to find a place to live.

Proptrack data shows rental vacancy rates of just 1.1% across regional Australia in August this year, while the share of properties affordable to those on minimum wage has plummeted from pre-pandemic levels.

The consequences of that rental shortage can be profound for small businesses, particularly those reliant on part-time staff or those entering the workforce for the first time.

If businesses cannot boost wages to the point where workers can afford their surging rents, workplaces can be deprived of staff, workers can miss out on employment opportunities, and visitors may not find the holiday experience they came to expect.

As residents are increasingly priced out of the regions, state governments are now introducing measures they hope will strike a balance between the needs of visitors and long-term occupants.

In regions like Byron Bay, the coastal NSW town that has become an international travel destination, short-term accommodation hosts will only be allowed to offer their homes for 60 nights a year as of next September.

Across the border in Victoria, the state government is pushing ahead with a 7.5% levy on earnings from those bookings, with those funds going towards the state’s social housing initiatives.

Airbnb itself has railed against the Victorian proposal, saying traditional hotels should also be subject to the new levy.

“Appeal drastically dwindles” without regional workforce

Jen Clark is the founder of Heartful, an upcoming Airbnb competitor with a stated focus on social responsibility.

Speaking to SmartCompany, Clark acknowledged any location with an over-abundance of short-term rentals “inevitably suffers” as a result.

To make the point, the founder pointed to a 2022 report from the Australian Housing and Urban Research Institute (AHURI), which found that “tourism-rich regional and coastal areas” are particularly vulnerable.

“With no restaurants, cafes, retailers, medical facilities and other infrastructure, the appeal [of regional destinations] drastically dwindles,” she said.

Yet Clark maintained that accommodation booking platforms are not the sole cause of the regional rental crisis.

“The media has tended to embellish the issue such that the general public now sees [short-term rentals] as being more responsible for the lack of long-term rental stock than they actually are, whereas in reality — like most things — it’s a much more complex, multi-faceted situation,” she said.

The AHURI report itself notes that there are not enough dwellings to keep up with changing household makeups, the reopening of Australia’s borders, and the surge in post-lockdown internal migration.

The responsibility lies with governments to ensure there are enough suitable properties in the first place, Clark said.

“As I see it, the local governments managing these locations have an absolute obligation to ensure ample long-term rental stock is available in order to maintain the appeal of these destinations and by implication, their continued economic viability.”

“Humility” for holiday homeowners

While outlining the multiple causes of the rental crisis, Clark also says Heartful will operate differently from platforms that have veered from the original spirit of the ‘sharing economy’, and the idea that homeowners could rent out their homes during brief stints away.

Hosts who list their properties on the platform will need to agree to a minimum occupancy threshold, ensuring homes listed for rent are occupied for the majority of the year and do not sit vacant during the off-season.

“If that occupancy threshold isn’t met, hosts will be urged to consider listing their properties on the long-term market,” Clark said.

Hosts who use the platform will also be encouraged to direct guests to local businesses.

While Heartful is at odds with laws capping the number of nights a holiday home can be rented out, Clark said measures like the Victorian government’s incoming 7.5% levy should be welcomed.

“I won’t win a lot of friends in the hosting community by saying this, but I think it’s a good thing,” she said.

“To own one property in Australia is considered incredibly fortunate,” the founder continued.

“To own more than one is an undeniable privilege, no matter how you got there.

“The hosting community needs to check its privilege and adopt a position of humility.”

The platform will also pass on 1% of annual revenue to social housing initiatives across Australia and New Zealand, she added.

Heartful, which concluded a Birchal crowdfunding round on Thursday, is set to launch in Australia and New Zealand next year.