Growth

The risks of renting out your residence to tourists

Adam Turner
Technology Journalist

Adam Turner is a Sydney Morning Herald senior technology columnist who has been writing about the challenges facing Australian business for more than a decade

Adam Turner
Technology Journalist

Adam Turner is a Sydney Morning Herald senior technology columnist who has been writing about the challenges facing Australian business for more than a decade

Australia’s hotels and accommodation lobbies say that they’re being unfairly penalised by the increasing popularity of online holiday rental sites.

Both the Australian Hotels Association (AHA) and the Accommodation Association of Australia (AAA) said that the rapid growth of the grey market rentals driven by the internet had forced commercial accommodation providers to compete on an uneven pitch.

Stephen Ferguson, spokesperson for the AHA, said that domestic homeowners seeking to make extra money during holiday periods should be required to comply with the same regulations as commercial accommodation providers.

“We’re all in favour of competition but given that we’re all licensed and regulated we’d expect a level playing field and expect our competition to be regulated,” says Stephen.

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Holiday home owners dodge hotel rules

AAA chief executive Richard Munro said that the at all levels of government domestic [online] operators were being allowed to function unchecked.

“They should be held to the same standards as the rest of the legitimate industry, which is to provide safety, security, pay taxes and making sure that they have disabled access. There’s a range of things that are just being ignored including public liability insurance.

“It’s a bit like swimming outside the flags. Quite often you can do it and get away with it but when things go wrong it will be bad,” says Richard.

Insuring your property for paying guests

The Insurance Council of Australia (ICA) has warned domestic homeowners and holidaymakers that their traditional insurance policies could be impacted by the use of unregulated online rental accommodation services.

ICA spokesman Campbell Fuller said that residential homeowner’s domestic home and contents policy might not cover them for damage that takes place if their property is being used for holiday leasing.

“When you rent it out for holiday leasing, whether short or long-term, the risk profile of the property changes quite dramatically and the insurer needs to know this when writing the policy,” advised Campbell.

Does travel insurance cover private residences?

The ICA also urged holidaymakers to check that their travel insurance provides them with coverage if they’re using unregulated accommodation providers.

Phil Morle, chief executive of start-up incubator, Pollenizer.com said that the insurance industry had a vested interest in riding the online rental boom.

“It’s all good for them because they’re just another part of that ecosystem that benefits in the end from providing policies to people leasing out their rooms online,” remarks Phil.

Adding that he believed technology would ultimately iron out any wrinkles in the domestic online accommodation market.

“It’s something that not just one company comes along to destroy the incumbents, it’s a general trend that there are many thousands of companies of different sizes all having a go. Unlike the hotel that has to get it right the first time, they’re on a journey towards what the industry will become.

“There’s very good reasons for making this work, and the technology and the products around it get more and more powerful. And with lots of companies having a crack at it the product that customers ultimately buy is going to get better as the years go on so I think hotels are going to increasingly come under threat,” predicts Phil.

Home owners versus regulated accommodation

The AHA believe it’s difficult to provide hard statistics about the financial impact of online holiday letting on regulated accommodation providers as unregulated internet operators tended to shield their books from scrutiny, though anecdotally it appeared more transparency is starting to happen.

The AAA is doing everything it can to persuade government to bring the regulatory holiday currently being enjoyed by the online accommodation websites to an end.

Phil said that the online accommodation providers would be doing their best to delay that as long as possible.

“I think in the end, as these things become bigger industries everyone comes under the same level of scrutiny. If you spend time with start-ups in these disruptive kind of areas, you’ll see a lot of effort to make sure that they land on the right side of the regulations so they try to do the right thing by customers before regulation is required,” explains Phil.

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