The Air BnB phenomenon.
Is it money making genius, or tenant and property management nightmare?
Whichever way you look at it is a growing trend - a disruption to industry so I was interested to read Australia’s Short Term Rental Report to learn more about the Short Term Rental (STR) trends across our three major cities.
Here's what the Short Term Rental Report had to say: 
In the past 5 years, Australia has seen its number of international visitors increase significantly.
The key driver of the growth in international tourism comes from the Asian markets, with majority of travelers coming from China, Japan, and South Korea.
In particular, China has seen the strongest growth in travelers at 12 percent in 2017, and is expected to become the largest source of inbound arrivals by the end of 2018.
STRs contribution to the economy 
The total national GDP comprises of $842 million direct contribution by the STR sector, and $5.7 billion indirect contribution from activity generated through host purchases of intermediate inputs, host’s additional expenditure on goods and services in the economy, and visitor spending.
This is equivalent to a 0.34 percent estimated contribution to Australia’s gross domestic product (GDP) in 2016.
It is estimated that the STR industry in Australia supported about 40,823 full-time equivalent (FTE) jobs in 2016.
To put the figure in perspective, every one million dollars of revenue generated by STR providers translated to the support of an additional 39 FTE jobs elsewhere within the Australian economy.
Airbnb vs Stayz
The two major STR booking services in Australia are Airbnb and Stayz.
Airbnb appears to be very well received among STR hosts from urban and metropolitan areas, with bookings from the capital city area supplying a significant 69 percent of revenue to Airbnb, and only a sizeable 17 percent to Stayz.
In comparison, its major competitor Stayz is seemingly more popular in the regional areas of Australia, with majority of its revenue derived from bookings made within these areas.
Notably, the $1,041 million gross revenue from Australian STR comprises of bookings made within capital cities and from the regional area.
Contrary to common belief, the economic contributions of STR from both the capital cities and regional areas are at par with each other at 50 percent of the total amount of revenue generated.
Sydney
Sydney is the country’s tourism capital with over 3 million international visitors between 2016 and 2017, well known for its iconic attractions like the Opera House, Harbour Bridge, and outstanding coastlines. 
The next most visited cities are Melbourne and Brisbane, with over 2 ½ million and 1 million international visitors respectively during the same period.
Even though subject to seasonality, the number of Airbnb reservations has significantly increased those last two years with a record of 41,000 reservations in December 2017, compared to a maximum of 28,000 reservations in December 2016, which is a 46% increase in one year
The majority of STR listings in Sydney are found along the popular eastern coast, as well as the city centre.
Listings in these locations can command between $200 and up to $450 per night.
Albeit a sparse amount, there is availability of property listings in the western regions of Sydney, around the iconic Blue Mountains as well as the Royal National Park. 
The figure demonstrates that areas with low density of STR supply can still command high average nightly rates if they are located in touristic areas, or if there is a mild level of competition.
Looking closer into Sydney as an example while investigating on price difference between STR and hotels, we noticed that Airbnb is cheaper than hotel prices, and the disparity is more apparent in Central Sydney or metro areas.
However, the difference is low compared to other cities of the world.
As on average, Airbnb listings are priced no less than 30 percent cheaper than hotel options.
According to AAA, this is due to having a large number of entire homes available on the platform, while in other cities such as Brisbane, cheaper rooms are shared with the hosts.
Melbourne
Melbourne shows an outstanding performance evolution of number of reservations over the last two years, reaching almost 44,000 reservations in December 2017, which overpasses Sydney for the same month.
Regarding the associated revenue, we notice that Melbourne hosts generate slightly less than Sydney hosts as accommodation rates are lower on average.
It seems that the STR supply in Melbourne is less spread out as compared to Sydney and Brisbane.
This is possibly because Melbourne inner city suburbs are easily accessible within a 10km radius, and have a smaller net of touristic suburbs, as opposed to the other two capital cities.
In Melbourne, the most popular size of STR listings are 2-bedroom properties, followed by one-bedroom. 
Similar to Sydney, the high concentration of listings in the centre of Melbourne explains why one and two bedroom properties are the most popular sizes.
It is interesting to observe that Melbourne shows relatively consistent occupancy throughout the year except in the summer months with sharper increase than other cities mentioned, rising from 62.6 percent on average in winter to 68.3 percent in summer.
For example, Brunswick as the most popular suburb for houses all year long, increases its occupancy rate from 71.8 percent in winter to 78.4 percent in summer.
The boost of occupancy rate during the summer months is attributed to the multiple sporting and cultural events.
Brisbane
Although Brisbane’s STR demand is yet to be at par with Sydney and Melbourne, there has been a huge increase in popularity of Airbnb over the last two years with an impressive number of reservations in December 2017, reaching 9,400.
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The supply of short-term rentals is fairly spread out across Brisbane, with East Brisbane having the highest density of STR listings and the average daily rate ranges from $60 to $210 per night. 
Even though the STR offer in Brisbane is more spread out than in Sydney and Melbourne, the most popular type of properties in Brisbane are 2-bedroom homes, either houses or apartments.
Airbnb recorded over 25,000 reservations between January and December 2017.
Overall, Brisbane is less affected by seasonality than Sydney and even Melbourne, as its occupancy rates are quite constant throughout the year.
This can be explained by its unique climate: with relatively warm and sunny seasons throughout the year, the city stays attractive all year long.
There seems to be greater rental revenue gained for 4+ bedroom properties as the increase in revenue is much higher in rate than 3-bedrooms or smaller.
This is likely because large villas of 4+ bedrooms in Brisbane usually offer great amenities such as large outdoor areas and pools justifying the high-end price.
Core findings
Increasing demand and performance of STR across major states
STR demand has more than doubled over the last two years across Sydney, Melbourne and Brisbane; the best STR performing states in terms of revenue generated are NSW, VIC and QLD in this order. 
Healthy economic contribution from STR sector
The growing STR sector contributed over $1 billion revenue to the Australian economy in 2016 and supported more than 40,823 FTE jobs during the same year.
High revenue generating potential of STR houses
STR houses present the most opportunity for generating maximum weekly revenue in comparison to LTR,
Sydney as top performing city for STR in Australia
Although Sydney is most susceptible to changes in seasonality, it remains the top tourist destination in Australia and has the largest supply and demand of STR
Average nightly rate of STR in Sydney is comparable to hotels 
As a result of the high proportion of listings of entire homes in Sydney, the average nightly rate of STR in Sydney is closest to that of hotels, as compared to the other major cities,.
Melbourne has centralised STR listings and surge of demand in summer
Melbourne has the least spread-out offer of STR listings as the main attractions of the city are located in the centre and is the most successful for STR during the summer, when internationally renowned sporting events occur.
Brisbane is least impacted by seasonality and has highest room rentals
With a warm climate all year long, Brisbane is the least impacted by seasonality for STR and shows a lower weekly revenue for STR apartments as a result of higher proportion of room rental as opposed to home rental.
The rise and rise of Airbnb
Australia’s short term rental market, driven by platforms such as Airbnb and Stayz, is now worth over $1billion and supports over 40 000 full time jobs, a new report has found.
Australia’s Short Term Rental Report has been compiled by MadeComfy, Australia’s first performance-based short term rental specialist.
The report has released new findings on the state of Australia’s short term rental market. 
Looking at tourism in Australia over 2016-2017, Australia’s Short Term Rental Report found that the demand for Short Term Rentals (STR) has more than doubled over the last two years in Sydney, Melbourne and Brisbane.
With STR making up 11.8% of total tourist accommodation and over 8.5 million international visitors coming to Australia each year, the opportunity for growth in this area is massive.
A 2017 study by ACIL Allen found that Short Term Rentals across Australia provided 7.1 million nights of accommodation in 2016, generating over $1billion worth of revenue.
The majority of accommodation provided was in NSW, which supplied over 2.5 million nights of accommodation in 2016 alone.Victoria was followed closely by NSW at just over 2 million nights, and coming up third is Qld at just over 1.2 million nights.
Using this data, combined with their own data, Australia’s Short Term Rental Report shows that STR average weekly revenue far out performs the Long Term Rental (LTR) average in all three states. 
The weekly LTR average for both houses and apartments in Sydney was $550 and for apartments,the STR average was $733, while houses bring in an average of $1211 per week.
In Melbourne, the LTR average for houses was $420 and $400 for apartments, compared to the STR average of $577 for apartments and $898 for houses.
Brisbane saw a LTR average of $370 for apartments and $400 for houses, with a STR average of $447 for apartments and $720 for houses.
“The study showed conclusively that Australia’s demand for short term accommodation options is only going to keep increasing,” says MadeComfy co-founder Sabrina Bethunin.
“It shows that people considering renting properties on the short term basis can see a much larger return on investment than those locking in long term tenants.”
To read the full report click here
