Economic effects of Airbnb in Australia Airbnb Australia

Economic eects of

Airbnb in Australia

Airbnb Australia

2017

Glossary

ABS Australian Bureau of Statistics

DAE-RIO-M Deloitte Access Economics’ Regional Input-Output Model

DAE-TFM Deloitte Access Economics’ Tourism Forecasting Model

EBITDA Earnings before interest, tax, depreciation and amortisation

FTE Full time equivalent

GDP Gross domestic product

GOS Gross operating surplus

GSP Gross state product

IO Input output

IVS International Visitor Survey

NVS National Visitor Survey

TARDIS model Tourism Accommodation Regional Demand,

Investment and Supply model

TRA Tourism Research Australia

Economic eects of Airbnb in Australia

Contents

Executive summary 03

1. Introduction 10

1.1 Purpose and scope of report 11

1.2 What is Airbnb? 11

1.3 Other issues not in the scope of this report 12

2. Supporting government tourism objectives 13

2.1 The Australian industry context 14

2.2 Helping the federal government deliver tourism objectives 15

2.3 Helping state governments deliver tourism objectives 16

3. The contribution of Airbnb to tourism in Australia 17

3.1 Airbnb in Australia 18

3.2 Methodology 20

3.3 Contribution to the Australian economy 20

4. Consumer eects 23

4.1 Benets of Airbnb’s features 24

4.2 Cost savings for consumers 29

4.3 Sydney – a case study 30

4.4 Benets for business travellers 34

5. Producer eects 36

5.1 Benets for Airbnb hosts 37

5.2 Driving competition and growing the market 38

5.3 Supporting local economies 39

Appendix A: Helping state governments deliver tourism objectives 41

Appendix B: Economic contribution modelling framework 46

Appendix C: State-by-state breakdown of economic contribution 49

Appendix D: Consumer eects modelling framework 64

Footnotes 73

Authors 79

Limitation of our work 79

Economic eects of Airbnb in Australia

Executive summary

Key points

• Airbnb has grown in popularity in recent years as part of a broader trend towards

the ‘sharing economy’, where peer to peer platforms directly connect customers

and providers. Hosts across Australia accommodated around 2.1 million guests

for 3.7 million nights in 2015-16

• Airbnb guests are now a signicant driver of the tourism economy, with a total

contribution to Australia’s GDP of $1.6 billion in 2015-16, supporting over 14,000 jobs

in addition to the activities of hosts. An analysis of tourism policies across Australian

states and territories nds Airbnb can help contribute to a number of their objectives

• Platforms like Airbnb increase the supply of guest accommodation in volume and

variety terms, so they can both drive growth of the tourism industry and increase

competition. There may be costs and impacts for existing operators, but consumers

stand to gain

• One of the drivers of Airbnb growth has been creating lower cost accommodation

options – we estimate a cost saving of around $26 million in 2015-16 for guests

staying in Sydney who might otherwise have stayed in traditional accommodation

• One of the key non-price dierences of Airbnb is location – three-quarters of

Airbnb properties in major markets are located outside traditional tourist areas.

Other features include bringing people together from other states or countries,

home-like facilities in accommodation, and the features of the Airbnb app itself

such as the rating system. The non-price benets are estimated to be worth the

equivalent of almost $50 million in 2015-16 for guests staying in Sydney alone

• The average star rating for Airbnb listings across Australia is 4.7 out of 5

• Airbnb hosts in Australia earned a median income of $4,920 in 2015-16 – a fairly

modest supplement to a household’s main sources of income, but which may

nevertheless be handy for living expenses, to pay down debt or to increase savings.

Economic eects of Airbnb in Australia

In one year in Australia, 2.1 million Airbnb guests

spent $2 billion

supporting 14,000 jobs and $1.6 billion in GDP

Airbnb guests in Sydney saved $26 million

On average, guests across Australia rated their

Airbnb listing 4.7 stars out of 5

Economic eects of Airbnb in Australia

Airbnb is a peer to peer platform on which

people can list and book accommodation

around the world – whether that be a spare

bed, a private room or a whole house.

Short-stay rentals facilitated by platforms

like Airbnb are part of a broader trend: the

growth of the ‘sharing economy’, through

which consumers are choosing to share

assets and services via digital platforms.

Airbnb is distinct from traditional tourist

accommodation, in that Airbnb does not

own any of the property listed on its website

– it acts as a platform to connect hosts and

guests to book accommodation, publish

information about host properties, facilitate

payments and collect ratings from hosts

and guests.

This report examines the economic impacts

of Airbnb, estimating the contribution of

guest spending to the Australian economy,

the economic benets enjoyed by guests,

and the income earned by hosts. By adding

to both the volume and variety of guest

accommodation, we nd that there are a

number of benets for guests, hosts, and

the tourism industry.

The contribution of Airbnb

to tourism in Australia

Airbnb plays an important role in

supporting tourism in Australia, by

facilitating accommodation bookings

and advertising Australian destinations to

consumers around the world. In 2015-16,

over 800,000 stays were booked with

Airbnb in Australia. Hosts across the nation

accommodated around 2.1 million guests

for 3.7 million nights in places as diverse

as Collingwood to Coober Pedy. Airbnb has

grown rapidly in Australia since its launch

in 2012, with its innovative market oering

allowing ordinary people to host tourists

from around the world. According to Airbnb,

over 80 per cent of Airbnb hosts across

Australia share the homes in which

they live.

Our analysis is based on the tourism

expenditure of Airbnb’s guests in Australia.

Airbnb guests spent over $2 billion around

Australia in 2015-16, based on Airbnb

bookings and survey data from Airbnb

and Tourism Research Australia.

This includes the amount paid to Airbnb

hosts for accommodation, as well as

expenditure on items like food, drinks and

entertainment, but excluding fees charged

by Airbnb. The economic contribution

study is based on Input-Output (IO)

modelling techniques.

Our analysis found that the total economic

contribution is on average 1.6 times the

direct contribution.

The total economic contribution associated

with the tourism expenditure of Airbnb

guests in 2015-16 was $1.6 billion in value

added, with 14,409 full time equivalent

(FTE) jobs supported around Australia, in

addition to the activities of hosts. A state

-by-state breakdown is shown in the

table below.

While induced eects were not assessed

quantitatively in this report, these eects

may be locally signicant in some regions,

especially where tourism plays a signicant

role in the economy.

Table i: Economic contribution of tourism expenditure associated with Airbnb in Australian states and territories, 2015-16

Direct contribution

($m)

Indirect contribution

($m)

Total contribution

($m)

Total employment

(FTE)

New South Wales 376.8 135.7 512.5 4,452

Victoria 305.2 107.3 412.6 4,084

Western Australia 76.5 23.2 99.7 780

Queensland 160.5 56.8 217.4 2,115

Tasmania 42.1 12.5 54.5 599

South Australia 29.1 9.1 38.2 407

Northern Territory 5.1 1.3 6.5 55

Australian

Capital Territory

9.9 2.7 12.6 99

Interstate

indirect activity

– 252.8 252.8 1,818

Australia 1,005.3 601.6 1,606.9 14,409

Source: Deloitte Access Economics based on Airbnb, TRA and ABS data. These contributions do not include induced impacts,

which is the spending of those who receive additional income.

Economic eects of Airbnb in Australia

Total contribution

$1,606.9m

Total employment

14,409

Western Australia

Total contribution ($m)

99.7

Total employment (FTE)

780

Northern Territory

Total contribution ($m)

6.5

Total employment (FTE)

Queensland

Total contribution ($m)

217.4

Total employment (FTE)

2,115

New South Wales

Total contribution ($m)

512.5

Total employment (FTE)

4,452

ACT

Total contribution ($m)

12.6

Total employment (FTE)

Tasmania

Total contribution ($m)

54.5

Total employment (FTE)

599

Victoria

Total contribution ($m)

412.6

Total employment (FTE)

4,084

South Australia

Total contribution ($m)

38.2

Total employment (FTE)

407

Economic eects of Airbnb in Australia

Supporting government

tourism objectives

Airbnb is aligned to both federal and state

government objectives. The key federal

objective – Tourism 2020 – sets stretch

targets for Australia’s tourism industry.

Short-term private rental services like

Airbnb can assist the government in

meeting its accommodation supply and

tourism expenditure targets. At the state

level, Airbnb generally supports a number

of policy goals, including those related to

visitor expenditure, room supply, regional

dispersal and tourist experience.

Consumer eects

Guests who book accommodation through

Airbnb benet from its features and the

lower average cost of accommodation on

the platform. Airbnb’s innovative platform

allows guests to nd accommodation

outside major hotel districts and enjoy a

personal connection with their host and

the surrounding community. Airbnb’s

bidirectional ratings system also encourages

quality service, with listings across Australia

rated 4.7 stars on average. The features

(other than price) of Airbnb are further

described in Figure i.

Traditional accommodation providers

have also been part of digital innovation

trends in recent years, including greater

use of comparison websites that increase

competition, increased use of guest ratings

and easier ways to nd accommodation in

certain locations. Nevertheless, the features

in Figure i, along with competitive prices,

have seen Airbnb have a number of

eects in the market.

Figure i : Features of Airbnb

Location Bidirectional reviews

Peer to peer platformAvailability

Cultural experiences Business benets

The majority of Airbnb listings

are located outside traditional

hotel districts worldwide

Guests rate listings and host

rate guests following a stay,

encouraging better service

Airbnb expands

accommodation supply,

increasing availability during

peak periods

Airbnb facilities personal

connections between hosts

and guests

Consumers can enjoy

unique properties in dierent

locations, generating a cultural

experience

Business travellers can take

advantage of 'at home' facilities

and use Airbnb listings for team

sessions or retreats

Economic eects of Airbnb in Australia

Firstly, Airbnb facilitates people oering

their homes for short term accommodation,

which can occur at lower prices than

traditional tourist accommodation. These

cost savings, as well as the features of

Airbnb, encourage some consumers to book

Airbnb listings. The lower average prices

may also induce price-sensitive consumers

who could not otherwise have aorded to

travel – thus growing the size of the overall

short term accommodation market.

Secondly, Airbnb is adding to the overall

variety in the market– listings are available

in a variety of locations outside major

hotel districts, in diering congurations

(from apartments to treehouses) and are

provided through a peer to peer platform.

These dierences may create extra traveller

non-price benets known as ‘consumer

surplus’ – the dierence between what

consumers are willing to pay for Airbnb

accommodation, and what they actually

paid. Guests may be willing to pay more for

Airbnb accommodation due to the

features described.

Airbnb also has a platform for business

travellers – Airbnb for Business. Over

200,000 clients have registered and used

the Airbnb for Business platform worldwide.

In addition to the broader consumer

benets and cost savings for employers, the

ability to rent an entire space – such as a

whole apartment or house – is particularly

useful for businesses wishing to facilitate

a retreat or osite team session. It is also

benecial for business travellers on an

extended stay or preparing for relocation,

as the property is more similar to a home

than a hotel.

Sydney – a case study

To illustrate these two eects, Deloitte

Access Economics examined the Sydney

accommodation market as a case study. As

we have described throughout the report,

many of the features of Airbnb listings

and traditional hotels are considerably

dierent. Airbnb listings and hotel rooms

are not perfectly substitutable, however they

compete in the market for accommodation.

Airbnb listings also typically do not have

many of the services which are provided

by hotels and expected (and valued) by

guests, such as a permanent reception desk,

baggage storage or daily housekeeping.

Airbnb bookings data and traditional

accommodation bookings data from the

Australian Bureau of Statistics showed that

rooms in Airbnb listings are, on average,

$88 cheaper per night compared to

traditional accommodation in central

Sydney, while this dierence is $50 per

night outside central Sydney. This cost

dierential excludes Airbnb shared rooms

and private rooms within dwellings to

provide better comparability to hotels.

Using this price dierential and an analysis

of how Airbnb interacts with the traditional

accommodation market, we estimate that

Sydney guests saved $25.8 million in

2015-16.

Overall, we estimate that total consumer

surplus for Airbnb trips to Sydney was

$48.4 million in 2015-16. This is based

on the dierence between aggregate

willingness to pay (derived using elasticities)

and the total amount spent on Airbnb

accommodation in Sydney in 2015-16.

This value indicates how much extra

consumers are willing to pay for Airbnb

accommodation.

Producer eects

Platforms like Airbnb are adding to

accommodation supply and in doing so,

are generating competition in the market.

There may be costs and impacts for existing

operators in the accommodation market

due to this competition, particularly given

Airbnb’s rapid growth. However, Airbnb is

also growing the overall size of the market –

with consumers induced by Airbnb’s lower

average prices or its innovative features.

Despite the potential impacts on existing

operators, consumers stand to gain from

competition in the long term through

improved quality and reduced prices.

Airbnb hosts benet from additional

income. Airbnb hosts in Australia earned

a median income of $4,920 in 2015-16 – a

fairly modest supplement to a household’s

main sources of income. However it can be

used for living expenses, to pay down debt

or increase savings. This extra income can

also support hosts to explore new business

ventures – in 2013, 27 per cent of Sydney

Airbnb hosts surveyed were freelancers,

entrepreneurs or self-employed.

Airbnb hosts can also enjoy the cultural

exchange facilitated by Airbnb. Both the

host and guest can experience another

culture through Airbnb, whether that be

through a conversation, a meal or a guided

tour. This can be a learning opportunity

for hosts, and can help develop a greater

understanding of diversity, culture

and community.

Airbnb can activate local communities

by distributing visitors across cities. 74 per

cent of Airbnb properties in major markets

across the world are located outside the

traditional tourist districts – meaning

that both visitors and their spending

is dispersed rather than concentrated,

helping local businesses outside areas

which traditionally benet from tourism.

Public discussion surrounding the potential

neighbourhood and amenity impacts of

Airbnb continues, and it is acknowledged

appropriate regulation could help address

these concerns. Airbnb has previously

supported legislation to address potential

neighbourhood and amenity impacts,

such as the amendments to the Owners

Corporations Act 2006 (Vic). However, we

did not consider regulation in detail as part

of this analysis.

Economic eects of Airbnb in Australia

$88

$50

Australian Bureau of Statistics data showed

that rooms in Airbnb listings are, on average,

cheaper per night compared to traditional

accommodation in central Sydney,

while this dierence is

per night outside central Sydney

Sydney

guests saved

$25.8 m

in 2015-16

Economic eects of Airbnb in Australia

1. Introduction

“Our guests are always out and

about. Without kitchen facilities in

the room, they tend to go out for

meals, though we’ve had a few

pizza deliveries!“

Sharon,

host from Perth

Economic eects of Airbnb in Australia

1.1 Purpose and scope of report

Since its Australian launch in August 2012,

Airbnb has facilitated over 1.3 million short

stays in Australian cities. In excess of 150

million guests, including over 2.5 million

Australian guests, are currently on

the platform.

Airbnb engaged Deloitte Access Economics

to assess the economic eects of Airbnb

in Australia. This report aims to quantify

the economic contribution of Airbnb guest

spending to the Australian economy, and

evaluate the economic benets enjoyed

by guests, hosts and the wider community.

These eects are considered in the

remaining chapters of this report:

• The tourism industry in Australia

and support for government tourism

objectives, described in Chapter 2

• The economic contribution of tourism

facilitated by Airbnb, described in

Chapter 3

• Benets for guests, including business

travellers, described in Chapter 4

• Producer eects, described in Chapter 5.

Each of these chapters will also consider the

impacts in a qualitative fashion.

1.2 What is Airbnb?

Airbnb is a peer to peer platform on which

people can list and book accommodation

around the world. Established in San

Francisco in 2008, Airbnb today has

properties listed in over 65,000 cities and

towns, including around 800 Australian

cities, towns and suburbs. Airbnb has grown

rapidly following its Australian launch in

2012, with around 800,000 stays booked

in 2015-16 – out of 1.3 million stays

since 2012.

Unlike most tourist accommodation,

properties on Airbnb are listed by the

person in possession of the property. This

is in comparison to hotels and serviced

apartments – many of which are owned

and managed by large private companies.

Airbnb enables ordinary people to list their

spare rooms, homes and holiday houses

as available for short term stays. According

to Airbnb, over 80 per cent of Airbnb hosts

across Australia share the homes in which

they live.

Short-stay rentals facilitated by platforms

like Airbnb are part of the sharing economy,

through which consumers are choosing

to share assets and services via digital

platforms. While at its core, Airbnb lls

the same role as traditional short-stay

accommodation – providing a place to sleep

at night – the way in which it delivers this

service is dierent to existing operators.

This dierentiated service leads to a number

of benets for guests and hosts, as well as

positive eects for local communities.

Other platforms exist which provide a

similar service to Airbnb. For example, Stayz

– on which people can list whole homes and

apartments for short-term stays – has been

in operation since 2001. Some real estate

agents can also list and arrange short-term

leases of holiday homes and apartments.

1.2.1 Listing a property on Airbnb

A person who has a space that they would

like to list on Airbnb is required to register

as a host on Airbnb’s website to use the

platform. The registration process involves

signing up to the platform and completing

information about their property, including

a description of the space available and

uploading photos. The host also provides

personal details, and can add a government

identication to verify their account.

The person who lists the property is able to

set the cost of renting the accommodation,

with Airbnb receiving a small percentage

fee per booking. The host also decides the

availability of the property and booking

settings. Hosts on Airbnb have a range

of options, for example, whether instant

bookings are available, or whether stay

requests need to be conrmed by the host.

Hosts can also set minimum requirements

for guests, including veried identication,

prole picture or rating.

Hosts are protected through Airbnb’s host

guarantee, which will reimburse eligible

hosts for damages up to $1 million.

1.2.2 Booking a stay on Airbnb

Guests register through the Airbnb platform

in a similar manner to hosts. Guests can

also verify their account using government

identication, and link other online proles

to their Airbnb account.

Guests can book a stay via Airbnb’s website

or on its mobile application. Guests can

search for listings using dierent criteria,

such as by date, city, neighbourhood, price

or type of property. A sample listing is

shown in Figure 1.1 below.

Source: Airbnb

Figure 1.1: Airbnb listing

Economic eects of Airbnb in Australia

Depending on the host’s booking settings,

a listing may be available for instant booking

or the stay may need to be approved by

the host. The host will be able to see the

guest’s prole and any reviews written by

other hosts when accepting the reservation

request. Similarly, the guest will be able to

see other guests’ reviews of the listing.

When an instant booking is made or a

booking request is accepted, the guest’s

reservation is automatically conrmed.

Hosts and guests agree a check-in time

and how the keys to the property will be

exchanged. Hosts can also add a security

deposit to their listing before the reservation

is booked.

Guests are charged for the reservation by

Airbnb at the time the booking is conrmed.

Airbnb then remits payment to the host

24 hours after check-in. Guests are also

charged a guest service fee by Airbnb.

While staying at a property, Airbnb guests

are asked to follow house rules set by the

host. These may include requests not to

smoke, prohibitions against holding parties

or dealing with the misuse of common

areas. After the stay is completed, both the

guest and the host are invited to submit a

review on their experience within 14 days

of checkout and provide a star rating out

of ve about their experience.

1.2.3 Other Airbnb services

Airbnb recently expanded its oering to

include city tours and activities through

Airbnb Experiences. The platform features

local experts and guides who have joined

Airbnb to share their city and their passion

with travellers from around the world.

Guests can book these experiences through

Airbnb, with the sessions ranging from one-

day tours to week-long immersive classes

with accommodation included. Experiences

are broadly categorised into sports, nature,

social impacts, entertainment, food and the

arts, with examples including surng classes

in Los Angeles, true hunting in Florence

and samurai swordplay workshops in Tokyo.

The Airbnb website and mobile application

also features a separate section dedicated

to places and neighbourhoods. Local

hosts share their knowledge to develop

guides for travellers exploring dierent

neighbourhoods in each city – such as

Fitzroy in Melbourne, or Redfern in Sydney.

The guides can not only be used to explore

a city, but also to help choose which

neighbourhood best suits a guest’s

needs and interests.

1.3 Other issues not

in the scope of this report

It is acknowledged that there are some

community issues relating to Airbnb, such as

noise levels and strata issues. As this report

focuses on the economic benets of Airbnb,

it does not consider these topics in detail.

Airbnb listings are, in many cases, located in

suburban neighbourhoods – meaning that

there is potential for conicting views. For

example, Tourism Accommodation Australia

has noted in a submission to the Federal

Opposition that there are possible amenity

issues associated with short term letting,

such as anti-social behaviour, increases in

building wear and tear and degrading of

amenities and capital values.

Appropriate

regulation can help address these concerns

to ensure that individual players do not

negatively aect neighbours and amenity.

This report does not analyse in detail the

drivers of the cost dierential between

hotel accommodation and Airbnb listings.

The regulatory requirements for hotel

accommodation and Airbnb listings

are dierent. Airbnb has previously

supported legislation to address potential

neighbourhood and amenity impacts,

such as amendments to the Owners

Corporations Act 2006 (Vic). However, this

report does not analyse or compare the

regulatory arrangements for home sharing

or traditional accommodation.

Economic eects of Airbnb in Australia

2. Supporting government

tourism objectives

“Airbnb has given me the

condence to accept people for

who they are and in its own way,

it is teaching people to be more

accepting by welcoming dierent

cultures into one’s home.“

Spencer,

host from Redfern

“I already had friends of friends

staying in my spare room – so

why not go one step further?“

Jodie,

host and Airbnb entrepreneur

from Melbourne

Economic eects of Airbnb in Australia

Tourism is an important part of the

Australian economy, with both levels of

government setting objectives to achieve

industry potential. Airbnb can help

governments achieve these objectives

through the expansion of room supply and

greater average tourism expenditure.

2.1 The Australian industry context

This section outlines how tourism in

Australia is growing, and how the traditional

part of the market is also growing in both

occupancy and supply terms. Short-term

private rentals are growing and represent a

modest component of the overall sector.

2.1.1 Tourism in Australia

Tourism was estimated to contribute

$53 billion to Australian Gross Domestic

Product (GDP) in 2015-16, representing

3.2 per cent of national income.

Deloitte

Access Economics identied tourism as one

of the 'Fantastic Five' sectors driving the next

wave of Australian prosperity in its thought

leadership report, Building the Lucky Country

– Positioning for Prosperity? Catching the

next wave.

7.4 million international visitors aged

15 years and over visited Australia in the

year ending September 2016, increasing

by 11 per cent over the period

– the fastest

rate of growth since the mid-1990s. At

the same time, domestic overnight trips

increased by 5 per cent to 89.4 million

trips, with overnight spend reaching $59.8

billion.

Clearly, Australian tourism is bucking

domestic and international trends, with total

tourism expenditure growing more than

three times faster than the overall economy

in the past year.

Table 2.1: Tourism in Australia, year ending September 2016

Metric International Domestic

Overnight visitors (international)

/trips (domestic)

7.4 million 11% 89.4 million 5%

Number of nights 251 million 4% 330 million 4%

Overnight visitor expenditure $38.8 billion 11% $59.8 billion 5%

Source: Tourism Research Australia

Deloitte Access Economics forecasts

international visitor trips to grow by 6.3 per

cent per year and visitor nights by 6.2 per

cent per year on average over the next three

years. This places the aggregate number

of international visitors to Australia in 2019

at 9 million, and the total number of nights

at 310 million. In terms of domestic travel,

Deloitte Access Economics forecasts trips

to grow by 3.3 per cent and visitor nights to

grow by 3.2 per cent each year on average

over the next three years.

2.1.2 Traditional visitor accommodation:

growing strongly

Estimates of visitor nights and hotel supply

suggest that the most signicant part of

the market, the traditional hotel market

is growing strongly. Traditional visitor

accommodation is dened here to include

hotels, motels, guesthouses and serviced

apartments, consistent with the Australian

Bureau of Statistics (ABS) denition of tourist

accommodation.

The latest available data shows that

domestic tourists stayed 84.1 million nights

in traditional visitor accommodation in

2015-16, with international visitors staying

28.7 million nights.

Domestic visitor nights

in traditional accommodation are predicted

to reach 112.0 million by 2024-25, with

international visitor nights forecast to reach

48.1 million.

This represents a 10-year

average annual growth rate of 3.3 per cent

for domestic visitor nights and 5.5 per cent

for international visitor nights.

Economic eects of Airbnb in Australia

160

140

180

Nights (millions)

120

100

2005-06

Source: Tourism Research Australia

2007-08 2009-10 2011-12 2013-14 2015-16 2017-18 2019-20 2021-22 2023-24

Chart 2.1: International and domestic visitor nights in traditional visitor accommodation, 2005-06 to 2024-25

International Domestic

Room occupancy rates in tourist

accommodation establishments with

15 or more rooms rose by 1.3 percentage

points to 66.6 per cent in trend terms in

June 2016.

According to STR Global, room

occupancies in Australia were 75.7 per cent

in 2016 – a gure which includes all hotels,

regardless of establishment size.

This compares to 72.8 per cent in 2010.

Deloitte Access Economics expects hotel

supply in Australia will increase by 15,800

rooms over the period to December 2019.

Room nights sold are forecast to grow at 2.7

per cent per year, and room nights available

at 2.1 per cent per annum over the next

three years – representing a narrowing gap

between supply and demand compared to

previous forecasts.

2.1.3 Short-term private rentals

Aside from Airbnb, other platforms which

facilitate short-term private rentals include

Stayz, TripAdvisor, FlipKey and Couch

Surng. Some larger platforms do not

operate in Australia, including the Expedia-

owned HomeAway. However, Stayz was

acquired by HomeAway in 2013. Some real

estate companies also manage holiday

home rentals.

It is dicult to estimate the size of this

market, given many of the companies which

facilitate private rentals are privately owned.

Airbnb has an estimated market share

of less than 2.0 per cent.

Airbnb shares

some similarities with these online booking

sites, but features such as bidirectional

ratings, fully integrated payments and

the predominance of non-traditional

accommodation options combine to

create a dierent experience.

2.2 Helping the federal government

deliver tourism objectives

Tourism 2020 is the key federal government

objective relevant to Airbnb. Tourism 2020,

initially launched in 2010, set stretch targets

for Australia’s tourism industry. Relevantly,

it was identied in 2013 that between

6,000 and 20,000 new capital city rooms

(including the Gold Coast and Tropical North

Queensland) will be required to meet visitor

demand by 2020, assuming occupancy

rates of 80 per cent.

The most recent

data shows that occupancies in commercial

accommodation across Australia reached

75.7 per cent in 2016, according to

STR Global.

As at February 2017, the

accommodation sector had progressed 88

per cent towards the upper bound Tourism

2020 target of 20,000 capital city rooms, with

17,694 rooms added to accommodation

supply since the end of 2009.

Short-term

private rental services like Airbnb can assist

the government in meeting these targets.

Economic eects of Airbnb in Australia

Importantly, Airbnb properties are

distributed across capital cities and

regional areas, and between the CBD

and metropolitan areas. This may assist

in achieving another key area of strategic

focus in Tourism 2020: improving regional

dispersal.

Of the 74,400 listings booked in

2015-16 in Australia, 25,900 were outside

the greater capital city areas of Australian

states. This is particularly important, given

regional areas have experienced a decline

in accommodation supply in recent years.

Airbnb can also assist the government

in meeting another key objective of Tourism

2020 – increasing overnight spend to

$140 billion by 2020. As at February 2017,

tourism expenditure had tracked 38 per

cent towards the upper bound Tourism

2020 goal.

Airbnb survey data shows that

Airbnb guests spend more than the average

tourist, with Airbnb guests spending $237

per night on average, and general overnight

visitors spending $146 per night.

Higher

yielding visitors may assist the government

in meeting this upper bound target.

2.3 Helping state governments

deliver tourism objectives

Each state government around

Australia has tourism-related objectives

and strategies, many of which are aligned

with the national Tourism 2020 goal.

The service provided by Airbnb supports a

number of these strategies, and may assist

governments in achieving their objectives.

While the specic nature of objectives

obviously varies between jurisdictions,

some key themes emerge. The rst is in

line with Tourism 2020 – to increase room

supply. As noted earlier, Airbnb can assist

in increasing accommodation supply,

particularly during peak periods and major

events (where supply may be limited) and

in regional areas (which have experienced

a decline in supply in recent years

Additional supply in regional areas may

also support regional dispersal objectives,

such as those in Victoria, Tasmania and

South Australia.

Increasing tourism expenditure to meet

Tourism 2020 goals is also a common theme

across jurisdictions. Tourism expenditure

can increase through greater visitor volume

or through higher-yielding tourists. Airbnb

survey data from guests across Australia

indicates that Airbnb guests spend, on

average, 62 per cent more than the average

tourist. This additional expenditure may

assist governments in meeting Tourism

2020 objectives.

More broadly, a number of governments

focus on enhancing the visitor experience.

Airbnb’s peer to peer service can change

how visitors interact with a destination,

by creating a network of hosts who are

advocates for their local community and

state. The hosts consulted with as part of

this study each frequently recommended

local businesses and tailored experiences

to their guests, creating a sense of

community and facilitating an enjoyable

and authentic stay.

Each state government’s strategies are

evaluated separately in Appendix A.

Economic eects of Airbnb in Australia

3. The contribution

of Airbnb to tourism

in Australia

“I underestimated how many

customers would not be local

residents, and how many Airbnb

properties were located in such

close proximity to the store“

Katinka,

Tasmanian small business owner

“I enjoy giving good levels of

service, and spend time with my

guests to help them nd what

they are looking for in Byron Bay.

Having an extensive knowledge

of local cafes, restaurants and

entertainment, I am able to refer

guests to specic activities that

are more closely aligned to

their tastes“

Donald,

host from Byron Bay

Economic eects of Airbnb in Australia

Airbnb plays an important role in supporting tourism in Australia, by facilitating accommodation bookings and advertising Australian

destinations to consumers. This chapter details the value added to the Australian economy and the employment in Australia facilitated

by Airbnb through its platform to book accommodation.

3.1 Airbnb in Australia

In 2015-16, over 800,000 stays were booked with Airbnb around Australia. Hosts across the nation accommodated around 2.1 million

guests for 3.7 million nights in capital cities and regional towns. On average, each host had 15 bookings over the nancial year.

A breakdown of bookings in each jurisdiction is shown in Table 3.1.

According to 2015 survey data collected by Airbnb, around 71 per cent of Sydney trips, 66 per cent of Melbourne trips and 63 per cent of

Perth trips were for the primary purpose of vacation or leisure. A high proportion of trips were also booked to visit friends or relatives, with

15 per cent of Sydney trips and 22 per cent of Melbourne and Perth trips primarily booked for this purpose. The survey data is detailed in

Table 3.2.

Tourism facilitated by Airbnb contributes $1.6 billion in value added,

with 14,409 full time equivalent jobs supported around Australia

Table 3.1: Airbnb bookings, broken down by state or territory, 2015-16

State or Territory Total bookings Total guests Total nights booked

New South Wales 289,600 742,800 1,418,900

Victoria 235,900 651,600 1,134,300

Queensland 133,300 343,800 586,700

Western Australia 62,100 171,500 292,900

Tasmania 46,800 124,500 126,300

South Australia 24,400 64,100 109,000

Australian Capital Territory 9,200 20,000 47,30 0

Northern Territory 4,200 8,800 18,000

Total 805,500 2,127,100 3,733,300

Source: Airbnb

Economic eects of Airbnb in Australia

Around 51 per cent of Airbnb bookings in Australia between July 2015 and June 2016 were made by Australian guests. The remaining listings

were booked by international guests, with 4 per cent of guests each from the United States and United Kingdom, 3 per cent from Singapore

and 2 per cent from China and Germany.

Table 3.2: Primary purpose of visit survey results, 2015

Table 3.3: Guest origin for Airbnb trips in Australia, 2015-16

Purpose of visit Sydney Melbourne Perth Rest of Australia

Vacation/leisure 71% 66% 63% 77%

Visiting friends or relatives 15% 22% 22% 12%

Business 11% 6% 8% 7%

Conference/convention 0% 4% 2% 2%

Job search/interview 1% 0% 1% 0%

Study 1% 1% 1% 1%

Short-term

housing while relocating

1% 1% 3% 1%

Guest origin Guest arrivals Proportion of total

Australia 1,077,910 51%

United Kingdom 77,673 4%

United States 76,020 4%

Singapore 71,305 3%

China 46,952 2%

Germany 35,355 2%

Malaysia 27,582 1%

France 26,949 1%

New Zealand 23,969 1%

Canada 18,891 1%

Other countries 644,494 30%

Total 2,127,100 100%

Source: Airbnb

Economic eects of Airbnb in Australia

3.2 Methodology

The economic contribution of trips

facilitated by Airbnb is a measure of the

direct activities of Airbnb guests, as well

as their indirect contributions through the

supply chain. Airbnb stays are a key part

of the tourism sector, with local, interstate

and international guests hosted

around Australia.

This analysis is based on stays facilitated

by Airbnb in Australia. The analysis does

not take into account the fact that, in

the absence of Airbnb, guests may have

still travelled and stayed in alternative

accommodation. In addition, this

analysis does not consider the economic

contribution associated with the Airbnb

platform itself. Airbnb prots, revenue

and expenditure activities are specically

excluded from the analysis.

The economic contribution analysis is based

on data provided by Airbnb on the number

of guests and their expenditure in 2015-16.

The analysis also draws on publicly available

expenditure data from Tourism Research

Australia (TRA) and the tourism satellite

accounts from the Australian Bureau of

Statistics (ABS).

The estimate of economic contribution is

driven by the expenditure of Airbnb’s guests.

In 2015-16, the average Airbnb guest spent

1.6 times more per day than the average

tourist in Australia. Expenditure data was

provided by Airbnb for guests staying in

Sydney, Melbourne and the Australian total,

with expenditure estimates for visitors to

the other capital cities and the states and

territories estimated from TRA data. This

is then weighted by the total number of

nights attributable to Airbnb customers in

each region, to estimate the total level of

expenditure in the region.

The pattern of guest expenditure highlights

the sectors of the economy that benet

(in revenue and employment terms) from

Airbnb’s guests, including food service

(restaurants, cafes, bars, etc.), shopping,

transportation, leisure and groceries

being the key categories of expenditure.

Value added is the most appropriate

measure of the economic contribution to

gross state product (GSP). It is the sum

of the returns to the primary factors of

production – labour and capital (i.e. wages

to workers and prot to shareholders) –

and can be calculated by adding the

gross operating surplus and wages paid

to workers in the tourism sector.

The estimates of the direct and indirect

economic contribution are based on

Input-Output (IO) modelling techniques.

The Australian Bureau of Statistics (ABS)

produces IO tables which provide the value

added for each sector of the Australian

economy, as well as the linkages between

sectors. This allows the expenditure by

Airbnb guests to be traced through the

economy, to estimate the value added at

each stage. Deloitte Access Economics’

Regional Input-Output Model (DAE-RIO-M)

is used to estimate the direct value add and

employment for each region. The indirect

value add and employment, generated by

expenditure on the intermediate inputs is

determined based on the cost structure

of each industry.

While we have not assessed the value of

induced eects quantitatively, in addition

to the direct and indirect economic

contribution, in some regions tourism

expenditure associated with Airbnb would

likely result in additional consumption

beyond expenditure on intermediate

inputs. In areas where tourism is especially

important to local industry, these eects

could be locally signicant.

Appendix B provides further

background on the economic

contribution modelling framework.

3.3 Contribution to the

Australian economy

The total economic contribution associated

with the tourism expenditure of Airbnb

guests in 2015-16 was $1.6 billion in value

added, with 14,409 full time equivalent

(FTE) jobs supported around Australia.

The total tourism expenditure of Airbnb

guests in Australia in 2015-16 is estimated

to be $2.041 billion. This gure includes

spending on items such as food, shopping

and entertainment, as well as the amount

paid to Airbnb hosts for accommodation.

Table 3.4 shows a breakdown of Airbnb

guest expenditure. As the amount spent

varies by jurisdiction, these gures

are based on state-by-state

expenditure estimates.

Economic eects of Airbnb in Australia

Table 3.4: Tourism expenditure of Airbnb guests in Australia, 2015-16

Category Total expenditure ($m) Share of expenditure

Accommodation $441.6 22%

Food service (e.g. restaurants) $554.1 27%

Groceries $185.6 9%

Shopping $353.8 17%

Other leisure (e.g. entertainment) $245.8 12%

Transportation $216.7 11%

Other services $43.7 2%

Total $2,041.3 100%

Source: Deloitte Access Economics estimates for categories based on Airbnb and TRA

survey and other data

It is necessary to consider how the

expenditure ows through the economy

to estimate the economic contribution

associated with Airbnb guest spending.

The amount spent directly by Airbnb guests

at local businesses represents revenue for

those businesses. Each business employs

workers and capital to provide goods or

services to the Airbnb guest. The returns

to labour (employee wages) and returns on

capital (business owner’s prots) associated

with the Airbnb guests’ spending comprise

the direct economic contribution.

However, some of the revenue earned

by those businesses is spent sourcing

intermediate inputs and paying other

expenses to run the business. For example,

a restaurant might source ingredients from

a market, and pay for gas, electricity and

water. This expenditure generates ow-on

economic activity, as supplying businesses

will also employ workers and capital to

produce goods and services. This additional

economic activity comprises the indirect

economic contribution.

Guests also pay hosts to stay in their

Airbnb accommodation. This revenue

represents income for hosts, with the

prots (or gross operating surplus) from this

exchange comprising the direct economic

contribution.

The indirect contribution

reects the purchase of intermediate

inputs by hosts to be able to provide Airbnb

accommodation. This principally includes

intermediate inputs provided by the

construction and nance sector required

to build and pay for the property. It also

includes other intermediate inputs used to

provide Airbnb accommodation (such as

cleaning services).

The total economic contribution is the

sum of the direct and indirect economic

contribution. The direct and indirect

contribution are calculated by considering

the value added to the Australian

economy arising from Airbnb guests’

visitor expenditure.

Our analysis has found that the total

economic contribution is on average

1.6 times the direct contribution.

Visitor expenditure of Airbnb guests is

estimated to directly contribute $1 billion

in value added to the Australian economy,

with a further indirect contribution of $602

million in value added. Tourism expenditure

of Airbnb guests also supported 14,409 FTE

jobs around Australia (see Table 3.5).

“Airbnb is good for the

local community. We’ve

been able to direct our

guests towards local

events in our area, which

they wouldn’t have known

about otherwise. One

family from Ecuador

enjoyed our local

community fete!”

Jess and Ashe,

hosts from Canberra

Economic eects of Airbnb in Australia

Table 3.5: Economic contribution of tourism expenditure associated with Airbnb in Australia, 2015-16

Table 3.6: Economic contribution of tourism expenditure associated with Airbnb in Australian states and territories, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $2,041.3

Value added ($m) $1,005.3 $601.6 $1,606.9

• Labour income ($m) $449.2 $307.3 $756.5

• Gross operating surplus ($m) $556.1 $294.3 $850.4

Employment (FTE) 10,025 4,384 14,409

Direct contribution

($m)

Indirect contribution

($m)

Total contribution

($m)

Total employment

(FTE)

New South Wales 376.8 135.7 512.5 4,452

Victoria 305.2 107.3 412.6 4,084

Western Australia 76.5 23.2 99.7 780

Queensland 160.5 56.8 217.4 2,115

Tasmania 42.1 12.5 54.5 599

South Australia 29.1 9.1 38.2 407

Northern Territory 5.1 1.3 6.5 55

Australian Capital Territory 9.9 2.7 12.6 99

Interstate indirect activity 252.8 252.8 1,818

Australia 1,005.3 601.6 1,606.9 14,409

Source: Deloitte Access Economics based on Airbnb, TRA

and ABS

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Source: Deloitte Access Economics based on Airbnb, TRA

and ABS

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Table 3.6 provides a breakdown of the economic contribution by state or territory. This highlights that the two largest contributions to

value add are in New South Wales and Victoria, which together account for 58 per cent of total value add and 59 per cent of employment.

This reects the higher number of listings in these cities, their higher tourism visitation, and may also reect the relative cost of

accommodation in these states compared to the other states and territories.

The table also reects that in calculating the economic contribution of tourism expenditure state by state, some indirect activity is excluded

as it leaks out of that jurisdiction’s economy as imports. However, this interstate activity is accounted for in the national totals.

A state-by-state breakdown of the economic contribution, including capital city and regional gures, is contained in Appendix C.

Economic eects of Airbnb in Australia

4. Consumer eects

“Airbnb is a great way to

meet people and make friends.

I keep in touch with some guests

through Facebook, especially

those who stay in the main

house. I form real connections

with people – it’s only sad you

often don’t see them again!”

Melissa,

host from Darwin

“Airbnb is good for the local

community. We’ve been able to

direct our guests towards local

events in our area, which they

wouldn’t have known about

otherwise. One family from

Ecuador enjoyed our local

community fete!”

Jess and Ashe,

hosts from Canberra

Economic eects of Airbnb in Australia

Source: Deloitte Access Economics

Guests choose to use Airbnb for a range of reasons – sometimes price,

but often for a dierent type of service. The value of these non-price

benets, measured by consumer surplus, is twice the value of cost

savings enjoyed by Airbnb guests in Sydney.

Airbnb provides a number of benets

to guests who book stays on the

platform. These benets arise due to

the dierentiated service provided by

Airbnb and the lower average cost of

accommodation on the platform.

This chapter outlines the dierentiation

benets associated with the Airbnb

platform and accommodation booked

through Airbnb, as well as additional

benets for business travellers using

the Airbnb for Business platform.

It also describes the economic model used

to quantify these consumer eects and

cost savings, using Sydney as a case study.

4.1 Beyond lower prices:

benets of Airbnb’s features

While cost may be a factor in motivating

travellers to use Airbnb,

it’s not the only

reason. A number of studies have suggested

that collaborative consumption is driven

by the perceived value and benets of

these transactions.

These benets are related to the specic

product oered by Airbnb to consumers in

the market, and the extent to which it diers

from the current traditional oering. These

features of Airbnb are summarised in the

diagram below.

Figure 4.1: Features of Airbnb

Location Bidirectional reviews

Peer to peer platformAvailability

Cultural experiences Business benets

The majority of Airbnb listings

are located outside traditional

hotel districts worldwide

Guests rate listings and host

rate guests following a stay,

encouraging better service

Airbnb expands

accommodation supply,

increasing availability during

peak periods.

Airbnb facilities personal

connections between hosts

and guests

Consumers can enjoy

unique properties in dierent

locations, generating a cultural

experience.

Business travellers can take

advantage of 'at home' facilities

and use Airbnb listings for team

sessions or retreats

Economic eects of Airbnb in Australia

These features create additional consumer

surplus for travellers using Airbnb. In this

context, consumer surplus is dened as the

dierence between what consumers are

willing to pay for Airbnb accommodation,

and what they actually paid – in other

words, the value individuals receive from

their Airbnb over and above what they

paid for it. The dierentiation benets

described in the diagram may inuence

the amount consumers are willing to pay

for accommodation, and therefore the

amount of consumer surplus they receive.

The following sections describe the

benets of Airbnb’s features qualitatively,

while a case study in Section 4.3 quanties

consumer surplus for people using Airbnb

in Sydney.

4.1.2 Location and availability

of Airbnb properties

The vast majority of properties listed on

Airbnb are located outside the traditional

hotel areas of major cities around the

world.

This is in contrast to the location of

traditional tourist accommodation, which is

generally centred on the CBD and the

inner suburbs.

The varied location of Airbnb properties

leads to two key benets.

Firstly, it allows consumers to book

accommodation close to their desired

location. In providing greater choice, Airbnb

is more likely to facilitate a booking which

meets the needs of guests. For example,

guests may choose to stay outside the CBD

if visiting a suburban business, hospital

or university.

Sharon – using the vacant part of the house

When Sharon and her family moved into their Perth home two years ago, they soon

realised that the lower level of their house wasn’t being used, and decided to list the

private room on Airbnb after renovating the space.

Sharon’s home is located between Perth’s city centre and Fremantle, making it

convenient for travellers who want easy access to Perth’s sights via car. Sharon

estimates that around one third of her guests are tourists from Asia, a third are

interstate business travellers, and the remainder are from rural and regional parts

of Western Australia – often receiving medical treatment at the nearby Fiona Stanley

Hospital. Her home is also close to Garden City Shopping Centre, the Swan River and

public transport.

“Our guests are always out and about. Without kitchen facilities in the room, they tend

to go out for meals, though we’ve had a few pizza deliveries!”

The income earned from Airbnb is supplementary to Sharon’s primary income, though

it is particularly welcome while Sharon is on maternity leave. The earnings generally

go towards luxuries, including employing a cleaner for the home. As Sharon has a

professional background in luxury accommodation, she particularly enjoys that aspect

of hosting on Airbnb.

Sharon’s guests tend to be independent travellers, but she always greets them in

person on arrival. A handy guide in the room provides local recommendations to eat

and sightsee, though guests are always welcome to contact Sharon for her

local expertise.

Secondly, visitors are able to explore areas

‘o the beaten track’ by staying in an area

outside the location of traditional tourist

accommodation. Guests can stay in the

suburban areas of a city, generating a

living experience more similar to a local

resident.

Guests may place value on this

dierentiated and authentic experience.

The other key benet of Airbnb is its

facilitation of expanded accommodation

supply. While this point will be discussed

further in the following sections, the

greater availability of Airbnb properties in a

wider area means that it may be easier, on

the whole, for a guest to book a short-term

stay in a city. This can be particularly so

during periods of peak demand, such as

special events or long weekends.

Economic eects of Airbnb in Australia

Meeting the demand for rooms during Mardi Gras

The Sydney Gay and Lesbian Mardi Gras is an annual event which has its origins in

a night of political protest in 1978. Today, it is a two-week festival which celebrates

diversity and queer pride. In 2016, over 12,500 members of the queer community and

their supporters joined the key event, the Mardi Gras parade, on 178 oats. Around

300,000 people attended the parade as spectators.

Airbnb supported the Mardi Gras as a major partner in 2015 and 2016, and entered

a corporate oat in the Mardi Gras parade in both years. In 2016, Airbnb’s house-

oat was oered as a prize in a competition. Pink Media Group arranges Mardi Gras’

sponsorships and partnerships on their behalf.

Mardi Gras is not only the biggest queer celebration in Australia, but is also Sydney’s

second most-attended event, following only New Year’s Eve. In this context, Pink

Media reports that accommodation can be expensive and dicult to come by, with

hotels and other lodgings frequently selling out. The availability of Airbnb properties

may mean that more interstate and international visitors can attend the event, with

around 100,000 attendees coming from the rest of Australia and around 50,000 from

overseas. Visitors tend to stay around a week for the event, and according to Pink

Media, many continue to travel around Australia.

Airbnb oers an alternative place to stay for Mardi Gras participants, and at a range of

price points to suit dierent budgets. Importantly, many Airbnb listings are located in

Surry Hills, Darlinghurst and Newtown – neighbourhoods which are not only nearby to

Mardi Gras events, but according to Pink Media Group, also have a high proportion of

queer residents in their communities. Given there is limited hotel availability in these

suburbs, Airbnb facilitates an enhanced experience for Mardi Gras attendees. Hosts

are also able to benet from the interaction, particularly those who are attending

the event.

4.1.3 Cultural experiences

Consumer preferences for

accommodation vary signicantly.

Preferences may be inuenced by personal

tastes, purpose of travel, travel party size

or a range of other factors. Travellers may

look for a number of key attributes when

booking accommodation – such as location,

the number of beds or rooms, free Wi-Fi or

kitchen facilities.

Airbnb’s platform allows for the listing of

a wide variety of property types in varying

locations. This means that travellers are

more likely to nd a listing which meets all

of their wants and needs, especially when

outside the realm of traditional tourism

accommodation. The location of a listing

is important to guests who are seeking

a particular cultural experience when

travelling – such as terrace house in Surry

Hills, or a cottage in Fitzroy.

Airbnb also provides certain unique listings

that are unavailable in the traditional

tourist accommodation market. Airbnb’s

listings include treehouses, castles and

caves; this may suit tourists seeking a more

unique experience. Airbnb hosts may be

able to facilitate a wider range of requests

which are often disallowed in traditional

tourist accommodation, such as travelling

with pets.

Airbnb properties can also provide

additional ‘at-home’ facilities, such as a

laundry and kitchen, or a separate study.

These facilities provide additional benets

to travellers, especially in the context of

long-term stays.

Economic eects of Airbnb in Australia

Donald – personalising the Byron Bay experience

After having an excellent experience as an Airbnb guest, Donald decided to give

hosting a go, and listed his Byron Bay studio on Airbnb. With tourism being the largest

industry in Byron Bay, Donald has had no shortage of guest requests, and the Airbnb

platform allows him to manage his hosting.

“By varying the price and my style of advertising, I can control the level and type of

occupancy to suit my needs. This allows me to attract the guests I want at the time

I want.”

Having the exibility to attract certain types of guests allows Donald to provide his

guests with highly personalised service.

“I enjoy giving good levels of service, and spend time with my guests to help them nd

what they are looking for in Byron Bay. Having an extensive knowledge of local cafes,

restaurants and entertainment, I am able to refer guests to specic activities that are

more closely aligned to their tastes.”

This has resulted in over 100 positive reviews from guests enjoying Donald’s

recommendations. This, in turn, has led to more guest requests from both locally

and abroad.

Donald’s recommendations have positively impacted local businesses. For example, by

taking the time to understand what sort of food his guests are looking for, Donald can

provide them with local knowledge of where to nd quality meals.

“Tourists will spend more if they are recommended places that they like. I can refer my

guests to specic restaurants where they are more likely to get exactly what they want,

and this leads them to spend more locally, generating incremental business for

the region.”

4.1.4 Bidirectional reviews

Airbnb employs a bidirectional review

system, whereby guests and hosts

are invited to rate their counterpart

following the conclusion of a reservation.

Importantly, each party is unaware of

their own rating before submitting their

response, reducing the prospect of

potential retaliation bias.

Ratings can encourage the provision of

better service, as ratings are publicly

available on the platform. Reputation can

also aect listing prices according to one

US study.

Guests are able to view reviews

when searching for accommodation, and

may take this into account when choosing

a property. Hosts are also able to see a

guest’s rating when a guest requests a

reservation at their property, and may

similarly choose whether to approve the

stay based on ratings. Hosts can also set a

minimum ratings requirement for guests

where instant booking of their property is

available. TripAdvisor performs a similar

role in the traditional accommodation

market, although accommodation

providers cannot rate guests. Out of all

Airbnb reservations in Australia between

July 2015 and August 2016, listings were

rated 4.7 stars on average.

Table 4.1: Average ratings for Airbnb listings

Jurisdiction Rating

Western Australia 4.65

Victoria 4.68

Australian Capital Territory 4.65

South Australia 4.69

New South Wales 4.66

Northern Territory 4.63

Queensland 4.7

Tasmania 4.69

Australia 4.67

Source: Airbnb

Economic eects of Airbnb in Australia

Lyn – hosting festivalgoers in Adelaide

Lyn and her husband live in a two-storey townhouse in the south-west corner of

the Adelaide CBD. Given they only occupy the rst oor in their home, Lyn decided to

list the ground oor on Airbnb during Adelaide’s festival season. Two years later, the

bookings continue to ow through and supplement Lyn’s part-time work as a teacher.

Airbnb has given Lyn the opportunity to do something she always wanted – to work

in the tourism industry – and share her passion for Adelaide and South Australia.

Lyn’s home is conveniently located next to some of Adelaide’s best small

bars and restaurants, as well as near tourist attractions like the Central Market.

Lyn recommends local restaurants, bars and attractions based on what guests

are interested in, both within Adelaide and across South Australia’s wine regions.

“My guests are able to experience real life, not tourist life, by using Airbnb.”

Some guests are quite independent, while others seek Lyn’s assistance in building an

itinerary and exploring Adelaide. Many use Adelaide as a base to visit South Australia’s

wine regions, or as a stopover before or after a trip on the Great Ocean Road, the

Ghan or to Kangaroo Island.

“Recently, we had a retiree travelling around the world stay with us for just over a

week. She chose Airbnb because she didn’t want to be by herself each night – she

wanted to share her day and her experiences with someone else.”

The income Lyn and her husband earn from Airbnb funds their own overseas travel.

Recently they have visited the United States and Japan, with a trip planned for Italy in

the near future. Going forward, the income will also support Lyn and her husband in

their retirement.

Ratings also support the development of

the online Airbnb community. In allowing

guests to review the space in which they

stayed, rapport is generated between the

host and the guest and between others

on the platform. While this community is

an integral feature of Airbnb, one study

has noted that social interactions between

hosts and guests can introduce positive

bias in reviews. Omitting negative feedback

from reviews is said to occur due to the

empathy generated in social interactions

between hosts and guests. One study

estimated this eect by assuming that

social interactions are more likely to occur

where a guest is staying in a private room

of a private residence, and less likely to

occur where a host has more than three

listings. Fradkin et al found that trips to

private rooms have a 0.005 star higher

rating and trips to hosts with multiple

listings have a 0.112 lower rating, holding

guest characteristics xed.

Notably,

however, this bias is minimal.

4.1.5 Peer to peer platform

The peer to peer nature of Airbnb may

provide additional benets to guests. In

many cases, hosts will greet guests on

arrival, and assist their guests in settling in

to the accommodation and the local area.

This additional service may be valued by

guests, as they are able to connect with

a local resident in the area.

Airbnb also

facilitates hosts to write guides for guests,

which are available on the Airbnb platform

(as shown in Figure 4.2).

Economic eects of Airbnb in Australia

Figure 4.2: Host guidebook on

Airbnb mobile application

Some guests may also derive value from

the peer-to-peer connection facilitated

by the platform, with this experience

oering value beyond the provision of the

good or service purchased. Peer to peer

networks like Airbnb allow participants to

form friendships and develop and maintain

social connections.

Guests and hosts can

also share recommendations and personal

experiences, allowing tourists to connect

with the local community.

Source: Airbnb

Jess and Ashe - community connections in suburban Canberra

Ashe and Jess signed up to Airbnb after hearing about a friend’s experience listing his

home while on holiday. Jess and Ashe’s home is located in Weston Creek, around 20

minutes’ drive to central Canberra. Their Airbnb listing is a self-contained studio at

the rear of the property, with side access and separate kitchen facilities. A number of

people have stayed at the property while looking for more permanent accommodation

in the area, including people from overseas and interstate. The self-contained nature

of the studio particularly appeals to people looking for an extended stay.

“We initially thought people may only want to stay in the inner city – but were

surprised at how many travellers also came here for the surrounding Canberra

attractions, which are within easy reach from Weston Creek”

Ashe and Jess have enjoyed meeting their guests and hearing their stories. Although

the separate studio gives guests privacy, Ashe and Jess are always happy to have a

drink with guests or share local recommendations on request. They have also been

able to facilitate conversations with friends and colleagues for business travellers.

Importantly, Ashe and Jess see Airbnb as contributing to their local economy – by

linking tourists to local businesses and events.

“Airbnb is good for the local community. We’ve been able to direct our guests towards

local events in our area, which they wouldn’t have known about otherwise. One family

from Ecuador enjoyed our local community fete!”

4.2 Cost savings for consumers

The additional room supply facilitated

by Airbnb increases competition in the

market, while also providing dierent

types of accommodation for consumers.

Increased competition and additional

supply in the market can have a number

of eects, including lower prices for

consumers and greater availability during

peak periods.

This report does not analyse in detail the

drivers of the cost dierential between

hotel accommodation and Airbnb listings.

It is likely there are a number of factors.

There is a relatively low marginal cost in

letting an empty room in a property or an

apartment that would have been empty

while the owner was on an

extended holiday.

Airbnb listings also typically do not

have many of the services which are

provided by hotels and expected (and

valued) by guests, such as a permanent

reception desk, baggage storage or daily

housekeeping. Finally, the regulatory

requirements for hotel accommodation

and Airbnb listings are dierent. This

report does not analyse or compare the

regulatory arrangements for home

sharing or traditional accommodation.

Lower accommodation prices can

have a number of eects. Clearly, for

those who are incentivised to switch

from using traditional accommodation to

Airbnb, there are resulting cost savings.

The magnitude of these savings depends

on the dierential between Airbnb prices

and hotel prices.

Economic eects of Airbnb in Australia

Importantly, the lower average price of

Airbnb listings may encourage people

to travel who could otherwise not have

aorded hotel prices, or encourage more

frequent travel. These new entrants to

the accommodation market increase the

overall size of the market, and can help

boost tourism more broadly. In one study,

67 per cent of respondents agreed that

peer to peer accommodation expands

their selection of places to travel, with the

lower accommodation cost making more

destinations aordable. 41 per cent of

respondents also agreed that peer to peer

accommodation increases the frequency of

their travel, mainly due to the social aspects

of using peer to peer accommodation.

In a survey undertaken across the United

States, United Kingdom, Germany and

France, respondents indicated that price

was the most important factor in choosing

Airbnb. The survey, conducted by Morgan

Stanley and AlphaWise in 2016, also

showed that 2 per cent of trips would

not have been taken if not for Airbnb.

There are also benets for those who

continue to use traditional accommodation.

In the longer term, hotels may reduce

their prices in order to compete with

Airbnb listings – leading to cost savings

for this segment of the market. Whether

this occurs depends on the extent to

which hotels compete with Airbnb listings.

However, the location of Airbnb listings

in Australia – primarily outside the major

hotel districts – may bring into question

the extent to which Airbnb and the hotel

industry directly compete.

It is important to note that Airbnb listings

are not always less expensive than hotels.

As shown by CBRE analysis in the United

States,

the average daily rate for Airbnb

may exceed that of hotels, depending on

the type of listing. But the overall eect of

Airbnb is to drive competition – with lower

prices and dierentiation attracting new

consumers to the market.

4.3 Sydney – a case study

Deloitte Access Economics quantied the

two core consumer eects of Airbnb:

• The cost savings for consumers switching

from hotels to Airbnb

• The consumer surplus arising from the

quantity and dierentiation benets

of Airbnb.

This case study focuses on Sydney to

illustrate these two eects. Given the

unique market conditions across Australian

cities, these results are only applicable to

the Sydney area. However, similar results

are likely to occur in other cities.

We found that consumers who switched

from traditional accommodation to Airbnb

homes and apartments saved $25.8 million

in 2015-16. Net consumer surplus enjoyed

by all Airbnb guests totalled $48.4 million.

Appendix D contains further detail about

our modelling framework and technical

assumptions. For this case study, ‘Central

Sydney’ is dened to include the Sydney

CBD, Redfern, Pyrmont, Chippendale,

Ultimo, Surry Hills and Potts Point.

References to ‘hotels’ incorporate all

traditional accommodation included in

the ABS denition, including hotels, motels

and serviced apartments with 15 or more

rooms. Notably, this analysis excludes

other types of accommodation, such as

bed and breakfasts, hostels and

caravan parks.

4.3.1 Savings to consumers

Consumers who switch from booking

traditional accommodation to staying

in Airbnb listings enjoy cost savings

on average because, in most cases,

Airbnb listings are relatively cheaper.

4.3.1.1 Dierence in price between

Airbnb and traditional accommodation

Airbnb listings are often – but not always

– cheaper than booking traditional

accommodation. Chart 4.1 shows a

comparison between average nightly

prices in Airbnb apartments and homes

and hotels in central and greater Sydney.

Entries below the line represent that hotels

are more expensive on average, while

entries above the line show that Airbnb

listings are more expensive on average.

Economic eects of Airbnb in Australia

$200

Airbnb price

45 degree line

$150

$100

$50

Source: Deloitte Access Economics, using Airbnb and ABS

data.

Note: The comparison between areas is subject to data availability, as postcodes in

Airbnb data and Statistical Area 2 areas in ABS data may not perfectly align. Shared rooms

and private rooms within dwellings were excluded from Airbnb data to provide better

comparability to hotels. Hotel prices are determined by considering total takings from

accommodation and room nights occupied. Airbnb prices are determined by considering

total takings from accommodation and the number of room nights in occupied listings

– i.e. prices are provided per room, not per listing.

Hotel price

$100

$200 $300

Chart 4.1: Comparison of average price per night in hotels and Airbnb listings

Rest Central the bubble size is scaled based on total nights in each suburb

Area

Economic eects of Airbnb in Australia

Chart 4.2 shows monthly movements in price in central Sydney and the rest of Sydney. It is clear that Airbnb listings are cheaper per room,

per night on average. Interestingly, the monthly movements in price are remarkably similar for both Airbnb listings and hotels, suggesting

that seasonal factors have an important impact on price. The variation in price is also greater in central Sydney compared to the rest of

Sydney, potentially reecting capacity constraints during peak seasons.

Table 4.2 shows a comparison of average nightly room prices in Airbnb listings and hotels across 2015-16. In central Sydney, Airbnb

properties are on average $88 cheaper per night, while this dierence is $50 per night outside central Sydney. Note this report does

not analyse in detail the drivers of the cost dierential between hotel accommodation and Airbnb listings.

$300

$200

$100

Central Rest

Chart 4.2: Comparison of average nightly room price in Airbnb listings and hotels, 2015-2016

Airbnb price Hotel price Dierence in price

Sept 2015 Dec 2015 Mar 2016 Jun 2016 Sept 2015 Dec 2015 Mar 2016 Jun 2016

Source: Deloitte Access Economics, using Airbnb and ABS

data.

Note: Shared rooms and private rooms within dwellings were excluded from Airbnb data to provide better comparability to hotels.

Hotel prices are determined by considering total takings from accommodation and room nights occupied. Airbnb prices are determined

by considering total takings from accommodation and the number of room nights in occupied listings – i.e. prices are provided per room,

not per listing.

Source: Deloitte Access Economics, using Airbnb and ABS

data.

Note: Shared rooms and private rooms within dwellings were excluded from Airbnb data to provide better comparability to hotels.

Hotel prices are determined by considering total takings from accommodation and room nights occupied. Airbnb prices are determined by

considering total takings from accommodation and the number of room nights in occupied listings – i.e. prices are provided per room, not

per listing. Dierence may not sum due to rounding.

Table 4.2: Comparison of average nightly room price in Airbnb listings and hotels in Sydney, 2015-2016

Area of interest Hotel Airbnb Dierence Price ratio

Central Sydney $250 $163 $88 1.5

Rest of Sydney $182 $132 $50 1.4

Economic eects of Airbnb in Australia

4.3.1.2 Savings arising from cheaper average prices

Deloitte Access Economics used an in-house model to estimate the eect of growth in Airbnb room nights on the number of hotel

room nights booked. Although both Airbnb and the traditional accommodation market are growing, the relatively faster growth of

Airbnb bookings suggests there may be an associated eect on hotels. Further detail on this analysis is contained in Appendix D.

Using this price dierential and an analysis of how Airbnb interacts with the traditional accommodation market, the total savings

enjoyed by consumers switching from traditional accommodation to Airbnb was calculated to be $25.8 million in 2015-16. This is

comprised of $9.1 million in savings to consumers staying in central Sydney and $16.7 million to consumers staying in the rest of Sydney.

Shared rooms and private rooms located in dwellings were excluded from Airbnb bookings data, as these oerings are less similar to

traditional accommodation.

Source: Deloitte Access Economics, using Airbnb and ABS

data.

Note: Shared rooms and private rooms within dwellings were excluded from Airbnb data to provide better comparability to hotels.

Table 4.3: Total consumers savings for consumers switching from hotels to Airbnb accommodation in Sydney, 2015-16

Area of interest Total nights Total Airbnb spending Consumer saving

Central Sydney 162,536 $33.8 million $9.1 million

Rest of Sydney 395,772 $86.2 million $16.7 million

Total 558,308 $119.9 million $25.8 million

4.3.2 Benets other than price

Travellers who book Airbnb

accommodation in Sydney enjoy the

dierentiation benets provided by

Airbnb. These benets may aect

the value consumers place on Airbnb

accommodation. If this value is greater

than the price paid for accommodation,

consumer surplus is created.

Estimating consumer surplus requires

an understanding of the demand curve

for Airbnb accommodation. The slope of

the demand curve is determined by the

responsiveness of consumers to changes

in price – also known as price elasticity.

Given the wide variety of accommodation

oered on the Airbnb platform – across

dierent areas of Sydney and in various

forms – Deloitte Access Economics divided

Airbnb booking data into ve key regions

(Sydney CBD, Blue Mountains, eastern

suburbs, northern beaches, and other

areas) and six accommodation sizes. Each

sample was then analysed separately to

determine the price elasticity of demand,

and therefore the value of

consumer surplus.

Deloitte Access Economics used hedonic

regression to estimate price elasticities.

Hedonic models break down a consumer’s

value of a good into its constituent parts,

such that it is possible to estimate how

much each characteristic contributes

to willingness to pay. In this context, the

price paid for Airbnb accommodation was

broken down into elements such as the

number of nights booked, the number of

guests staying, and the number of days in

advance the booking was made. Each of

these components contributes to the

price a consumer is willing to pay for

Airbnb accommodation.

Two dierent forms of hedonic modelling

were used to elicit elasticities, and

therefore consumer surplus. The rst is a

traditional two-stage hedonic model, while

the second uses a direct utility estimation

approach. These approaches, and further

technical assumptions regarding the

models, are described in Appendix D.

The results of the two approaches were

averaged to provide a robust estimate.

Overall, Deloitte Access Economics

estimates that total consumer surplus for

Airbnb trips to Sydney was $48.4 million

in 2015-16. This is based on the dierence

between aggregate willingness to pay

(derived using elasticities) and the total

amount spent on Airbnb accommodation

in Sydney in 2015-16.

Economic eects of Airbnb in Australia

4.4 Benets for business travellers

Airbnb provides a specialised service

for companies, Airbnb for Business. As its

name suggests, this service tailors Airbnb’s

regular oering for corporate travel.

Listings are curated for business features,

including 24 hour check in, provision of

an entire space (e.g. a whole apartment

or house) and extra amenities, such as

Wi-Fi and toiletries. Travel managers

are able to make bookings on behalf of

team members, and Airbnb for Business

also integrates with spend management

platforms such as International SOS and

Concur, with booking data readily available

from the Airbnb website.

Over 200,000 clients have registered

and used the Airbnb for Business platform

worldwide. Notable companies which

use Airbnb for Business include Google,

Facebook and Morgan Stanley. Around

10 per cent of Australian bookings

were business-related in 2016, with the

majority of bookings made in Sydney and

Melbourne. In the United States, Fast

Company estimates that 10 per cent of

Airbnb rentals are business travellers.

On average, business travellers rated their

stay 4.7 stars, reecting the amenities and

standards required for business-ready

listings. 24 per cent of business trips

within Australia are made by international

travellers, with the remaining 76 per cent

being domestic travellers.

The key benets of Airbnb for Business

relate to the dierent service oering it

provides, and are in some cases similar to

the broader consumer benets of Airbnb.

Firstly, Airbnb’s business clients have

reported to Airbnb that listings are up to

35 per cent less expensive than traditional

hotel accommodation. As highlighted in

Table 4.4, standard Airbnb listings were

around 54 per cent cheaper compared

to traditional accommodation in central

Sydney. Although it is important to note

that these prices may reect dierent

standards of accommodation, the overall

sentiment remains the same – that

business travel is, on average,

less expensive through Airbnb.

Source: Deloitte Access Economics, using Airbnb and ABS

data.

Note: Shared rooms and private rooms within dwellings were excluded from Airbnb data to provide better comparability to hotels.

Hotel prices are determined by considering total takings from accommodation and room nights occupied. Airbnb prices are determined

by considering total takings from accommodation and the number of room nights in occupied listings – i.e. prices are provided per room,

not per listing. Dierence may not sum due to rounding.

Table 4.4: Comparison of average nightly room price in Airbnb listings and hotels in Sydney, 2015-2016

Area of interest Hotel Airbnb Dierence Price ratio

Central Sydney $250 $163 $88 1.5

Rest of Sydney $182 $132 $50 1.4

As noted earlier, Airbnb expands

accommodation supply, particularly

in areas outside of traditional tourist

hotspots. This may provide benets for

businesses which require accommodation

for employees outside the CBD of capital

cities; for example, where a client is based

in the inner metro area. Business travellers

may also enjoy the opportunity to explore

a new area of the city, particularly for an

extended stay.

For those requiring accommodation within

the CBD, Airbnb can expand supply during

peak periods where the availability of

traditional tourist accommodation may

be limited. This can particularly occur

during special events, such as the Mardi

Gras Festival in Sydney. Recent statistics

show that in 2016, hotel occupancies in the

cities of Melbourne and Sydney reached

87 per cent and 88 per cent respectively.

Robyn Johnson, CEO of Meetings & Events

Australia, recently stated:

'The conference cycle in Australia

often coincides with peak corporate

activity and festivals that puts high demand

on hotel accommodation. Airbnb could

be an option that may be attractive to

conference attendees who are looking

for a dierent experience.'

Economic eects of Airbnb in Australia

Aesop – using Airbnb for Business

Aesop is an Australian skincare company headquartered in Melbourne. Aesop has 180

stores worldwide, with global oces in New York, London, Paris, Tokyo and Hong Kong.

While the senior leadership team is based in Melbourne, frequent international and

interstate travel is required to open and manage stores around the world.

Driven by employee demand, Aesop began using Airbnb for Business for corporate

travel. Airbnb complements traditional tourist accommodation and is generally used

for dierent travel purposes. As Aesop stores are frequently established in local

neighbourhoods rather than corporate areas, Airbnb is often more convenient for

travelling sta. Employees can stay in the neighbourhood near the proposed or

established Aesop store, and experience the local culture shaping each location.

Airbnb is ideal for longer-term stays where Aesop employees will be living out of home

for an extended period of time. Aesop reported that people who use Airbnb tend to

engage more with the local community, as opposed to experiencing their destination

at a purely business level. Kitchen and laundry facilities are also useful for extended

stays, as they render the living and working environment more similar to home than to

a hotel. Pricing can also be more aordable through Airbnb for long term stays.

Hotels are still important in the context of Aesop’s corporate travel, especially for

shorter stays or long trips with multiple stopovers and complex itineraries. Sta who

are travelling to unfamiliar locations may also choose to stay at a hotel where easy

airport transfers are available. Airbnb and hotels are alternative options which each

have dierent advantages depending on travel requirements.

The Airbnb for Business platform provides for ease of booking in a corporate

environment. Authorised travel organisers can book accommodation on someone

else’s behalf, which is important for Aesop given the frequency of travel required for

some employees and directors. Global applications are increasingly changing how

Aesop undertakes corporate travel around the world.

The nature of Airbnb properties

may also benet both businesses

and travellers. The ability to rent an entire

space – such as a whole apartment or

house – is particularly useful for businesses

wishing to facilitate a retreat or osite team

session. It is also benecial for business

travellers on an extended stay or preparing

for relocation, as the property is more

similar to a home than a hotel. 67 per cent

of Airbnb’s business travel bookings are

for an entire home or apartment.

As with Airbnb’s regular oering,

stays booked through Airbnb for

Business are protected by a $1 million

host guarantee (covering damages and

protecting the guest and host) and $1

million host protection (providing coverage

if a guest is injured). Airbnb also partners

with International SOS and iJET such

that itinerary data can be integrated into

these travel assistance platforms, and

provides 24/7 phone support for corporate

travellers. Companies can choose a list

of pre-approved listings that meet their

individual travel policies and requirements.

Economic eects of Airbnb in Australia

5. Producer eects

“Recently, we had a retiree

travelling around the world stay

with us for just over a week. She

chose Airbnb because she didn’t

want to be by herself each night –

she wanted to share her day

and her experiences with

someone else.”

Lyn,

host from Adelaide

Economic eects of Airbnb in Australia

Airbnb hosts are rewarded beyond the income they earn – they also enjoy

the benets of cultural exchange. While traditional accommodation may be

impacted by Airbnb, competition can drive better quality and the size of

the market.

5.1 Benets for Airbnb hosts

Airbnb hosts enjoy a number of benets

arising from their activities on the platform.

These benets are not limited to the

income earned from Airbnb stays – hosts

also benet from the interactions with

their guests and the broader community,

and can experience new cultures without

leaving their hometown.

5.1.1 Income

Airbnb allows ordinary households to have

an extra source of income by sharing their

existing property, whether that be a spare

room or a holiday house. For over 80 per

cent of Airbnb hosts across Australia, this

property is the home in which they live.

Airbnb hosts in Australia earned a median

income of $4,920 in 2015-16.

A survey of Sydney Airbnb hosts in 2013

found that 31 per cent rely on their Airbnb

income to make ends meet, spending on

average 47 per cent of this income on

essential living expenses. The remaining

income is used as extra spending money,

to pay for holidays or contributes to

long-term savings.

Beyond comprising an additional source of

income, Airbnb can also support hosts to

explore new business ventures. In 2013, 27

per cent of Sydney Airbnb hosts surveyed

were freelancers, entrepreneurs or self-

employed. Airbnb income can help bridge

the gap between earnings and expenses

during the start-up period, or fund new

projects which may otherwise not occur.

Spencer – a small business owner hosting with condence

“Airbnb provided me with the condence and ability to try something dierent.”

Spencer began listing his spare bedroom in Redfern 5 years ago. At the time, he felt

stuck in a job he no longer enjoyed, but after hosting on Airbnb, felt condent enough

to start his own small business. Airbnb provided Spencer with a source of income to

cover the home loan whilst he built up his business.

Within his rst year of hosting, Spencer received guest requests from all over the

world – which Spencer says has broadened his horizons. Being able to communicate

with guests via Airbnb’s internal messaging platform means that Spencer can feel

comfortable accepting guests from around the world. His “best guests ever” were a

couple from Kenya.

“I would never have had this experience, let alone in my own home,

if it hadn’t been for Airbnb.”

The majority (80 per cent) of Spencer’s guests are from overseas and within this,

40 per cent are from Asia. Airbnb provides international guests with an alternative to

CBD accommodation and after seeing the sights, Spencer noticed that all his guests

would spend their last few days in local spots. He has stated that Airbnb appears to

drives money into the local community.

To date, Spencer has hosted around 270 people of varying ages, ethnicities and

nationalities. The majority of Spencer’s guests stay for 3-4 days, which provides him

with a good balance of having quality company but not a housemate.

Spencer believes Airbnb was the major factor as to why he started his business, as it

provided him with the condence and means to do so, while exposing him to a range

of people.

“Airbnb has given me the condence to accept people for who they are and in its own

way, it is teaching people to be more accepting by welcoming dierent cultures into

one’s home.”

Economic eects of Airbnb in Australia

5.1.2 Cultural exchange and

community benets

Airbnb hosts can benet from the

cultural exchange facilitated by Airbnb.

With over 80 per cent of Australian hosts

listing their primary residence on Airbnb,

there are ample opportunities to connect

with people from dierent countries and

cultures through peer to peer transactions.

Broadly, platforms like Airbnb connect

people – with one participant providing

accommodation, and the other (or others)

requiring accommodation. This personal

connection can range from the mere

exchange of services, to a conversation

or lasting friendship. The ability of Airbnb

to facilitate social interactions as well as

accommodation is a key benet of

the platform.

These interactions are even more benecial

when it’s considered that a substantial

proportion of people using Airbnb when

travelling are from overseas. Both the host

and guest can experience another culture

through Airbnb, whether that be through

a conversation, a meal or a guided tour.

This can be a learning opportunity for

hosts who have never travelled, and can

help develop a greater understanding of

diversity and culture.

Through the interactions between hosts

and guests, travellers can connect with

local communities and vice versa.

With

the majority of Airbnb accommodation

situated outside major hotel districts and

instead nearby local neighbourhoods,

travellers are likely to visit restaurants,

bars, attractions and shops in the area – as

recommended by their host. In this way, the

broader community can also benet from

the cultural exchange facilitated by Airbnb,

instead of this eect being more limited to

major hotel districts or tourist areas.

5.2 Driving competition and

growing the market

Platforms like Airbnb are adding to

accommodation supply and in doing so, are

growing the overall size of the market. This

growth arises as Airbnb’s lower prices and

features may encourage people to enter

the market, or stay longer or more often

in tourist accommodation than what they

would otherwise.

Airbnb is also increasing competition in

the tourism accommodation market, with

more rooms and more players in the

space overall. There may, however, be

costs and impacts for existing operators

in the accommodation market. Research

undertaken by Zervas, Proserpio and Byers

in the US found that Airbnb limited the

ability of the hotel industry to raise prices

during peak periods, with exible Airbnb

supply positioned to absorb

additional demand.

CBRE also analysed the impact of Airbnb

on the traditional accommodation market in

59 key markets in the US. It concluded that

while Airbnb may impact a hotel’s ability to

raise rates and may lead to hotels lowering

rates to stay competitive, it is having a

minimal impact outside the top markets.

Melissa – sharing Darwin with the world

Melissa lives on a 10 acre property in rural Darwin, around 20 minutes from the CBD.

She has two Airbnb listings on her property – a bedroom with an ensuite in the main

house, and a luxury caravan parked close to natural bushland. The caravan was

initially purchased to travel around Australia, but as it made sense to make use of it

year-round, Melissa listed it on Airbnb too. Guests enjoy the proximity of the property

to the city centre, as well as the privacy and serenity of the rural location and

neighbouring farm.

Melissa’s Airbnb guests have come from around the world, with around two thirds

from overseas and the rest from Australia. The vast majority of guests visit Darwin

as tourists, and so Melissa can advise people what to do based on their interests

– whether that be the best place to see crocs or how long to stay at Kakadu. Some

guests also stay longer-term while looking for permanent accommodation or trialling a

move to Darwin.

“Airbnb is a great way to meet people and make friends. I keep in touch with some

guests through Facebook, especially those who stay in the main house. I form real

connections with people – it’s only sad you often don’t see them again!”

Airbnb generated 2 per cent or more of

hotel revenue in only 15 of the 59 markets

assessed – and in those 15 markets, the vast

percentage of that revenue was generated

in downtown.

Despite the impact on existing operators,

consumers stand to gain from competition

in the long term. Competition is a good

thing – more competitive markets can help

deliver greater variety, choice and quality

of goods. Competition and choice are also

important in the context of the broader

economy, supporting productivity and

income growth.

Airbnb has also spurred the

development of new jobs, such as Airbnb

host coaching. Jodie and Rob, for example,

established Guest Ready to provide support

and advice on getting started as an Airbnb

host. Airbnb also indirectly supports jobs in

other industries – for example, some hosts

may employ a cleaner, or use a short term

rental manager while on holiday. Deloitte

Access Economics found that 4,384 FTE

jobs are indirectly supported by Airbnb

guest expenditure, including the amount

paid to hosts and other holiday expenses.

Economic eects of Airbnb in Australia

Jodie – from Airbnb host to Airbnb entrepreneur

Jodie began hosting on Airbnb in early-2014. After deciding to move in with her

partner Rob, the inevitable discussion came up – his house or hers? Airbnb appeared

to be the perfect middle ground, allowing Jodie to keep her home in Melbourne with

the exibility to evaluate the situation down the track.

“I already had friends of friends staying in my spare room – so why not go

one step further?”

Not long after Jodie listed her apartment on the platform, a friend asked her for

some tips on how to prepare an apartment for Airbnb. A conversation over coee

turned into a client proposal, and Jodie and Rob went on to start their own business,

Guest Ready. Guest Ready provides support and advice on how hosts get started on

the platform and prepare their room, apartment or house for Airbnb guests. Their

business has expanded to business planning and coaching for Airbnb marketplace

businesses who provide services to hosts.

Jodie still lists her own apartment on Airbnb, and she values the personal interactions

with her guests. Understanding why guests want to stay in her apartment – whether

for a training course, a holiday or to relocate to Australia – is an important part of

tailoring her service to each guest.

One guest Jodie remembers fondly was a retiree who booked in to stay at her

apartment for a month, for something dierent to do. Jodie invited her guest to

accompany her partner and friends to a Melbourne Fringe Show, an experience the

guest might not have had in Melbourne otherwise.

“I would never imagine this would happen in more traditional accommodation. We had

a great time, and now the guest is considering hosting on Airbnb in her own home – a

perfect project for her retirement!”

5.3 Supporting local economies

Airbnb can activate local communities by

distributing visitors across cities. 74 per cent

of Airbnb properties are located outside

traditional hotel districts in major markets

across the world

– meaning that both

visitors and their spending is dispersed

rather than concentrated.

The dispersal of visitors across cities

provides benets to local communities,

as Airbnb guests spend money in the area

where they stay, rather than in areas which

traditionally benet from tourism. Airbnb

survey data shows that 46 per cent of

guest daytime spending is in the suburbs

in which they stay, and that 98 per cent of

hosts suggest local restaurants, cafes, bars

and shops in their neighbourhoods. This

expenditure can assist local businesses

which generally rely on foot trac and

residents who live in the area.

Local communities may also benet from

the presence of tourists (particularly those

from overseas) in the context of cultural

exchange. As discussed in Section 5.1.2,

residents may be able to benet from

interactions with travellers of dierent

backgrounds.

These exchanges may

otherwise not occur, and can introduce

locals to people from all over the world.

Economic eects of Airbnb in Australia

Katinka – how the Airbnb community benets a Tasmanian small business

Katinka is the sole owner and operator of Lily & Dot, a retail store and online

shop based in Hobart, Tasmania. Lily & Dot showcases Tasmanian-made gifts and

homewares, with a focus on children’s products. Katinka also hosts crochet classes

and other ‘nanna craft’ workshops at the store on a regular basis.

While Lily & Dot has only been open for just over a year, Katinka quickly realised the

importance of tourists to the Hobart mid-town precinct and Tasmania more broadly.

“I underestimated how many customers would not be local residents, and

how many Airbnb properties were located in such close proximity to the store.”

She noticed from speaking to customers that many were staying in hosted

accommodation in the nearby historical Hobart area.

Katinka began to form relationships with local Airbnb hosts, which have now

developed into mutually benecial partnerships. Both Katinka and Airbnb hosts

benet from the referrals and the special oers they can give to their customers.

This provides a unique experience for the guest who can discover stores like Lily

& Dot, and support other small Tasmanian makers and craftspeople who supply

Katinka’s products.

Importantly, these partnerships can benet small businesses and give them an

“eective and inexpensive channel” to advertise in what Katinka described as a

“noisy marketplace”. The way in which Airbnb can help facilitate a new network is

important, and as Katinka stated, is gaining traction across other small Tasmanian

businesses. Importantly, the connections made in store can continue and translate

to benets down the track, with Katinka noting that many customers will return via

her online store – even if they did not purchase something on their rst visit.

Katinka drew parallels between the shop small movement and Airbnb. In both cases,

consumers desire an authentic experience, and one which is focused on building

relationships. In Katinka’s store, she forges relationships with her customers and can

explain the stories behind products in a way that large chain stores cannot. Similarly,

Katinka noted the importance of living the local experience for Airbnb guests.

“I know who made the products, where they came from, and the stories behind them”.

Katinka’s store has also beneted from Airbnb in that she is now more aware of the

importance of reviews and referrals. Seeing how vital positive ratings are for Airbnb

hosts encouraged her to review her own online presence on other platforms, such as

Google and TripAdvisor. Her involvement with Airbnb has impacted how she interacts

with other technologies, especially given that Lily & Dot is a small one-person business.

Economic eects of Airbnb in Australia

Appendix A: Helping

state governments deliver

tourism objectives

New South Wales

The key tourism strategy in New South

Wales is the state government’s Visitor

Economy Industry Action Plan. Released at

the end of 2012, the action plan sets out a

series of strategic imperatives and actions

in response to the Visitor Economy

Taskforce Report.

The strategic imperatives relevant

to Airbnb and its oering include:

• Strategic imperative 2: Grow

physical capacity

• Strategic imperative 3: Renew and

revitalise destinations

• Strategic imperative 4: Improve the

visitor experience

• Strategic imperative 5: Increase

visitor spend.

The second strategic imperative, grow

physical capacity, refers to physical

capacity in the context of visitor

accommodation, labour supply, aviation

and other transport modes (such as cruise

and point-to-point transport). The Visitor

Economy Taskforce recommended a series

of actions to facilitate an increase in visitor

accommodation, including via incentives,

land use planning and regulatory regimes.

Although short-term letting was not

considered in the original taskforce report

or the government’s response, it is clear

that platforms like Airbnb can increase

accommodation supply. This is particularly

important in Sydney, where occupancy

rates hit 88.1 per cent in 2016.

Airbnb also

facilitates increased room supply in regional

areas, which may assist the government

in achieving its third objective, renew and

revitalise destinations.

Based on Airbnb data, around 8,600

unique listings booked in 2015-16 in New

South Wales were outside the Greater

Sydney area, out of a total 30,900.

Beyond the supply of additional rooms to

the visitor market, Airbnb can also facilitate

an enhanced visitor experience. While the

action plan considers visitor experience

in the context of how visitors interact with

tourism-related products (such as key

attractions and public transport), Airbnb’s

peer-to-peer service can also change

how visitors interact with a destination.

Hosts can introduce guests to the area,

recommend their favourite attractions,

and provide an overall more authentic

experience compared to tourists staying in

traditional accommodation. This may assist

in improving the visitor experience, as

targeted in strategic imperative 4.

The action plan also aims to increase

visitor spend across New South Wales.

A number of actions were identied to

assist in achieving this goal, including

greater exibility in trading hours and

payment methods, and promotion of

unique New South Wales experiences

(including education).

Airbnb survey data shows that, on average,

Airbnb guests spend 54 per cent more than

an average tourist in Sydney, with Airbnb

guests spending $227 per night and average

tourists spending $148 per night.

While

not directly linked to any of the initiatives

listed above, Airbnb may nevertheless assist

in increasing visitor spend across the state.

It is acknowledged that the New South

Wales Parliament is currently undertaking

an inquiry into the adequacy of the

regulation of short-term holiday letting

in the state. However, the regulatory

framework relating to Airbnb and similar

platforms is not a focus of this report.

Tasmania

The Tasmanian Government and the

Tourism Industry Council Tasmania

jointly agreed in 2015 to implement T21,

the state’s visitor economy strategy. T21

aims to grow annual visitor numbers to

Tasmania to 1.5 million by 2020, and annual

visitor expenditure to $2.47 billion. Other

key metrics include tourism employment,

regional dispersal and visitor satisfaction.

T21 is underpinned by four

strategic priorities.

The fourth priority under T21 is to build

capability, capacity and community. Rather

than focusing on increasing accommodation

supply, the strategic intent behind the

fourth priority is to facilitate high quality

tourism experiences. A number of actions

were identied to achieve this goal, including

workforce development, quality assurance

programs and developing approaches to

increasing international education

in Tasmania and regulating the

sharing economy.

Economic eects of Airbnb in Australia

Services like Airbnb can assist the

government and industry to achieve the

broad goal of improving capability, capacity

and community. Aside from the increase

in visitor accommodation supply facilitated

by Airbnb, it also creates a vast network

of hosts who are advocates for their local

community and more broadly, Tasmania.

The hosts consulted with as part of this

study each frequently recommended local

businesses and tailored experiences to their

guests, creating a sense of community and

facilitating an enjoyable stay.

Airbnb may also assist in achieving the

rst priority under T21: generating more

demand for travel to Tasmania. The actions

identied to achieve this priority relate to

marketing, word-of-mouth and third party

endorsement, and developing a series of

strategies to promote Tasmania’s oering.

However, survey results show in New South

Wales that 31 per cent of Airbnb guests said

they would not have come or stayed as long

in Sydney without Airbnb. Assuming similar

results are found in other jurisdictions,

including Tasmania, Airbnb may be able to

facilitate increased demand for travel to

Tasmania. This is particularly so for regional

areas outside Hobart such as the Tasmanian

east coast, which is well-served by both

private rental accommodation (listed on

websites such as Airbnb and Stayz) and

traditional accommodation. The Premier,

Will Hodgman, stated that 'without the

sharing economy and companies like

Airbnb and Stayz, Tasmania would have

a serious accommodation shortage'.

The Tasmanian Government recently

announced its sharing economy policy,

which includes new provisions and

exemptions relating to accommodation

sharing. Under the policy, hosts sharing

up to four bookable rooms on a platform

are not required to obtain a permit, while

listings with more than four bookable

rooms or properties over a certain size

have dierent requirements.

It is noted,

however, that Deloitte Access Economics

did not consider appropriate regulation in

this report.

Victoria

The Victorian Visitor Economy Strategy,

recently released by the Victorian

Government, aims to increase visitor

spending to $36.5 billion by 2025 and

increase employment in the sector to

320,700 jobs. The strategy identies nine

priorities to achieve this goal, with a focus

on positioning Victoria competitively

against the other states.

The key aspiration under the strategy is

to develop better experiences for visitors

travelling for leisure, business, education

and health services, and visiting friends

and relatives. Airbnb can assist in achieving

this broad aspiration through the unique

service oered through its platform. As

described in Chapter 4, consumers enjoy

a range of benets associated with the

Airbnb platform, many of which contribute

to the overall visitor experience. For

example, guests can enjoy restaurants,

cafes and attractions recommended

by their Airbnb host, generating a living

experience more similar to a local resident

than a conventional tourist. The range of

accommodation, price of accommodation

and duration of stay available on Airbnb

may also suit a wider variety of visitor

types compared to traditional tourist

accommodation.

The second priority identied in the

strategy relates to building on the

potential of regional and rural Victoria.

The various actions identied include

redeveloping regional visitor infrastructure

and collaborating with Regional Tourism

Boards to better promote the regions

and facilitate visitation. While visitor

accommodation is not noted as a specic

action within this priority, the provision of

Airbnb accommodation in regional and rural

Victoria may nevertheless assist in attracting

more visitors to Victoria’s regions. Not only

does Airbnb increase accommodation

supply in situations where supply may

otherwise be limited, such as during key

events and peak periods, but it also serves

as an important marketing tool in and of

itself. Visitors browsing the platform may

discover regional locations to add to

their itineraries.

Maximising the benets of events is the

fourth priority in the strategy. A number

of targeted actions are identied to achieve

this goal, including allocating funding and

attracting new and existing events to

Victoria. As above, visitor accommodation

is not a focus under this priority; however,

platforms such as Airbnb can assist in

ensuring sucient accommodation is

available during peak periods. Interstate,

Airbnb has previously partnered with the

Sydney Gay and Lesbian Mardi Gras, the

Adelaide Fringe and the Australian

Masters Games.

The broad goal of the visitor economy

strategy is to increase visitor expenditure

across the state. Airbnb survey data shows

that, on average, Melbourne Airbnb guests

spend 41 per cent more than an average

tourist in Melbourne, with Airbnb guests

spending $248 per night and average

tourists spending $176 per night.

While

not directly linked to any of the actions listed

above, Airbnb may nevertheless assist in

increasing visitor expenditure across

the state.

South Australia

The South Australian Tourism Commission

launched the South Australian Tourism Plan

2020 in mid-2014. It identies a number

of priority action areas to increase visitor

expenditure to $8.0 billion by 2020.

The third priority identied under the plan is

to support and reap the benets of existing

infrastructure in the state, recognising

the substantial recent investments in

accommodation and other developments

around Adelaide and in regional areas.

The priority is articulated as using existing

infrastructure to foster quality experiences,

thereby enticing visitors and driving

repeat visitation.

Economic eects of Airbnb in Australia

While Airbnb was not referred to in the

strategy, the way in which Airbnb facilitates

quality experiences can assist in achieving

this goal. Guest satisfaction survey data

from Airbnb shows that 63 per cent of

Airbnb guests staying in Sydney said that

Airbnb made them more likely to return

to Sydney. This is likely due to the range of

benets provided by Airbnb, as described in

Chapter 4. In particular, hosts contribute to

the visitor experience through providing tips

and recommendations and facilitating

a local experience for guests.

The fth priority identied relates to

using events to grow visitation to South

Australia. The actions under this priority

include attracting or developing new

events, and taking advantage of established

events to showcase South Australia and

encourage regional dispersal. Although

visitor accommodation was not identied

as an issue under this priority, adequate

availability of a range of accommodation

types is important, particularly during large

events. Airbnb has previously partnered

with the Adelaide Fringe and the Australian

Masters Games in Adelaide. Airbnb can

facilitate expanded accommodation

supply during periods of peak demand,

and can also provide dierent types of

accommodation that may not be otherwise

available (such as a whole house or large

apartment to rent).

Relevantly, the broad target under

the tourism plan is to increase visitor

expenditure to $8.0 billion by 2020. Airbnb

survey data from guests across Australia

indicates that Airbnb guests spend, on

average, 62 per cent more than the average

tourist. In Adelaide, Airbnb and TRA survey

data shows that Airbnb guests spend an

additional 40 per cent each night.

These

visitor tendencies can assist the government

to achieve the rst identied priority –

driving demand – both across existing and

target markets.

The South Australian Government

claried in mid-2016 that people renting

their residential property for short term

stays does not constitute a ‘change in use’

under the Development Act 1993 (SA). As

such, development approval is not required

to list a property on Airbnb.

It is noted,

however, that Deloitte Access Economics

did not consider appropriate regulation in

this report.

Queensland

The Queensland Government released

Destination Success, a 20-year plan for

Queensland’s tourism industry, in 2013.

The long term strategy is supported by a

series of short-term action plans, the most

recent of which is Advancing Tourism 2016-

20 – Growing Queensland Jobs.

Destination Success sets a target of $30

billion visitor expenditure by 2020, which

is supported by a broad vision focusing

on Queensland’s tourism experiences and

diverse regions. Six key themes are outlined

under the strategy to guide industry and

government eorts.

The rst theme identied is to build

strong partnerships between industry,

government and communities. Within this

theme, community engagement in tourism

is listed as one of four strategic directions

to progress the broad goal. Platforms such

as Airbnb involve ordinary members of the

community in providing tourism services.

Hosts have the opportunity to interact

with visitors to their community, creating

a welcoming environment and allowing

guests to have a real, local experience.

By activating local communities that may

otherwise be less aected by tourism,

Airbnb can help facilitate partnerships

between hosts, guests and local businesses,

thereby creating a unique experience for

visitors to Queensland. Further detail about

how Airbnb activates local communities is

contained in Section 5.3.

Using events to attract both domestic and

international visitors is a strategic direction

identied in the fourth theme, to target

a balanced portfolio of markets, and the

fth theme, to oer iconic experiences.

The strategy recognises that events can

both attract visitors and encourage repeat

visitation through the experiences oered.

It also recognises that events can be used

to grow and develop regional tourism

destinations. Airbnb can support events

calendars across Queensland, by expanding

accommodation supply in times of peak

demand. Interstate, Airbnb has previously

partnered with the Sydney Gay and Lesbian

Mardi Gras, the Adelaide Fringe and the

Australian Masters Games.

The more recent short-term strategy,

Advancing Tourism 2016-20, sets out a

number of strategic priorities to leverage

Queensland’s competitive advantages. Its

goal is to attract more visitors to the state

and increase visitor expenditure, with a

special focus on Queensland’s diverse

regions. Similar to Destination Success,

the strategy identies a number of ways in

which Queensland can achieve its priorities,

which broadly include quality products,

investment, workforce development and

seizing the opportunity in Asia. As described

earlier, Airbnb can assist the government

to achieve its goals in these areas by

facilitating a quality, local experience for

guests, and expanding accommodation

supply in periods of peak demand. While

Airbnb and other short-stay providers are

not directly referenced or identied in these

strategies, they can nevertheless support

the government in conjunction with other

tourism providers to achieve these goals.

Economic eects of Airbnb in Australia

Airbnb can also assist the government to

achieve the broad goal under Destination

Success – to increase visitor expenditure.

Airbnb survey data from guests across

Australia indicates that Airbnb guests spend,

on average, 62 per cent more than the

average tourist. In Brisbane, Airbnb and TRA

survey data shows that Airbnb guests spend

an additional 42 per cent per night.

While

not directly linked to any of the actions listed

in the strategy, Airbnb may nevertheless

assist in increasing visitor expenditure

across the state.

The Queensland Government also recently

released the Queensland Asia Tourism

Strategy 2016-2025. The strategy aims

to position Queensland as the leading

Australian destination for Asian travellers

in terms of market share, reputation and

experience. Key target countries include

China, Japan and South Korea, while key

market segments include millennials and

free and independent travellers.

With

China being Airbnb’s fastest growing

outbound travel market – with travel

growing 500 per cent in 2015-16 –

Airbnb may assist in driving visitation

to meet the government’s goals.

Western Australia

The State Government Strategy for Tourism

in Western Australia 2020 outlines seven

focus areas to double the value of tourism in

Western Australia to $12 billion. The strategy

outlines a partnership model between

government and industry to achieve

this goal.

The rst focus area relates to the Western

Australian brand and how Western Australia

can be marketed through a variety of

channels. It also recognises that Western

Australia’s tourist oering must align

with this brand promise, with high quality

experiences, events and infrastructure

forming the centre of the identied

government and industry strategies. Given

the unique consumer benets provided

by Airbnb, the platform could potentially

assist the government in delivering high

quality experiences to visitors. Airbnb plays

a role both in the provision of tourism

infrastructure (accommodation) and the

overall visitor experience (host-guest

interactions). Further detail about the

consumer benets of Airbnb and how

visitors can enjoy quality local experiences

is contained in Chapter 4.

Infrastructure is the second focus area of

the Western Australian tourism strategy.

At the time the strategy was written, Perth

faced a signicant shortfall in hotel rooms.

Since then, however, a number of new

hotels and developments have either

opened or are planned to open in the next

couple of years, with the corresponding

increase in room supply potentially

meeting demand.

Nevertheless, the provision of Airbnb short-

term rentals may help to meet demand for

Perth hotels rooms in peak periods where

availability might be limited. Airbnb may also

help to meet shortfalls in regional areas,

particularly those which are less serviced

by traditional hotel accommodation. This

would also assist the government in meeting

its sixth objective, to increase visitors to

regional Western Australia. The government

recognised in its strategy that extraordinary

experiences are key to growing visitors

to regional Western Australia, as well

as the provision of necessary tourism

infrastructure. Given Western Australia’s vast

size, the caravan, camping and self-drive

market segments are also noted as a way

to increase regional visitation. Airbnb could

also play a role for these market segments.

In a similar way, Airbnb may assist the

government in achieving its objective to

position Western Australia as a recognised

events destination: the fth priority under

the tourism strategy. Airbnb can support

events calendars across Western Australia,

by expanding accommodation supply in

times of peak demand. Interstate, Airbnb

has previously partnered with the Sydney

Gay and Lesbian Mardi Gras, the Adelaide

Fringe and the Australian Masters Games.

Economic eects of Airbnb in Australia

Given the strategy aims to increase visitor

expenditure to $12 billion by 2020, the

fact that Airbnb guests spend more per

night compared to average tourists is an

important point to make. Airbnb guest data

and TRA survey data show that Perth Airbnb

guests spend 46 per cent more per night.

These visitor tendencies may assist the

government to meet its broad goal.

Australian Capital Territory

The ACT’s 2020 Tourism Strategy was

launched by the ACT Government in late

2013, with a goal to double the value of

overnight visitor expenditure to $2.5 billion

by 2020. Seven pillars form the basis of the

strategy, under which targeted programs

and initiatives can be developed.

The third pillar relates to the digital capability

of the tourism industry. This initiative

recognises that most consumers interact

with tourism destinations and experiences

through digital means, and therefore

industry must not only be prepared, but

actively participating in the online world.

Airbnb, as a platform that exists only online,

both can help the government to achieve

this goal and can be used as another means

to market the ACT. For example, Airbnb

guidebooks feature the recommendations

of local hosts. This feature is a way to

communicate with potential visitors online,

while still delivering a local experience.

Similar to other jurisdictions, the ACT

Government recognises events as a key

contributor to tourism in the fourth pillar

of its strategy. The priorities identied are

focused on supporting major events and

exhibitions and ensuring the opportunities

arising from these events are eectively

leveraged. Airbnb can support events across

Canberra, by expanding accommodation

supply in times of peak demand. Interstate,

Airbnb has previously partnered with

the Sydney Gay and Lesbian Mardi Gras,

the Adelaide Fringe and the Australian

Masters Games. Partnerships may present

a new opportunity to attract guests to

major events, while the supply of Airbnb

accommodation can ensure that a range

of property types are available to suit

dierent needs.

Airbnb can also assist the government to

achieve its visitor expenditure target under

the strategy. Airbnb survey data from guests

across Australia indicates that Airbnb guests

spend, on average, 62 per cent more than

the average tourist. While not directly linked

to any of the pillars listed in the strategy, the

spending tendencies of Airbnb guests may

assist the government to achieve its goal.

Northern Territory

The Northern Territory’s Tourism Vision

2020 provides a blueprint for the Northern

Territory’s tourism sector to grow overnight

visitor expenditure to $2.2 billion by 2020.

This was in light of decreasing visitation to

the Northern Territory since 2000 (at the

time of writing, in 2013).

The strategy is built upon a partnership

between government, industry and

other partners (including land councils

and traditional owners). Four strategic

requirements were identied to achieve

the stretch growth target.

Under the rst strategic requirement,

grow value, digital capacity and capability

are identied as an important channel to

market. The broad intention is to increase

the Northern Territory’s digital presence

in order to advertise the destination and

convert desire to actual bookings. Although

not directly related to the actions identied

under this priority, Airbnb could serve as

a potential model or means by which the

Northern Territory could access dierent

markets, and leverage the opportunity

presented by a global platform. In addition,

Airbnb guests tend to spend more than

average tourists, with Airbnb and TRA

survey data showing that Airbnb guests in

Darwin spend 53 per cent more on average.

These spending tendencies may assist

the government to grow the value of the

tourism sector.

The second strategic requirement

recognises that the Northern Territory

may face a shortage of accommodation

if the targeted growth in visitor numbers

are achieved. In 2013, Tourism NT forecast

that the Northern Territory will need an

additional 205-215 hotels rooms per year

to 2020 to meet growth targets. The Airbnb

platform can assist the government to

alleviate supply constraints, by facilitating

the addition of rooms, apartments and

homes available for short stays across

the Northern Territory. This additional

supply is particularly important in the

context of events, which is a key action for

growth identied under the rst strategic

requirement. Given the Northern Territory

Government intends to further develop

an events calendar which maximises the

economic benets across the territory,

adequate availability of accommodation

during peak periods is a necessary

consideration. Airbnb can support events

across the Northern Territory, by expanding

accommodation supply in times of

peak demand.

Under the third strategic requirement,

Tourism NT outlines a strategy to improve

the visitor experience. A number of potential

actions are identied to build the tourism

experiences unique to the Northern

Territory and to ensure that visitors have

access to the services they need and want.

While not directly linked to the actions

listed, Airbnb may nevertheless assist the

government in creating and improving

quality visitor experiences. Airbnb provides

a number of consumer benets unique to

the accommodation platform, as described

in Section 4. In particular, the peer-to-peer

platform allows guests to connect with local

hosts, who can then introduce guests to

the area and provide recommendations for

local experiences. This feature can change

how visitors interact with their destination,

providing an authentic local experience.

Economic eects of Airbnb in Australia

Appendix B: Economic

contribution modelling framework

Economic contribution studies are intended to quantify measures such as value added, exports, imports and employment associated with a

given industry or rm, in a historical reference year. The economic contribution is a measure of the value of production by a rm or industry.

All direct, indirect and total contributions are reported as gross operating surplus (GOS), labour income, value add and employment,

with these terms dened in Table B.1.

Source: Deloitte Access Economics (2016)

Table B.1: Denitions of economic contribution estimates

Estimate Denition

Gross operating surplus (GOS) GOS represents the value of income generated by the entity’s direct capital inputs, generally

measured as the earnings before interest, tax, depreciation, and amortisation (EBITDA).

Labour income Labour income is a subcomponent of value add. It represents the value of output generated by

the entity’s direct labour inputs, as measured by the income to labour.

Value add Value add measures the value of output (i.e. goods and services) generated by the entity’s factors of

production (i.e. labour and capital) as measured in the income to those factors of production. The sum

of value add across all entities in the economy equals gross domestic product. Given the relationship

to GDP, the value add measure can be thought of as the increased contribution to welfare.

Employment (FTE) Employment is a fundamentally dierent measure of activity to those above. It measures the

number of workers (measured in full-time equivalent terms) that are employed by the entity,

rather than the value of the workers’ output.

Direct economic contribution The direct economic contribution is a representation of the ow from labour and capital committed

in the economic activity.

Indirect economic contribution The indirect contribution is a measure of the demand for goods and services produced in other

sectors as a result of demand generated by economic activity.

Total economic contribution The total economic contribution to the economy is the sum of the direct and indirect

economic contributions.

Economic eects of Airbnb in Australia

Source: Deloitte Access Economics

Figure B.1: Economic activity accounting framework

Value added

The measures of economic activity provided

by a contribution study are consistent with

those provided by the Australian Bureau of

Statistics. For example, value added is the

contribution the sector makes to total factor

income and gross domestic product (GDP)

and gross state product (GSP).

There are a number of ways

to measure GDP:

• Expenditure approach –

measures the expenditure of

households, on investment,

government and net exports

• Income approach – measures the

income in an economy by measuring

the payments of wages and prots

to workers and owners.

Below is a discussion measuring the value

added by an industry or rm using the

income approach.

Measuring the economic

contribution – income approach

There are several commonly used measures

of economic activity, each of which describes

a dierent aspect of an industry’s economic

contribution. One measure is value added.

Value added measures the value of output

(i.e. goods and services) generated by the

entity’s factors of production (i.e. labour

and capital) as measured in the income

to those factors of production. The sum

of value added across all entities in the

economy equals gross domestic product.

Given the relationship to GDP, the value

added measure can be thought of as

the increased contribution to welfare.

Value added is the sum of:

• Gross operating surplus (GOS)

represents the value of income

generated by the entity’s capital inputs,

generally measured as the earnings

before interest, tax, depreciation and

amortisation (EBITDA)

• Tax on production less subsidy

provided for production. Note: given

the manner in which returns to capital

before tax are calculated, company tax

is not included or this would double-

count that tax. In addition it excludes

goods and services tax, which is a tax on

consumption (i.e. levied on households)

• Labour income is a subcomponent of

value added. It represents the value of

output generated by the entity’s direct

labour inputs, as measured by the

income to labour.

Figure B.1: shows the accounting

framework used to evaluate economic

activity, along with the components that

make up output. Output is the sum of value

added and the value of intermediate inputs

used by the rm. Net taxes on products

are not included in value added but are

included in GDP.

The value of intermediate inputs can

also be calculated directly by summing

up expenses related to non-primary

factor inputs.

Intermediate

inputs (sourced from

other industries)

Labour

Gross

operating

surplus

Net tax on production

(e.g. company tax,

casino royalities)

Net tax on products

(e.g.GST, fuel excise)

Output (revenue)

Direct value added

Economic eects of Airbnb in Australia

Contribution studies generally outline

employment generated by a sector.

Employment is a fundamentally dierent

measure of activity to those above. It

measures the number of workers that are

employed by the entity, rather than the

value of the workers’ output.

Direct and indirect contributions

The direct economic contribution is a

representation of the ow from labour

and capital in the company.

The indirect contribution is a measure

of the demand for goods and services

produced in other sectors as a result of

demand generated by Airbnb-facilitated

tourism. Estimation of the indirect economic

contribution is undertaken in an input-

output (IO) framework using Australian

Bureau of Statistics IO tables which report

the inputs and outputs of specic sectors

of the economy.

The total economic contribution to the

economy is the sum of the direct and

indirect economic contributions.

Other measures, such as total revenue

or total exports are useful measures of

economic activity, but these measures

alone cannot account for the contribution

made to GDP. Such measures overstate the

contribution to value added because they

include activity by external rms supplying

inputs. In addition, they do not discount

the inputs supplied from outside Australia.

Limitations of economic

contribution studies

While describing the geographic origin of

production inputs may be a guide to a rm’s

linkages with the local economy, it should

be recognised that these are the type of

normal industry linkages that characterise

all economic activities.

Unless there is unused capacity in the

economy (such as unemployed labour)

there may not be a strong relationship

between a rm’s economic contribution as

measured by value added (or other static

aggregates) and the welfare or

living standard of the community.

The use of labour and capital by demand

created from the industry comes at an

opportunity cost as it may reduce the

amount of resources available to spend on

other economic activities. This is not to say

that the economic contribution, including

employment, is not important. As stated by

the Productivity Commission in the context

of Australia’s gambling industries:

'Value added trade and job creation

arguments need to be considered in

the context of the economy as a whole …

income from trade uses real resources,

which could have been employed to

generate benets elsewhere. These

arguments do not mean that jobs, trade

and activity are unimportant in an economy.

To the contrary they are critical to people’s

well-being. However, any particular

industry’s contribution to these benets is

much smaller than might at rst be thought,

because substitute industries could

produce similar, though not equal gains.'

In a fundamental sense, economic

contribution studies are simply historical

accounting exercises. No ‘what-if’, or

counterfactual inferences – such as ‘what

would happen to living standards if the

rm disappeared?’ – should be drawn

from them.

The analysis – as discussed in the report

– relies on a national IO table modelling

framework and there are some limitations

to this modelling framework. The analysis

assumes that goods and services provided

to the sector are produced by factors of

production that are located completely

within the state or region dened and that

income ows do not leak to other states.

The IO framework and the derivation of the

multipliers also assume that the relevant

economic activity takes place within an

unconstrained environment. That is, an

increase in economic activity in one area of

the economy does not increase prices and

subsequently crowd out economic activity

in another area of the economy. As a result,

the modelled total and indirect contribution

can be regarded as an upper-bound

estimate of the contribution made by the

supply of intermediate inputs.

Similarly the IO framework does not account

for further ow-on benets as captured in a

more dynamic modelling environment like

a Computerised General Equilibrium

(CGE) model.

For guest expenditure on accommodation

(i.e., payments to Airbnb hosts), the analysis

is based on the ownership of dwelling

industry group within the ABS Input-Output

tables and it should be noted that the prole

of expenditure on intermediate inputs for

those providing Airbnb accommodation

may dier somewhat from owners of

dwelling more generally. Ownership of

dwellings is not assumed to create any

direct employment in the ABS national

accounts but the purchase of intermediate

inputs by owners does contribute to indirect

employment in the economy.

Input-output analysis

Input-output tables are required to account

for the intermediate ows between sectors.

These tables measure the direct economic

activity of every sector in the economy at

the national level. Importantly, these tables

allow intermediate inputs to be further

broken down by source. These detailed

intermediate ows can be used to derive the

total change in economic activity associated

with a given direct change in activity for a

given sector.

A widely used measure of the spill-over

of activity from one sector to another is

captured by the ratio of the total to direct

change in economic activity. The resulting

estimate is typically referred to as ‘the

multiplier’. A multiplier greater than one

implies some indirect activity, with higher

multipliers indicating relatively larger indirect

and total activity owing from a given level of

direct activity.

The IO matrix used for Australia is

derived from the ABS 2012-13 IO tables.

The industry classication used for IO tables

is based on the Australian and New Zealand

Standard Industrial Classication

(ANZSIC), with 114 sectors in the

modelling framework.

Economic eects of Airbnb in Australia

Appendix C: State-by-state

breakdown of economic

contribution

Contribution to the New South Wales economy

Airbnb guests are estimated to have spent $753.3 million in New South Wales in 2015-16, generating $512.5 million in value added to the

New South Wales economy and supporting 4,452 full time equivalent (FTE) jobs.

The tourism expenditure of Airbnb guests is estimated using survey and booking data provided by Airbnb. The guest spend in New South

Wales across a variety of categories is shown in Table C.1. Airbnb guests spend around 54 per cent more than the average Sydney tourist

according to Airbnb survey data and Tourism Research Australia (TRA) statistics.

Source: Deloitte Access Economics estimates for categories based on Airbnb and TRA

survey and other data

Table C.1: Tourism expenditure of Airbnb guests in New South Wales, 2015-16

Category Average spend per guest per day Total expenditure in NSW

($m)

Share of expenditure

Accommodation $58 $184.0 24%

Food service (e.g. restaurants) $62 $196.5 26%

Groceries $21 $65.8 9%

Shopping $40 $125.4 17%

Other leisure (e.g. entertainment) $28 $87.1 12%

Transportation $24 $76.8 10%

Other services $5 $15.5 2%

Total $238 $753.3 100%

Economic eects of Airbnb in Australia

Table C.2: Economic contribution of Airbnb guests in Sydney, 2015-16

Table C.3: Economic contribution of Airbnb guests in New South Wales outside Sydney, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $540.0

Value added ($m) $270.7 $106.3 $37 7.0

• Labour income ($m) $111.7 $52.8 $164.5

• Gross operating surplus ($m) $158.9 $53.6 $212.5

Employment (FTE) 2,517 748 3,266

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $213.2 – –

Value added ($m) $106.2 $29.3 $135.5

• Labour income ($m) $47.5 $14.8 $62.3

• Gross operating surplus ($m) $58.7 $14.6 $73.2

Employment (FTE) 971 216 1,186

Focusing on the greater Sydney region, Airbnb guest expenditure is estimated to contribute $377.0 million in value add to the regional Sydney

economy and support 3,266 FTE jobs. Airbnb guest expenditure in Sydney totalled $540.0 million. A further breakdown of the economic

contribution is shown in Table C.2.

More broadly, Airbnb guests also stay outside the greater Sydney region. The economic contribution to these regional economies is

estimated to be $135.5 million in value added, based on the dierence between the value added to the New South Wales and greater Sydney

economies. Airbnb guests in New South Wales spent a total of $213.2 million when staying outside the greater Sydney region. The top four

destinations in New South Wales outside the Sydney region are Byron Bay, Nowra, Newcastle and Wollongong.

Source: Deloitte Access Economics based on Airbnb, TRA

and ABS

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Source: Deloitte Access Economics based on Airbnb, TRA

and ABS

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Economic eects of Airbnb in Australia

Table C.4: Economic contribution of Airbnb guests in New South Wales, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $753.3 – –

Value added ($m) $376.8 $135.7 $512.5

• Labour income ($m) $159.3 $67.5 $226.8

• Gross operating surplus ($m) $217.6 $68.2 $285.8

Employment (FTE) 3,488 964 4,452

Overall, it is estimated that Airbnb guest expenditure is associated with $512.5 million in value add to the New South Wales economy,

and supports 4,452 FTE jobs across the state.

Although induced eects were not assessed quantitatively as part of this analysis, these eects may be locally signicant in some regions –

especially where tourism plays a signicant role in the economy.

Contribution to the Victorian economy

Airbnb guests are estimated to have spent $625.3 million while visiting Victoria in 2015-16, generating $412.6 million in value added

to the Victorian economy and supporting 4,084 full time equivalent (FTE) jobs. The vast majority of this activity occurs in the greater

Melbourne region.

The tourism expenditure of Airbnb guests is estimated using survey and booking data provided by Airbnb. The guest spend in Victoria across

a variety of categories is shown in Table C.5. Airbnb guests in Melbourne spend around 41 per cent more than the average Melbourne tourist

according to Airbnb survey data and TRA statistics.

Source: Deloitte Access Economics based on Airbnb, TRA

and ABS

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Source: Deloitte Access Economics estimates for categories based on Airbnb and TRA

survey and other data

Table C.5: Tourism expenditure of Airbnb guests in Victoria, 2015-16

Category Average spend per

guest per day

Total expenditure

in Victoria ($m)

Share of

expenditure

Accommodation $48 $125.6 20%

Food service (e.g. restaurants) $67 $173.4 28%

Groceries $22 $58.1 9%

Shopping $43 $110.7 18%

Other leisure (e.g. entertainment) $30 $76.9 12%

Transportation $26 $67.8 11%

Other services $5 $13.7 2%

Total $241 $625.3 100%

Economic eects of Airbnb in Australia

Focusing on the greater Melbourne region, Airbnb guest expenditure of $530.3 million is estimated to contribute $343.4 million in value add

to the regional Melbourne economy and support 3,467 FTE jobs. A further breakdown is shown in Table C.6.

While the majority of Airbnb guests stay in Melbourne, some activity also occurs in Victoria’s regional areas. The top 4 destinations outside

Melbourne in 2015-16 were Geelong, Apollo Bay, Ballarat and St Kilda. The economic contribution to these regional economies is estimated

to be $69.1 million in value added, based on the dierence between the value added to the Victorian and greater Melbourne economies.

Airbnb guests in Victoria spent a total of $95.0 million outside the greater Melbourne region.

Table C.6: Economic contribution of Airbnb guests in Melbourne, 2015-16

Table C.7: Economic contribution of Airbnb guests staying in the rest of Victoria, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $530.3 – –

Value added ($m) $253.1 $90.3 $343.4

• Labour income ($m) $117.7 $46.2 $163.9

• Gross operating surplus ($m) $135.4 $ 4 4.1 $179.5

Employment (FTE) 2,764 703 3,467

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $95.0 – –

Value added ($m) $52.2 $17.0 $69.1

• Labour income ($m) $22.9 $8.6 $31.5

• Gross operating surplus ($m) $29.3 $8.4 $37.7

Employment (FTE) 487 131 617

Source: Deloitte Access Economics based on Airbnb, TRA

and ABS

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Source: Deloitte Access Economics based on Airbnb, TRA

and ABS

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Economic eects of Airbnb in Australia

Overall, it is estimated that Airbnb guest expenditure is associated with $412.6 million in value add to the Victorian economy, and supports

4,084 FTE jobs across the state directly and indirectly.

Although induced eects were not assessed quantitatively as part of this analysis, these eects may be locally signicant in some regions –

especially where tourism plays a signicant role in the economy.

Contribution to the Queensland economy

Airbnb guests are estimated to have spent $330.8 million while visiting Queensland in 2015-16, generating $217.4 million in value added to

the Queensland economy and supporting 2,115 full time equivalent (FTE) jobs. Of this amount, $160.2 million in value add and 1,562 FTE jobs

– more than half – are outside the greater Brisbane region, demonstrating the broad appeal of Queensland’s major tourism destinations. The

top 5 destinations for guests visiting Queensland in 2015-16 were Brisbane, the Gold Coast, Cairns, Surfers Paradise and Noosa.

The tourism expenditure of Airbnb guests is estimated using survey and booking data provided by Airbnb, and tourism expenditure data

from TRA. The guest spend in Queensland across a variety of categories is shown in Table C.9.

Table C.8: Economic contribution of Airbnb guests in Victoria, 2015-16

Table C.9: Tourism expenditure of Airbnb guests in Queensland, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $625.3 – –

Value added ($m) $305.2 $107.3 $412.6

• Labour income ($m) $140.6 $54.8 $195.4

• Gross operating surplus ($m) $164.6 $52.5 $217.2

Employment (FTE) 3,250 834 4,084

Source: Deloitte Access Economics based on Airbnb, TRA

and ABS

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Source: Deloitte Access Economics estimates for categories based on Airbnb and TRA

survey and other data

Category Average spend per

guest per day

Total expenditure in

Queensland ($m)

Share of

expenditure

Accommodation $44 $63.0 19%

Food service (e.g. restaurants) $65 $93.1 28%

Groceries $22 $31.2 9%

Shopping $42 $59.4 18%

Other leisure (e.g. entertainment) $29 $41.3 12%

Transportation $26 $36.4 11%

Other services $5 $7. 3 2%

Total $233 $330.8 100%

Economic eects of Airbnb in Australia

In Brisbane, Airbnb guest expenditure is estimated to contribute $57.1 million in value add to the regional economy and support

553 FTE jobs. A further breakdown is shown in Table C.10.

Airbnb guests also stay outside the greater Brisbane region. In contrast to all the other states where the majority of visitation is to the capital

city, visitation outside Brisbane is more than double that to the capital city, reecting the variety of tourism hotspots in the state (including the

Gold Coast, Cairns etc.). The economic contribution to these regional economies is estimated to be $160.2 million in value added, based on

the dierence between the value added to the Queensland and greater Brisbane economies. Airbnb guests visiting Queensland spent a total

of $244.3 million outside the greater Brisbane region.

Table C.10: Economic contribution of Airbnb guests in Brisbane, 2015-16

Table C.11: Economic contribution of Airbnb guests outside Brisbane, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $86.5 – –

Value added ($m) $41.9 $15.2 $57.1

• Labour income ($m) $19.6 $7.6 $27.2

• Gross operating surplus ($m) $22.3 $7.6 $29.9

Employment (FTE) 442 112 553

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $244.3 – –

Value added ($m) $118 .6 $41.6 $160.2

• Labour income ($m) $55.8 $21.1 $76.9

• Gross operating surplus ($m) $62.8 $20.6 $83.4

Employment (FTE) 1,251 311 1,562

Source: Deloitte Access Economics based on Airbnb, TRA

and ABS

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Source: Deloitte Access Economics based on Airbnb, TRA

and ABS

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Economic eects of Airbnb in Australia

Overall, it is estimated that Airbnb guest expenditure is associated with $217.4 million in value add to the Queensland economy, and supports

2,115 FTE jobs across the state.

Table C.12: Economic contribution of Airbnb guests in Queensland, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $330.8 – –

Value added ($m) $160.5 $56.8 $217.4

• Labour income ($m) $75.5 $28.7 $10 4.1

• Gross operating surplus ($m) $85.1 $28.2 $113.3

Employment (FTE) 1,692 423 2,115

Source: Deloitte Access Economics based on Airbnb, TRA

and ABS

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Although induced eects were not assessed quantitatively as part of this analysis, these eects may be locally signicant in some regions –

especially where tourism plays a signicant role in the economy.

Contribution to the Western Australian economy

It is estimated that Airbnb guests spent $155.1 million while visiting Western Australia in 2015-16, generating $99.7 million in direct and

indirect value added and supporting 780 full time equivalent (FTE) jobs. Of this amount, $76.3 million in value add and 599 FTE jobs are

connected to the greater Perth region.

The tourism expenditure of Airbnb guests staying in Western Australia is estimated using survey and booking data provided by Airbnb,

and tourism expenditure data provided by TRA. The guest spend in Western Australia is broken down into categories in Table C.13.

Table C.13: Tourism expenditure of Airbnb guests in Western Australia, 2015-16

Source: Deloitte Access Economics estimates for categories based on Airbnb and TRA

survey and other data

Category Average spend per

guest per day

Total expenditure

in WA ($m)

Share of

expenditure

Accommodation $47 $33.9 22%

Food service (e.g. restaurants) $58 $42.0 27%

Groceries $19 $14.1 9%

Shopping $37 $26.8 17%

Other leisure (e.g. entertainment) $26 $18.6 12%

Transportation $23 $16.4 11%

Other services $5 $3.3 2%

Total $213 $155.1 100%

Economic eects of Airbnb in Australia

Airbnb guest expenditure is estimated to have contributed $76.3 million in value add to the regional Perth economy and supported 599 FTE

jobs in 2015-16. A further breakdown is shown in Table C.14.

Airbnb guests also stay outside the greater Perth region, although to a lesser extent than some other jurisdictions. The economic

contribution to these regional economies is estimated to be $23.4 million in value added, based on the dierence between the value added

to the Western Australia and greater Perth economies. Airbnb guests in Western Australia spent a total of $40.5 million outside Perth.

The top 4 destinations outside Perth for Airbnb guests were Margaret River, Busselton, Dunsborough and Albany.

Table C.14: Economic contribution of Airbnb guests in Perth, 2015-16

Table C.15: Economic contribution of Airbnb guests outside Perth, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $114.6 – –

Value added ($m) $56.4 $20.0 $76.3

• Labour income ($m) $25.3 $10.1 $35.4

• Gross operating surplus ($m) $31.0 $9.9 $40.9

Employment (FTE) 476 123 599

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $40.5 – –

Value added ($m) $20.1 $3.3 $23.4

• Labour income ($m) $8.7 $1.5 $10.2

• Gross operating surplus ($m) $11.4 $1.8 $13.2

Employment (FTE) 162 19 180

Source: Deloitte Access Economics based on Airbnb, TRA

and ABS

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Source: Deloitte Access Economics based on Airbnb, TRA

and ABS

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Economic eects of Airbnb in Australia

Overall, it is estimated that Airbnb guest expenditure is associated with $99.7 million in value add to the Western Australia economy, and

supports 780 FTE jobs across the state.

Table C.16: Economic contribution of Airbnb guests in Western Australia, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $155.1 – –

Value added ($m) $76.5 $23.2 $99.7

• Labour income ($m) $34.0 $11.6 $45.6

• Gross operating surplus ($m) $42.5 $11.7 $54.1

Employment (FTE) 638 142 780

Source: Deloitte Access Economics based on Airbnb, TRA

and ABS

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Although induced eects were not assessed quantitatively as part of this analysis, these eects may be locally signicant in some regions –

especially where tourism plays a signicant role in the economy.

Contribution to the South Australian economy

Airbnb guests are estimated to have spent $59.9 million while visiting South Australia in 2015-16, generating $38.2 million in value added

to the South Australian economy and supporting 407 full time equivalent (FTE) jobs. Of this amount, $32.8 million in value add and 357 FTE

jobs are connected to the greater Adelaide region, with only a small level of activity in South Australia’s regions.

The tourism expenditure of Airbnb guests is estimated using survey and booking data provided by Airbnb, and tourism expenditure data

provided by TRA. The guest spend in South Australia across a variety of categories is shown in Table C.17.

Table C.17: Tourism expenditure of Airbnb guests in South Australia, 2015-16

Source: Deloitte Access Economics estimates for categories based on Airbnb and TRA

survey and other data

Category Average spend per

guest per day

Total expenditure

in SA ($m)

Share of

expenditure

Accommodation $45 $11.7 20%

Food service (e.g. restaurants) $64 $16.7 28%

Groceries $22 $5.6 9%

Shopping $41 $10.7 18%

Other leisure (e.g. entertainment) $29 $7.4 12%

Transportation $25 $6.5 11%

Other services $5 $1.3 2%

Total $230 $59.9 100%

Economic eects of Airbnb in Australia

Airbnb guest expenditure is estimated to contribute $32.8 million in value add to the regional Adelaide economy and support 357 FTE jobs,

as shown in Table C.18.

Table C.18: Economic contribution of Airbnb guests in Adelaide, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $51.7 – –

Value added ($m) $24.9 $7.9 $32.8

• Labour income ($m) $11.9 $4.0 $15.9

• Gross operating surplus ($m) $13.0 $3.9 $16.9

Employment (FTE) 293 64 357

Source: Deloitte Access Economics based on Airbnb, TRA

and ABS

100

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

More broadly, Airbnb guests also stay outside the greater Adelaide region, although the proportion is relatively small. The top 4 destinations

outside Adelaide for guests in 2015-16 were Robe, Victor Harbor, Mt Gambier and Kingscote. The economic contribution to South Australia’s

regional economies is estimated to be $5.5 million in value added, based on the dierence between the value added to the South Australian

and greater Adelaide economies. Airbnb guests in South Australia spent a total of $8.1 million outside the greater Adelaide region.

Table C.19: Economic contribution of Airbnb guests in rest of South Australia, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $8.1 – –

Value added ($m) $4.2 $1.2 $5.5

• Labour income ($m) $1.7 $0.6 $2.3

• Gross operating surplus ($m) $2.6 $0.6 $3.2

Employment (FTE) 40 10 50

Source: Deloitte Access Economics based on Airbnb, TRA

101

and ABS

102

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Economic eects of Airbnb in Australia

Overall, it is estimated that Airbnb guest expenditure is associated with $38.2 million in value add to the South Australian economy, and

supports 407 FTE jobs across the state.

Table C.20: Economic contribution of Airbnb guests in South Australia, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $59.9 – –

Value added ($m) $29.1 $9.1 $38.2

• Labour income ($m) $13.6 $4.6 $18.1

• Gross operating surplus ($m) $15.6 $4.5 $20.1

Employment (FTE) 333 74 407

Source: Deloitte Access Economics based on Airbnb, TRA

103

and ABS

104

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Although induced eects were not assessed quantitatively as part of this analysis, these eects may be locally signicant in some regions –

especially where tourism plays a signicant role in the economy.

Contribution to the Tasmanian economy

Airbnb guests are estimated to have spent $86.0 million while visiting Tasmania in 2015-16, generating $54.5 million in value added to the

Tasmanian economy and supporting 599 full time equivalent (FTE) jobs. Of this amount, $37.7 million in value add and 417 FTE jobs are

connected to the greater Hobart region. Tourism is particularly important in the Tasmanian economy; overall, tourism directly and indirectly

contributes around 9.9 per cent to Gross State Product (GSP), the highest of any Australian jurisdiction.

105

The tourism expenditure of Airbnb guests is estimated using survey and booking data provided by Airbnb, and tourism regional expenditure

data from TRA. The guest spend in Tasmania across a variety of categories is shown in Table C.21.

Table C.21: Tourism expenditure of Airbnb guests in Tasmania, 2015-16

Source: Deloitte Access Economics estimates for categories based on Airbnb and TRA

106

survey and other data

Category Average spend per

guest per day

Total expenditure in

Tasmania ($m)

Share of

expenditure

Accommodation $55 $17.6 20%

Food service (e.g. restaurants) $74 $23.7 28%

Groceries $25 $7.9 9%

Shopping $47 $15.1 18%

Other leisure (e.g. entertainment) $33 $10.5 12%

Transportation $29 $9.3 11%

Other services $6 $1.9 2%

Total $267 $86.0 100%

Economic eects of Airbnb in Australia

Guests using Airbnb are estimated to have spent $58.7 million in Hobart in 2015-16. This expenditure is associated with $37.7 million

in value added to the Hobart economy, and supported 417 FTE jobs directly and indirectly. A further breakdown is shown in Table C.22.

Table C.22: Economic contribution of Airbnb guests in Hobart, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $58.7 – –

Value added ($m) $28.5 $9.2 $37.7

• Labour income ($m) $13.2 $4.6 $17.8

• Gross operating surplus ($m) $15.3 $4.6 $19.9

Employment (FTE) 341 76 417

Source: Deloitte Access Economics based on Airbnb, TRA

107

and ABS

108

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Airbnb guests also stay outside the greater Hobart region, including in Launceston and other towns. The economic contribution to these

regional economies is estimated to be $16.8 million in value added, based on the dierence between the value added to the Tasmanian and

regional Hobart economies. Airbnb guests in Tasmania spent a total of $27.3 million outside the greater Hobart region.

Table C.23: Economic contribution of Airbnb guests in Tasmania outside Hobart, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $27.3 – –

Value added ($m) $13.5 $3.3 $16.8

• Labour income ($m) $6.0 $1.7 $7.7

• Gross operating surplus ($m) $7.5 $1.6 $9.2

Employment (FTE) 153 29 182

Source: Deloitte Access Economics based on Airbnb, TRA

109

and ABS

110

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Economic eects of Airbnb in Australia

Overall, it is estimated that Airbnb guest expenditure is associated with $54.5 million in value add to the Tasmanian economy, and supports

599 FTE jobs across the state.

Table C.24: Economic contribution of Airbnb guests in Tasmania, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $86.0 – –

Value added ($m) $42.1 $12.5 $54.5

• Labour income ($m) $19.2 $6.3 $25.5

• Gross operating surplus ($m) $22.8 $6.2 $29.1

Employment (FTE) 494 105 599

Source: Deloitte Access Economics based on Airbnb, TRA

111

and ABS

112

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Although induced eects were not assessed quantitatively as part of this analysis, these eects may be locally signicant in some regions –

especially where tourism plays a signicant role in the economy.

Contribution to the Australian Capital Territory economy

Airbnb guests are estimated to have spent $20.4 million while visiting the Australian Capital Territory in 2015-16, generating $12.6 million

in value added to the ACT economy and supporting 99 full time equivalent (FTE) jobs.

Airbnb guest expenditure is estimated using survey and booking data provided by Airbnb, and publicly available tourism expenditure data

from TRA. The guest spend in the ACT across a variety of categories is shown in Table C.25.

Table C.25: Tourism expenditure of Airbnb guests in the Australian Capital Territory, 2015-16

Source: Deloitte Access Economics estimates for categories based on Airbnb and TRA

113

survey and other data

Category Average spend per

guest per day

Total expenditure

in ACT ($m)

Share of

expenditure

Accommodation $45 $3.8 19%

Food service (e.g. restaurants) $68 $5.8 28%

Groceries $23 $1.9 9%

Shopping $44 $3.7 18%

Other leisure (e.g. entertainment) $30 $2.6 13%

Transportation $27 $2.3 11%

Other services $5 $0.5 2%

Total $241 $20.4 100%

Economic eects of Airbnb in Australia

It is estimated that Airbnb guest expenditure is associated with $12.6 million in value add to the ACT economy, and supported 99 FTE jobs

across Canberra in 2014-15. Due to the size of the territory and its visitation, the economic contribution has not been further disaggregated.

The top 5 destination suburbs for guests within the ACT were Canberra, Belconnen, Macquarie, Kaleen and Macarthur. Although induced

eects were not assessed quantitatively in this report, they may be locally signicant in some regions – especially where tourism plays a

signicant role in the economy.

Table C.26: Economic contribution of Airbnb guests in the Australian Capital Territory, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $20.4 – –

Value added ($m) $9.9 $2.7 $12.6

• Labour income ($m) $4.7 $1.4 $6.1

• Gross operating surplus ($m) $5.2 $1.3 $6.5

Employment (FTE) 83 16 99

Source: Deloitte Access Economics based on Airbnb, TRA

114

and ABS

115

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Contribution to the Northern Territory economy

Airbnb guests are estimated to have spent $10.6 million while visiting the Northern Territory in 2015-16, generating $6.5 million in value

added to the NT economy and supporting 55 full time equivalent (FTE) jobs.

Airbnb guest expenditure is estimated using survey and booking data provided by Airbnb, and publicly available tourism expenditure data

from TRA. The guest spend in the NT across a variety of categories is shown in Table C.27.

Table C.27: Tourism expenditure of Airbnb guests in the Northern Territory, 2015-16

Source: Deloitte Access Economics estimates for categories based on Airbnb and TRA

116

survey and other data

Category Average spend per

guest per day

Total expenditure

in NT ($m)

Share of

expenditure

Accommodation $53 $2.0 19%

Food service (e.g. restaurants) $79 $3.0 28%

Groceries $27 $1.0 9%

Shopping $51 $1.9 18%

Other leisure (e.g. entertainment) $35 $1.3 12%

Transportation $31 $1.2 11%

Other services $6 $0.2 2%

Total $282 $10.6 100%

Economic eects of Airbnb in Australia

It is estimated that Airbnb guest expenditure is associated with $6.5 million in value add to the NT economy, and supported 55 FTE jobs in

2014-15. Due to the size of the territory and its visitation, the economic contribution has not been further disaggregated. Although induced

eects were not assessed quantitatively in this report, they may be locally signicant in some regions – especially where tourism plays a

signicant role in the economy. The top 3 destinations for Airbnb guests visiting the NT were Darwin, Alice Springs and Katherine.

Table C.28: Economic contribution of Airbnb guests in the Northern Territory, 2015-16

Direct contribution Indirect contribution Total contribution

Expenditure ($m) $10.6 – –

Value added ($m) $5.1 $1.3 $6.5

• Labour income ($m) $2.4 $0.7 $3.1

• Gross operating surplus ($m) $2.7 $0.7 $3.4

Employment (FTE) 47 8 55

Source: Deloitte Access Economics based on Airbnb, TRA

117

and ABS

118

data

Note: Expenditure is calculated in the input-output model using basic prices, which reect the revenue received by producers of goods

and services. The spending on accommodation is based on the amount of revenue received by hosts (i.e. it excludes Airbnb charges).

These contributions do not include induced impacts, which is the spending of those who receive additional income.

Economic eects of Airbnb in Australia

Appendix D: Consumer eects

modelling framework

Savings to consumers

Approach

The purpose of this analysis is to investigate the impact of Airbnb on the demand of hotel room nights in central Sydney since 2012.

To accomplish this goal, we have developed a dynamic econometric functional model based on Deloitte Access Economics’ Tourist

Accommodation Regional Demand, Investment and Supply model (TARDIS).

The TARDIS model consists of a system of equations that combines underlying visitor demand forecasts with a hotel accommodation

supply pipeline growth prole to develop estimates of key hotel market outcomes. It is a bespoke model of the hotel accommodation

market in Australia which has been implemented and updated over 15 years. Coupled with the Deloitte Access Economics Tourism

Forecasting Model (DAE-TFM), it forms the core modelling engine behind the Deloitte Tourism and Hotel Market Outlook.

For this analysis, we augmented the TARDIS model with a new equation for Airbnb, for which the dependent variable also enters the

demand equation for hotel room nights. The demand and supply system can be collapsed into a system of three simultaneous equations:

The rst equation captures the relationship between the monthly hotel Room Nights Occupied (RNO) and Takings from

Accommodation (TFA). TFA, along with Room Occupancy Rate (ROR) and a congestion parameter k,

119

are used to derive the own and

competitor price variables (to capture eective takings). The competition between Australian and foreign destinations are captured through

the trade weighted exchange rate (TWI) in the competitor price variable. Income eects are captured by DEM

DOM

and DEM

INT

. Airbnb enters

the competition for hotel room nights via the last variable, lnABN, which is the log of monthly Airbnb nights booked in the same period. This

variable becomes the dependent variable in the second equation which relates Airbnb nights with the total number of unique Airbnb listings

(ABL) and Hotel Room Occupancy Rate (ROR). Finally, the third equation captures the supply-side relationship between hotel takings (TFA),

index of real wages (WGE) and hotel room occupancy rate (ROR). S2, S3 and S4 are quarterly dummies to adjust for seasonality.

The system of equations has to be solved numerically. Improvements in econometric software make it possible to estimate this highly

non-linear system of equations using 'o the shelf' programs such as R.

120

The system is estimated using a technique known as 'Full

Information Maximum Likelihood' (FIML) which maximises the t of the equations to the data simultaneously.

It should be noted that all of the variables in the model are dierenced for the purpose of estimation – as the Augmented Dickey-Fuller

Test suggests that the time-series are not stationary in level but stationary in rst dierence, at 1 per cent statistical signicance.

Economic eects of Airbnb in Australia

Table D.1 : Augmented Dickey-Fuller Test results

Source: Deloitte Access Economics

Alternative hypothesis Variable Statistic P value Variable Statistic P value

Stationary lnRNO -2.858 0.236 d.lnRNO -8.872 <0.01

Stationary lnTFA -2.919 0.211 d.lnTFA -7.945 <0.01

Stationary lnABL -2.083 0.541 d.lnABL -14.888 <0.01

Stationary lnABN -1.463 0.785 d.lnABN -9.035 <0.01

One simplication of our model is that the two exogenous demand indices derived from the DAE-TFM model do not take into account the

potential impact from Airbnb on the total number of visitors to Sydney. As a consequence, although the coecient on lnABN, γ

, can reect

the competition between hotels and Airbnb, the residuals from the model would necessarily capture a combination of new visitors who

would not otherwise visit Sydney, and people who would otherwise stay with friends or relatives, etc.

Data

We have compiled our estimation data from three separate sources. Firstly, Airbnb Australia has provided Deloitte Access Economics with

the monthly number of Airbnb nights booked (ABN) and total unique Airbnb listings (ABL) in Sydney from January 2012 to June 2015, on

a condential basis. Secondly, we have collected the monthly hotel RNO, TFA and ROR from the tourist accommodation series released

annually by the Australia Bureau of Statistics (ABS) for the same period. Finally, the two demand indices and the real wage index are

obtained directly DAE-TFM.

Result

Chart D.1 illustrates the relationship between the monthly and quarterly growth rate of Airbnb nights booked and hotel nights occupied

during the sampling period. It can be seen that higher growth in Airbnb nights is usually associated with higher growth in hotel nights.

Chart D.1 : Scatter plot of the growth rate of hotel and Airbnb nights

Mar

Hotel vs Airbnb nights quaterly growth, Jan 2012-Jun 2015 Hotel vs Airbnb nights monthly growth, Jan 2012-Jun 2015

20%

10%

-10%

-20%

-40% 40% 60%-20% 20%0% -40% 40% 60%-20% 20%0%

Hotel nights growth

Airbnb nights growth Airbnb nights growth

Jun Sep Dec

Quarter

Source: Deloitte Access Economics

Economic eects of Airbnb in Australia

Incorporating Airbnb listings and bookings into Deloitte Access Economics’ Tourism Accommodation Regional Demand, Investment and

Supply (TARDIS) model shows the eect of Airbnb on the number of hotel room nights booked. Applying this relationship to historical Airbnb

bookings data reveals the number of booked Airbnb nights which can be attributed to those switching from traditional accommodation, and

those which are booked by new entrants to the market. Estimates for the proportion of new entrants each year range between 40 to 62

per cent. We have adopted a midpoint of 51 per cent to calculate the number of Airbnb guests who enjoyed cost savings due to the price

dierential between Airbnb listings and hotels.

Consumer benets

Approach

From a microeconomic perspective, the advent of Airbnb has eectively brought down the transaction cost of providing and screening

peer to peer short-stay accommodation services. Consequently, consumers are better o with the expanded budget set to reach goods and

services that were previously unattainable. Similar to any economic transaction, consumption of Airbnb rooms would happen if and only if the

consumer’s willingness to pay (WTP) is above the actual price required to secure the accommodation. The dierence between total WTP and

actual price is called net 'consumer surplus', which is an integral component of consumer benet.

The purpose of this analysis is to quantify the amount of consumer surplus obtained by Airbnb customers that visited Sydney during 2015-

16. To accomplish this goal, we have developed two hedonic price models in the spirit of Rosen

121

and Bajari and Benkard.

122

The analysis is

performed separately on data for 30 sub-markets, with each sub-market representing a certain type of accommodation

123

in a certain area

of Sydney,

124

to account for product heterogeneity and heteroscedasticity.

The rst approach is a two-stage regression similar to that described by Rosen. In the rst stage, the total prices of Airbnb bookings are

regressed on various booking characteristics:

From each of the 30 regressions, we obtain the coecients β

and β

, the tted total payment values and the number of nights

from each booking. These estimates can then be used to calculate the marginal willingness to pay for the last consumed night for

each observation:

Where the rst equals sign follows from consumers maximising their utilities.

125

Economic eects of Airbnb in Australia

Compared with the approach described by Rosen,

126

it is clear that our model has an insucient number of product characteristics such as

room size, neighbourhood environment, distance to public transport, etc. In this respect, equation (*) can only be regarded as an assumed

functional form of marginal WTP. Intuitively, it assumes that the marginal enjoyment from an extra night of stay with Airbnb is higher for more

expensive listings while become increasingly lower as the period of stay extends.

In the second stage, the log of marginal WTPs are regressed on the log of nights booked, along with other booking characteristics:

where ϵ

is the elasticity of demand (negative) in the sub-market

One limitation of the two-stage hedonic approach is that the second-stage regression has a simultaneity problem because consumers with

a higher preference for a longer period of stay would naturally book from hosts that provide long-term contracts. This simultaneity problem

causes inconsistent estimates in the second stage.

128

To address this issue, Bajari and Benkard introduce a dierent two-stage approach

that species a functional form of utility and uses Gibbs sampling to simulate the population distribution of consumers’ taste coecients.

However, the lack of product characteristics has limited the value in adopting such complicated methodologies. Therefore, we have only

estimated consumer surplus based on a simplied log-linear utility function, as a complement to the rst approach:

The elasticity of demand can be calculated as the inverse of the coecient γ

in each of the corresponding regressions for the 30 sub-

markets. Consumer surplus can then be calculated based on the estimated elasticity, the total nights booked and weighted average price

per night in each sub-market:

127

Similar to the two-stage model, this specication assumes utility to increase with total expenditure but at a declining rate as the

period of stay extends.

Data

We obtained transaction data for all of the Airbnb bookings to Sydney during July 2015 to June 2016, on a condential basis. Table D.2 shows

the list of variables, along with their transformations, that are used for the analysis.

Economic eects of Airbnb in Australia

Table D.2: List of variables supplied from Airbnb

Variable Description Transformation

Nights booked Total nights booked –

Total guests Total number of guests –

Total guest price Total amount of payment –

Guest country The country where the guests

are from originally.

Coded as 'AU' or 'Foreigner'.

Listing postcode The postcode Used to classify each observation into

the ve regions in Sydney

129

Check-in date Date of check-in Used to derive quarterly and weekend

dummies

Booking date Date of booking Used to derive variable 'booking_in_

advance'=number of days between booking

and check-in, as a measure

of exibility

Listing type Whether the listing is a private/shared

room or entire house/apartment

Used to split the sample by dierent

accommodation types

130

Total bedrooms Total number of bedrooms

Overall rating Airbnb rating (integer 1-5) Coded as 'low' (0-3), 'medium' (4) and 'high' (5)

AUD Australian dollar exchange rate Matched with the date of reservation for each

observation

Chart D.2 below shows the respective number of observations from the 30 sub-markets. It is not surprising that private/shared rooms

comprise a signicant share (40 per cent) of the observations. However, they only represents one fth of the total expenditure due to

their relative lower prices.

Economic eects of Airbnb in Australia

Result

The rst stage regression provides a decent t to the price equations. Chart D.3 below shows the adjusted R-square from the

30 regressions performed. The overall average is 73.5 per cent.

30,000

20,000

10,000

Source: Deloitte Access Economics

Chart D.2 : Number of observations for the 30 sub-markets

P/S

P/S P/S

P/S P/S1

1 1

1 12

2 2

2 23

3 3

3 34+

4+ 4+

4+ 4+Studio

Bedrooms

# of obs

20454

4099

4000

3792

1142

2661

8458

9784

2894

1293

794

1214

6868

4444

28181

19102

1074

3877

3301

2228

2910

9972

2808

901

10210

4831

15604

7861

2060

500

Studio Studio

Sydney CBD

Northern beaches

Blue mountain areas

Other areas

Eastern suburbs

Economic eects of Airbnb in Australia

30,000

20,000

0.25

0.50

0.75

10,000

Source: Deloitte Access Economics

Chart D.3: Adjusted R-square from the rst-stage regression

P/S

P/S P/S

P/S P/S1

1 1

1 12

2 2

2 23

3 3

3 34+

4+ 4+

4+ 4+Studio

Bedrooms

adj.r.squared

0.78

0.82

0.86

0.83

0.78

0.72

0.56

0.79

0.83

0.80

0.72

0.66 0.66

0.82 0.82 0.8

0.74

0.69

0.67

0.71

0.69 0.69

0.58

0.52

0.79 0.79 0.8

0.75

0.71

0.65

Studio Studio

Sydney CBD

Northern beaches

Blue mountain areas

Other areas

Eastern suburbs

1.00

Based on results from the second stage regression, Chart D.4 shows the weighted average consumer surplus and price per night in

each of the 30 sub-markets. It can be seen that accommodation with higher number of bedrooms are yielding, on average, a higher

proportionate surplus. This is because the demand for multi-bedroom accommodation is found to be relatively more inelastic. It is

conceivable that consumers that booked for multi-bedroom listings would be less sensitive to prices due to the scarcity of supply and/

or the potentially higher demand for quality.

Economic eects of Airbnb in Australia

Table D.3 shows the calculated surplus from the two hedonic approaches. The two approaches are distinct in the specication of

consumer preferences. In particular, the rst approach assumes linear demand which implies a quadratic utility function while the

second approach assumes a log-linear utility function. We believe the average of the two estimates provides a sensible measure of

the total consumer surplus.

750

500

250

Source: Deloitte Access Economics

Chart D.4 : Weighted average surplus vs price

P/S

P/S P/S

P/S P/S1

1 1

1 12

2 2

2 23

3 3

3 34+

4+ 4+

4+ 4+Studio

Bedrooms

109

178 179

274

466

136

156

231

350

583

731

103

166

196

320

505

115

154

181

259

408

715

777

462

273

179

171

632

Studio Studio

Sydney CBD

Northern beaches

Blue mountain areas

Other areas

Eastern suburbs

Surplus Price

Economic eects of Airbnb in Australia

Table D.3: Consumer surplus created by Airbnb

Method Aggregate willingness to pay Total amount paid Consumer surplus

Two-stage hedonic $173.6 million $149.2 million $24.4 million

Direct utility estimation $221.6 million $149.2 million $72.4 million

Average $197.6 million $149.2 million $48.4 million

Source: Deloitte Access Economics, using Airbnb data.

Economic eects of Airbnb in Australia

Footnotes

1. Estimating consumer surplus required an understanding of the demand

curve for Airbnb accommodation. The slope of the demand curve is

determined by the responsiveness of consumers to changes in price –

also known as price elasticity. Deloitte Access Economics used hedonic

regression to estimate price elasticities. Hedonic models break down a

consumer’s value of a good into its constituent parts, such that it is possible

to estimate how much each characteristic contributes to willingness to pay

2. Tourism Accommodation Australia, Submission to The Federal Opposition

Discussion Paper, Sharing the future: Getting policy right in the Age of the

App, June 2015

3. Tourism Research Australia, Tourism Satellite Account – Summary of Key

Results 2015-16 (21 December 2016) <https://www.tra.gov.au/documents/

Economic-Industry/State_Tourism_Satellite_Account_2016.pdf>

4. Tourism Research Australia, International Visitors in Australia: September

2016 Quarterly Results of the International Visitor Survey (7 December

2016) <https://www.tra.gov.au/research/latest-ivs-report.html>

5. Tourism Research Australia, Travel by Australians: September 2016

Quarterly Results of the National Visitor Survey (21 December 2016)

<https://www.tra.gov.au/research/latest-nvs-report.html>

6. Tourism Research Australia, Travel by Australians: September 2016

Quarterly Results of the National Visitor Survey (21 December 2016)

<https://www.tra.gov.au/research/latest-nvs-report.html>; Tourism

Research Australia, International Visitors in Australia: September 2016

Quarterly Results of the International Visitor Survey (7 December 2016)

<https://www.tra.gov.au/research/latest-ivs-report.html>

7. Deloitte, Tourism and Hotel Market Outlook (January 2017)

8. The ABS denition only incorporates establishments with 15 or more rooms.

In contrast, TRA data captures tourist nights spent in all traditional visitor

accommodation establishments, regardless of the number of rooms. The

dierences between these denitions are highlighted throughout the text

where relevant

9. Tourism Research Australia, Travel by Australians: September 2016

Quarterly Results of the National Visitor Survey (21 December 2016)

<https://www.tra.gov.au/research/latest-nvs-report.html>; Tourism

Research Australia, International Visitors in Australia: September 2016

Quarterly Results of the International Visitor Survey (7 December 2016)

<https://www.tra.gov.au/research/latest-ivs-report.html>

10. Tourism Research Australia, Tourism Forecasts 2016 (14 July 2016)

<https://www.tra.gov.au/research/Tourism-Forecasts-2016.html>

11. Ibid

12. Australian Bureau of Statistics, Tourist Accommodation, Australia, 2015-16,

cat. no. 8635.0 (25 November 2016) <http://www.abs.gov.au/AUSSTATS/

[email protected]/Lookup/8635.0Main+Features12015-16?OpenDocument>

13. STR Global, STR Trend Report - Australia, January 2010 to December 2016

(18 January 2017)

14. Deloitte, Tourism and Hotel Market Outlook – The changing face of travel

(August 2016).

15. IBISWorld, Industry Report OD4163 – Online Travel Bookings in Australia

(March 2016)

16. Tourism Australia, Tourism 2020: Setting the foundations (2010-2014)

(October 2013) <http://www.tourism.australia.com/documents/Statistics/

TACP8132_2020_Update_2013-SP.pdf>

17. STR Global, STR Trend Report - Australia, January 2010 to December 2016

(18 January 2017).

18. Tourism Research Australia, State of the Industry 2016 (February 2017)

<http://tra.gov.au/reports/soi2016/state_of_the_industry_2016.pdf>

19. Tourism Australia, Tourism 2020: Setting the foundations (2010-2014)

(October 2013) <http://www.tourism.australia.com/documents/Statistics/

TACP8132_2020_Update_2013-SP.pdf>

20. Tourism Research Australia, Tourism Investment Monitor 2016 (July 2016)

<https://tra.gov.au/documents/Economic-Industry/Tourism_Investment_

Monitor_2016.pdf>; Tourism Research Australia, Tourism Investment

Monitor 2015 (May 2015) <http://tra.gov.au/documents/Economic-Industry/

Tourism_Investment_Monitor_2015_FINAL.pdf>

21. Tourism Research Australia, State of the Industry 2016 (February 2017)

<http://tra.gov.au/reports/soi2016/state_of_the_industry_2016.pdf>

22. Tourism Research Australia, Tourism Region Proles <http://tra.gov.au/

Tourism_Region_Proles/Region_proles/index.html#about>

23. Ibid.

24. Tourism Research Australia, Tourism Region Proles <http://tra.gov.au/

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25. Note that this payment is not assumed to create any direct employment

within the ABS IO tables, meaning that Airbnb hosts are not included in the

overall employment gures.

26. Tourism Research Australia, Tourism Region Proles <http://tra.gov.au/

Tourism_Region_Proles/Region_proles/index.html#about>

27. Australian Bureau of Statistics, Australian National Accounts: Tourism

Satellite Account, 2015-16, cat. no. 5249.0 (21 December 2016) <http://

www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/5249.0Main+Features12015-

16?OpenDocument>; Australian Bureau of Statistics, Australian National

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28. Tourism Research Australia, Tourism Region Proles <http://tra.gov.au/

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29. Australian Bureau of Statistics, Australian National Accounts: Tourism

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30. Daniel Guttentag, ‘Airbnb: Disruptive innovation and the rise of an

informal tourism accommodation sector’ [2013] Current Issues in Tourism

<https://www.researchgate.net/publication/271624904_Airbnb_Disruptive_

innovation_and_the_rise_of_an_informal_tourism_accommodation_sector>

31. Iis Tussyadiah and Juho Antti Pesonen, ‘Drivers and barriers of peer-to-peer

accommodation stay – an exploratory study with American and Finnish

travellers’ [2016] Current Issues in Tourism <http://www.tandfonline.com/

doi/abs/10.1080/13683500.2016.1141180>, citing Rachel Botsman and

Roo Rogers, What’s Mine Is Yours: The Rise of Collaborative Consumption

(HarperBusiness, 1st ed, 2010) and Jeremiah Owyang, The Collaborative

Economy (4 June 2013) http://www.slideshare.net/Altimeter/the-

collaborative-economy

32. Airbnb, Submission No 207 to Committee on Environment and Planning,

Adequacy of the regulation of short-term holiday letting in New South

Wales, 1 December 2015

33. Daniel Guttentag, ‘Airbnb: Disruptive innovation and the rise of an informal

tourism accommodation sector’ [2013] Current Issues in Tourism <https://

www.researchgate.net/publication/271624904_Airbnb_Disruptive_

innovation_and_the_rise_of_an_informal_tourism_accommodation_sector>,

citing Dean MacCannell, ‘Staged Authenticity: Arrangements of Social Space

in Tourist Settings’ (1973) 79(3) American Journal of Sociology 589

34. Adam Dennett and Hanqun Song, ‘Why tourists thirst for authenticity – and

how they can nd it’, The Conversation (online), 26 November 2016 <http://

theconversation.com/why-tourists-thirst-for-authenticity-and-how-they-

can-nd-it-68108>; Expedia, Millennial traveller report – Why millennials will

shape the next 20 years of travel (October 2016) <http://expediablog.co.uk/

wp-content/uploads/2016/10/Expedia-Millennial-Traveller-Report.pdf>

35. See, e.g., Hotels.com, Chinese International Travel Monitor 2016 <http://

www.citmhotels.com/english.pdf>

36. Lian Jian, Jerey K. MacKie-Mason and Paul Resnick, ‘I Scratched Yours: The

Prevalence of Reciprocation in Feedback Provision on eBay’ (2010) 10(1)

The B.E. Journal of Economic Analysis & Policy 1; Gary Bolton, Ben Greiner

and Axel Ockenfels, ‘Engineering Trust: Reciprocity in the Production of

Reputation Information’ (2013) 59(2) Management Science 265

37. Teubner et al, ‘It’s only pixels, badges, and stars: On the economic value of

reputation on Airbnb’ (Paper presented at the Australasian Conference on

Information Systems, Wollongong, 2016)

38. Andrey Fradkin et al, Bias and Reciprocity in Online Reviews: Evidence From

Field Experiments on Airbnb (National Bureau of Economic Research and

Airbnb Inc., 19 December 2014)

39. Daniel Guttentag, ‘Airbnb: Disruptive innovation and the rise of an informal

tourism accommodation sector’ [2013] Current Issues in Tourism <https://

www.researchgate.net/publication/271624904_Airbnb_Disruptive_

innovation_and_the_rise_of_an_informal_tourism_accommodation_sector>

40. Iis Tussyadiah and Juho Antti Pesonen, ‘Drivers and barriers of peer-to-peer

accommodation stay – an exploratory study with American and Finnish

travellers’ [2016] Current Issues in Tourism <http://www.tandfonline.com/

doi/abs/10.1080/13683500.2016.1141180>, citing Rachel Botsman and

Roo Rogers, What’s Mine Is Yours: The Rise of Collaborative Consumption

(HarperBusiness, 1st ed, 2010)

41. Daniel Guttentag, ‘Airbnb: Disruptive innovation and the rise of an

informal tourism accommodation sector’ [2013] Current Issues in Tourism

<https://www.researchgate.net/publication/271624904_Airbnb_Disruptive_

innovation_and_the_rise_of_an_informal_tourism_accommodation_sector>

42. Iis P. Tussyadiah and Juho Pesonen, ‘Impacts of Peer-to-Peer

Accommodation Use on Travel Patterns’ (2016) 55(8) Journal of Travel

Research 1022

43. Morgan Stanley Research, Who Will Airbnb Hurt More – Hotels or OTAs?...

One Year Later (Morgan Stanley, 13 November 2016)

44. Jamie Lane and R. Mark Woodworth, The Sharing Economy Checks In: An

Analysis of Airbnb in the United States (January 2016) CBRE <http://rss.

hsyndicate.com/le/152006083.pdf>

45. Australian Bureau of Statistics, Tourist Accommodation, Australia, 2015-16,

cat. no. 8635.0 (25 November 2016) <http://www.abs.gov.au/AUSSTATS/

[email protected]/Lookup/8635.0Main+Features12015-16?OpenDocument>

46. Ibid

47. Ibid

48. Ibid

49. Doblin and Deloitte Consulting, The Hotel of the Future (2016) <https://

www2.deloitte.com/content/dam/Deloitte/us/Documents/consumer-

business/us-cb-the-hotel-of-the-future.pdf>, citing Fast Company

50. Ibid

51. STR Global, STR Trend Report – Country: Australia, Tract: Sydney City,

January 2010 to December 2016 (18 January 2017); STR Global, STR Trend

Report – Country: Australia, Tract: Melbourne City, January 2010

to December 2016 (18 January 2017)

52. Email from Robyn Johnson to Deloitte, 10 March 2017

53. Daniel Guttentag, ‘Airbnb: Disruptive innovation and the rise of an

informal tourism accommodation sector’ [2013] Current Issues in Tourism

<https://www.researchgate.net/publication/271624904_Airbnb_Disruptive_

innovation_and_the_rise_of_an_informal_tourism_accommodation_sector>

54. Ibid

55. Georgios Zervas, Davide Proserpio and John W. Byers, ‘The Rise of the

Sharing Economy: Estimating the Impact of Airbnb on the Hotel Industry’

(Research Paper No 2013-16, Boston U. School of Management, 18

November 2016)

56. Jamie Lane and R. Mark Woodworth, The Sharing Economy Checks In: An

Analysis of Airbnb in the United States (January 2016) CBRE <http://rss.

hsyndicate.com/le/152006083.pdf>

57. Professor Ian Harper et al, Competition Policy Review: Final Report

(Australian Government, March 2015)

58. Airbnb, Submission No 207 to Committee on Environment and Planning,

Adequacy of the regulation of short-term holiday letting in New South

Wales, 1 December 2015

59. Daniel Guttentag, ‘Airbnb: Disruptive innovation and the rise of an

informal tourism accommodation sector’ [2013] Current Issues in Tourism

<https://www.researchgate.net/publication/271624904_Airbnb_Disruptive_

innovation_and_the_rise_of_an_informal_tourism_accommodation_sector>;

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accommodation stay – an exploratory study with American and Finnish

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doi/abs/10.1080/1368350 0.2016.1141180>

60. STR Global, STR Trend Report - Australia, January 2010 to December 2016

(18 January 2017)

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Economic eects of Airbnb in Australia

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119. The system is estimated with k held constant at 0.05. Note that k can be

estimated econometrically, but due to the non-linearity of the system

of equations and limited degrees of freedom it can be quite dicult to

estimate a consistent or reliable estimate

120. The 'sem' package in R is used for this analysis

121. Sherwin Rosen, ‘Hedonic Prices and Implicit Markets: Product

Dierentiation in Pure Competition’ (1974) 82(1) Journal of Political

Economy 34

122. C Lanier Benkard and Patrick Bajari, ‘Demand Estimation with

Heterogeneous Consumers and Unobserved Product Characteristics:

A Hedonic Approach’ (2005) 113(6) Journal of Political Economy 1239

123. Studio, private/shared room, one bedroom, two bedrooms, three

bedrooms, over four bedrooms, based on the number of bedrooms and

accommodation types (entire house/apartment vs. private/shared room)

124. Sydney CBD, Blue Mountain areas, Eastern Suburbs, Northern Beaches

and other areas, based on postcodes of Airbnb listings

125. Consumers consume up to the point where the extra surplus from the last

consumed unit of goods is equal to the marginal/shadow price of the goods

at that consumption level

126. Sherwin Rosen, ‘Hedonic Prices and Implicit Markets: Product Dierentiation

in Pure Competition’ (1974) 82(1) Journal of Political Economy 34, 50

127. Assuming linear demand curves

128. James N Brown and Harvey S Rosen, ‘On the Estimation of Structural

Hedonic Price Models’ (1982) 50(3) Econometrica 765; Timothy J Bartik, ‘The

Estimation of Demand Parameters in Hedonic Price Models’ (1987) 95(1)

Journal of Political Economy 81; Dennis Epple, ‘Hedonic Prices and Implicit

Markets: Estimating Demand and Supply Functions for Dierentiated

Products’ (1987) 95(1) Journal of Political Economy 59

129. Sydney CBD, Blue Mountain areas, Eastern Suburbs, Northern Beaches

and Other areas

130. Studio, private/shared room, one-bedrooms, two-bedrooms, three-

bedrooms, over-four-bedrooms.

Economic eects of Airbnb in Australia

Authors

Aaron Hill

Director

Deloitte Access Economics

+61 8 8407 7130

aahill@deloitte.com.au

Yanjun Liu

Senior Analyst

Deloitte Access Economics

+61 2 8260 4277

yanjliu@deloitte.com.au

Elizabeth Alvaro

Analyst

Deloitte Access Economics

+61 8 8407 7093

ealvaro@deloitte.com.au

John O’Mahony

Partner

Deloitte Access Economics

+61 2 9322 7877

joomahony@deloitte.com.au

Ric Simes

Senior Advisor – Economics

Deloitte Access Economics

+61 2 9322 7772

rsimes@deloitte.com.au

Economic eects of Airbnb in Australia

Limitation of our work

General use restriction

This report is prepared solely for the use of Airbnb Australia Pty Ltd. This report is not

intended to and should not be used or relied upon by anyone else and we accept no

duty of care to any other person or entity. The report has been prepared for the purpose

of providing an analysis of the economic contribution of and selected economic eects

related to short-stay rentals facilitated by Airbnb in Australia. You should not refer to or

use our name or the advice for any other purpose.

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