Remaining profitable on Airbnb post Auckland bed tax

Since announcing changes to the APTR (Accommodation Provider Target Rate), Airbnb hosts around Auckland have been hit with an increase in their rates.

With some providers being stung with a 225%, it’s not surprising the number of news articles which have surfaced, painting a picture of doom and gloom, prophesying the end of the Airbnb industry in NZ’s largest centre.

Although at face value, this change appears to be largely negative it is important to put it in the context of the state of the Airbnb industry in NZ.

“Airbnb hosting and holiday rentals have really been booming in Auckland over the past 5 years”, explains Stefan Nikolic, director of Auckland Airbnb property management company, Zodiak Management

“Prior to this change, pretty much anyone could throw together a listing and rent their apartment out through the platform and have no trouble filling it due to the high demand for accommodation in Auckland”.

Nikolic explains that, due to the ease of profitability, coupled with an increasing demand, he was hearing increasing accounts of poor service and experiences.

He expects that, with these changes to the APTR, we will see these fly-by-nighters begin to drop off, as they will not be willing to put in the effort which will now be required to be successful in the short-term rental market.

“There’s no doubt, the holiday accommodation market will still continue to be profitable.  Like in any businesses, much of this cost increase will be passed on to the consumer”, explains Nikolic.

“Even with such an increase, Airbnb will continue to be cheaper than traditional hotel accommodation – thus the competitive advantage is maintained”.

“However, consumers will expect the level of quality and service to also increase to match this price rise – which will be the downfall of many low-quality listings”.

In order to remain successful on the Airbnb platform,  Nikolic believes you should look to position your property as a highly rated, premium accommodation option. This, however, will require an on-going investment of time to ensure your property is well presented and guest communication is timely.

“With our customers, we are able to create a 30 – 40% higher rental income than long-term tenancy after all expenses. We do this by offering guests of the properties we manage a hotel-quality experience”.

“This leads to a high amount of five-star ratings and glowing testimonials, which allows us to position our listings as a premium option, justifying a higher nightly rate while still remaining competitive over traditional accommodation options”.

For those looking to continue listing their property on Airbnb, but are worried about the new “bed tax” introduced in Auckland, Nikolic recommends getting in touch via Zodiak’s website for a no-obligation consultation.