Why Auckland Airbnb Hosting Will Remain Profitable Despite New ATPR (Bed Tax) Rates

Why Auckland Airbnb Hosting Will Remain Profitable Despite New ATPR (Bed Tax) Rates
Industry News
August 22, 2018

ATPR Rates and the Airbnb Community

If you’re a member of the Auckland Airbnb hosting community, you have undoubtedly heard about Auckland Council’s rate changes. With the taxes implemented from July, a large number of hosts have seen their costs skyrocket. People that rent out their property for short-term accommodation purposes more than 180 days each year are now expected to pay full business rates, similar to that of hotels and other commercial providers.

Who is Affected?

If you’re an Airbnb host in Auckland, it’s likely that you’re affected by the changes, even if only marginally. These rate changes for short-term accommodation providers are subject to how regularly you let out your property, where your property is based, your income from this property and whether you’re renting out single rooms or entire lodgings. Auckland users should take the time to understand their obligations, find out what the ATPR tax means for them and plan a strategy moving forward. While the changes have caused considerable outrage and disappointment amongst hosts, accommodation demand is booming in Auckland. National news may be painting a bleak outlook for the future of Airbnb, however, with huge nightly rate gaps and cultural differences between the platform and traditional accommodation, there are many reasons to remain confident during this period.In some cases, the ATPR or “Bed Tax” will be an advantage to proficient Airbnb hosts. There are a number of strategies users can take to ensure they’re not negatively impacted by the charges. With profitability prioritised, here’s why the ATPR tax can be an advantage to leading Airbnb hosts in Auckland.

ATPR Rates will be Passed onto the Consumer

For Airbnb hosts, overhead cost increases should be passed onto their guests. This means that people will have to pay a higher nightly rate to book short-term accommodation in Auckland. While this may seem like an undesirable method of retaining profit, hosts should consider the huge price gap between Airbnb listings and hotel rooms. Even with an ATPR proportional price increase, Airbnb will continue to substantially undercut traditional commercial providers. Airbnb hosts can rest assured that the platform will continue to be a cheaper alternative for consumers. With the history of the service and its clear price difference, Airbnb will endeavour as a cost-effective option for travellers to Auckland city.

Airbnb Hosts will Become More Competitive

With the majority of hosts increasing their nightly rates, price gaps between listings will likely close and users will become more competitive. Hosts that previously had no trouble attracting guests may now notice a lower booking rate - if their listing is subpar with others in their price range. A competitive environment for Airbnb hosts in Auckland will require a much more strategic approach to utilising the platform.

Low-Quality Airbnb Hosts Will Struggle with Rising Expenses

Owners of Airbnb listings that aren’t comparable to others in their range will struggle with rising expenses. Auckland Airbnbs are set to become more competitive than ever which will cause the less desirable properties to lose out. Low-quality Airbnb listings and hosts with bad reputations are set to struggle as a result of the “Bed Tax”. The natural conclusion of this is that the better hosts, the ones that care about the experience they provide and the ones that optimise their listings, will continue to profit. Rising expenses will weed out hosts that don’t put as much effort into their Airbnbs and allow high-quality hosts to thrive.

Accommodation Demand is Growing - Auckland Airbnb Hosts Can Afford to Charge More

Huge international events are set to hit Auckland in the near future and Auckland’s demand for short-term accommodation is higher than it has ever been. With the tourism industry worried about how the city is going to house the number of tourists we’re receiving, Airbnb will unquestionably see high influxes of guests in coming times. With the huge price-difference between hotels and Airbnb listings, hosts can afford to charge more for their nightly rate. As demand grows so does people’s readiness to pay a premium for their accommodation. The next few years can be an extremely profitable time for Airbnb hosts.

How to Ensure Your Listing Remains Profitable

While it is entirely possible to remain profitable and even increase revenue during this time, it’s not something that can happen effortlessly. Airbnb hosts need to put in the time to strategise and optimise their property and listing. Here’s how users can ensure they remain profitable:

Purpose Your Property for Guests

Airbnb hosts should create an environment that people will want to stay in. This means putting effort into interior design, decorating your property tastefully and adjusting features for your ideal guests. A common mistake people make when renting their home out on Airbnb is neglecting to consider guest experience. Many hosts will leave their property looking too personal and this can make guests uncomfortable. Treat your Airbnb as a business and you’ll achieve business type revenue.

Optimise Your Listing

Optimising your listing is crucial if you want to compete as an Airbnb host in Auckland. This process involves taking high-quality photos, paying attention to Airbnb SEO factors, writing appealing descriptions and completing your host profile. Hosts that optimise their listing are guaranteed to stand out on the website. The steps may take time to get right, but they’re well worth it in terms of profitability and appeal.

Establish a Reputation in the Airbnb Community

Your reputation as an Auckland Airbnb host will be extremely important as the ATPR begins to bite. Factors like your reviews, your listings, your relationships with your guests and your ability to adapt to these changes will have an impact. Working to provide the best guest experience possible will do wonders for your Airbnb host reputation. As you build your name in the community, you can expect to see more booking requests, more attention to your listing and more repeat guest. These are all fantastic signs and will make a huge difference to your Airbnb profits. If you don’t have the time to invest in these efforts, one of the best ways to ensure profitability is through an Airbnb property manager. Equipped with a pre-established reputation in the community and the experience to provide great guest experiences, they can allow you to maximise revenue and absorb rising tax expenses.

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