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Beyond the expected

Hotels squeal as the internet bites them too

By johnboy - 9 August 2011 16

One of the more powerful factors at play as the internet infects our lives is a process known as disintermediation, the cutting out of middlemen.

This is great if you’re a source creator, or consumer, but not at all welcome if you’re one of the middlemen.

The Canberra Times has a story today on squealing from the Australian Hotels Association as the citizenry cut them out of the loop putting houses and rooms up for short term rental on the internet.

Australian Hotels Association ACT branch general manager Gwyn Rees said the internet was fuelling a market for short-term accommodation in the ACT.

He said these operators had a competitive advantage over “legitimate” accommodation providers because they were classified differently under the Building Code of Australia and did not have comply with the same standards for security, fire safety and disability access. He said they also gained a competitive advantage by only paying domestic rates on utilities.

“[We] are not concerned about fair and robust competition between legitimate operators,” he said.

“However, people who on-sell these rooms have the very real potential to cause harm on a number of levels and undermine the high standards set by the accommodation and tourism industry.”

He said apartments and spare rooms that were rented out on a short-term basis created security and amenity issues for surrounding neighbours.

“There is also a risk to permanent residents and owners from fire, floor or other damage caused by the occupants of one of these apartments. A property insured for domestic purposes would not be covered for damage if used for short-term accommodation.”

Rather than trying to compete they’re hoping to lobby for regulatory change to favour them.

It sounds as if, for now, the Government is not amenable to this line of thinking.

What’s Your opinion?


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16 Responses to
Hotels squeal as the internet bites them too
sexynotsmart 7:41 pm 09 Aug 11

I only agree with disintermediation when both chicks are hot

00davist 4:58 pm 09 Aug 11

thatsnotme said :

Sure, Summernats hoons are still going to come, and they’re going to stay somewhere. The thing is, if I buy a house next door to a hotel, I know what I’m getting myself in for. I know that all sorts of people are going to be coming and going, and some of them are likely to be dickheads – and if I think that’s going to be an issue, then I can choose not to live there. When my next door neighbour decides that he’s going to use his spare room as a hotel room though, that’s a different matter – it’s not even like there’s any type of DA I get a chance to object to beforehand.

When it comes to regulation, if I go to check into a hotel and it’s substandard, not only can I choose not to stay there, I can complain to the proper authorities and get something done about it. So if my hotel has crappy fire safety, I can complain to someone. Who do I complain to about someone’s private house I’ve paid to stay in though?

I’m all for people having the freedom to do what they want to in their own homes, but when you take other people’s money to provide a service, I think that you’ve crossed the line from ‘home’ to ‘business’. I’m no fan of pointless regulation, but I do think that some is necessary. I’m also a fan of competition, but when the playing field isn’t level, it’s not really fair competition.

I can understand where you are comming from, and when i turn it around, I guess I too would be upset if i had chosen an area for the purpose of avoiding establishments such as hotels, just to have it turn up next door. However, the traffic generated by Joe’s back room, would be considerably less than a hotel, even if joe had a new guest every night!

You als raise a fair point with the ability to notiffy authority’s on sub-standard hotels, and perhaps something need be in place to help protect conumers.

However, while it may be reasonable to ask that regulations be put in place to protect consumers, and neghbors, those regulations would also need to be tailored as to not make it impossible to provide this service, It’s OK to ask Joe to keep it safe, clean and quiet, but to ask him to cough up what a hotel would, for his one budget room, is a bit much.

And lets face it, the AHA is not asking us to put some clear, yet affordable and acheivable regulations in place to help Joe’s neighbors and customers, while not preventing joe from turning his spare room into cash.

They are asking for regulation that would make it impossible for joe to continue with the practise, therefore eliminating him as competition, and not having to consider adjusting theriown competitiveness.

The fact stands, the AHA is not looking out for disturbed neighbors, or guests at risk, they are looking out for themselveves.

So before everyone jumps on theire bandwagon, realise their motives, and work out what it is YOU want, because they may seem to share your concerns, but do they really?

If you feel this area needs more regulation, then workout what you think that should be (Do you want to imrove the home-hotel situation to benifit all, or shut it down) then, if you decide you want to be part of it, put your thought in writing, and send them in.

Just be carefull before jumping in with a +1 for the AHA, you may not agree with them as much as you think!

p1 4:54 pm 09 Aug 11

Stevian said :

johnboy said :

broaden your thinking, the hotels are being disintermediated.

It’s not actually disintermediation, it’s just an alternative. There is no middleman being removed.

If you consider “paid accommodation” as the “end man” and you as the “first man” then the hotelier can be considered the “middle man”. More accurately in my model the whole concept of hotels are the middle man, and it is being replaced with a whole different concept of spare rooms let out occasionally as needed.

My point is, how you see the system defines what the end points (and the middle points) are.

thatsnotme 4:13 pm 09 Aug 11

Sure, Summernats hoons are still going to come, and they’re going to stay somewhere. The thing is, if I buy a house next door to a hotel, I know what I’m getting myself in for. I know that all sorts of people are going to be coming and going, and some of them are likely to be dickheads – and if I think that’s going to be an issue, then I can choose not to live there. When my next door neighbour decides that he’s going to use his spare room as a hotel room though, that’s a different matter – it’s not even like there’s any type of DA I get a chance to object to beforehand.

When it comes to regulation, if I go to check into a hotel and it’s substandard, not only can I choose not to stay there, I can complain to the proper authorities and get something done about it. So if my hotel has crappy fire safety, I can complain to someone. Who do I complain to about someone’s private house I’ve paid to stay in though?

I’m all for people having the freedom to do what they want to in their own homes, but when you take other people’s money to provide a service, I think that you’ve crossed the line from ‘home’ to ‘business’. I’m no fan of pointless regulation, but I do think that some is necessary. I’m also a fan of competition, but when the playing field isn’t level, it’s not really fair competition.

00davist 3:43 pm 09 Aug 11

This is what happens when an industry decides actually making the necessary changes to compete with new idea’s, is too hard, so they simply try and use their weight to control the market to there own desires.

And like so many arguments made by these industries (like Smokes: Plain packs wont do a thing, but it scares us enough to spend heaps of money fighting) they assume the average person is stupid, too stupid to see the contradictions in their arguments.

1) Lets look at the whole “Unsavoury Characters” argument. And for this, Grails “Redfern Summernats” example is great. So having people let out rooms or apartment on a short term basis is going to expose neighbouring residents to unnecessary issues?

Sure, because ‘Redfern Summernats hoons’ only come here because they can rent a room in someone’s shed? Not to mention, these unsavoury characters are already coming, TO THE HOTELS, and heck, to use the Summernats example, SOME of them manage to wreak havoc on neighbouring suburbs, regardless of where they will be sleeping!

Oh, and the whole “Who would you rather renting from you” argument: Umm, who someone wants to rent a room to, is entirely up to them, and their opinion, NOT YOURS!

As for the “entirely reasonable” comment about regulation, mate, if you don’t think it’s up to scratch, don’t stay there! I can tell you now, i have stayed in plenty of ‘Regulated’ hotels, that were well and truly sub-standard when compared to some of the short-term rentals on offer.

Further, How do you regulate it? How do you create law saying “You don’t have the free will to decide who you let into your own house?” It’s a bit of a minefield!

I will however agree with one point, Insurance, Maybe they should be looking into an affordable insurance option, for those wishing to make a little cash from the spare room, but taking it much further than that, is really encroaching on telling people what they can and cant do with their own damn house.

Not to mention, the hotels in Canberra really do NEED this kind of competition, they may actually have to become competitive themselves!

Stevian 3:41 pm 09 Aug 11

johnboy said :

broaden your thinking, the hotels are being disintermediated.

It’s not actually disintermediation, it’s just an alternative. There is no middleman being removed.

thatsnotme 3:41 pm 09 Aug 11

johnboy said :

broaden your thinking, the hotels are being disintermediated.

How can a hotel ever be considered a middle man? It’s like saying that by driving to Sydney, I’m disintermediating Qantas. Whether I stay in a hotel, or in someone’s spare room, they’re both end points in the process…they’re just slightly different end points.

I can see the AHA’s point to some extent here too. I’m pretty sure I wouldn’t get far if I decided that every Saturday night, I was going to use my car to offer an alternative taxi service from the city to pick up a few extra bucks. I can’t really see why I should expect to be able to turn my house into a hotel either – not without paying for the same approvals and insurance coverage that a hotel needs to pay.

I’m not really sure that the hotel industry has a huge amount to be concerned about here though. I can’t see this ever taking off in the business travel market, and I’m pretty sure no coach load of package tourists are going to rock up to a house in the ‘burbs to check in. I think the market for this style of accommodation will always be fairly limited. It’s not like the differences between buying a TV online, instead of a store – this is somewhere that people are laying their heads down to sleep, and entrusting their security to strangers.

johnboy 3:29 pm 09 Aug 11

RedDogInCan said :

Grail said :

The real issue here is the number of people using AirBnB and other similar services to let out their spare rooms, who do not have insurance covering commercial use of their residence.

AirBnB has a total of 25 listings in Canberra – not exactly flooding the market. Hoteliers would be better off complaining about the visitors who stay in Canberra with friends or relatives.

Give them time, they already complain about people entertaining friends at home rather than in bars.

RedDogInCan 3:27 pm 09 Aug 11

Grail said :

The real issue here is the number of people using AirBnB and other similar services to let out their spare rooms, who do not have insurance covering commercial use of their residence.

AirBnB has a total of 25 listings in Canberra – not exactly flooding the market. Hoteliers would be better off complaining about the visitors who stay in Canberra with friends or relatives.

johnboy 3:18 pm 09 Aug 11

broaden your thinking, the hotels are being disintermediated.

random 3:16 pm 09 Aug 11

WTF? This has nothing to do with disintermediation. You could already book directly with most hotels — i.e., no middlemen. Most of these short-term rentals go through services like AirBnB.com, so if anything there’s more intermediation going on, not less.

The (entirely reasonable) complaint is that hotels are regulated and these private rentals aren’t. There are cases in other cities where property owners have more or less been running illegal hotels in residential areas: a new tourist every night. It’s not good for the neighbours and it’s unfair competition for legitimate operators.

Next you’ll be upset because the AMA gets antsy if you set up an unlicensed surgical practice out of your garage. Why don’t they just let the market work?

Grail 3:13 pm 09 Aug 11

The real issue here is the number of people using AirBnB and other similar services to let out their spare rooms, who do not have insurance covering commercial use of their residence.

The real estate agent letting out serviced apartments most likely has the appropriate liability insurance in place, has known safety standards to adhere to as a condition of their ongoing licence, etc. The person letting out their spare room for commercial gain may not have public liability insurance for such things as injuries suffered by tenants who slip on the bathroom floor in the middle of the night.

As for trevar’s question about short term residents being greater safety or security threats?

Think about this for a moment: a long term tenant is someone who works here and lives here. A short term tenant is the guy who came down from Redfern to visit the Summernats. Do you think one of these folks is more likely to make a mess of your place than the other?

RedDogInCan 3:01 pm 09 Aug 11

Sorry, but what has this got to do with the Internet? The guy renting out serviced apartments is real estate agent who happens to use the Internet for online bookings in exactly the same way as the hotels use it. You could just as easily blame the telephone.

However, the real lead in this story is why are apartment owners preferring short term rentals when there is an apparent rental shortage here in Canberra? Why would landlords prefer irregular short term rentals from travellers over long term rentals to tenants? Tenancy laws perhaps?

GottaLoveCanberra 2:19 pm 09 Aug 11

“Rather than trying to compete they’re hoping to lobby for regulatory change to favour them.”

Seems to be the common theme when old industries meet new ones. I say suck it up hotels and start to adapt.

trevar 2:01 pm 09 Aug 11

So they’re saying that tourists and people who come to Canberra short term are probably criminals who are likely to start fires and damage floors?

Sorry, but I don’t see how a tourist or short term resident is a greater safety or security risk than a long term tenant.

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