By Paul Stevens and Miles Hurley, news editor and reporter for ShortTermRentalz
Australia / New Zealand: As countries around the world slowly begin to ease their collective lockdowns, one is left to wonder whether Australia and New Zealand hold the key for the rest of the world in responding to the coronavirus pandemic.
Back in January, as news began to filter out of China of this coronavirus’ devastating potential, it would have been hard to imagine that these two island nations would be the countries that the rest of the world was looking to mirror in terms of responses to Covid-19. Since then, governments worldwide have adopted widely different lockdown policies and travel restrictions, with very contrasting results in some cases.
At the time of writing, the global death count from this virus stands at just under 450,000 reported fatalities, out of 8.3 million suspected Covid-19 cases in 213+ countries around the world. That figure appears likely to be significantly higher, due to alleged attempts by countries such as Brazil and China to downplay their figures.
In contrast to this, the Australiasian states have both demonstrated success with vastly different styles of preventative tactics.
New Zealand’s Prime Minister Jacinta Ardern enacted swift and efficient lockdown proceedings, that saw it heralded as the first country to seemingly eliminate Covid-19 cases. It has counted 1156 cases and 22 deaths, with an infection rate of around 0.023 per cent, but three cases have since emerged in the last week to remind us of the dangers of being complacent.
Across the Tasman Sea, Australian counterpart Scott Morrison laid down strict initial restrictions, but loosened earlier, allowing haircuts and coffees with friends, within social distanced and safe circumstances. And though it has had more cases [7,367], its infection rate stayed similarly low at 0.029 per cent.
Compare this with some of the countries who have recorded the highest number of deaths, such as the United States and the United Kingdom, the latter also being an island, and the figures are stark.
From a population of approximately 330 million people, the USA has recorded 2.21 million cases [a 0.666 per cent infection rate] and the UK, from a population of almost 68 million people, has recorded 299,000 cases [a 0.44 per cent infection rate]. As opposed to Morrison and Ardern, Donald Trump and Boris Johnson initially understated the consequences of the virus and locked down much later into their virus cycles.
It therefore seems that Australia and New Zealand could provide valuable insights into not only what a sustained affront to Covid-19 looks like, but also how life after lockdown might play out. Unfortunately, we will never know how many lives could have been saved in other countries had they enacted more immediate shutdowns.
But what can we deduce from this that will help us understand the impact of Covid-19 on the short-term rental industries in Australia and New Zealand? And are there any lessons other countries can take away from this to rebuild their own tourism industries?
What have been New Zealand and Australia’s approaches to lockdown?
Australian Prime Minister Morrison announced in March that the government would lift its coronavirus lockdown restrictions in a three-step process: a measure that was credited with substantially reduced the rate of new infections from Covid-19.
- Stage One: Restaurants and cafes were limited to takeaway services, or open to a maximum of ten customers at one time.
- Stage Two saw gyms, cinemas and galleries reopen, though only 20 customers were allowed in at a given time. Some states were able to close their borders and allow domestic travel.
- Stage Three permitted gatherings of up to 100 people, and allowed employees to return to work. Interstate travel was allowed to resume, along with limited international travel, including flights between Australia and New Zealand.
It is now up to each state and territory to decide when and to what extent they can ease restrictions. Most states currently allow restaurants, cafes, bars and camping grounds to remain open to a limited number of people, while interstate travel is only prohibited in some states where people are advised not to travel to remote communities.
States such as Northern Territory, South Australia and Tasmania have imposed 14-day self-quarantines, whereas new South Wales has not. These steps have so far ensured Australia has remained ahead of the curve, compared to more hard-hit countries elsewhere.
New Zealand, meanwhile, entered lockdown in March, cutting down on all gatherings and introducing strict social distancing measures. For a time, all shops, including food takeaways were barred, and nobody could enter or leave their homes beyond necessary trips.
The country began its relative lifting of measures in April, which reduced its lockdown alert level to Level One. This now allows New Zealanders to:
- Go to shops, restaurants and transport and gatherings without distancing requirements
- Attend community sports events, but with particular tracing requirements.
The immediacy and consistency of Ardern’s approach has won her widespread admiration from the international community.
With a quick, decisive shutdown in New Zealand, the short-term rental market took a sharp dive as bookings plummeted in March. Companies note that though the decisiveness allowed clarity between guests and owners, businesses still lost the entirety of potential earnings from the twin holidays of Easter and ANZAC Day.
Back in Australia, properties returned to the long-term rental market, cutting the prices of long-term leases. Many of these homes have remained empty, however.
Kiel Glass, co-founder of SafeStay Australia, said: “Domain figures suggested that the national stock levels for long-term rentals increased by more than 12 per cent. A lot of short-term rental owners have still found themselves with vacant properties.”
Fortunately in New Zealand, short-term accommodation was viewed as an essential service, allowing front-line workers and medical professionals to successfully isolate without putting families in danger. This allowed some businesses to maintain revenue during this time.
Shaun Fitzmaurice, COO at Kiwi full-service holiday home management company Bachcare, said: “We were able to support some bookings for guests in certain circumstances. These bookings tended to be longer stays from essential workers, those looking to self-isolate or migrants looking for a home to stay rather than a hotel or shared accommodation.”
What measures have short-term rental companies been taking to limit the spread of Covid-19?
In order to continue operating, hospitality establishments and management companies have enhanced their safety standard protocols in order to make guests feel safer than ever within their vacation rentals.
The World Health Organisation [WHO] is advocating for fabric face masks to be mandatory in public areas and on public transportation as they act as a barrier to contamination. New Zealand and Singapore are also considering digital tools such as Bluetooth-enabled devices which may be more effective in contact tracing and reduce the rate of infections.
Companies already focused on ensuring high standards of cleanliness have seen an uptick in business, as they began to put in place or enhance existing sanitation policies. SafeStay Australia, a short-term rental safety audit company based out of Sydney, has noted that owners have turned to outside agencies as a way to stay competitive.
Glass said: “The feedback we received was largely owners of short-term rental properties unsure of what their requirements are, not only from a safety and security perceptive but also a cleanliness perspective. Most owners felt that the information provided in the marketplace was misleading or contained no substance with advice.
“We therefore have seen a large uptake of hosts identifying our services as a great way to promote their property with a unique framework and focus on safety, security and cleanliness, which creates a unique proposition over their property competitors,” he added.
As short-term rentals have been seen as a safer alternative to hotels for quarantine purposes, many have been inhabited by those isolating. Some resident advocacy groups have complained that this unfairly increases viral load on those neighbourhoods.
Australian property management company MadeComfy has provided self-contained accommodation for health care and key workers on Airbnb, working with hospitals and retirement homes to isolate frontline staff and ease the burden on health services and authorities. CEO Quirin Schwaighofer told YourInvestmentProperty magazine that short-term rentals were providing a “crucial service to ensure there is appropriate accommodation for a range of needs” as New South Wales residents were encouraged to stay in one place unless they had a reasonable excuse to travel.
What will this mean for the short-term rental industry in a post-Covid era?
Data from Airbnb recorded between 9-16 May suggested that New Zealand had seen a resurgence in short-term rental bookings compared to previous weeks as they moved into the second week of Level Two restrictions, which allowed some domestic travel.
Airbnb figures indicated:
- Domestic bookings on Airbnb increased 15 times compared with the same week in April.
Domestic bookings on Airbnb recovered to 85 per cent of pre-Covid levels [compared with the same week in 2019].
- Popular tourist destinations such as Queenstown, Taupo and Northland all recorded an increase in domestic bookings compared to the same week from 2019, although international bookings are still being restricted due to the closure of borders.
- Auckland, Christchurch and Wellington saw month-on-month bookings increase sevenfold on the same period in 2019, with Northland and Hamilton also proving popular search term destinations.
That backs up the takeaways from our recent podcast with AirDNA chief revenue officer Tom Caton, who predicted that New Zealand in particular would be seen as a “portend” for how vacation rentals will pick up in the future.
This virus is likely to lead to a shift in consumer behaviour, Caton said, as travellers will be increasingly conscious of their surroundings, i.e. sharing the same air conditioning with strangers, bumping into people in lifts, moving around en masse, going down to breakfast, as well as cleaning procedures in properties.
He said: “While the debate will run and run on how consumer behaviour will change post-Covid-19, it is becoming clear that it will be difficult to maintain the same intensity of cleaning in a vacation rental as opposed to in a hotel. Airbnb has introduced a mandatory, one-day gap between rental bookings – you can opt out of it – but it is impractical to have the same level of cleanliness as in a hotel.”
Operators around the world have quickly taken stock of this trend to implement enhanced cleaning protocols, but they will also need to consider how to adapt housekeeping services, the types of linen and materials present in properties in order to satisfy the new, health-conscious traveller of the future.
Meanwhile, the mooted concept of a “Trans-Tasman bubble” would allow travel between these two countries, which seem – for now – to have kept infection rates under control, while keeping their borders with the rest of the world closed or tightly monitored. The proposal provides a glimmer of optimism for tourism businesses in the two countries, who rely heavily on visitors from each other.
The travel arrangement, first discussed in late march, would allow citizens between the two countries to travel when conditions were deemed safe enough. Ministers on both sides were given implementation blueprints at the start of June, with July being rumoured as the earliest moment for its implementation.
Nicholas Casely Parker, head of GoodStays Queenstown, said: “We have to tip our hat to our prime minister Jacinda Adhern and how they have protected New Zealand’s citizens, but it has had a detrimental affect on our economy. The trans-Tasman bubble will have a significant impact for our tourism industry and a stepping stone to rebuild.”
For tourist destinations such as Queenstown, which rely heavily on international visitation and make 55 per cent of their money from tourism, that bubble cannot come soon enough. Many businesses have already laid off workers, and some have said that if the bubble does not come into place by July, the town may suffer further.
Other companies providing a diverse offering of services are less dependent on the international market, but still hope for the limited return to international travel.
Fitzmaurice said: “As a business, we are less reliant on international visitors than some other areas of tourism so we are well placed to manage should the Trans-Tasman bubble be delayed. However, Australia is our largest market behind New Zealand and as such makes up an important part of our overall guest mix.”
As the two countries have cut a majority of their cases, this serves as not only a jolt in the arm for tourism, but a demonstration of a new normalcy. Implementation of a Trans-Tasman bubble could serve as a test model for other countries looking to introduce travel spending back into the economy while still maintaining safety.
Caton maintains that there will be significant implications for tourism as a result of Covid-19, especially with bookings in non-urban locations seeing a recovery in late-summer / early autumn. Guests will be more keen than ever to stay in drive-to, short trip destinations, where they will not need to worry about the hassle of immunity passports and border controls.
Airbnb rises in New Zealand
The encouraging statistics by AirDNA reflect a growing trend that is being across the short-term rental industry since the coronavirus outbreak emerged at the start of the year.
AirDNA public relations associate Elyce Behrsin said: “As you will see, four of the five locations experiencing the most growth are destination tourism locations, opposed to cities, which is in line with the trends we are seeing globally.”
Domestic bookings look set to be the major driver of growth in the short-term rental industry for the foreseeable future as Kiwis across the board look to explore their own backyard properly.
Parker said: “We are fortunate to live in a beautiful, diverse country full of everything a tourist could want to experience. There is a theme of supporting local that has grown in recent months and Tourism New Zealand has launched a domestic campaign to increase awareness of the amazing options on offer.”
In Australia, domestic travel is also a key generator for short-term rental bookings, as data provider Transparent highlighted that 86 per cent of visiting guests were domestic travellers from the country, making it the fourth highest in that regard out of countries with the highest supply of rentals.
Metasearch engine AllTheRooms shared AirDNA’s optimism for a mid- to late-summer recovery in Australia and New Zealand’s vacation rental industry.
Though occupancy rates are understandably still significantly below 2019 levels, AllTheRooms’ Forward Booking Index highlighted that those rates have increased week by week since April towards last year’s precedent, before a gradual decline sets in over the coming months. When the data was published earlier this month, the average occupancy rate for Airbnbs in Australia was at 25 per cent [compared to over 40 per cent at this stage last year] and in New Zealand the figures were even closer to those recorded last June.
Provided that cases in both countries remain low and isolated circumstances, we can expect the lines on the graphs to match up more evenly as restrictions continue to be lifted, although a number of variables will still make that uncertain.
From now on, property management companies may need to look at adopting a more flexible model with limited or no commitments, as well as a full complement of services to drive higher occupancy rates.
That is not to say that both countries’ responses have been a complete success.
Three Covid-19 cases have come to light in New Zealand in the last week, after one Pakistani and two Kiwi travellers returning from the UK tested positive for the coronavirus to break a 24-day streak without any cases.
The two sisters returning from the UK bypassed lockdown rules on compassionate grounds to visit a dying relative, but they are believed to have come into contact with at least 300 people on their return while still infectious. It was reported that neither was tested in that time, raising further questions about how alert New Zealand was to this possibility.
The economies of both Australia and New Zealand have also suffered significant damage due to the coronavirus restrictions and both Prime Ministers were asked about whether they were too quick to initiate a lockdown.
According to Al Jazeera, New Zealand’s economy shrank by 1.6 per cent in the March quarter, its largest drop in 29 years and the first quarterly fall since December 2010. In Australia, unemployment has surged to its highest point in about two decades in May as nearly a quarter of a million people lost their jobs due to pandemic-driven shutdowns, according to the Australian Bureau of Statistics [ABS].
Australia’s flagship airline, Qantas Airways, has also suspended almost all of its international flights until October at the earliest after the government gave indications that the number of Covid-19 cases would rise again this year. It remains a realistic prospect that international travel in and out of Australia will be suspended until 2021, apart from with New Zealand.
What can the rest of the world take away from Australia and New Zealand’s responses to this pandemic?
The pandemic has painted an uncertain picture for the future of the world, as well as the hospitality industry, as the virus spread from country to country at a rate none of us, nor our governments, could have easily predicted.
While Australia and New Zealand have battled intently to eradicate the coronavirus from their respective countries, the fact that these countries are still reporting the emergence of a handful of cases underlines the challenges we will all face over the coming weeks and months as lockdowns ease and the impulse to travel again intensifies.
The uncomfortable threat of a second wave remains a very realistic prospect, for not only these two countries, but the whole world. For the travel industry to fully rehabilitate, a sense of trust needs to be established and that is difficult to imagine with the spectre of virus lurking in the background, even for those countries who are seeing a high recovery rate.
Speaking on BBC Newsnight yesterday, international editor and foreign correspondent, Gabriel Gatehouse, said: “Public health experts say that once you get on top of the initial outbreak, you’ve either got two options: you either accept you’re going to have to live with an amount of the virus in the medium-term, then set up a really comprehensive, robust testing and tracing mechanism and you put out those fires as they appear, as China has done, or you go down the New Zealand route and you try and eliminate it completely altogether.”
No country can stay in lockdown forever – if each one is to rebuild its economy, opening up hospitality venues such as vacation rentals and hotels is an important milestone but must be done to ensure public safety and security is a top priority. As Scott Morrison said: “You can stay under the doona [duvet] forever. You’ll never face any danger but we’ve got to get out from under the doona at some time.”
Full reopening is still a distance away though: Australia is unlikely to open international borders until at least the start of 2021 as it seeks to contain the virus to relatively few cases, and New Zealand’s borders are remaining firmly shut to prevent another deadly wave.
When examining these two countries side-by-side, we are able to see that there is a pathway to recovery. The implementation of a Trans-Tasman bubble and the gradual rebound of occupancy rates and bookings in New Zealand show that when lockdown is lifted, the short-term rental industry will pick up – again. Australia and New Zealand’s data projections show that a mid-summer recovery is very much a possibility.
There may be no uniform lockdown strategy that is being implemented worldwide but the indications are that those countries, such as Australia and New Zealand, which went into lockdown earlier, have been the most successful in containing the virus’ spread. Hospitality owners and operators should heed this warning for the future, as they will have to become more adaptable to survive in the event of another global pandemic.
For similar articles and feature content about the industry recovery in some countries, read our latest piece on accelerating occupancy rates in Spain here, our analysis of whether Sweden’s lockdown was a gamble here, and our article on the upsurge in bookings in the United States here.