New legislation could hurt the Scottish tourism economy by £133m

Scotland’s tourism economy could lose £133m and lose more than 7,000 jobs if local authorities implement the most complex version of the legislative changes introduced to regulate the short-term rental sector.

This is stated in a study by BiGGAR Economics commissioned by Airbnb. The study found that choices made by local councils would have a domino effect on their tourism economy and could create disproportionate barriers to entry for casual homeowners.

The typical Airbnb host in Scotland shares their home for less than three nights a month and makes less than £6,000 a year. Hosts interviewed said the cost-of-living crisis is making them more dependent on the revenue they receive from Airbnb. Nearly half said hosting helps them cope with the rising cost of living, and more than a third rely on extra income to make ends meet.

The new Scottish Government Licensing Order requires all short-term rental operators to apply for a license from their local authority – regardless of the type of shared space and for how long.

The license is expected to cost between £300 and £1,000 and will need to be renewed every one to three years, depending on local authorities. In addition, the cost of complying with the mandatory conditions of the license order is estimated at an additional £300 per annum, excluding one-time and long-term costs. Implementing the strictest rules risks discouraging local families, who rely on extra income from Airbnb accommodations to make ends meet. The subsequent decline in available property will drive up house prices and reduce the competitiveness of Scottish tourism, jeopardizing important guest spending in beleaguered sectors such as hospitality.

Our research has shown that the new legislation will significantly reduce the contribution Airbnb Hosts and guests currently make to the Scottish tourism industry. Even the lowest level of additional regulation could potentially result in £32 million of gross value added (GVA) losses and 1,740 job losses across Scotland.

If local authorities impose even stricter regulations, the industry could face £71m GVA cuts and 3,830 job losses. And the toughest restrictions could hit the Scottish tourism economy by £133m and result in the loss of 7,190 jobs.

The study also predicts big differences in the extent of local government losses in Scotland. The Highlands could be hit the hardest with the highest potential loss of £33m GVA and 1,780 jobs, followed by the city of Edinburgh with a potential loss of £26m GVA and 1,390 jobs.

These scenarios will depend on the cost and processes of new licenses, and how they impact guest and host decisions. They also do not take into account the potential impact of control zone legislation, which is likely to further reduce the supply of short-term rentals.

At a time when tourism is recovering…

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