Accommodation industry welcomes Victorian Government legislative changes on short-stay operators

The Owners Corporation and Other Acts Amendment Bill 2020 passed through the Upper House of Victorian Parliament on February 16. It covers a broad range of reform around the functioning of strata titled buildings, in particular between Owners Corporation (OC) Managers and OC Committees.

ResortBrokers, one of Australia’s leading accommodation industry agencies, led a campaign to amend part of the original legislation which proposed restricting developers from entering an owner’s corporation into any management agreements for more than three years. Without amendment, the legislation would have killed new short-stay operations in residential apartment buildings in Victoria.

The company engaged with the key ministers including the Victorian Treasurer, Minister for Tourism and the Minister for Consumer Affairs and successfully achieved an amendment to the Bill which effectively protected contracts that facilitated hotel and serviced apartment operations from the restrictions of Section 67B.

Well known hotel and serviced apartment brands that operate under this structure include Mantra, BreakFree, Oaks, AVANI, Imagine and Arise. They manage 1000’s of hotel rooms and serviced apartments in Victoria, providing an essential contribution to the state’s tourism / corporate stay industry.

“This is a great result for the Victorian economy as it provides the security of tenure to short-stay operators required to invest the significant amount of time and capital necessary to establish a successful and professional short-stay operation. It also ensures tourists and travellers staying in Victoria have the option of staying in a wider range professionally run hotels and service apartment buildings,” said ResortBrokers Director Alex Cook.

Several key industry players voiced concerns that the restriction would make establishment and ongoing functioning of short-stay operations within strata titled buildings very difficult. This refers to a model where a professional short-stay operator is granted a ‘letting agreement’, whereby they have the exclusive right to run a letting business from within a strata building, generally accompanied by a license or lease over some key operational space such as reception and linen storage.

“Operators must invest large amounts of time and capital to establish professional short-stay operations, starting months if not years before a building settles - furnishing apartments, hiring staff, erecting signage, fitting out operational areas etc.

“Without the security of longer-term tenure, this would be unviable, and the future establishment of these operations would be deeply threatened.

“During our good faith discussions with the Victorian Government, we also pointed out that it was important to bear in mind that the services provided by onsite letting operators are entirely optional and if a lot owner wants to use a local external agent, they can

“Without the ability to establish onsite short-stay operations, lot owners wishing to rent their apartment on a short-term basis would be left with no option but to use services such as Airbnb.

“We now have certainty in the industry and both lot owners and consumers will benefit from that.”