Difference Between Airbnb and Traditional Renting in Hobart

Hobart’s property market has become a hotspot for investors largely because of its strong tourism demand and stable rental market. But that doesn’t mean all property investments in this Tasmania capital are a sure win. One factor to consider is deciding between short-term rentals like Airbnb and traditional long-term renting. Each option has distinct advantages and challenges, so finding the right fit depends on what your goals are, where your property is located, and how you like to manage things. In today’s guide, we’ll break down the profitability, potential for capital growth, and other factors to help you weigh options and settle the Airbnb vs rental debate. 

Airbnb: The Short-Term Rental Model

Airbnb has brilliantly transformed how properties are rented out, particularly in tourist-heavy cities like Hobart, which is home to MONA (Museum of Old and New Art), Salamanca Market, and the annual Dark Mofo festival. Airbnb rentals often command significantly higher nightly rates than traditional renting. For example, a two-bedroom property in Battery Point can earn $250 per night during peak tourist seasons like summer or major events. Over a month with high occupancy rates, this could translate to $7,500 in revenue—far exceeding what you might earn from traditional renting. However, it pays to note that this profitability isn’t consistent year-round. Hobart experiences fluctuations in tourism demand, with quieter months during winter potentially leading to lower occupancy rates and reduced income. 

Capital growth potential is another factor that makes Airbnb appealing. Properties in tourist hotspots, such as Sandy Bay or Salamanca Place, often see increased demand from buyers looking to enter the short-term rental market. This demand can drive up property values over time. Also, if you position your property as premium accommodation with features like modern interiors or waterfront views, your property may achieve faster appreciation than standard residential properties.

However, there are several downsides to Airbnb renting. For example, Airbnb comes with higher management costs and responsibilities. Frequent guest turnover requires regular cleaning, maintenance, and marketing efforts to maintain high ratings on the Airbnb platform. Many investors hire professional property management services to handle these tasks, which can take 15–25% of their rental income. Also, short-term rentals are subject to stricter regulations in Hobart. Some suburbs require permits for short-term rentals, and council restrictions may limit how you use your property.

Traditional Renting: The Long-Term Rental Model

In the Airbnb vs traditional rental debate in Australia, traditional renting often wins in terms of income predictability and stability. Hobart’s strong demand for long-term rentals is driven by its growing population, affordability compared to larger Australian cities, and steady demand from families and students attending the University of Tasmania (UTAS). For example, a three-bedroom home in Kingston might rent for $600 per week, providing consistent monthly income without the seasonal fluctuations usually experienced when running short-term rentals like Airbnb homes.

In terms of capital growth potential, traditional rentals tend to follow broader market trends rather than being influenced by tourism demand. Suburban areas like Glenorchy or New Town often attract families looking for reasonably priced housing near schools and amenities. These areas may not experience the same rapid appreciation as tourist hotspots, but they can provide steady capital growth over time due to infrastructure development and population increases.

Traditional renting also comes with lower management costs than Airbnb. Property managers typically charge 6–12% of the monthly rent for their services in Hobart. This fee covers tenant screening, routine inspections (required every three months under Tasmanian tenancy laws), rent collection, and handling maintenance requests. Unlike Airbnb properties that demand constant attention every time a guest books, long-term rentals are relatively hands-off once tenants are settled.

However, traditional renting provides less flexibility than Airbnb when it comes to adjusting rental terms or using the property yourself. Tenancy agreements are governed by Tasmania’s Residential Tenancy Act 1997, which outlines strict rules regarding lease terms, notice periods for evictions or inspections, and rent increases.

Comparing Profitability: Airbnb vs Traditional Rental

When comparing the profitability of Airbnb and traditional renting in Hobart, you must consider gross income potential and associated costs. While Airbnb can generate higher revenue during peak seasons due to high nightly rates, its overall profitability depends on maintaining high occupancy rates year-round. Seasonal gaps during cold months can dramatically lower annual income unless your property is in a highly desirable area like Battery Point or Salamanca Place.

Traditional renting offers a steadier income throughout the year but typically generates lower gross revenue than Airbnb during peak seasons. However, after factoring in lower management costs and fewer vacancies, long-term rentals may provide comparable net returns over time—especially if your property is in a suburban area with strong tenant demand.

Airbnb vs Traditional Renting: Other Key Considerations

Time Commitment

Managing an Airbnb property requires significant time investment or hiring professional services for tasks such as guest communication, cleaning coordination, and marketing updates on platforms like Airbnb or Stayz. Traditional renting involves less day-to-day involvement once tenants are secured but still requires occasional oversight through routine inspections or maintenance requests.

Tax Implications

Income from Airbnb is taxed as business income if annual turnover exceeds $75,000—requiring GST registration. On the other hand, traditional rental income is taxed as investment income with potential benefits such as negative gearing deductions on interest payments or maintenance expenses.

Which Option Is Right for You?

Choosing between Airbnb and traditional renting depends on your long-term goals and lifestyle preferences as an investor. If your property is located in a high-demand tourist area like Battery Point or Salamanca Place, and you’re comfortable with active management (or outsourcing it to a property manager), Airbnb may offer higher profitability during peak seasons along with faster capital growth potential.

On the other hand, if you prefer predictable income with lower management involvement—and your property is located in a family-friendly suburb like Kingston or Glenorchy—traditional renting might be the better fit for your investment strategy.

Let Us Help You Make a Well-Informed Decision

Both Airbnb and traditional renting have advantages depending on your goals as a property investor in Hobart. However, you must deeply understand the differences in profitability, capital growth potential, regulatory requirements, and management demands to make an informed decision that aligns with your financial objectives.

If you need further help or tailored advice on maximising returns from your investment property—whether through short-term or long-term renting—contact Deltos Finance today! Our team specialises in helping Hobart investors deal with the complexities of property ownership and secure the best investment loan products.