How Melbourne Apartment Owners Can Manage Victoria’s 7.5% Short-Stay Levy
Victoria’s 7.5% short-stay levy has changed the cost structure of operating an Airbnb or holiday rental in Melbourne. For apartment owners, the important question is no longer simply, “How much is the levy?” It is:
How can I keep my property competitive and protect my net rental return after the levy is taken into account?
The levy does not necessarily make short-stay accommodation unviable. However, it does make accurate pricing, cost control, booking strategy and professional revenue management more important than ever.
This guide explains how the Victorian short-stay levy works and what Melbourne apartment owners can do to manage its impact.
What is Victoria’s 7.5% short-stay levy?
The Victorian short-stay levy commenced on 1 January 2025. It generally applies to paid accommodation in Victoria where a guest stays for less than 28 consecutive days. This includes many investment apartments used for Airbnb and other short-stay accommodation across:
Melbourne CBD
Southbank
Docklands
Carlton
South Yarra
Richmond
St Kilda
Other metropolitan and regional Victorian locations
Although it is sometimes called the “Airbnb levy”, it is not limited to bookings made through Airbnb. It can also apply to bookings received through other accommodation platforms and directly through an owner or property manager.
The levy is calculated at 7.5% of the total booking fee.
What is included in the total booking fee?
The State Revenue Office of Victoria states that the levy can apply to more than just the nightly accommodation rate. The total booking fee may include:
Nightly accommodation charges
Cleaning fees
Applicable GST
Late checkout fees
Compulsory booking or service charges
Any amount separately attributed to the levy
Credit card surcharges charged specifically for using a particular payment method are generally excluded. Charges for damage caused by a guest are also not treated as part of the booking fee.
For example, where the total booking fee is $1,000, the short-stay levy is $75.
Owners should not assume that moving part of the accommodation charge into a cleaning or administration fee will reduce the levy. Compulsory charges connected to the stay will generally still form part of the total booking fee.
Be careful when separately charging the levy
One detail that can easily be overlooked is that an amount separately described as a “short-stay levy” can itself form part of the total booking fee used to calculate the levy.
This means simply adding a 7.5% levy line to the original booking amount may not fully recover the amount that ultimately needs to be paid.
Your booking platform, property management system or accountant should ensure that the calculation is configured correctly. Owners should also check that the levy is not accidentally being collected or deducted twice.
Who is responsible for paying the levy?
The responsibility depends on how the guest makes the booking.
Bookings made through an accommodation platform
When an eligible booking is accepted through a booking platform, the platform is generally responsible for:
Calculating the levy
Collecting it
Lodging the required return
Paying it to the State Revenue Office
Owners who receive all their bookings through registered booking platforms generally do not need to separately register for the levy.
Airbnb currently states that it automatically adds the levy to the total amount paid by the guest and that the collection does not reduce the host’s payout. However, the increased total guest price may still influence booking conversion and competitiveness.
Owners should check how each platform displays, collects and reports the levy rather than assuming every channel handles it in exactly the same way.
Direct bookings
Where a booking is accepted directly without using a booking platform, the property owner or tenant may be responsible for registering, lodging and paying the levy.
Direct bookings can include reservations received through:
A property’s own booking website
Telephone or email
Social media
Repeat guest enquiries
Referrals
A property manager’s direct booking channel
Where a property generates at least $75,000 in applicable booking fees during a calendar year, returns are generally lodged quarterly. Properties below that threshold generally lodge annually.
Owners using professional management should confirm who is responsible for levy registration, reporting and payment under their management and booking arrangements.
Does the levy automatically reduce an owner’s income by 7.5%?
Not necessarily.
When a booking platform adds the levy to the guest’s total, the owner’s payout may not be directly reduced by the full levy amount. The more important commercial effect may be that the guest sees a higher final booking price.
Guests normally compare the complete price of several similar apartments before booking. A property may therefore lose bookings when its total price becomes noticeably higher than comparable accommodation.
The real challenge is balancing:
Nightly rate
Total guest price
Occupancy
Length of stay
Platform commissions
Cleaning and turnover expenses
Net owner income
Increasing every nightly rate by the same percentage is not always the best response.
Seven ways Melbourne apartment owners can manage the levy
1. Price according to demand rather than applying a blanket increase
A flat price increase across every date can make an apartment uncompetitive during quieter periods.
Melbourne demand changes considerably according to:
Day of the week
Season
School holidays
Major sporting events
Concerts and exhibitions
Conferences
Booking lead time
Availability of competing accommodation
During high-demand periods, the market may absorb a higher total price. During softer periods, applying the same increase could reduce occupancy and produce a worse result.
Dynamic pricing allows rates to be adjusted according to actual market conditions instead of relying on one fixed rate throughout the year.
2. Monitor the total price shown to guests
Owners often focus on the nightly rate while guests focus on the final checkout price.
The complete guest price may include:
Accommodation
Cleaning
Platform service charges
The Victorian short-stay levy
Other compulsory charges
A competitive nightly rate can still appear expensive after these amounts are added.
Pricing decisions should therefore be based on the final bookable price of comparable Melbourne apartments, not only the headline nightly rate displayed in search results.
3. Encourage longer average stays
Longer bookings can help reduce the operational cost of each occupied night.
For example, one seven-night booking usually requires fewer turnovers than several one- or two-night bookings covering the same period. This can reduce:
Cleaning frequency
Linen movements
Guest communication
Check-in coordination
Consumable usage
The risk of vacant nights between bookings
Stays between seven and 27 days may still be subject to the levy, but they can improve profitability by spreading turnover expenses across more nights.
4. Consider genuine stays of 28 days or longer
A continuous stay of 28 days or longer is not treated as a short stay for levy purposes.
This may create opportunities during traditionally softer periods for:
Corporate accommodation
Relocation stays
Project-based workers
Visiting academics
Medical stays
Guests waiting for a home settlement
Insurance accommodation
However, owners should not view this as an artificial workaround. Longer accommodation arrangements can create different legal, insurance and operational considerations.
Professional advice should be obtained before changing the way a property is offered or documented.
5. Control cleaning and turnover expenses
Because cleaning fees are included in the levy calculation, simply increasing the separately advertised cleaning fee does not avoid the levy.
A better approach is to improve the efficiency of each turnover through:
Consistent cleaning procedures
Reliable linen supply
Preventative maintenance
Regular property inspections
Appropriate minimum stays
Fewer unnecessary one-night gaps
Early identification of damage and maintenance issues
The aim should be to reduce avoidable costs without lowering cleanliness or guest satisfaction.
6. Use multiple booking channels strategically
Listing a property across several suitable booking channels can increase exposure to different types of travellers.
Depending on the apartment, this may include leisure travellers, business guests, families, relocation guests and longer-stay visitors.
Channel diversification does not remove the levy. Eligible Victorian stays remain subject to the applicable rules regardless of where the booking originates.
The benefit is access to a broader pool of demand, which can help reduce vacant nights and dependence on a single platform.
Each channel should still be assessed according to:
Commission cost
Guest quality
Cancellation risk
Average length of stay
Average booking value
Net revenue after all expenses
7. Measure net return instead of occupancy alone
High occupancy does not always mean high profitability.
An apartment can achieve strong occupancy but perform poorly if it is regularly sold at low rates and incurs frequent cleaning, linen, platform and maintenance expenses.
Owners should monitor:
Average daily rate
Occupancy
Revenue per available night
Average length of stay
Cost per booking
Platform commissions
Cleaning and linen costs
Levy treatment
Monthly net owner return
The objective is not to fill every available night at any price. It is to achieve the strongest sustainable net result for the property.
Common mistakes Melbourne owners should avoid
Assuming direct bookings are exempt
Direct bookings can still attract the levy. The main difference is that the owner, tenant or relevant booking operator may be responsible for registration and payment.
Moving charges into the cleaning fee
Cleaning fees are normally included in the total booking fee. Renaming or restructuring a compulsory accommodation charge does not necessarily reduce the levy.
Increasing all rates by the same percentage
A blanket rate increase may work during major events but cause weaker occupancy during winter weekdays and other lower-demand periods.
Ignoring the guest’s final checkout price
Guests compare total prices. Owners should review how their property appears after the levy, cleaning fee and platform charges have been added.
Adding the levy twice
Owners should check whether the booking platform already collects the levy before adding any separate charge.
Chasing occupancy at unprofitable rates
Discounting can help secure bookings, but a booking that does not adequately cover the property’s operating costs may not improve the owner’s return.
Does the levy mean short stays are no longer worthwhile?
The answer depends on the individual property.
A well-located and professionally presented Melbourne apartment may still benefit from:
Event-driven demand
Higher peak-period nightly rates
Flexible lengths of stay
Corporate and relocation bookings
Owner access to the property
Broader exposure across multiple booking channels
However, short stays will not automatically outperform a traditional lease for every apartment.
Factors such as the building, location, views, bedroom configuration, parking, furnishings, owners corporation rules and operating costs all influence the result.
The appropriate comparison should be between the expected net short-stay return and the expected net long-term rental return, not simply short-stay gross revenue against advertised weekly rent.
Frequently asked questions
-
The levy commenced on 1 January 2025.
-
It is 7.5% of the total booking fee for an eligible short stay.
-
Yes. Cleaning fees charged as part of the stay are generally included in the total booking fee.
-
It generally applies to eligible Melbourne stays of less than 28 consecutive days. The levy is not limited to Airbnb and may also apply to bookings received through other channels.
-
Airbnb states that it automatically collects the levy from guests for applicable Victorian bookings and remits it without reducing the host payout. Owners should separately check the arrangements used by every platform on which their property is listed.
-
Yes. When a booking is accepted directly without a booking platform, the owner or tenant may be responsible for registering, lodging and paying the levy.
-
A continuous stay of 28 days or longer is not considered a short stay for levy purposes. Other laws, insurance requirements and accommodation arrangements may still apply.
-
A short stay in a property that is genuinely the principal place of residence of the owner or renter is generally excluded. Separate residences on the same land may still be treated differently.
-
Generally, no. Compulsory fees associated with the accommodation can form part of the total booking fee, regardless of how they are described.
Professional short-stay management in Melbourne
Victoria’s short-stay levy has made professional pricing and financial oversight increasingly important for Melbourne apartment owners. Advante Homes manages the complete short-stay process, including property marketing, dynamic pricing, multi-channel distribution, guest communication, housekeeping and ongoing performance monitoring.
Rather than relying on fixed nightly rates, each property can be managed according to its location, features, seasonality and current Melbourne demand.
Own an apartment in Melbourne CBD, Southbank, Docklands or the surrounding inner city?
Contact Advante Homes for a personalised assessment of your property’s short-stay potential and a realistic comparison against long-term rental.
This article provides general information only and should not be considered legal, taxation, accounting or financial advice. Owners should review the latest State Revenue Office guidance and obtain professional advice for their individual circumstances.