The Tasmanian Hospitality Association is calling for a pause on short-term accommodation permit approvals, saying the hotel industry is struggling with the continuing impact of border closures.
THA deputy chief executive Brad Upton said the industry had seen a devastating reduction in occupancy rate.
"In the last few months we've seen between 46 and 50 per cent occupancy, down from the 80 and 90 mark in the year prior," Mr Upton said.
"With borders reopening, we're asking for a pause on the short term accommodation approval process, so the market isn't saturated, so commercial properties that have struggled the last nine months have the opportunity to trade and have guests in.
"We don't want to shut down the Airbnb industry, we believe in a balanced environment for all, we just don't want new ones as the industry starts to recover."
Mr Upton said he had spoken to many operators across the state who had struggled with the changes in border restrictions due to hotspots.
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"I spoke with one Launceston hotel who refunded $4500 one morning alone in forward bookings when the borders shut to the Greater Sydney area," he said.
"That's the hard part - businesses are taking forward bookings, things look rosy but it's really more of a challenge.
"Let's work on what we have now and not saturate the industry."
Balmoral on York owner Trevor Donaldson said he believed visitors had lost confidence in travelling interstate.
"We lost four rooms overnight when the Brisbane restrictions were announced, it's crippling," Mr Donaldson said.
"The industry as a whole is in a coma and we just can't get started again because we do rely so heavily on interstate travellers - people are worried their stay will turn into a longer one being forced into isolation, or will be cut short.
We're all hurting.Trevor Donaldson
Airbnb head of public policy Derek Nolan said the businesses Tasmania hosts remained focused on attracting tourists to the region to drive economic recovery.
"There's never been a more critical time to stay focused on the need to grow tourism for the benefit of all Tasmanians," he said.
"It's especially important to avoid having these crucial recovery efforts derailed."
A government spokesperson said they remained committed to ensuring the home sharing economy continues to play a positive role in the visitor economy.
"At the same time, we also realise that our hospitality industry, particularly the accommodation sector, was one of the hardest hit by the COVID-19 pandemic and that's why we provided support and assistance to operators through a range of support programs," they said.
"Local councils currently have, and always had, the discretion to restrict the conversion of properties to short-stay accommodation, should they wish to."
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