Dubbo businesses and residents could suffer financially if proposed changes to short-term rental accommodation rules go ahead, Airbnb hosts fear.
New safety standards, which would ban three or more people staying in one bedroom at Airbnb properties, are currently being considered by the NSW government.
Other proposed standards include one which would force Airbnb hosts to install a lighting system in hallways that would be activated by a smoke alarm system.
Lucy Cook owns a small property on the outskirts of Dubbo and uses Airbnb to rent her guest suite out to tourists.
She said most bookings were made by families of five or more who could be adversely affected if the new new bedroom limits are introduced.
"There's ample space [at the property, which is like a studio] for four guests so it's a bit puzzling why they're wanting to bring in that regulation," Mrs Cook said.
If costly new regulations were introduced, Mrs Cook said it could cause Airbnb hosts to stop renting their properties out. This would put extra pressure on local motels in busy periods, potentially leave visitors with nowhere to stay and result in less money being spent at drought-affected businesses.
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Derek Noland, Airbnb's head of public policy for Australia and New Zealand, claimed about 31,000 Airbnb guests were estimated to have spent $16.4 million in Dubbo during a recent 12-month period.
"That's $16.4 million which helped small businesses grow local jobs...being put at risk for the sake of arbitrary red tape," Mr Noland said.
"Airbnb hosts in Dubbo have made it clear that they are extremely concerned about how the proposed red tape will hurt jobs and tourism in the region, along with their ability to cope with rising costs of living," he said.
"To that end, we're calling on the NSW government and Dugald Saunders to rule out these proposed changes."
State Member for Dubbo Dugald Saunders said community members raised concerns about short-term holiday letting.
"Short-term letting has increased dramatically over recent years, and while the NSW government supports the sector, we do want to ensure that short-term lettings are safe for guests, and respectful of their neighbours and communities," he said.
"The Short-Term Rental Accommodation discussion paper was drafted to encourage the community to provide feedback on the proposed standards and rules for holiday letting. It is my understanding that more than 2000 submissions have been received and the NSW government is currently reviewing the submissions which will inform the final set of rules and standards."