There are thousands of battles occurring in counties all across the United States between those in favor and those opposed to short-term vacation rentals. At the center of the intense debate between both sides are short-term vacation rental regulations and enforcement of those regulations.
Those who support the vacation rental industry and advocate for fewer regulations and enforcement mechanisms primarily consist of vacation rental guests, property management, and rental companies. On the opposite side of the argument are those who are opposing the vacation rental industry and are advocating for stronger regulations and enforcement mechanisms. Those opposing the vacation rental industry typically include the hotel industry, vacation rental neighbors, and local government officials.
THOSE SUPPORTING THE VACATION RENTAL INDUSTRY
Ironically the vacation rental industry depends on guests for revenue, but they are the least passionate about the ongoing battle surrounding the vacation rental industry. Realistically it’s because guests have the least to lose in the situation. If vacation rentals are outlawed across the country then the guests that used to use short term vacation rentals for their travel accommodations will simply find another place to stay, which most likely means a hotel.
Comprising vacation rental property management are property managers and property owners. Property management is in favor of fewer regulations and enforcement mechanisms because every change to their process and additional staff person required to ensure compliance with regulations costs the company money. Lifestyle Properties’ general manager Katy Armes in Newberg, OR explains “There’s not enough beds in the county to accommodate the tourism influx. Short of new hotel construction, [increasing local accommodations] will likely come about through more residences being converted to vacation rentals.”¹ Similarly in Sonoma, CA vacation rentals make up about one fourth of all travel accommodations.² Other reasons property management state in favor of vacation rentals include that the industry brings additional guests to the area, it creates additional revenue for residents, and it provides competition in a non-competitive industry.
The strongest advocates for short term vacation rentals and companies providing the strongest opposition to new regulations are the vacation rental companies, whose largest players include Airbnb, VRBO, HomeAway, and Booking.com. These companies profit mightily from short term vacation rentals, which provides quite the motivation to make it as easy and profitable as possible for homeowners to become vacation rental hosts. Airbnb, the most well-known company in the industry, in the face of heavy regulations in Miami says that it wants to work with the city to develop “clear, fair rules.”³ In general the largest companies are fighting heavier regulations to ensure survival of the industry and sharing economy they depend on.
THOSE OPPOSING THE VACATION RENTAL INDUSTRY
The hotel industry serves as the biggest barrier to the continued success of the vacation rental industry. As the vacation rental industry has grown, hotels have seen their competitors increase and occupancy rates decrease, though the growth in the vacation rental market is not proportional to the small decrease in hotel demand.³ Given the decrease in demand for hotel accommodations, hotels have to reduce their rates to ensure occupancy, which reduces their profitability.
Some neighbors of vacation rental homes are understandably upset with vacation rentals because of their experiences. Henan Cardeno, a passionate opponent of vacation rental homes contends that short term vacation rentals are “changing the character and the nature of our neighborhoods.”³ Alicia Wuscher, a Palm Island resident, says the short term rental next to her home is notorious for throwing parties that shake her home.4 Susan Strong told the Desert Sun that she had to endure five years of loud music, yelling, and laughing because of a short term vacation next door that was not judicious in who could rent it out.4 While it appears as though some neighbors have a negative view of vacation rentals, according to a 2017 David Binder Research poll of 500 Miami residents, more than half said they had a favorable opinion of Airbnb and just 1 in 10 respondents said they had an unfavorable opinion.³ So up to this point reactions are still mixed among the general public.
Local government officials are usually opposed to vacation rentals, which make their job of regulation more difficult than ever before. As a result of their frustration, those in favor of the vacation rental industry would contend they have received heavy regulations and ridiculous fines.
REGULATIONS AND ENFORCEMENT
Since the regulations are largely passed and enforced on the local level, there is a great variety in what the regulations look like. In San Francisco, the city where Airbnb was founded, short-term vacation rental owners are limited to renting in certain areas and must register their homes for $50.³ In Palm Springs the local government is proposing a limit on the number of times a home can be rented each year, which discourages short-term weekend rentals. Palm Springs officials also are considering raising permit fees to $900 per year and limiting vacation rental owners to just a single vacation rental.4 On the corporate side of the industry, Airbnb recently agreed for the first time to enforce legal limits on the number of nights a vacation rental can be rented each year in London and Amsterdam.5 This compromise with regulators could be a foreshadowing of what is yet to come in the United States.
To ensure that regulations are followed, Miami penalizes illegal vacation rentals by charging both the owner and the rental company $20,000. These fines are much higher than most other counties across the United States, but Miami regulators suggest that they could even raise the fines further. To this point they’ve already passed out $4 million in fines.³ In Palm Springs, with the new proposal in place operating a home without a permit and failing to report the rental agreement could result in a $7,500 fine and homeowners would be limited to one vacation rental.4 Other enforcement mechanisms besides fines are still being explored, as fines do not appear to be effectively deterring many vacation rental owners from operating outside of the law.
Instead of proposing a resolution in this battle, given that each county and city are imposing their own regulations, it’s probably better to consider a couple of questions moving forward.
Are short term vacation rentals on their way out? Are all vacation rentals doomed to fail? If the vacation rental business continues to grow, will our hotel industry collapse? What will the future of tourism and travel accommodations look like? Is there a way the industry and its opponents can come to a compromise? Can the vacation rental and hotel industries coexist in the sharing economy?
What are your thoughts on this very contentious issue? We’d love to hear them and have a discussion!
³ http://www.miamiherald.com/news/business/biz-monday/article117332773.html – Miami stuff