To Regulate or Not? | Think Realty | A Real Estate of Mind
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To Regulate or Not?

Regulate or Not

Regulations in the vacation rental industry raise the bar on short-term stays.

Now that vacation rentals are mainstream, thanks mostly to Airbnb and Vrbo, the question is coming up on regulations. The popularity of using a vacation rental, also known as a short-term rental, has brought about much dismay from the hotel industry. The hotel industry is heavily regulated with ADA (Americans with Disability Act), safety, fire, occupancy, and a slew of other regulations, which translates to additional costs for hotels to ensure they are compliant with state and local laws and regulations. In most states and municipalities, that is not the case for vacation rentals.

When I first got into the vacation rental industry, I was very antiregulation. In spring 2019, I spoke at a Vacation Rental Management Association forum, and my public comment in front of about 200 people was that I am not in favor of regulations. My company goes above and beyond in providing safety items that are not required or regulated by the state. We strive to be ahead of the curve and help set the standards. The issue, however, is that not all hosts feel this way or think about the safety of their guests.

I couldn’t understand in the beginning why the hotel industry so loathed us vacation rental folks. There is plenty to go around for everyone and you can always set yourself apart from the competition. However, the regulation issue comes into play when other hosts do not value the position they are in and ensure safety features are included in the property. There are properties that don’t even have smoke detectors, which is totally unacceptable. A few national headline stories reported deaths resulting from the property simply not having a carbon monoxide detector, a very inexpensive device that can save lives.

Occupancy is another regulation issue with vacation rentals and hotels because it is nearly impossible to control how many guests show up to a vacation rental property or hotel room. Hotels are regulated as to how many guests are supposed to stay in a room. Some municipalities have those regulations for vacation rentals as well, but far more do not. The major issue with vacation rentals is that some hosts will advertise 20 guests for a three-bedroom property. The industry term “heads in beds,” where a host knowingly welcomes an obscene number of guests into a property, is often not safe. In these cases, the host will charge a per headcount fee. Perhaps they will charge an extra $10 or $20 per head. Multiply that by 15 or 20 heads, and that’s a lot of money for a nightly stay for a three-bedroom property; yet, still less expensive for the guest than booking additional properties.

The profits involved with vacation rentals has lured in a lot of investors that think it is easy to run a vacation rental. You buy a property, throw in some furniture, list it on an online travel agency and boom, the money rolls. In reality, it takes vision, dedication, and passion to provide a true quality experience for the guest. 

Now that I have seen everything that’s going on in the industry, I have definitely changed my mind about regulations. In some cases, the safety of the guest is knowingly put in jeopardy. On the other hand, in the beginning we didn’t put safety ladders in our second- and third-story levels of the properties we manage. I just never thought of it, until I went to a conference and attended a session on safety for the vacation rental industry. That session was invaluable.

With guests at risk, I am fully in favor of regulations. Accidents happen and while you can’t plan for everything, at least having basic regulations in place will help everyone. Implementing regulations will also help the industry to become more professional. I applaud hosts who truly love what they’re doing and provide quality accommodations for guests. That raises the bar for everyone.

Regulations will separate those who are serious about hosting and managing vacation rentals and those who just throw properties together. The onset of regulations and professionalizing the industry will help meet the rising expectations of our guests as well. Regulations benefit guests, the industry, and in turn my own business!