The Shared Economy Offers Limited Solutions for Corporate Housing

By: Gavan James, CEO, Nomad Temporary Housing

Given that private home rental arrangements are so popular for vacation and leisure stays, some employers may be considering tapping into these shared economy platforms as an option for their traveling and relocating employees.

After all, the rates for modest-sized homes or apartments are almost always less than for typical business hotels. They’re often priced comparably to extended stay corporate properties. And employees may prefer the private rental option because of location and amenities as well as the opportunity to choose a living situation that matches their home lifestyle. Who can blame them?

Employers Beware

However, relocation management companies (RMCs) and corporate decision-makers should be aware of the risks of utilizing and facilitating payments for these private rentals for employees on business travel, long-term business assignments and relocation status.

Regardless of who pursues and obtains the private rental arrangement (even in a Lump Sum reimbursement situation), employers bear a legal and ethical responsibility for the health and safety of their employees – a covenant known as “Duty of Care.”

Most of these private rental arrangements in the U.S. are, in fact, illegal for stays under 30 nights. In locations subject to home owner associations, co-op/condo boards and property management companies, these rentals are almost always prohibited, regardless of the length of stay. It’s not unheard of for guests, after paying a host, to be denied entry by building doormen and security staff when the rental arrangement is discovered.

Fire Safety

With all due apologies, I’ll be especially blunt on this point. If an employer directly or indirectly, knowingly or unknowingly, pays for an illegal short-term (generally less than 30 days) private rental for an employee who dies or is injured in a fire or other accident at that location, the employer will almost surely be named in related lawsuits.

After all, hotels operate under special zoning and city permits. They have extraordinary fire and life safety features that residential buildings don’t offer, such as special signage, wider stairwells and egress systems designed to guide guests out of a building when they’re unfamiliar with their surroundings.

Other Duty of Care Concerns

While the vast majority of these private, short-term stays may lead to safe, enjoyable experiences, remember that an amateur landlord might not adhere to expected hospitality standards and practices. How do these owners manage key control, quality control, pest control and noise and disruption from other guests?

Taxation

Most rentals under 30 nights, and in some cases under 90 nights, are subject to lodging and other taxation by their municipality. But most short-term private listings fail to collect and remit these taxes, creating another area of liability for employers and RMCs. And on the other hand, no one should assume that just because taxes are collected and remitted that the private rental arrangement is legal.

Targeting Business Travelers and Transferees

Make no mistake, these online platforms want to move into the corporate travel arena as they:

• Designate “corporate use friendly” listings with free Wi-Fi and minimum standards.
• Provide payment options for employees via central corporate billing.
• Offer reporting on organization-wide spending, stay duration and other data.

And employers may be tempted to go along, taking advantage of lower costs and eager to accommodate their traveling employees who want more freedom when selecting their accommodations.

The Temporary Housing Option  

In contrast, temporary apartments are a $2 billion industry in the U.S., offering 90,000 apartments in prime locations. More than 95% are operated by professional companies and property managers. Most belong to the Corporate Housing Providers Association (CHPA) and comply with the following standards and practices:

• Adherence to all local, state and federal housing laws
• Payment of taxes where applicable
• Maintenance of high levels of liability insurance
• 24/7 service response to guests
• Prompt response to maintenance and service requests
• Availability of professional cleaning services during the stay

Final Thought

Private rental arrangements may be a wonderful experience for a 10-day vacation rental in Paris. But think twice and then maybe once more if you’re considering accepting this model as corporate housing option.

About Nomad Temp Housing

Employing a unique model of technology and personalized customer care that utilizes a bidding platform of more than 950 vetted partners worldwide, Nomad Temporary Housing offers a single point of contact for clients. Nomad capitalizes on its vast array of partners to offer thousands of apartments and suite hotel rooms to clients in the locations they need, with the selection of choice they demand. Our top clients report Nomad’s service delivery is a step above any other global serviced accommodation brand.