How Local Governments View the Sharing Economy
I signed up for my first email address barely twenty-five years ago. It’s wild to imagine. The internet was young, and the ideas about what it would produce were endless. But we still did most things the old-fashioned way: we still did our own shopping, household work, and travel planning.
In those days, when we had to buy groceries we went to the store, and if we forgot something we were forced to go back. We asked friends and family for a ride to the airport and called a taxi if we couldn’t find anyone—and we hoped it didn’t come to that. And we rented homes for our vacation through a property manager (whose name we got from a friend), who said, “You’ll like this house; you can walk to everything.”
Today, the sharing economy has connected people and services around the world. People share experiences and leave ratings for the next potential user. They sell products and services, often the fruit of their own time and effort, and are able to make a little extra income or even a full salary.
We can have groceries delivered quickly and efficiently by a woman who seems to really enjoy what she’s doing. We can press a button and find a hassle-free ride to the airport from a guy who loves his Toyota Highlander and is happy to tell you about some of the new restaurants in town. And we get to cruise multiple vacation rental websites to read reviews of past users, view photos, and read lengthy commentary about all the amenities and nearby opportunities of a home to rent through vacation rental managers who take pride in providing a great experience.
Some insist that this sharing economy is better described as the new economy, app-based economy, mobile economy, or peer-to-peer economy. And a few companies are typically identified as industry leaders. Their names become ubiquitous with the activity, and their brand becomes a verb. And so the sharing economy has turned companies like Uber and Airbnb into the next Scotch Tape, ChapStick, or Kleenex, producing phrases like “I’ll just Uber to my next appointment.”
But as we Uber-ize everything, local governments are grappling with the question of how to regulate this phenomenon. And arguably, these new regulations are touching people and activities that have been occurring for decades without concern—such as vacation rentals or hiring a handyman.
Mayors and city managers are struggling with finding viable regulations or best practice models in areas like mobility innovation (Uber, drones, autonomous vehicles), short-term rentals (Airbnb), and the gig economy (TaskRabbit, Thumbtack). And these city leaders are right to be struggling; there aren’t a lot of best practice models. In fact, in 41,000 cities in the United States, both industry and government scratch their heads to point to a few small examples of what works.
Technology changes are sweeping the world, and government leaders are perplexed about how to provide levels of safety, security, and reasonable understanding for their communities. And just when they think they’ve figured out the issue, the technology changes and activity is further transformed—often making newly adopted regulations irrelevant.
What does a mayor or city manager think about how to regulate the new, Uber-ized world?
Innovative technology has companies using drones that will make deliveries to your home. How does a city address airspace and privacy concerns?
Technology also provides an immediate solution for that clogged kitchen sink: one click on an app or a webpage and a handyman will come to your house to fix it. Is he licensed? Is he paying an occupational tax? How does a mayor wrap her mind around that?
Addressing Short-Term Rentals
And what about those short-term rentals? Local policy makers often hear, “I’m happy to use a short-term rental when I go somewhere else, but I don’t want one causing loud parties next door.”
The discussion of how to regulate short-term rentals has accidentally scooped up the decades-old profession of the vacation rental manager. In some cities, vacation rental managers are the last people to know they’re now subject to significant restrictions. With little to point to as a best practice model, local policy makers are trying to grapple with the seemingly new phenomenon of the sharing economy. A flurry of questions runs through policy makers’ minds: “How do I address zoning, noise, parking, taxes, and complaints?” New practices and technologies will generate even more such questions.
Policy makers are forced to try to answer these questions while a group of angry citizens is chanting outside city hall calling for rules and enforcement. At the same time, industry leaders are moving so quickly to provide a better product that the changes they’re creating don’t get transmitted effectively to the communities where their impact is felt.
The speed of industry growth and the rapid and continuous change in technology call for rules and enforcement from the community, but the lack of best practice models leads to serious challenges for local policy makers. Their world is a confusing buzz of new information around the sharing economy.
There’s no easy answer—and there never is when it comes to creating good, effective public policy. But there is a solution. There is a path that will lead local policy makers to find answers to their questions, provide data to their constituents and their staff, and build a regulatory framework. It starts with community and stakeholder engagement: understanding the needs and concerns of the community, the demands of the users, and the constantly evolving industry.
Cities can choose to hire a professional or a team with experience in these areas—people who have been on the policy-making side, who understand the importance and the challenges of community and stakeholder engagement, and who have a long history with the industry.
To help in this process, the local stakeholders and users should be prepared to share their experiences and the experiences of those who are affected by the industry. For short-term rentals, we recommend that traditional vacation rental managers, property owners, and users prepare to submit their stories to local government. Stakeholders themselves will benefit when they inform local government about their activities to help produce the best public policy.
Governments don’t have to go it alone. With the help of engaged industry professionals, local government officials can better understand the subject they are discussing—essentially using a trained guide to help them better understand how the industry works, how to communicate to the stakeholders and the industry, and how to create regulations that will achieve compliance.
Recognizing that local governments are struggling with how to address the new sharing economy is part of the battle. Helping them understand the industry in an effort to create a best practice model is the other part of the battle.
A lot has changed since we sent our first emails. And now, as we Uber-ize everything, we can also help local government address these changes so that everyone can win.
hope that it would lead to economic growth. The updated provisions in the TCJA increase these limits even more. The Section 179 limit, previously $510,000, has now been increased to $1 million on purchases of eligible property, up to $2.5 million in 2018. (The old limit was $2 million.) In addition, Section 179 can now be applied to tangible personal property used in connection with furnishing lodgings, aka rental properties, starting in 2018. Changes to bonus depreciation allow taxpayers to immediately expense 100 percent of the purchase price on eligible property and equipment, compared with only 50 percent in 2017. Now bonus depreciation also includes qualified “used” property for the first time.
I often come across situations in which sales representatives don’t feel like they personally can afford such a stay, so they are not comfortable quoting higher prices. I find that lack of value building and overall confidence in the homes they are selling come out in the sales representatives’ tones when quoting pricing. The reservation sales agent often will also be quick to discount or will not ask for the reservation and quote only the lowest pricing available. In these situations, I recommend coaching the sales representative to give three pricing options. Start with a home that is an extra treat for the caller—maybe the home has a game room, mountain view, or hot tub—followed by quoting the price, being careful not to pause, and asking the caller how the home feels for his or her family. Callers will then share if the price is more than they are looking for or not. The next step is to go to the second pricing level based on the caller’s response, and then follow the same steps until getting to an agreed-upon fit for the caller.
every department!
demonstrating their dedication to the security of their vacation rental companies,” says Amber Mayer, 
another brand must lose. There are 
In my training programs, I always advocate for a phone call in these situations. Participants resist at first, and the most common response is, “If they wanted to talk on the phone, they would have called us! These are ‘chat’ people, Doug!” Managers seem to be biased towards using pre-written templates to respond quickly by simply answering the question rather than personalizing the messaging to push for a sale. Yet, once they give my ideas a try, they find that some guests are very open to talking. It’s just that, for whatever reason, they started out on chat. Hey, it’s worth a try, right? Isn’t it better to engage an undecided guest via phone so we can share our enthusiasm and show empathy for their travel plans or circumstances? Can’t we read the guest better when we can hear their reactions, vocalizations, and inflections?
Alex and his partner Tammi are frequent speakers and panel moderators at VR conferences in North America and Europe; their sessions have been attended by thousands of property managers and owners.
You want more bookings and revenue. Property photos have become your ticket to get there, and HGTV has changed everything. For those reasons, décor matters. And not just whatever décor your owners fancy. A certain “look” is booking better than others. Guests have come to expect that their vacation home will be as nice—or nicer—than their homes. They come from larger cities where every restaurant worth visiting is hip, cool, and very 2018, not 1998. And they choose where they will stay from thousands of vacation rentals based entirely on the photos. If your 1999 pastel fish house is listed next to the cool West Elm one, you know who is going to get the booking. Or, you’ll have to lower rates significantly to get the booking but will still have the same costs to clean, host guests, and maintain the home.
Here’s an idea: At both of our locations, Winter Park and Steamboat, we purchased $2K worth of art (the wrapped canvas kind, no frames) and decorated our Winter Park and Steamboat offices with it. All for sale to owners. Average price is $125. We have already sold a lot of it and had to make another bulk purchase.
Although technology has always been prevalent in the vacation rental industry and companies have been able to vastly improve their businesses as a result, the options for operations lagged behind the adoption of technology, which focuses on marketing, distribution, and accounting solutions. The evolution of vacation rentals and increased guest expectations has required managers to come together to address the ever-changing needs of the industry and has resulted in the creation of purpose-built software and technology that improves efficiency. New policies and practices required adjusting expectations for both guests and owners while helping owners understand the need to update their rental properties to meet the demand of instant-satisfaction guests.
“Never has there been a time in our industry when your content needs to count more.” – Wes Melton, 
