Sunday, April 21, 2013

New Twists on the idea of Short Term Rentals

The concept of lending out a room or a cottage that you don't need at the time, has been around for centuries.  Even in the middle ages, a weary traveler would arrive in a small hamlet where there was no inn, and find that locals would share a room or a spare cottage for a modest fee or trade.  A century ago trips to the coast from inland cities were common pursuits, and people were able to rent cottages and homes during their stay.

The concept has grown with the emergence of the internet and recent economic changes.  Venture capitalists, entrepreneurs, and existing businesses have noticed.  New businesses have formed, and existing businesses have made changes to accommodate the activity. Larger new companies like HomeAway.Com and AirBnB have been very successful.  Some of these businesses are now on the NY Stock Exchange.

Billions of dollars changes hands every year as a result of short term rental activity - guests pay for their lodging and patronize local restaurants and businesses - owners pay local businesses for supplies, management, cleaning and maintenance services, and taxes are collected by local communities.  Many more billions are tied up in rental home real estate, and vacation rental activity has become a major driver for the real estate business in many small communities.

Now, with the emergence of internet-driven social networks, the sharing economy and peer marketing, the short term rental sector is evolving again.  A new company called SpinLister now specializes in peer to peer bike rental in New York City.  bnbBoat.Com will soon offer listing services for owners of Yachts and Boats who are willing to rent them out by the hour, the day or the week.

The Economist reports that everything from cars to surfboards to saxophones is being shared using this model.

The peer to peer economy is estimated to be directly involved in $26 billion of transactions each year, and if we count the value of businesses that serve this sector of the economy, and the value of assets that are shared through this sector of the economy, you start to realize that this part of our economy can not be ignored.  Many destinations communities find that short term rentals are one of the top 3 drivers of their local economy.

Collaborative consumption is another name for it, and its a good thing.  Owners make money from under-used assets.  Renters get to use assets that they otherwise would not have access to.  The personalized nature of the service makes it fun for everyone.  And some people point out that fewer resources will be tied up in the production of more homes and cars and other assets if people can share what we already have.

Its an old idea, with some new twists!

Doug Coates

1 comment:

Thoughtful comments are welcome, whether you are in favor of vacation rentals or concerned about the impacts of VRs on your community. Comments that contain advertising, including ads for properties, will be deleted.