By Carl Shepherd, Co-founder/Chief Strategy & Development Officer, HomeAway, Inc.

The news out of New York in September that the City was making all short-term leases illegal was extensively covered by both the travel industry and national press. The new law prohibits vacation rentals of less than 30 days in some New York City buildings, depending on certain guidelines. Those guidelines, however, happen to cover most of the residential buildings in the five boroughs, so even though it is still technically legal to rent short-term for some owners, the ban imposed by the state legislature is quite damaging to New York City property owners.

This news was accompanied by follow-up stories of increased or renewed regulations in Paris, Chicago and San Francisco. This sudden burst of activity made us think - are vacation rental regulations on the rise?

As you might suspect, HomeAway receives notices from owners around the world whenever news surfaces locally that some form of regulation is being considered or has recently been enacted by some jurisdiction. Looking back through our files, we can say that we have seen more reports of regulation activity in 2010 than we did in 2009 and 2008. In fact, since we formed HomeAway in 2005, we have seen an increase in notifications about restrictions each year.

It is fair to say that the industry can expect to see increased restriction activity in the future. But why?

The primary reason is because owners—like you—have been successful in creating an industry that provides a great consumer value and unmatched experiences. That success attracted more homeowners, and the Internet allowed the marketplace to be organized and searchable by millions of people. At HomeAway, we like to tell people that the vacation rental industry is the largest industry no one has ever heard of: yes, people knew that they could rent a house on the beach, but now they know they can rent an apartment in Lisbon, a chateau in Provence, a cabin in Maine, or a home near Disney World large enough for their entire family.

In short, there are more regulations being proposed for vacation rentals because municipalities are looking for tax revenues, hotels are looking to slow the growth of competitors, and neighborhoods are saying “not in my backyard.” It’s a predictable phenomenon that our industry would attract regulations.

At HomeAway, we don’t like to lump these together as “bans”—although we, too, are sometimes too quick to use the word. While some of these regulations are outright “bans” on vacation rentals (as in New York), most are simply attempts by cities to ensure the safety of travelers, income from tourists, and compliance with local ordinances on noise, nuisance, and nefarious activities.

Taken at their word, the ban in New York City is rooted in seeking to provide a safe environment for tourists who were staying in unregulated hotels, wherein entire single room occupancy hotels had been converted to nightly rentals but were somehow exempt from basic health and safety requirements. And we’re all in agreement that no one should stay in an unsafe environment.

In San Francisco, the regulations were put on the books over 10 years ago and never enforced. The vacation rental industry has flourished in that city, as people paid their property taxes and transient occupancy taxes and generally behaved as good neighbors. But after New York’s news, San Francisco said, “Hey, we need these apartments for residents, and look, we even have a law on the books requiring rentals of more than 30 days.” The same thing happened in Chicago and Paris.

This is not happening only in big cities: calls for regulation can occur anywhere, and owners of vacation rentals will benefit from paying close attention to their own cities and towns so as to be a full participant in the discussion, should the need arise. Places as diverse as Venice Beach, Florida and Sonoma, California have toyed with the idea of placing intense regulations on owners who rent short term. The ban in Venice was actually overturned after an owner/manager sued, and Sonoma opted to regulate instead of ban outright.

Regulations, whether proposed or enacted, represent both an opportunity and a threat for our industry.

The threat is easier to see and potentially more significant. Restrictions of your ability to rent your home short term could dramatically affect your income, the value of your property, and consumers’ choice for vacation rentals. But if a town opts for an outright ban instead of regulations, then the risks escalate.

Take the most recent solution in Venice Beach, for example. There, owners who were renting before can continue to rent for fifteen years; new owners cannot. So, some homes are “legal,” but some are not. How is a consumer to know? In our view, making something illegal and driving the practice underground diminishes the experience for both owners and travelers and needlessly increases the risk of consumer fraud and other unsafe actions. Does anyone seriously believe that no one in New York City will attempt to rent their apartment after May 2011? But if a traveler does so, he is much more likely to be the victim of fraud or find unsafe conditions, than if he was renting in a city that embraced and had appropriate regulations on vacation rental activity.

In our view, any action that makes a consumer feel less confident about vacation rentals as a safe, valuable choice for travel diminishes the overall reputation of the industry and is harmful to owners.

But opportunities can also arise out of adversity. News about regulations gives us the opportunity to tout what the vacation rental industry has become. In many locations around the world, vacation rentals are the majority of the lodging inventory; the importance of that inventory is not lost on the city fathers of Destin, Florida or Breckenridge, Colorado, for example. But vacation rental travelers are just as valuable to New York City, San Francisco, and Paris, and it’s up to our industry to make this clear to those city fathers. These bans give the industry the opportunity to help municipalities understand the positive contributions property owners and managers are making to their cities in terms of retail sales, tourism dollars, and, yes, tax dollars.

What can the industry do to minimize the threat and optimize the opportunity?

• The first thing is to remember that you—vacation rental owners—are “the industry representative” in your town. Be diligent in following local politics, as most restrictions start because a citizen in the community has an issue. It could be the local owner of the only hotel in town, or a neighbor of a home where the traveler held a noisy party. (Hey, it happens: dealing with it swiftly when it happens to you is the best defense available.) 
  
  When you hear or read about proposed or anticipated restrictions in your municipality, remember that you are the industry. Show up at public meetings. Tell authorities what vacation rental home ownership has done for your family. Share what your contribution has been to your community in terms of tax dollars collected and paid or even just the number of weeks your home was rented to people buying movie tickets, shopping in local stores, visiting local attractions, eating in local restaurants, and then returning home to tell others about the wonderful time they had visiting your community.
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• Let other owners in your area know what is being discussed. If you’re not sure how, we can help. Because regulations are much more difficult to overturn than they are to influence, it is critical that people affected by potential restrictions meet and organize to be heard. If you know of an upcoming meeting that would impact short-term rentals in your area and would like us to notify other owners, please The specified article was not found..*
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• Finally, be a good citizen from the start. Enforce your rules on occupancy, and where possible, create attractive off-street parking. Collect and remit transient taxes. Attend neighborhood meetings. In short, remember the Golden Rule: do unto others. It is much more difficult for a municipality to drive you out of business if you are following all the rules yourself.

HomeAway continues to study this issue and participate where we can add value. For example, we recently funded the effort of the Florida Vacation Rental Managers Association to successfully overturn an effort by the hotel lobby to require Florida vacation rental owners to install sprinkler systems. Other opportunities will arise for HomeAway to help, and we plan to keep our eyes open for those situations where we can be part of a positive solution.

Regulations on our industry are inevitable. We are all best served by working with our city fathers to craft regulations that support a safe environment for our travelers, a level playing field for our owners and the continued development of an industry about which we are all passionate.

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About the Author: As the co-founder of HomeAway, Inc., Carl oversees the company’s worldwide corporate development efforts, including mergers, acquisitions and key partnerships. Carl has a personal interest in learning about the various ways that local governments may regulate short-term rentals and protecting the rights of owners to rent their vacation homes to the public. The long-term effect of proposed bans and restrictions is a serious issue, not only to our industry, but to the tax revenues generated for local governments by the hundreds of thousands of vacation rental units worldwide. Carl has made it a priority to understand proposed legislation affecting the livelihood of our customers and is a vocal proponent of owner’s rights.