Investments

Know the Difference: Corporate Housing and Airbnb

Airbnb can probably be considered the Uber of travel and lodging. Not only has it disrupted hotels and homestays, but it has forever changed the way we talk about travel and lodging.

It used to be that lodging definitions were simple. All lodging was professional and renting out your personal residence was limited to the fringe on websites like CouchSurfing and Craigslist. You had hotels that were nightly in urban and transit areas. You had vacation rentals that were nightly in rural areas. Anything over 30 days had to be a long-term rental scheme.

Airbnb conflated all those definitions by overlapping with all of them. Airbnb made it possible to rent out an extra room or a whole house, situated in urban and rural areas, and available for varying lengths of time.

Today, the Airbnb model is one (particularly controversial) model among many. Joining it are listing sites that connect travelers to corporate housing units —apartments, condos, and homes rented out to business travelers looking for extended stays.

To learn about the key differences between Airbnb and corporate housing, have a look at the following article.

Professional Ambiance

Airbnb is all about belonging where you travel. The idea of the business is that you can live like a local and enjoy an unique trip.

This means that they prefer to do away with having professional landlords on their platform. They have gone so far as to enforce a one host, one listing policy, removing hundreds of listings from their platform as a result.

Airbnb hosts that offer a full listing only rent that listing out for part of the year, living there the rest of the time, according to AirbnbCitizen. This means that Airbnb is about experiencing a local destination by staying in someone’s home - it’s puts less focus on a productive, professional space and more on immersion.

Corporate housing, on the other hand, puts a premium on providing spaces where busy travelers can get work done. These aren’t people’s home or sublets --they’re units rented out with the intention of providing travelers with a base of operations. This type of housing guarantees privacy and minimal distraction.

Differences in Service

With Airbnb, service is provided by a private individual. The benefit of this is that you will get a personal experience and live a local’s life and perspective. However, a private individual may not be trained or capable of providing a quality hospitality experience. This means that you will get a very personalized experience, but there may be hiccups or idiosyncrasies during booking or during your stay.

Corporate housing, on the other hand, is facilitated by an intermediary (usually a listing site, like 2nd Address). While the unit provider may be a private individual, the experience from booking to (goodness forbid) conflict resolution is managed and overseen by a business that values professionalism.

Liability

Airbnb is cruising in uncharted territories. This raises many insurance questions. If there is an issue in an Airbnb, who is liable for the issue? Insurance sometimes has exceptions from coverage for home sharing - so will insurance cover an issue? Airbnb provides some insurance product, but there are many questions about what that product actually protects. There have not been any high profile liability cases with Airbnb yet, so the risk is low, but personal injury attorneys are excited about trying such cases. The NY Times recently wrote an article on Airbnb and liability.

Corporate housing is an established business model with clear insurance coverage. Issues happen that raise liability, but companies in this space carry insurance and corporate and personal policies also cover this kind of stay.

Corporate housing is an established business model with clear insurance coverage. Issues happen that raise liability, but companies in this space carry insurance and corporate and personal policies also cover this kind of stay.

Pricing

Airbnb is priced nightly with a monthly discount. Corporate housing, on the other hand, is often priced monthly. Even with the monthly discount on Airbnb, it often turns out to be more expensive than services that primarily offer extended stays. For another perspective on pricing for corporate housing, you can read about how 2nd Address compares against hotels in terms of pricing.

Rental Laws

Since Airbnb is short term, the booking process is designed to be as similar to booking a hotel as possible. It often starts with the guest messaging the host, followed by the booking process happening online. For stays shorter than 30 days, hotel law applies to the booking --meaning the visitor will have to pay hospitality tax on your stay. If one were to stay longer in an Airbnb, rental laws will apply.

Since corporate housing is monthly, a different law applies. For any stay over 30 days, tenant-landlord law kicks in and real estate law applies. There are several implications. Landlords are not legally allowed to discriminate against tenants. If a landlord wants a tenant to leave, they must follow eviction law to remove a tenant. This means that background checks are important, since evictions are very difficult and costly. Lastly, a lease is required to cover all of the special liability and laws around 30+ day stays and protect both the provider and their tenant.

Conclusion

I hope this helps you plan the best use for your investment property. If you're a corporate travel manager, we've got a ton of resources for you here.

Or, if you’re a business traveler, we hope it helps you decide which kind of housing works best for your lodging needs.