WEBVTT 00:00:00.000 --> 00:00:02.279 Welcome back to the Deep Dive. I want you to 00:00:02.279 --> 00:00:05.099 close your eyes for a second. Okay. Imagine you're 00:00:05.099 --> 00:00:10.900 walking down a hallway. The carpet is, you know, 00:00:10.919 --> 00:00:13.759 that pattern beige, maybe a little bit damp from 00:00:13.759 --> 00:00:15.919 a recent shampoo. Oh, I know that smell. Right. 00:00:16.079 --> 00:00:18.780 The walls are a neutral cream color. You get 00:00:18.780 --> 00:00:21.980 to a door, you slide in a plastic key card, the 00:00:21.980 --> 00:00:24.379 little light flashes green, and you walk in. 00:00:24.539 --> 00:00:28.429 What do you see? I see a bed with those crisp 00:00:28.429 --> 00:00:30.609 white linens tucked in so tight you could bounce 00:00:30.609 --> 00:00:33.409 a quarter off them. Yes. I see a desk with a 00:00:33.409 --> 00:00:36.990 laminated menu for room service and a small bathroom 00:00:36.990 --> 00:00:39.509 with those tiny, tiny little bottles of shampoo 00:00:39.509 --> 00:00:42.270 that smell vaguely of cucumber. Exactly. You 00:00:42.270 --> 00:00:44.829 are in a hotel. And whether you're in Tokyo or 00:00:44.829 --> 00:00:47.829 Toledo or Toronto, that experience is almost... 00:00:48.200 --> 00:00:50.600 Well, it's aggressively standardized. You know 00:00:50.600 --> 00:00:52.340 exactly what you're getting. It's safe. It's 00:00:52.340 --> 00:00:54.700 predictable. And for a century, that was the 00:00:54.700 --> 00:00:56.600 gold standard of travel. Predictability was the 00:00:56.600 --> 00:00:58.619 product. I mean, you didn't want surprises when 00:00:58.619 --> 00:01:01.719 you were 3 ,000 miles from home. But then something, 00:01:02.020 --> 00:01:04.840 something shifted. We decided that predictable 00:01:04.840 --> 00:01:08.079 was, I don't know, maybe a little boring. A lot 00:01:08.079 --> 00:01:10.439 boring. And we started grabbing our passports, 00:01:10.480 --> 00:01:13.500 packing our bags, and collectively deciding that, 00:01:13.519 --> 00:01:15.659 you know what? We wanted to sleep in a stranger's 00:01:15.659 --> 00:01:18.469 house instead. It sounds so weird when you put 00:01:18.469 --> 00:01:20.930 it like that. It is weird. So today we're not 00:01:20.930 --> 00:01:23.030 just talking about booking a room. We are looking 00:01:23.030 --> 00:01:25.709 at a full blown travel revolution. It really 00:01:25.709 --> 00:01:28.090 is a revolution. And I know the moment we say 00:01:28.090 --> 00:01:31.180 the words vacation rental. Everyone listening 00:01:31.180 --> 00:01:35.239 probably pictures a specific colorful app icon 00:01:35.239 --> 00:01:37.900 on their phone. Sure. Or maybe they're remembering 00:01:37.900 --> 00:01:41.000 a weekend trip to a cabin last summer. But what 00:01:41.000 --> 00:01:43.219 we found in the research for this deep dive is 00:01:43.219 --> 00:01:46.219 that the app is just the shiny surface. Just 00:01:46.219 --> 00:01:48.579 the tip of the iceberg. Exactly. Underneath there's 00:01:48.579 --> 00:01:51.420 this massive machinery that is reshaping real 00:01:51.420 --> 00:01:54.280 estate, hospitality, and even, you know, the 00:01:54.280 --> 00:01:56.599 social fabric of our neighborhoods. We're talking 00:01:56.599 --> 00:01:59.140 about a fundamental shift away from that industrial 00:01:59.140 --> 00:02:02.299 hotel. model to well to everything else okay 00:02:02.299 --> 00:02:04.760 and the sheer scale of everything else is what 00:02:04.760 --> 00:02:06.879 blew my mind it's enormous we're gonna be talking 00:02:06.879 --> 00:02:09.659 about everything from like a budget studio apartment 00:02:09.659 --> 00:02:12.180 where the bed is practically in the kitchen i've 00:02:12.180 --> 00:02:14.000 stayed in that one all the way to camper vans 00:02:14.000 --> 00:02:17.080 and then up to luxury villas that come with their 00:02:17.080 --> 00:02:21.250 own private staff It's a massive fragmented marketplace. 00:02:21.530 --> 00:02:24.849 And because it's so big, we kind of need to start 00:02:24.849 --> 00:02:27.610 by defining our terms. OK. Because depending 00:02:27.610 --> 00:02:29.550 on where you're listening from, you might not 00:02:29.550 --> 00:02:32.389 even use the phrase vacation rental. Right. In 00:02:32.389 --> 00:02:35.590 the U .S., that's the standard term. But the 00:02:35.590 --> 00:02:38.069 source material highlights that this is a global 00:02:38.069 --> 00:02:41.900 phenomenon and the language. It changes when 00:02:41.900 --> 00:02:44.099 you cross borders. For sure. If you're in the 00:02:44.099 --> 00:02:47.000 UK, for example, you wouldn't say vacation rental. 00:02:47.159 --> 00:02:50.039 It sounds a bit clunky, a bit American. So what 00:02:50.039 --> 00:02:51.719 would you say? You'd be looking for a holiday 00:02:51.719 --> 00:02:54.740 let or a holiday home. A holiday let. Okay. It's 00:02:54.740 --> 00:02:56.840 the same concept. You're paying for temporary 00:02:56.840 --> 00:02:59.919 access to a private dwelling, but the cultural 00:02:59.919 --> 00:03:02.039 branding is just different. And then there's 00:03:02.039 --> 00:03:03.840 my personal favorite, which comes from France. 00:03:03.919 --> 00:03:07.969 Yeah. The gite. The gite. G -I -T -E. It just 00:03:07.969 --> 00:03:10.370 sounds so much more romantic than short -term 00:03:10.370 --> 00:03:12.509 rental unit. It really does. It has this specific 00:03:12.509 --> 00:03:14.930 connotation, right? It usually refers to a furnished 00:03:14.930 --> 00:03:17.129 holiday home, typically in a rural district. 00:03:17.370 --> 00:03:20.870 You're picturing stone walls, rustic charm. Maybe 00:03:20.870 --> 00:03:23.150 a vineyard nearby. Right. But whether it's a 00:03:23.150 --> 00:03:25.889 sheet in Provence, a holiday let in Cornwall, 00:03:26.069 --> 00:03:29.590 or a condo in Florida, the core mechanism is 00:03:29.590 --> 00:03:32.689 the same. It's the monetization of private property 00:03:32.689 --> 00:03:35.060 for leisure. And I think that's a really important 00:03:35.060 --> 00:03:37.639 point to flag right at the top. We often think 00:03:37.639 --> 00:03:40.039 of this as a purely modern thing, something driven 00:03:40.039 --> 00:03:42.080 by Silicon Valley tech companies in the last 00:03:42.080 --> 00:03:44.580 15 years. Right, like it was invented in 2008. 00:03:44.939 --> 00:03:47.219 Yeah. But the research points out that this has 00:03:47.219 --> 00:03:49.719 been a popular travel option in Europe and Canada 00:03:49.719 --> 00:03:52.400 for a long, long time. Absolutely. The tech platforms 00:03:52.400 --> 00:03:55.460 might be new, but the behavior is old. People 00:03:55.460 --> 00:03:58.259 have been renting cottages by the lake or villas 00:03:58.259 --> 00:04:01.360 in Tuscany for decades. How did they do it? It 00:04:01.360 --> 00:04:03.699 used to happen through like classified ads in 00:04:03.699 --> 00:04:05.620 the back of magazines or through local travel 00:04:05.620 --> 00:04:08.520 agents. That's so analog. Totally. What the tech 00:04:08.520 --> 00:04:12.219 companies did was digitize it, speed it up, and 00:04:12.219 --> 00:04:15.319 then sail it to the moon. So here's our mission 00:04:15.319 --> 00:04:17.360 for this deep dive. We're going to look under 00:04:17.360 --> 00:04:19.000 the hood of this industry. We aren't just going 00:04:19.000 --> 00:04:21.180 to talk about how to book a cool house. Yeah. 00:04:21.300 --> 00:04:23.879 We're going to look at the economics. We're talking 00:04:23.879 --> 00:04:26.339 about $100 billion industry here. We're going 00:04:26.339 --> 00:04:28.420 to look at the risks because, yes, there are 00:04:28.420 --> 00:04:30.959 scams and they are terrifying. They really are. 00:04:31.100 --> 00:04:32.920 We're going to look at the impact on our neighborhoods. 00:04:32.959 --> 00:04:36.259 And finally, the really complex regulations that 00:04:36.259 --> 00:04:38.639 cities are inventing to try and control this 00:04:38.639 --> 00:04:42.040 beast. It's a collision of economics, sociology, 00:04:42.339 --> 00:04:45.180 and urban planning all in one. So let's start 00:04:45.180 --> 00:04:48.860 with segment one, the product. What exactly are 00:04:48.860 --> 00:04:51.379 we renting? Because unlike a hotel chain where 00:04:51.379 --> 00:04:55.319 consistency is the goal, here, inconsistency 00:04:55.319 --> 00:04:58.060 seems to be the feature. Inconsistent is the 00:04:58.060 --> 00:05:00.920 polite word for it. Broad is another. Because 00:05:00.920 --> 00:05:03.519 vacation rentals usually occur in privately owned 00:05:03.519 --> 00:05:05.660 properties, you are dealing with the individual 00:05:05.660 --> 00:05:09.959 tastes, the standards, and the eccentricities 00:05:09.959 --> 00:05:11.800 of the owner. Which is part of the charm, right? 00:05:11.839 --> 00:05:13.160 You want to feel like you're living a different 00:05:13.160 --> 00:05:15.870 life for a few days. Precisely. You aren't just 00:05:15.870 --> 00:05:19.189 renting a bed, you're renting an aesthetic. And 00:05:19.189 --> 00:05:21.649 the spectrum is just vast. You have your standard 00:05:21.649 --> 00:05:24.670 holiday villas, apartments, cottages, condos, 00:05:24.670 --> 00:05:27.029 townhomes. The stuff we all know. The structures 00:05:27.029 --> 00:05:29.110 we're all familiar with. But then the source 00:05:29.110 --> 00:05:31.449 material highlights some really niche options. 00:05:31.529 --> 00:05:34.910 For instance, farm stays. Now I have to ask, 00:05:35.110 --> 00:05:38.350 does a farm stay mean I have to wake up at 4 00:05:38.350 --> 00:05:42.240 a .m. to milk a cow? Because that sounds less 00:05:42.240 --> 00:05:45.319 like a vacation and more like unpaid labor. It 00:05:45.319 --> 00:05:48.000 can. It actually can. The definition encompasses 00:05:48.000 --> 00:05:50.819 both ends of that spectrum. It can involve active 00:05:50.819 --> 00:05:53.139 participation on a working farm where you're 00:05:53.139 --> 00:05:55.500 getting your hands dirty, collecting eggs, feeding 00:05:55.500 --> 00:05:57.779 livestock. And people want to do that. For some 00:05:57.779 --> 00:06:00.660 people, particularly those stuck in office jobs, 00:06:00.860 --> 00:06:04.220 that kind of tactile work is incredibly relaxing. 00:06:04.399 --> 00:06:06.660 I can see that. Reconnecting with the land. Yeah. 00:06:07.230 --> 00:06:09.189 But on the other hand, it can also just be a 00:06:09.189 --> 00:06:11.649 conventional rental that happens to be co -located 00:06:11.649 --> 00:06:14.269 on a farm. Ah, okay. That's more my speed. So 00:06:14.269 --> 00:06:16.769 you get the pastoral views, the fresh air, the 00:06:16.769 --> 00:06:19.069 sheep grazing in the distance, but you don't 00:06:19.069 --> 00:06:20.850 have to do any of the actual farming. Why want 00:06:20.850 --> 00:06:23.970 the view, not the shovel? Exactly. But then you 00:06:23.970 --> 00:06:25.990 go to the complete opposite end of the spectrum. 00:06:26.370 --> 00:06:28.689 The sources mention camper van and motorhome 00:06:28.689 --> 00:06:30.509 rentals are technically part of this market. 00:06:30.939 --> 00:06:33.060 Right. It meets the definition. I mean, it's 00:06:33.060 --> 00:06:35.579 accommodation, it's temporary and it's for tourists. 00:06:35.759 --> 00:06:37.600 It just happens to be on wheels. It just happens 00:06:37.600 --> 00:06:40.079 to be on wheels. And it speaks to that desire 00:06:40.079 --> 00:06:42.560 for freedom, you know, that really drives this 00:06:42.560 --> 00:06:45.120 whole industry. But let's talk about the high 00:06:45.120 --> 00:06:47.899 end, because I think when people dream of vacation 00:06:47.899 --> 00:06:50.759 rentals, they aren't dreaming of a camper van. 00:06:50.939 --> 00:06:54.360 They are dreaming of the lavish. The luxury segment 00:06:54.360 --> 00:06:57.339 of this market is fascinating because it's where 00:06:57.339 --> 00:07:00.300 the rental market starts to. to loop back around 00:07:00.300 --> 00:07:02.720 and become a hotel again. How so? We're talking 00:07:02.720 --> 00:07:05.160 about private villas in the world's most desirable 00:07:05.160 --> 00:07:08.800 locations, St. Barts, Lake Como, Aspen. Okay, 00:07:08.839 --> 00:07:11.379 so big money places. Big money. And for the price 00:07:11.379 --> 00:07:13.579 tag on these places, which can be thousands of 00:07:13.579 --> 00:07:15.779 dollars a night, I assume you weren't just getting 00:07:15.779 --> 00:07:18.019 a key code and a map to the nearest grocery store. 00:07:18.060 --> 00:07:20.360 I would hope not. Far from it. These properties 00:07:20.360 --> 00:07:22.980 are effectively private hotels. They come fully 00:07:22.980 --> 00:07:25.379 staffed. What does that mean? Fully staffed. 00:07:25.379 --> 00:07:28.180 We're talking private chefs who cook every meal, 00:07:28.360 --> 00:07:31.620 boat captains for excursions, daily cleaning 00:07:31.620 --> 00:07:35.860 crews, on -site concierges. Some even offer things 00:07:35.860 --> 00:07:38.720 like cooking lessons or yoga instructors that 00:07:38.720 --> 00:07:41.459 come right to the house. So in that scenario, 00:07:41.620 --> 00:07:44.300 the line between renting a house and staying 00:07:44.300 --> 00:07:47.860 at a five -star resort is, it's pretty much gone. 00:07:48.570 --> 00:07:51.370 And that line is blurring everywhere, not just 00:07:51.370 --> 00:07:54.069 at the ultra luxury level. One of the key trends 00:07:54.069 --> 00:07:56.269 the source material highlights is the rise of 00:07:56.269 --> 00:07:58.509 what they call the professionally managed resort 00:07:58.509 --> 00:08:02.149 condominium complex. That is a mouthful of a 00:08:02.149 --> 00:08:04.129 term. Yes. What does that actually look like 00:08:04.129 --> 00:08:06.189 on the ground? Okay. Think of it as a hybrid. 00:08:06.949 --> 00:08:10.170 Imagine a large building in a beach town. The 00:08:10.170 --> 00:08:12.470 units inside are condos. They're individually 00:08:12.470 --> 00:08:14.589 owned. They have full kitchens, living rooms, 00:08:14.670 --> 00:08:16.889 separate bedrooms. Oh, and an apartment. Basically. 00:08:17.069 --> 00:08:19.550 But the building itself operates like a hotel. 00:08:19.709 --> 00:08:22.470 You walk into a lobby with a front desk. You 00:08:22.470 --> 00:08:24.810 check in with a human being. There's 24 -hour 00:08:24.810 --> 00:08:27.009 maintenance on site. So I get the space of an 00:08:27.009 --> 00:08:29.089 apartment. I can cook breakfast. I can spread 00:08:29.089 --> 00:08:31.430 out. But if the toilet breaks at midnight... 00:08:31.889 --> 00:08:34.809 Someone actually comes to fix it. Exactly. And 00:08:34.809 --> 00:08:37.190 that appeals to a huge segment of travelers who 00:08:37.190 --> 00:08:39.750 want the space and the kitchen, but they don't 00:08:39.750 --> 00:08:42.909 want the risk or the hassle of a by -owner rental 00:08:42.909 --> 00:08:44.889 where you might be on your own if something goes 00:08:44.889 --> 00:08:46.990 wrong. You don't have to call Dave in another 00:08:46.990 --> 00:08:49.090 time zone to ask where the plunger is. Right. 00:08:49.250 --> 00:08:52.610 And the source notes that. Many traditional hospitality 00:08:52.610 --> 00:08:55.250 resorts are now pivoting to this model, taking 00:08:55.250 --> 00:08:57.389 their inventory and renting it out this way. 00:08:57.570 --> 00:08:59.370 It's so interesting how the industry is evolving 00:08:59.370 --> 00:09:02.789 to meet that demand for consistency. We want 00:09:02.789 --> 00:09:05.750 the cool factor of a rental, but we still crave 00:09:05.750 --> 00:09:08.309 the safety net of a hotel. We want it all. We 00:09:08.309 --> 00:09:10.389 want it all. But let's shift gears to the money, 00:09:10.490 --> 00:09:13.929 segment two, the business of booking. Because 00:09:13.929 --> 00:09:15.230 you mentioned earlier this is a $100 billion 00:09:15.230 --> 00:09:18.190 market. That is a staggering amount of money 00:09:18.190 --> 00:09:20.740 changing hands. It is huge. That figure comes 00:09:20.740 --> 00:09:23.740 from an estimate by Evercore. But here's a statistic 00:09:23.740 --> 00:09:25.820 that really blew my mind. I think it challenges 00:09:25.820 --> 00:09:28.799 the narrative we often hear. Two -thirds of that 00:09:28.799 --> 00:09:31.899 market is for rent by owner. Two -thirds. So, 00:09:32.000 --> 00:09:36.559 wait. Despite all the big corporate players we 00:09:36.559 --> 00:09:39.000 hear about, the majority of this money is still 00:09:39.000 --> 00:09:41.220 flowing to individual people renting out their 00:09:41.220 --> 00:09:43.600 places. That's right. It is a highly fragmented 00:09:43.600 --> 00:09:46.629 market at the owner level. It's millions of individuals 00:09:46.629 --> 00:09:49.549 interacting with millions of travelers. However. 00:09:49.889 --> 00:09:52.129 There's a however. The platforms that facilitate 00:09:52.129 --> 00:09:55.549 those transactions, the middlemen, are consolidating 00:09:55.549 --> 00:09:58.309 rapidly. Right. The big tech of travel. We have 00:09:58.309 --> 00:09:59.830 to talk about the evolution of these platforms. 00:10:00.009 --> 00:10:02.090 It feels like there used to be dozens of little 00:10:02.090 --> 00:10:04.289 websites, and now there are just a few giants. 00:10:04.840 --> 00:10:06.860 That's exactly what happened. The industry has 00:10:06.860 --> 00:10:10.039 seen massive consolidation. A pivotal moment 00:10:10.039 --> 00:10:12.059 mentioned in the research was back in November 00:10:12.059 --> 00:10:15.539 2015. What happened in November 2015? Expedia, 00:10:15.600 --> 00:10:17.519 which we all know as a travel giant for flights 00:10:17.519 --> 00:10:20.179 and hotels, bought HomeAway. I remember HomeAway. 00:10:20.320 --> 00:10:23.980 And the purchase price was $3 .9 billion. $3 00:10:23.980 --> 00:10:27.759 .9 billion. Wow. That is a serious bet on the 00:10:27.759 --> 00:10:30.639 future of vacation rentals. It was a huge strategic 00:10:30.639 --> 00:10:34.600 move to compete directly with Airbnb. And HomeAway 00:10:34.600 --> 00:10:37.480 wasn't just one site. It was a conglomerate that 00:10:37.480 --> 00:10:40.559 already owned VRBO and several other brands. 00:10:40.720 --> 00:10:43.159 So they bought a whole portfolio. Exactly. And 00:10:43.159 --> 00:10:45.840 eventually they took that whole cluster and rebranded 00:10:45.840 --> 00:10:48.820 it under the single name VRBO. Which is funny 00:10:48.820 --> 00:10:51.740 because for years I pronounced it VRBO, letter 00:10:51.740 --> 00:10:54.100 by letter. Everyone did. And then suddenly the 00:10:54.100 --> 00:10:56.840 commercial started saying Vrbo, and I felt like 00:10:56.840 --> 00:10:58.940 I had been doing it wrong my whole life. Branding 00:10:58.940 --> 00:11:01.059 is a powerful thing, but they aren't the only 00:11:01.059 --> 00:11:03.360 ones, of course. You have TripAdvisor, Booking 00:11:03.360 --> 00:11:07.100 .com, Tripping .com, Canada Stays. And while 00:11:07.100 --> 00:11:09.019 they all look kind of similar to the user. Right, 00:11:09.039 --> 00:11:11.620 a search bar and a map. The plumbing behind the 00:11:11.620 --> 00:11:14.440 scenes, the booking models are actually different. 00:11:14.740 --> 00:11:16.779 Okay, let's break that down because I think for 00:11:16.779 --> 00:11:18.960 the average listener, you just click search, 00:11:19.159 --> 00:11:23.039 find a house, and pay. But how the money moves 00:11:23.039 --> 00:11:26.200 and who is responsible for what, that varies. 00:11:26.440 --> 00:11:29.759 It really does. There are really three main models 00:11:29.759 --> 00:11:32.299 plus a search layer on top. First, you have the 00:11:32.299 --> 00:11:34.200 direct model. This is the old school way, right? 00:11:34.259 --> 00:11:37.779 Very old school. This is finding an owner's personal 00:11:37.779 --> 00:11:40.860 website. Maybe you saw a flyer on a bulletin 00:11:40.860 --> 00:11:43.620 board in a coffee shop or a friend recommended 00:11:43.620 --> 00:11:47.259 Judy's Lake House. So you go to her site. You 00:11:47.259 --> 00:11:49.539 email Judy. You might even send a check in the 00:11:49.539 --> 00:11:52.279 mail. It's very high touch, very personal. And 00:11:52.279 --> 00:11:54.360 probably a bit riskier, which we will get to 00:11:54.360 --> 00:11:57.659 later. Definitely. Then you have the second model, 00:11:57.840 --> 00:12:01.019 the listing services. This is what many of the 00:12:01.019 --> 00:12:03.860 big sites started as. How does that work? The 00:12:03.860 --> 00:12:06.139 homeowner pays a fee to the website to upload 00:12:06.139 --> 00:12:08.799 their photos and information. The website is 00:12:08.799 --> 00:12:11.460 essentially a digital bulletin board. A giant 00:12:11.460 --> 00:12:15.059 classified section. Exactly. So when you... the 00:12:15.059 --> 00:12:17.620 guest, want to book, the site connects you to 00:12:17.620 --> 00:12:19.639 the owner, but you deal with the owner directly 00:12:19.639 --> 00:12:22.539 to arrange the payment and contracts. So the 00:12:22.539 --> 00:12:24.600 website is just the matchmaker. They aren't handling 00:12:24.600 --> 00:12:27.460 the money? Not always, no. And crucially, the 00:12:27.460 --> 00:12:30.700 policies vary wildly. Why is that? Because you're 00:12:30.700 --> 00:12:32.899 dealing with the owner. The cancellation policy, 00:12:33.120 --> 00:12:35.340 the key pickup instructions, the security deposit, 00:12:35.559 --> 00:12:38.259 it's all up to that individual person. And that 00:12:38.259 --> 00:12:41.259 explains the inconsistency. It's why one rental 00:12:41.259 --> 00:12:45.830 has a strict no refunds ever. And the one next 00:12:45.830 --> 00:12:48.710 door is canceled 24 hours before. That's the 00:12:48.710 --> 00:12:50.750 one. But then you have the third model, which 00:12:50.750 --> 00:12:54.190 is becoming more dominant. Agencies. How is an 00:12:54.190 --> 00:12:56.009 agency different from a listing service? They 00:12:56.009 --> 00:12:58.789 sound similar. The key difference is the middleman. 00:12:59.070 --> 00:13:02.570 With an agency, there's usually no direct contact 00:13:02.570 --> 00:13:05.519 with the owner. The agency handles. Everything. 00:13:05.679 --> 00:13:07.960 What's everything? The billing, the reservations, 00:13:08.320 --> 00:13:10.600 the vetting of the property, and often the key 00:13:10.600 --> 00:13:13.240 exchange. It's a layer of professional management 00:13:13.240 --> 00:13:16.179 between you and the homeowner. And presumably 00:13:16.179 --> 00:13:19.240 that comes with a cost. You pay for that professionalism. 00:13:19.299 --> 00:13:22.340 You do. The fees or commissions charged by agencies 00:13:22.340 --> 00:13:24.600 are generally higher, so the rent tends to be 00:13:24.600 --> 00:13:26.279 higher for the traveler. And then you mentioned 00:13:26.279 --> 00:13:29.159 a search layer. Yes. The last piece is meta -search. 00:13:29.559 --> 00:13:32.100 Sites like Tripping .com, they are a search of 00:13:32.100 --> 00:13:35.200 searches. They aggregate listings from all these 00:13:35.200 --> 00:13:37.580 different companies, listing sites, agencies, 00:13:37.919 --> 00:13:41.379 big platforms like Vrbo into one single experience. 00:13:41.799 --> 00:13:43.940 So you aren't checking five different websites. 00:13:44.240 --> 00:13:47.320 You check one and it shows you everything. That's 00:13:47.320 --> 00:13:49.620 the idea. It's about convenience. That's helpful. 00:13:49.799 --> 00:13:52.350 But let's talk about the fees. Because this is 00:13:52.350 --> 00:13:54.070 the number one complaint I hear from friends. 00:13:54.389 --> 00:13:58.529 You see a price listed as, say, $100 a night. 00:13:58.629 --> 00:14:00.710 But by the time you go to checkout, it's $200 00:14:00.710 --> 00:14:03.529 a night. Where is all that extra money going? 00:14:03.970 --> 00:14:07.059 Well... A significant chunk of it is going to 00:14:07.059 --> 00:14:08.759 what are called management companies. Right. 00:14:08.840 --> 00:14:11.899 But why? Yeah. Why can't the owners just manage 00:14:11.899 --> 00:14:14.259 it themselves and keep the costs down? Think 00:14:14.259 --> 00:14:16.960 about the logistics. Most owners don't live next 00:14:16.960 --> 00:14:19.279 door to their vacation rental. If they live in 00:14:19.279 --> 00:14:21.580 Chicago and the rental is in Phoenix. They can't 00:14:21.580 --> 00:14:24.179 just pop over? They can't just pop over to unclog 00:14:24.179 --> 00:14:26.620 a toilet or wash the sheets between guests, so 00:14:26.620 --> 00:14:28.960 they hire local pros to do it for them. And these 00:14:28.960 --> 00:14:31.970 pros, I'm guessing, are not cheap. No. The source 00:14:31.970 --> 00:14:33.730 indicates that management companies typically 00:14:33.730 --> 00:14:36.129 work on a commission model. They take anywhere 00:14:36.129 --> 00:14:39.289 from 20 % to 50 % of the total revenue. 50%. 00:14:39.289 --> 00:14:41.769 That is half the income. Just gone for management. 00:14:42.049 --> 00:14:45.190 It sounds incredibly high, but think about everything 00:14:45.190 --> 00:14:48.809 they do. They handle housekeeping, property maintenance, 00:14:49.110 --> 00:14:51.909 marketing, reservations, those emergency calls 00:14:51.909 --> 00:14:54.730 at 3 a .m. It's a lot of work. And they're taking 00:14:54.730 --> 00:14:57.039 on some of the risk then. Well, in the commission 00:14:57.039 --> 00:14:59.200 model, they don't guarantee income. They just 00:14:59.200 --> 00:15:01.659 take a cut of whatever comes in. So if the place 00:15:01.659 --> 00:15:04.220 sits empty for a month, the owner gets zero and 00:15:04.220 --> 00:15:07.740 the manager gets zero. Correct. The risk is shared, 00:15:07.820 --> 00:15:10.440 but it primarily sits with the owner who still 00:15:10.440 --> 00:15:12.500 has to pay the mortgage and taxes every month. 00:15:12.659 --> 00:15:15.580 Okay. However, there is an alternative arrangement 00:15:15.580 --> 00:15:18.399 mentioned in the text that completely flips this 00:15:18.399 --> 00:15:20.980 risk profile. It's called the guaranteed model. 00:15:21.220 --> 00:15:23.610 A guaranteed model. How does that work? In this 00:15:23.610 --> 00:15:26.870 scenario, the rental manager actually buys all 00:15:26.870 --> 00:15:28.970 the available weeks from the homeowner up front. 00:15:29.129 --> 00:15:31.809 They might say, look, I will pay you $30 ,000 00:15:31.809 --> 00:15:34.549 for the year guaranteed. Oh, wow. So the owner 00:15:34.549 --> 00:15:36.470 just gets a check regardless of whether anyone 00:15:36.470 --> 00:15:38.970 ever stays there. Exactly. The owner gets guaranteed 00:15:38.970 --> 00:15:41.090 income and total peace of mind. What's the catch 00:15:41.090 --> 00:15:42.950 for the owner? The catch is they give up all 00:15:42.950 --> 00:15:45.330 the upside. The manager takes on the full risk. 00:15:45.470 --> 00:15:48.500 If they can't rent it, they lose money. But if 00:15:48.500 --> 00:15:50.519 they rent it out for a premium, say they make 00:15:50.519 --> 00:15:55.259 $50 ,000, they keep all that profit. The owner 00:15:55.259 --> 00:15:58.059 doesn't see another dime. That is fascinating. 00:15:58.200 --> 00:16:01.240 It turns the manager into almost a tenant who 00:16:01.240 --> 00:16:03.700 then sublets the place to tourists. It does. 00:16:03.899 --> 00:16:05.899 It just shows how financialized this industry 00:16:05.899 --> 00:16:08.080 has become. It's not just letting someone stay 00:16:08.080 --> 00:16:10.960 in your spare room. It's complex yield management 00:16:10.960 --> 00:16:13.919 and risk assessment. It is high finance disguised 00:16:13.919 --> 00:16:16.480 as hospitality. Speaking of complex financial 00:16:16.480 --> 00:16:19.200 arrangements, we need to clear up a major point 00:16:19.200 --> 00:16:21.360 of confusion for a lot of people. Segment three. 00:16:21.690 --> 00:16:24.490 Vacation rentals versus timeshares. Ah, yes. 00:16:24.730 --> 00:16:27.250 The classic mix -up. And it's completely understandable 00:16:27.250 --> 00:16:29.269 because they can look identical from the outside. 00:16:29.370 --> 00:16:31.490 You're staying in a nice condo in a resort area. 00:16:31.610 --> 00:16:33.110 There's a pool. There are families everywhere. 00:16:33.490 --> 00:16:35.909 So let's just ask it directly. Is a vacation 00:16:35.909 --> 00:16:38.470 rental just a timeshare by another name? No. 00:16:38.590 --> 00:16:41.029 The fundamental, the legal difference is ownership. 00:16:41.629 --> 00:16:43.970 A timeshare is a piece of real estate, or right 00:16:43.970 --> 00:16:46.789 to use, for a specific segment of time, often 00:16:46.789 --> 00:16:49.990 one week a year, every year. You are an owner, 00:16:50.129 --> 00:16:52.470 or at least a partial owner, you have a deed 00:16:52.470 --> 00:16:55.629 or a contract. Whereas a vacation rental is purely 00:16:55.629 --> 00:16:59.090 transactional. I pay, I stay, I leave, I own 00:16:59.090 --> 00:17:01.629 absolutely nothing. Correct. It is purely temporary 00:17:01.629 --> 00:17:05.990 access, no ownership stake at all. But... I feel 00:17:05.990 --> 00:17:07.670 like there's a but coming. This is never that 00:17:07.670 --> 00:17:09.509 simple. There is always a but. The lines are 00:17:09.509 --> 00:17:11.589 blurring here, too. The interesting thing is 00:17:11.589 --> 00:17:13.730 that timeshares often become vacation rentals. 00:17:13.809 --> 00:17:16.410 How so? How does that happen? OK, imagine two 00:17:16.410 --> 00:17:19.910 scenarios. Scenario A, you own a timeshare week 00:17:19.910 --> 00:17:24.009 in Orlando. You own week 27 every July. But this 00:17:24.009 --> 00:17:26.430 year, you can't go. Maybe you're busy. Maybe 00:17:26.430 --> 00:17:27.869 you're sick. You don't want to just lose it. 00:17:27.950 --> 00:17:29.849 Right. You're still paying your annual maintenance 00:17:29.849 --> 00:17:32.130 fees. So instead of letting it sit empty and 00:17:32.130 --> 00:17:34.430 wasting your money, you put it on a rental program. 00:17:34.750 --> 00:17:39.529 So I, the traveler, go onto a website and book 00:17:39.529 --> 00:17:42.009 a vacation rental, but I'm actually staying in 00:17:42.009 --> 00:17:44.450 your timeshare week. Exactly. To you, it's just 00:17:44.450 --> 00:17:47.130 a rental. To the system, it's a timeshare being 00:17:47.130 --> 00:17:49.119 utilized. That makes sense. And then there's 00:17:49.119 --> 00:17:51.740 scenario B, which is even bigger. And this is 00:17:51.740 --> 00:17:54.759 unsold resort inventory. This is the stuff that 00:17:54.759 --> 00:17:56.559 developers haven't been able to sell the timeshare 00:17:56.559 --> 00:17:59.339 buyers like in the first scenario. Right. The 00:17:59.339 --> 00:18:01.740 source notes that resorts control about 21 percent 00:18:01.740 --> 00:18:04.799 of the total inventory. These are unsold units 00:18:04.799 --> 00:18:06.960 just sitting on the books. A fifth of all units. 00:18:07.119 --> 00:18:09.519 Yeah. And developers do not want those assets 00:18:09.519 --> 00:18:11.859 sitting there doing nothing, generating zero 00:18:11.859 --> 00:18:13.940 revenue. So what do they do? They rent them out. 00:18:14.019 --> 00:18:15.980 They rent them out as vacation rentals to the 00:18:15.980 --> 00:18:18.420 general public. That is a huge chunk of the market. 00:18:18.579 --> 00:18:22.839 It is massive. In 2014, so a few years ago, but 00:18:22.839 --> 00:18:25.319 it shows the scale, the business of renting out 00:18:25.319 --> 00:18:28.640 these unsold timeshare rents was worth $1 .9 00:18:28.640 --> 00:18:32.970 billion. Wow. So when you book that nice two 00:18:32.970 --> 00:18:35.410 bedroom condo with the lazy river pool, there's 00:18:35.410 --> 00:18:37.789 a pretty good chance, maybe one in five, that 00:18:37.789 --> 00:18:39.690 you're sleeping in a timeshare unit that nobody 00:18:39.690 --> 00:18:41.630 ever bought. It's amazing how these industries 00:18:41.630 --> 00:18:43.789 feed into each other. But let's talk about when 00:18:43.789 --> 00:18:46.029 things go wrong. Yeah. Because for every dream 00:18:46.029 --> 00:18:49.329 vacation, there is a horror story. Segment four, 00:18:49.509 --> 00:18:52.490 the risks. And we have some industry jargon for 00:18:52.490 --> 00:18:57.349 this, which I love. SNAD. SNAD. SNAD. It sounds 00:18:57.349 --> 00:19:00.069 like a bad cold. What does that stand for? It 00:19:00.069 --> 00:19:04.730 stands for significantly not as described. That 00:19:04.730 --> 00:19:08.569 sounds legal and ominous. It is the bane of the 00:19:08.569 --> 00:19:11.450 traveler's existence. It refers to that scenario 00:19:11.450 --> 00:19:14.269 where the photos online look like absolute paradise. 00:19:14.509 --> 00:19:17.230 Professional photographer, wide angle lens, perfect 00:19:17.230 --> 00:19:20.190 lighting. Sparkling pool, stunning ocean view, 00:19:20.250 --> 00:19:23.809 marble countertops. But when you arrive... The 00:19:23.809 --> 00:19:26.509 pool is green and full of algae. The ocean view 00:19:26.509 --> 00:19:28.910 is visible only if you stand on a chair and lean 00:19:28.910 --> 00:19:31.329 out the bathroom window and the roof is leaking. 00:19:31.690 --> 00:19:34.009 Exactly. The reality does not match the marketing. 00:19:34.150 --> 00:19:37.450 That's SNAD. So how do we fight SNAD? What's 00:19:37.450 --> 00:19:39.890 the defense? The primary defense mechanism that 00:19:39.890 --> 00:19:41.549 the platforms have introduced is, of course, 00:19:41.630 --> 00:19:43.970 user reviews. The wisdom of the crowd. The idea 00:19:43.970 --> 00:19:45.710 is that the crowd will expose these misleading 00:19:45.710 --> 00:19:48.170 listings. If 10 people say the roof leaks and 00:19:48.170 --> 00:19:50.289 the pool is a swamp... You don't book it. It 00:19:50.289 --> 00:19:52.569 creates a self -policing system. But that relies 00:19:52.569 --> 00:19:54.509 on there being previous guests. If you're the 00:19:54.509 --> 00:19:56.329 first one to book a new listing, you're the guinea 00:19:56.329 --> 00:19:58.849 pig. You are the guinea pig. That's the risk. 00:19:59.349 --> 00:20:02.809 But honestly, SNAD is the better of the bad outcomes. 00:20:03.509 --> 00:20:05.769 What do you mean? How is a leaky roof a good 00:20:05.769 --> 00:20:08.069 outcome? At least you have a roof, even if it 00:20:08.069 --> 00:20:11.089 leaks. What's the worst outcome? The ghost rental 00:20:11.089 --> 00:20:14.390 scam. This is malicious fraud. This isn't just 00:20:14.390 --> 00:20:17.799 exaggerated photos. This is pure theft. Okay, 00:20:17.839 --> 00:20:19.759 how does this work? I want to walk through this 00:20:19.759 --> 00:20:21.740 so our listeners know what to look out for. Okay, 00:20:21.779 --> 00:20:24.930 picture this. A scammer goes onto a real estate 00:20:24.930 --> 00:20:28.369 website like Zillow or Redfin and finds a legitimate 00:20:28.369 --> 00:20:30.990 listing for a beautiful house that is for sale. 00:20:31.170 --> 00:20:33.390 They download all the high -resolution photos. 00:20:33.670 --> 00:20:36.069 Okay, so they have pictures of a real nice house. 00:20:36.369 --> 00:20:38.650 Then they create a fake account on a vacation 00:20:38.650 --> 00:20:41.609 rental site or, more commonly, a less regulated 00:20:41.609 --> 00:20:44.269 classified site like Craigslist. They upload 00:20:44.269 --> 00:20:46.329 the photos and advertise it as a vacation rental 00:20:46.329 --> 00:20:48.730 at a great price. Maybe a little too good of 00:20:48.730 --> 00:20:52.069 a price. That's the hook. And you, the unsuspecting 00:20:52.069 --> 00:20:54.519 travel - are looking for a deal you find it you're 00:20:54.519 --> 00:20:58.000 thrilled you book it the owner asks you to wire 00:20:58.000 --> 00:21:01.619 money or pay via a method that's hard to reverse 00:21:01.619 --> 00:21:05.059 usually months in advance to secure your spot 00:21:05.059 --> 00:21:08.559 you pay You're excited. You book your flights. 00:21:08.700 --> 00:21:10.680 And then I show up with my suitcase. And the 00:21:10.680 --> 00:21:13.039 rental doesn't exist. Or worse, the house exists, 00:21:13.140 --> 00:21:15.500 but real people live there. Maybe the new owners 00:21:15.500 --> 00:21:17.500 who just bought it. And they have absolutely 00:21:17.500 --> 00:21:20.380 no idea who you are or why you're on their doorstep. 00:21:20.460 --> 00:21:22.200 Well, that's a nightmare. The owner you paid 00:21:22.200 --> 00:21:25.160 has vanished with your money. The email account 00:21:25.160 --> 00:21:27.079 is deleted. The phone number is disconnected. 00:21:27.339 --> 00:21:30.220 That is awful. Especially because you're usually 00:21:30.220 --> 00:21:32.279 in a foreign place, maybe don't speak the language, 00:21:32.319 --> 00:21:34.460 you're tired from travel, and now you have literally 00:21:34.460 --> 00:21:36.839 nowhere to stay. It's devastating. And because 00:21:36.839 --> 00:21:39.440 the payment happens so far in advance, the trail 00:21:39.440 --> 00:21:42.200 is often cold by the time the victim even realizes 00:21:42.200 --> 00:21:45.440 what happened. Is there a safer way? The source 00:21:45.440 --> 00:21:48.440 material mentions a model used in the UK that 00:21:48.440 --> 00:21:50.880 seems a bit more secure against this kind of 00:21:50.880 --> 00:21:54.319 total fraud. Yes, the package deal model. In 00:21:54.319 --> 00:21:56.640 the UK and other parts of Europe, major tour 00:21:56.640 --> 00:21:59.319 operators often sell villa holidays. That's a 00:21:59.319 --> 00:22:01.480 villa holiday. It's not just renting a house. 00:22:01.599 --> 00:22:04.000 It's a full package that includes your flights, 00:22:04.160 --> 00:22:07.079 your rental car, and the home all bundled together. 00:22:07.500 --> 00:22:09.839 Ah, so you're buying it from a big established 00:22:09.839 --> 00:22:12.940 company. Exactly. So if the house turns out not 00:22:12.940 --> 00:22:15.539 to exist... The tour operator is on the hook. 00:22:15.720 --> 00:22:18.299 You have a single corporate point of accountability. 00:22:18.759 --> 00:22:21.299 They are legally required to find you alternative 00:22:21.299 --> 00:22:23.740 accommodation. It's much, much safer. What's 00:22:23.740 --> 00:22:25.539 the catch? Why don't we all do that? It sounds 00:22:25.539 --> 00:22:28.390 way better. The tradeoff is choice. In the DIY 00:22:28.390 --> 00:22:31.049 model, you can spend hours picking the specific 00:22:31.049 --> 00:22:33.490 quirky cottage with the blue door and the weird 00:22:33.490 --> 00:22:35.950 art on the wall. You choose the exact property. 00:22:36.150 --> 00:22:39.170 Yes. In the package model, you often just select 00:22:39.170 --> 00:22:42.250 a generic type like three -bedroom villa with 00:22:42.250 --> 00:22:44.650 pool in this region. You don't necessarily get 00:22:44.650 --> 00:22:46.589 to choose the specific property. You get what 00:22:46.589 --> 00:22:48.970 they assign you from their inventory. So it's 00:22:48.970 --> 00:22:51.269 safety versus specificity. That is the eternal 00:22:51.269 --> 00:22:53.549 struggle of travel planning, isn't it? It really 00:22:53.549 --> 00:22:55.589 is. Okay, we talked about the travel. Now I want 00:22:55.589 --> 00:22:58.079 to zoom out. Because this industry doesn't just 00:22:58.079 --> 00:23:00.799 happen in a vacuum. It happens on our streets, 00:23:00.900 --> 00:23:06.900 in our neighborhoods. This is where the debate 00:23:06.900 --> 00:23:10.200 gets really, really heated. There's a strong 00:23:10.200 --> 00:23:13.759 economic argument for vacation rentals and an 00:23:13.759 --> 00:23:16.319 equally strong community argument against them. 00:23:16.619 --> 00:23:19.220 Let's start with the good news. Let's start with 00:23:19.220 --> 00:23:22.380 the money. The key concept here? from the pro 00:23:22.380 --> 00:23:25.619 -rental side is the multiplier effect the multiplier 00:23:25.619 --> 00:23:27.839 effect okay how does that work in this context 00:23:27.839 --> 00:23:30.720 well the data suggests that vacation rentals 00:23:30.720 --> 00:23:33.539 often lead to longer stays than hotels right 00:23:33.539 --> 00:23:35.799 if you're crammed in a hotel room with your kids 00:23:35.799 --> 00:23:38.920 you might stay Three days before you go crazy. 00:23:39.140 --> 00:23:40.720 But if you have a whole house with a kitchen 00:23:40.720 --> 00:23:42.680 and a backyard, you might stay a week, maybe 00:23:42.680 --> 00:23:45.359 even two. And longer stays obviously mean more 00:23:45.359 --> 00:23:48.880 spending. Exactly. But it's where you spend it 00:23:48.880 --> 00:23:51.259 that's key. You aren't just eating at the hotel 00:23:51.259 --> 00:23:53.220 restaurant and drinking at the hotel bar. No, 00:23:53.299 --> 00:23:55.200 you're going to the supermarket. You're buying 00:23:55.200 --> 00:23:57.660 groceries at the local supermarket. You're going 00:23:57.660 --> 00:23:59.460 to the neighborhood coffee shop in the morning. 00:23:59.799 --> 00:24:02.220 You're renting bikes from the local shop down 00:24:02.220 --> 00:24:04.259 the street. So the money gets spread out more. 00:24:04.640 --> 00:24:06.740 That increased visitor spending flows directly 00:24:06.740 --> 00:24:09.440 into the community, supporting wages and employment 00:24:09.440 --> 00:24:12.140 in areas that might not normally see those tourist 00:24:12.140 --> 00:24:14.880 dollars. So local businesses potentially win. 00:24:15.420 --> 00:24:17.900 But what about the neighbors, the people who 00:24:17.900 --> 00:24:20.440 actually live there full time? That is the disruption 00:24:20.440 --> 00:24:23.279 argument. And it is a very, very real friction. 00:24:23.339 --> 00:24:26.299 When you introduce transient visitors into unfamiliar 00:24:26.299 --> 00:24:28.960 neighborhoods, things happen. Like the party 00:24:28.960 --> 00:24:31.799 house next door. Loud parties after quiet hours 00:24:31.799 --> 00:24:34.180 are the number one complaint. Absolutely. But 00:24:34.180 --> 00:24:36.920 it's also subtler things. Like what? It's taking 00:24:36.920 --> 00:24:39.259 up all the residential parking spots on a crowded 00:24:39.259 --> 00:24:42.700 street. Or just disregarding unspoken neighborhood 00:24:42.700 --> 00:24:45.200 cultural guidelines like putting the trash out 00:24:45.200 --> 00:24:47.000 on the wrong day or making a lot of noise with 00:24:47.000 --> 00:24:49.680 rolling suitcases early on a Sunday morning. 00:24:49.799 --> 00:24:52.519 Right. They are on vacation mode and the neighbors 00:24:52.519 --> 00:24:54.880 are on I have to get up for work on Monday mode. 00:24:55.259 --> 00:24:58.680 That clash is inevitable. It is. But the biggest 00:24:58.680 --> 00:25:01.099 accusation thrown at vacation rentals isn't about 00:25:01.099 --> 00:25:04.119 noise or parking. It's about housing. The housing 00:25:04.119 --> 00:25:06.400 crisis connection. This is the heavy question. 00:25:06.619 --> 00:25:09.220 Do vacation rentals make housing unaffordable 00:25:09.220 --> 00:25:12.140 for local residents? The general consensus from 00:25:12.140 --> 00:25:15.099 most economists and housing advocates is yes. 00:25:15.279 --> 00:25:18.359 They can negatively affect the long -term housing 00:25:18.359 --> 00:25:21.180 market. How exactly? What's the mechanism? It's 00:25:21.180 --> 00:25:23.900 a pretty straightforward supply and demand issue. 00:25:23.980 --> 00:25:27.339 If a landlord can make three times as much money 00:25:27.339 --> 00:25:29.680 renting their property to tourists by the night 00:25:29.680 --> 00:25:32.700 as they can renting to a local family for a year. 00:25:32.819 --> 00:25:34.660 They're going to rent to tourists. Many will, 00:25:34.779 --> 00:25:38.160 yes. That action removes a unit of housing from 00:25:38.160 --> 00:25:40.359 the long -term market. And when you have less 00:25:40.359 --> 00:25:43.180 supply for locals, the prices for the remaining 00:25:43.180 --> 00:25:46.359 units go up for everyone. Generally, yes, but... 00:25:46.880 --> 00:25:48.779 And this is a crucial nuance that our research 00:25:48.779 --> 00:25:51.779 uncovered. A Harvard Business Review study points 00:25:51.779 --> 00:25:54.799 out a very specific exception to this. I love 00:25:54.799 --> 00:25:56.380 a good exception. Let's hear it. The exception 00:25:56.380 --> 00:25:59.420 is owner -occupiers. Okay, what's an owner -occupier? 00:25:59.559 --> 00:26:01.599 This is the person renting out their spare room 00:26:01.599 --> 00:26:03.799 while they're living there, or the person who 00:26:03.799 --> 00:26:05.940 rents out their whole house only while they are 00:26:05.940 --> 00:26:08.000 away on their own vacation. So it's their primary 00:26:08.000 --> 00:26:10.019 residence. It's their primary residence. Their 00:26:10.019 --> 00:26:12.059 research suggests that this type of activity 00:26:12.059 --> 00:26:15.059 does not affect the long -term rental market. 00:26:15.299 --> 00:26:17.430 That makes sense. Because that house was never 00:26:17.430 --> 00:26:18.990 going to be available for a long term tenant 00:26:18.990 --> 00:26:22.049 anyway. The owner lives there. Exactly. It isn't 00:26:22.049 --> 00:26:24.329 removing stock from the market. It's just utilizing 00:26:24.329 --> 00:26:26.950 spare capacity that was already there. So the 00:26:26.950 --> 00:26:30.710 grandma renting her spare room isn't the villain 00:26:30.710 --> 00:26:33.769 here. No, it's the permanent investors, the people 00:26:33.769 --> 00:26:37.029 or corporations buying up homes solely to turn 00:26:37.029 --> 00:26:40.109 them into full time year round hotels that move 00:26:40.109 --> 00:26:42.940 the needle on housing affordability. That distinction 00:26:42.940 --> 00:26:45.019 is so important. And that leads us perfectly 00:26:45.019 --> 00:26:48.079 into our final section, segment six, the crackdown. 00:26:48.400 --> 00:26:51.099 Because cities aren't just watching this happen 00:26:51.099 --> 00:26:54.279 anymore. They are fighting back. They are. The 00:26:54.279 --> 00:26:56.200 pushback is coming from two main directions. 00:26:56.579 --> 00:26:59.240 First, from residents complaining about the noise 00:26:59.240 --> 00:27:01.880 and the housing costs, but also from competing 00:27:01.880 --> 00:27:05.349 lodging businesses. The hotels. Who are saying 00:27:05.349 --> 00:27:07.289 what? They're saying, hey, we pay commercial 00:27:07.289 --> 00:27:09.470 property taxes. We follow strict fire codes. 00:27:09.569 --> 00:27:11.750 We have to have tons of insurance. Why don't 00:27:11.750 --> 00:27:14.269 they? It's an issue of a level playing field. 00:27:14.670 --> 00:27:17.210 It's a fair point. So let's look at some case 00:27:17.210 --> 00:27:19.430 studies and regulation. What are cities actually 00:27:19.430 --> 00:27:23.069 doing to control this? It varies wildly. New 00:27:23.069 --> 00:27:25.369 York City and Chicago have introduced some very 00:27:25.369 --> 00:27:27.769 strict restrictions, though the source material 00:27:27.769 --> 00:27:30.910 notes that enforcement is not always strictly 00:27:30.910 --> 00:27:33.289 enforced. Why not? It's a game of whack -a -mole. 00:27:33.549 --> 00:27:36.349 It's incredibly difficult to police thousands 00:27:36.349 --> 00:27:38.730 and thousands of private apartments. I've heard 00:27:38.730 --> 00:27:40.609 about Portland, Oregon having some interesting 00:27:40.609 --> 00:27:43.509 rules. Portland is a fascinating case of what 00:27:43.509 --> 00:27:46.609 you could call a de facto ban through regulation. 00:27:46.769 --> 00:27:49.490 What does that mean, a de facto ban? It means 00:27:49.490 --> 00:27:51.789 they didn't pass a law saying vacation rentals 00:27:51.789 --> 00:27:54.809 are illegal. Instead, they made a rule that says 00:27:54.809 --> 00:27:57.430 you generally cannot have rentals of less than 00:27:57.430 --> 00:28:00.880 30 days in residential zones. 30 days. But who 00:28:00.880 --> 00:28:03.559 goes on vacation for 30 days? Very, very few 00:28:03.559 --> 00:28:06.200 people. The source material quotes local managers 00:28:06.200 --> 00:28:08.799 like Vacasa who say the average guest only stays 00:28:08.799 --> 00:28:11.299 for three 10 nights. So by setting the minimum 00:28:11.299 --> 00:28:14.440 at 30 days, Portland effectively outlawed the 00:28:14.440 --> 00:28:17.140 standard vacation rental business model in those 00:28:17.140 --> 00:28:19.740 areas without ever banning it by name. It's a 00:28:19.740 --> 00:28:22.779 very clever and very effective piece of regulation. 00:28:23.220 --> 00:28:25.759 But the most detailed example in our source material 00:28:25.759 --> 00:28:28.640 is San Diego. They have taken a very structured, 00:28:28.779 --> 00:28:30.839 very mathematical approach to this. They have. 00:28:30.960 --> 00:28:33.160 It's a really interesting model. So what is the 00:28:33.160 --> 00:28:36.400 San Diego plan? Starting in 2022, they put a 00:28:36.400 --> 00:28:38.480 hard cap on the number of properties that can 00:28:38.480 --> 00:28:41.019 be used as short -term rentals. They capped it 00:28:41.019 --> 00:28:44.990 at 1%. of the city's total housing stock. 1%. 00:28:44.990 --> 00:28:48.190 That is a very specific and pretty small number. 00:28:48.329 --> 00:28:50.730 It is. It creates a finite license system. If 00:28:50.730 --> 00:28:53.309 you want to run a rental, you need one of these 00:28:53.309 --> 00:28:55.890 licenses. And there are only so many to go around. 00:28:56.049 --> 00:28:57.529 Once they're gone, they're gone. You go on a 00:28:57.529 --> 00:28:59.470 waiting list. And did they include that owner 00:28:59.470 --> 00:29:01.450 -occupier nuance we were just talking about from 00:29:01.450 --> 00:29:03.349 the Harvard study? They did. And this is what 00:29:03.349 --> 00:29:06.670 makes it feel like smart policymaking. The restriction 00:29:06.670 --> 00:29:09.670 and the 1 % cap only apply to homes where the 00:29:09.670 --> 00:29:12.700 owner is not a permanent resident. So. the investor 00:29:12.700 --> 00:29:14.779 properties. And what about the people renting 00:29:14.779 --> 00:29:17.799 a spare room? Shared rooms where the owner lives 00:29:17.799 --> 00:29:20.119 on site. They are totally exempt. They are not 00:29:20.119 --> 00:29:22.019 part of the cap. You don't need one of the rare 00:29:22.019 --> 00:29:24.519 licenses for that. So they're specifically targeting 00:29:24.519 --> 00:29:26.920 the investors who take housing off the market 00:29:26.920 --> 00:29:29.299 while protecting the casual hosts who are just 00:29:29.299 --> 00:29:31.619 making some extra money. Precisely. And they 00:29:31.619 --> 00:29:33.799 did one more thing. They leveled the playing 00:29:33.799 --> 00:29:37.460 field on taxes. San Diego now requires rentals 00:29:37.460 --> 00:29:40.339 to pay a transient occupancy tax. Which is what 00:29:40.339 --> 00:29:43.400 hotels have to pay. Yes. It's a hotel tax. It 00:29:43.400 --> 00:29:46.019 helps pay for city services that tourists use, 00:29:46.240 --> 00:29:49.900 trash collection, water, police, public services. 00:29:50.200 --> 00:29:52.160 It treats the rental like the small business 00:29:52.160 --> 00:29:54.859 it is rather than just a house. It seems like 00:29:54.859 --> 00:29:56.799 they're trying to bring some order to the chaos. 00:29:56.940 --> 00:29:59.299 That's exactly the language they used. The San 00:29:59.299 --> 00:30:01.420 Diego Council President Jennifer Campbell had 00:30:01.420 --> 00:30:04.099 a great quote about this. She said the pre -regulation 00:30:04.099 --> 00:30:07.160 era was an unregulated market that has vexed 00:30:07.160 --> 00:30:10.279 our city. Vexed. She framed these new laws as 00:30:10.279 --> 00:30:12.220 a way to finally close. Close the chapter on 00:30:12.220 --> 00:30:14.740 that chaos. Vexed our city. You don't hear the 00:30:14.740 --> 00:30:18.539 word vexed enough in city council meetings. I 00:30:18.539 --> 00:30:20.839 love that. It perfectly captures the frustration, 00:30:21.039 --> 00:30:23.220 though, doesn't it? It implies this problem that 00:30:23.220 --> 00:30:25.519 has just been nagging and unsolvable for years 00:30:25.519 --> 00:30:28.059 and years. It really does. So let's bring this 00:30:28.059 --> 00:30:32.460 all home, or I guess back to the rental. We have 00:30:32.460 --> 00:30:35.220 gone from the humble beginnings of a spare room 00:30:35.220 --> 00:30:39.299 in a cottage to a $100 billion global industry. 00:30:39.789 --> 00:30:42.289 We've seen how it is reshaping real estate, changing 00:30:42.289 --> 00:30:45.269 how we travel, creating entirely new risks for 00:30:45.269 --> 00:30:48.150 travelers and forcing cities to completely rewrite 00:30:48.150 --> 00:30:50.829 their laws just to keep up. It's not just a place 00:30:50.829 --> 00:30:53.680 to sleep anymore. It's a major economic and social 00:30:53.680 --> 00:30:56.200 force. And if we connect all these dots and look 00:30:56.200 --> 00:30:58.319 at the bigger picture, it raises a really interesting 00:30:58.319 --> 00:31:00.400 kind of provocative question about the future 00:31:00.400 --> 00:31:03.319 of home. What's that? Well, think about the convergence 00:31:03.319 --> 00:31:05.440 we've been talking about this whole time. We 00:31:05.440 --> 00:31:08.279 are seeing hotels trying to act more like homes, 00:31:08.319 --> 00:31:10.519 building out suites and condo style units with 00:31:10.519 --> 00:31:12.920 kitchens and living rooms. Right. The residence 00:31:12.920 --> 00:31:15.339 in model. And at the same time, we're seeing 00:31:15.339 --> 00:31:17.960 homes trying to act more like hotels, offering 00:31:17.960 --> 00:31:21.299 concierges, daily cleaning staff and standardized 00:31:21.299 --> 00:31:23.519 predictable amenities. Everything is meeting 00:31:23.519 --> 00:31:26.240 in the middle. Exactly. So are we heading toward 00:31:26.240 --> 00:31:29.140 a future where the distinction between living 00:31:29.140 --> 00:31:31.640 somewhere and staying somewhere completely disappears? 00:31:31.859 --> 00:31:33.880 What do you mean? Are we all just going to be 00:31:33.880 --> 00:31:36.900 transient occupants in a world of professionally 00:31:36.900 --> 00:31:39.339 managed service departments, whether we're there 00:31:39.339 --> 00:31:41.539 for three nights or three years? Is the very 00:31:41.539 --> 00:31:46.259 concept of a long -term, stable home changing? 00:31:46.579 --> 00:31:49.599 That is a thought to mull over while you're browsing 00:31:49.599 --> 00:31:52.680 listings for your next trip. It is. Just remember 00:31:52.680 --> 00:31:55.440 to check the reviews for Licky Roofs before you 00:31:55.440 --> 00:31:58.200 book. Always, always check the reviews. That's 00:31:58.200 --> 00:32:00.019 it for this deep dive. Thanks for listening, 00:32:00.099 --> 00:32:01.220 and we'll catch you on the next one.