Vacation Rentals Can Have Risk - The Airbnb Situation

Airbnb, a website for vacation rentals, recently announced that a user of their site destroyed the home of another user during their vacation rental stay. The renter caused significant damage to the home and turmoil for the vacation rental owner.

The team and I feel very badly for the vacation property owner. Not only has she been the victim of a crime and her property destroyed but she is feeling a lack of trust towards another human being. Hopefully she can learn to trust again. We feel deeply for her. The other point I want to make is that there is a significant difference between a vacation rentals transaction of this nature and "timeshare" vacation rentals. Renting a private residence from someone and renting a professionally managed timeshare from someone is vastly different from several standpoints. Timeshares are not only bigger in size and equipped with more amenities but they have an extra layer of security included; that's important for both parties.

It's about risk management: I've heard people equate Airbnb to EBay in regards to "person to person transactions". You've got it wrong. I've been using EBay for over 10 years buying and selling items. I have never had an issue but if I did, the worst I would be out is a video game or perhaps a little cash. (Yes, I know EBay and PayPal have these guarantees and all but like most insurance I'm assuming those guarantees work perfect for everyone except on the items I am buying or the situation I am in.) So worst case scenario, the Wii Carnival Game I bought arrives and it doesn't work. I'll try to get the situation rectified but if I can't, I'll get over it; I can "tolerate" it. I realize that going in that I can handle a $20 loss. There's an inherent risk in this transaction; it's about $20 or so.

If I decided to rent out an oceanfront vacation rental in Laguna on Airbnb or homeaway and it got destroyed I know I would have significant financial damage but worse than that my family would be very upset. It would affect us all for quite some time.

Timeshare Vacation Rentals: But I have successfully rented my beachfront timeshare in Kauai many times and if there was an issue I never knew about it; the resort handles it. My guests are always greeted at check-in by a company called Marriott; a world-class organization. They have it handled. They take all the proper measures to protect OUR place. They also have a team of people on the resort grounds as well as 24-hour security. You get my point? This is a completely different transaction. By engaging Marriott, I have managed my risk.

Management Companies for Vacation Rentals: Some people hire vacation rental Property Management Companies to handle the transaction. I don't mean RCI as a Management Company. Many people opt to not hire them because of the fees involved - that's taking a risk. But even when you do hire them, there's no way that Management Company is hanging around all week to watch your place. They are not even doing drop-bys to ensure your renters are not stealing your granite countertops.

I'm not saying you should stay away from Airbnb or HomeAway for that matter. What I am saying is that you need to consider the risk when you do use them. And the risk is not the same as EBay. I'll recover from an "EBay-based $30 video game debacle" but I'm not sure if I can rebound from a "$500,000 Vacation Rental in Laguna Beach getting ruined debacle".

Most people are good; we firmly believe that. This person that destroyed the home is a "bad apple". There are bad apples out there. You are eventually going to encounter a bad apple in business. Consider what you have "at-risk" if the transaction goes sour. I, for one, can't tolerate a risk that large so I'll stick to timeshare vacation rentals.


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