Looking at Short-term Housing Options
Corporate housing, also referred to as temporary housing, is a common benefit included in relocation policies. Corporate housing is a short-term housing option for transferees who might not have an established home available in their new destination. Typically available in 14-, 30-, 60-, or 90-day increments, temporary housing provides a transitional period for those relocating to a new location. Most temporary housing units come fully furnished, with kitchenettes, and are pet-friendly.
Corporate housing may seem straightforward: a company covers temporary accommodations for employees while their permanent living arrangements are being sorted out. But what if finding long-term housing takes longer than anticipated? Or if the cost of corporate housing in the new location is significantly higher than budgeted? Are employees left to fend for themselves in finding a place to live?
While the specific answers to these questions will depend on the company’s relocation policies, many transferees may ask about Airbnb, VRBO, and other short-term rental options. Some companies may approve this idea and offer reimbursement packages for short-term rentals to employees who are relocating. However, there are some downsides to consider for companies that allow their employees these options, rather than covering the expenses for corporate housing. Those temporary housing options don’t offer the same coverage and come with more risk. Additionally, it could ultimately result in the company incurring more expenses in the long run. Here is a breakdown of why the use of Airbnb and VRBO could potentially backfire on companies relocating their employees.
Potential Overpayment
When working with a relocation consultant on policies for transferring employees, corporate housing pricing is typically broken down to a per-employee, per-night basis. When third-party solutions are used (like Airbnb), and employees are allowed to seek their short-term housing options, many companies provide a predetermined amount of support. The amount provided may exceed the level of support needed by the employee for suitable accommodations, leading to overpayment by the company. In the end, the company might not be getting as good of a deal as it could be.
In this scenario, the company could find that employees are pocketing the difference between their temporary housing allowance and the actual cost of accommodations. If an employee sees in the relocation policy that they qualify for a $X amount of benefits, then they can book something cheaper but still claim the entire amount and retain the balance.
This type of support may also put some employees in tougher spots than others when it comes to finding affordable options. The flat level of support provided may not be enough to cover the cost of reasonable temporary living accommodations.
On the other hand, if your relocation program has corporate housing units that have been pre-selected and pre-approved, your expenses will be easier to anticipate, and you can ensure that you are offering the appropriate level of assistance to your transferees.
Billing Could Become a Nightmare
Companies that allow employees to use their relocation benefits for their housing could also end up in a billing nightmare. Many companies’ policies are not written to address the unique challenges that come with employees booking their accommodations through third-party housing providers. Without established limits and a streamlined expense reimbursement policy, an HR or accounting team may need to process numerous third-party vendors who utilize different billing methods. This could also result in the accounting department having to spend more time cutting reimbursement checks to each employee.
One solution to address this issue is to have employees use company-approved corporate housing units that already have a direct billing arrangement in place. This ensures a more streamlined program when relocation specialists are already knowledgeable about the temporary housing options available.
Risk Considerations and Lack of Quality Control
Companies need their employees to have sufficient housing accommodations while relocating and starting their new positions. Allowing individual employees to book their third-party housing might expose them and your company to unnecessary risk. If an employee uses Airbnb or another company’s rental, there is no guarantee that the living accommodations will be clean, safe, or reparable at any given moment.
For example, with a corporate housing apartment, if something were to go wrong, the company would have an established contract with the corporate housing company that covers items such as repairs. This provides for timely repairs or the replacement of malfunctioning equipment as soon as possible. With a third-party rental that the employee chooses, there is no way for your company to guarantee timely repairs or replacements contractually. This places more risk on the employee and your organization and is not likely to be covered in the employee’s relocation policy. The last thing a transferee needs to deal with while relocating for a company is the issue of where they are staying.
Additional examples of risk exposure that may arise through the use of vacation-style rentals include:
- Property safety inspections
- Lack of appropriate safety equipment (such as door/window locks and fire extinguishers)
- No safety plans for documents in the event of a fire or natural disaster
- Challenges around property insurance
Lastly, with third-party rentals, there may be little to no established check-in process. This can lead to complaints related to customer service or quality, as employees might be left scrambling if the check-in process goes awry. If the employee shows up at the rental unit and the unit is not sufficient, or they are told it is no longer available, it will put the employee in a challenging situation where they are left to their own devices.
The workaround for this pain point is to have transferees utilize corporate housing units approved by the company, where a predictable direct billing relationship already exists. Additionally, a more consistently applied program is made possible when the relocation specialists working with your transferees are already familiar with your temporary housing providers.
GMS Can Provide Your Employees With Suitable Corporate Housing
Airbnb and other rental companies like it are an excellent option for those seeking a vacation. However, for companies that relocate multiple people annually for business purposes, this might not be the best option. Working with a qualified corporate relocation company, such as GMS, policies can be implemented to ensure your employees have suitable temporary housing units ready for them upon arrival in their new town or city. Contact us today online if you are prepared to start looking at corporate housing solutions for your relocation program or have any questions about temporary housing for your relocating employees.
We're Here to Help! Request a Courtesy Consultation
Are you ready to talk to a Mobility Pro? Learn how GMS can optimize your mobility program, enhance your policies to meet today’s unique challenges, receive an in-depth industry benchmark, or simply ask us a question. Your Mobility Pro will be in touch within 1 business day for a no-pressure, courtesy consultation.
Jules Matz | AHWD, ABR, CNE, CRP, GRI
Vice President, Real Estate Services Jules has over 21 years of experience as a licensed Real Estate Agent and Broker with operational experience gained from areas throughout the United States. She has held leadership positions such as Broker of Record and Real Estate Specialist, Team Leader, and Branch Manager, and as well as owned her own real estate company, working on U.S. Domestic and Government accounts. As a Team Leader, Jules taught monthly classes in contract writing, and contract negotiating to hundreds of Real Estate Agents.
