Looking at Short-term Housing Options
Corporate housing, also known as temporary housing, is a common benefit offered in a relocation policy. 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 offers a period of transition for those transferring locations. Most temporary housing units come fully furnished, with kitchenettes, and are pet-friendly.
Corporate housing sounds like a simple concept: the company pays for an employee to stay in accommodations in the short-term, while their long-term living situation is being arranged and finalized. However, what happens if the long-term housing for an employee takes longer than expected? What happens if corporate housing prices are much higher than expected in the new living area? Are employees now on their own when it comes to living solutions?
While the specific answers to these questions will depend upon the relocation policies of the company, many transferees might ask about Airbnb, VRBO, and other short-term rental options. Some companies might be quick to approve that idea and offer reimbursement packages on short-term rentals for transferees. However, there are some downsides to consider for companies allowing their employees these options over covering the expenses for corporate housing. Those temporary housing options don’t offer the same coverage and come with more risk. Additionally, it could end up costing the company more money in the long run. Here is a breakdown as to 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 own short-term housing options, many companies provide a predetermined amount of support. The amount provided may exceed the level of support actually 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 see employees pocketing the difference between their temporary housing allowance and the actual cost of accommodations. If an employee sees in the relocation policy that he or she qualifies for $X amount of benefits, then they can book something cheaper but still claim the entire amount and keep 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.
Conversely, if your relocation program has pre-identified and pre-approved corporate housing units already selected, your costs will become more predictable and you can be confident that you are providing the necessary level of support your transferees need.
Billing Could Become a Nightmare
Companies that allow employees to use their relocation benefits for their own 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 own 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 individual employee.
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.
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 own third-party housing might expose themselves and your company to unneeded risk. If an employee 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 the malfunctioning equipment ASAP. With a third-party rental that is chosen by the employee, there is no way for your company to contractually guarantee timely repairs or replacements. 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 is to deal with while relocating for a company is an issue with 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 documents safety plans in the event of a fire or natural disaster
- Challenges around property insurance
Lastly, with third-party rentals, there may be little in the way of an 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 to 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 tough 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 a great option for those looking to take a vacation. However, for companies that are relocating multiple people a year for business purposes, this might not be the best option. Working with a qualified corporate relocation company, like GMS, policies can be put into place that will ensure your employees have suitable temporary housing units ready for them when they arrive in their new town or city. Contact us today online if you are ready to start looking at corporate housing solutions for your relocation program or have any questions about temporary housing for your relocating employees.
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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.
