The wrong incentive at the wrong time in the wrong place

By on July 11, 2019

Clark Twiddy, President of Twiddy & Company

By Becoming Indispensable, Unregulated Home Sharing Businesses Have Created a Penalty Box for Our Professional Licensed Employers and Threaten Our Blue-Ribbon Tourism Economy

No industry is resistant to change even in a place as consistently beautiful as the Outer Banks. While the Outer Banks tourism industry continues to be an economic driver on par with anything in North Carolina, we’re witnessing significant inflection points within our historically rich core business models. Likewise, as the velocity and access to technological innovation increases, it’s vital to ensure that regulatory measures correspond with our region’s dominant economic driver – tourism.

For decades, the Outer Banks professional property management companies, and arguably the region’s largest local private employers, and taxpayers, have been tightly regulated by the State of North Carolina. These regulations delivered enormous benefits to consumers and are one of the key reasons for the economic vibrancy along our shores. However, with the advent of unregulated private accommodation companies like AirBnB and VRBO becoming more and more prevalent, the time has come to review and potentially recalibrate the regulatory architecture to ensure that the same level of governmental oversight applies to the same kinds of businesses. Of note, the issue is not whether home sharing is a negative business construct – fair competition identifies and promotes true consumer value. Instead, the issue is whether unequal regulatory application and unfair governmental enforcement leads to a better or worse economic climate for our local, private businesses?

That dilemma is not to say that we need more regulation or that we should discourage fair competition–we simply need equal regulation and enforcement that applies fairly to similarly situated business archetypes.

The home sharing business and professionally managed rental companies are performing the exact same functions–renting homes to vacationers and then attempting to create a valuable, memorable and rewarding experience during their stay. They do so, however, with completely separate regulatory burdens – the home sharing businesses operate without any regulations whatsoever, while the licensed vacation rental firms fall under various statutory and regulatory compliance measures.

In other words, as compared to private home sharing, current long-standing regulations unintentionally create a disincentive to economic development in all the wrong ways. Why should any vacation rental business subject themselves to state licensure and scrutiny when Airbnb and VRBO operate in an unrestricted manner? The answer is not just for local and state governments to simply tax the home sharing transaction, but rather to regulate them in the same manner as is currently required for the professionally managed vacation rental businesses. Turning a regulatory blind eye to home sharing, places the safety, consistency and vibrancy of residential Outer Banks vacation rentals squarely on the chopping block.

The time for either eliminating decades-old regulations and laws in the vacation rental industry or requiring that the home sharing enterprises fall under the same governmental scrutiny is now. The objective is a fair and balanced regulatory landscape. To do otherwise, simply penalizes our best and broadest, private regional employers (and their staffs, subcontractors, and vendors) while giving birth to a grossly unbalanced and unfair competitive environment. An environment where the unregulated businesses flourish, and the long standing, law-abiding professionally managed firms struggle.

Article provided by Clark Twiddy, President of Twiddy & Company

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Indeed! Timing is everything!

OBX Soundfront

Here is the difference in a rental management company vs. any of the third-party reservation websites. Companies like Airbnb, VRBO, and HomeAway process a transaction, take your payment and from that point forward, they have zero responsibility or accountability for your vacation. Example….your level 2 AC stops working and you cannot get in touch with the owner of the property. What then? The toilet in the level 3 master bathroom is plugged and will not flush. What then? Yes, some homeowners are attentive to your every need and others are not even available to assist you. The homeowners who have… Read more »

Jenna Kehoe

As a neutral party, I believe this article is void of data yet ripe with conjecture. I don’t have a horse in this race, but live in the area and have enjoyed rentals through rental companies and AirBnB on many occasions. Hopefully someone at Twiddy & Co can respond to these questions, and in doing so, provide some useful facts and insight to educate people. Although it may be unintentional, this article seems to attempt to solicit support of rental companies via fear, not facts. “Turning a regulatory blind eye to home sharing places the safety, consistency and vibrancy of… Read more »

Barb

I visit every year and the worst house I stayed in was a Twiddy rental. It was filthy, had multiple issues, and when we complained we were given 100 dollars for our problems. I have never had these issues using VRBO! The owners are receptive and the homes are generally much nicer.

Tod

Agree with the comments on Clark needing to identify exactly which regulations he proposes placing on small owners. Also, he neglects to mention the competitive advantages a big business like Twiddy enjoys: economies of scale, advertising advantages, labor advantages. Interesting that he wants our competitive advantages diminished so that he can further leverage his own.

Clark, think about evolving your business model rather than trying to shut us out through government fiat!! You’re trying to use government to shut down competition — not to provide more options for consumers (think taxi companies versus uber).

Barry

I would also like to point out that most homes here have a rental space on the ground floor that is unrentable due to local regulations that can and do make a perfectly good Air BNB or VRBO since they can be rented without a stove for Air BNB or VRBO, which helps seniors to be able to stay in their home and also helps the restaurant industry here as they are unable to cook without an oven-stove. Mr Twitty you have some nerve trying to force seniors out of their homes.

Patti

Over regulated? PLEASE, if anything you are under regulated. Otherwise these ‘mini hotels” with 18 to25 bedrooms you make a fortune off of would have to have sprinkler systems. Who did your lobbying arm pay off to get out of that? I still don’t understand how the hotel association let you guys get away with that. Now you want to stop retirees from pocketing a little cash, that is properly taxed. I think you might try some counseling to get that greed under control.

Drifter

or keep the govt out of everyones business, no idea why people want the govt in everything and more regulation, smh

Drifter

or keep the govt out of everyones business, no idea why everyone wants the govt in every single thing smh.

Beachcotton

Truly well written expressing your concerns. What about the homeowners who want to offer a reasonably priced rental in a 3bdrm that you don’t want to deal with? Additionally, two key points: who says VRBO owners do not pay appropriate fees and taxes. I am required to charge and pay taxes too !! Secondly, your lobbyists are working with insurance companies to skyrocket rates if owner uses VRBO or Airbnb!!! Really, does anyone think you check on the homes and who are in there during the week. ???

Just Beachy

As much as I disliked this article, the Outer Banks Association of Realtors has always lobbied against insurance increases on the Outer Banks. The state and national associations are mostly hands off as far as vacation rentals, so I seriously doubt they have anything to do with it. Insurance just like to squeeze as much as possible from us consumers.

Dave Ahearn

I would be very interested in what regulations you are referring to other than the licensing issue. I worry that pulling back regulations would open the door to previously resolved issues (i.e. limiting rental signage).

SurferObx

Thanks so much for your opinion Clark Twiddy. Surely you have the best interests of local Dare County residents at heart with no thought at all to your realty empire. The huge rental houses and OBRA have run this place for so long. So now you have a bit of competition. Boohoo

OK Corralus

I appreciate your concern, but I don’t need you to legislate my life. Less government is best government.

Coki

What about the lack of comparable regulations in regard to the mega homes aka mini hotels that Twiddy develops and manages compared to the regulations hotels need to follow? Crickets

Roxie

Oh please! This opinion is nothing short of an effort to instill fear and protect the status quo at a time when the Outer Banks needs to be embracing forward-thinking strategies that address the high cost of housing here. And it’s plain silly to think that home sharing businesses and large rental companies can’t coexist here like they do in other vacation destinations.

Craig

I am a frequent renter on Hatteras Island. I rent at least two houses each year. I’ve done VRBO along with several different realtors through the years. These days even if you do use a “Realtor” you rarely interact at all with a human being. The entire transaction is done via the internet. There really is no difference between making private arrangements via VRBO or using a realtor’s website for today’s vacation renter.. The only difference is that now you are hearing the realtors whine about their lost commissions and their dying business model.

Barry

The difference in my experience is that the new model Air BNB or VRBO is much better at offering the guests a customized experience, a cleaner home, and are more responsive to any issues that may arise during your stay. Having to deal with a single home or room to rent provides much better experiences than a realtor with 1000 homes to manage.

JohnBoyBilly

Not possible if you do it legally. A single unit owner has no leverage with certified service providers (electricians, plumbers, HVAC, etc.) when safety or habitability issues arise.

Cayce

Please note the exact regulations and laws of which you speak. Your argument seems quite vague and unsubstantiated without them. Thank you so much!

JohnBoyBilly

The Vacation Rental Act. Chapter 42A of the North Carolina General Statutes.

Nags Head Resident

Give me a freaking break. All I hear is a bunch of whining from the rich because some of us “small” people are finally able to make a few dollars of our own off of vacation rentals! This really pisses me off.

Just Beachy

I don’t see in the article what actual regulations you are suggesting be applied to Air Bnb or Vrbo. Can you explain?

Maureen Cowie

It has been a few years since we came to visit. The last time we were there, we paid a fortune and were sorely disappointed. For 8k we should have had a mattress that wasn’t worn out. There were not enough plates for us. Had to buy paper plates and toilet paper. Nice to know VRBO is causing competition