116 3rd St SE
Cedar Rapids, Iowa 52401
Airbnb, HomeAway here, Uber may be coming to the Corridor
By Stacey Murray, The Gazette
Aug. 10, 2014 1:01 am, Updated: Aug. 11, 2014 12:30 pm
Technology is changing the way vacationers are planning their summer getaways.
Instead of booking a suite in a hotel and making a car rental reservation, travelers are checking out websites listing spaces in private homes and cars available for rent. They can scroll through rentals in desired vacation spots, poring over details and prices until a home catches their eye.
They can send a request to the home's owner, letting them know with a personalized message that they would like to stay there and for how long. The host can accept, the two parties decide on a payment, and later meet at the home to exchange greetings and Wi-Fi passwords.
Welcome to the sharing economy, which is composed of various websites and apps. The sharing economy allows users to bypass traditional industries and 'share” resources - whether those resources are homes, cars or tools.
Start-ups such as Uber and Airbnb have become the faces of the sharing economy, but new companies are constantly emerging.
Uber, founded in 2009, allows its users to find rides through an app, giving consumers an alternative to taxis. On Airbnb, a San Francisco-based company, people can list their homes, condos or apartments for others to rent, and consumers have been doing so since 2008.
The use of these websites has been increasing. While listings on Airbnb date back to 2011, there has been a rise in the last few months.
Other websites allow their users to rent boats from each other, share meals or offer petsitting services.
Launched on the East and West coasts, the sharing economy is beginning to develop in Iowa.
A search for Cedar Rapids on Airbnb yields more than 40 listings. Three of them are in Cedar Rapids, with the rest in Iowa City, Coralville and Mount Vernon.
It is rumored Des Moines could be the next city to welcome Uber. If it does, it will be the first city in Iowa to have the service and will join the likes of Chicago, Kansas City, Omaha and Milwaukee.
The new services have industries crying foul. Taxi drivers have gone on strike in London, claiming Uber drivers should face the same regulations they do. Hotels are worried - The Economist magazine estimates that at the current rate Airbnb is expanding, it could steal 10 percent of hotels' profits by 2016.
Benjamin Peterson, a recent Iowa State University graduate, has listed his parents' basement on Airbnb. An avid traveler himself, Peterson heard positive reviews of the website from friends.
Peterson said his parents have perpetually opened their home to family and friends, so listing a room on Airbnb was a seamless transition - one that would bring in $60 per night.
But participants in the sharing economy have had some horror moments. In California, a woman rented out her condo for 44 days, and when the customer was asked to leave, he refused. California state law says any person staying in one place more than 30 days has tenants' rights and must be legally evicted.
Other reports continue to surface regarding these services. An Uber driver is accused of kidnapping a drunk woman and taking her to a motel. In Sweden, a home was used as a temporary brothel after being set up for use through Airbnb.
But Airbnb does not scare Peterson - he has received requests to stay at his home from seemingly dependable individuals, including faculty members from other universities and a traveling family of seven.
'Most people are good-natured and aren't looking to take advantage,” Peterson said.
Regulation
Stan Laverman, senior housing inspector in Iowa City, periodically scrolls through listings on Airbnb. He verifies that the properties listed are inspected and that they have bed-and-breakfast permits.
'If you want to endanger your own life, that's one thing,” Laverman said. 'But if you're charging $50 per night, you should be providing safe housing.”
Laverman said he's in the educational mode - he reaches out to the hosts to make them aware of regulations. The city has refrained from taking any legal action involving listings that are not in compliance with regulations.
'It's not illegal to advertise a zoning code operation,” Laverman said. 'Until I have reports of people actually staying there and verifying that, we don't pursue it.”
While Airbnb has been criticized for skirting ordinances, the terms and conditions advise hosts to understand local laws and zoning codes.
Cedar Rapids has an ordinance prohibiting people from operating businesses in residential areas.
But if Airbnb hosts house only one or two guests, they are in compliance with the ordinance. If they house more, homeowners are treated as landlords renting property.
They are responsible for obtaining a landlord business permit through the city, registering the rental property and attending a class.
The legal role of Airbnb is less clear. When hosts and guests connect, Airbnb receives part of the 6 percent to 12 percent service fee per guest, in addition to a 3 percent host fee.
While Airbnb is the third-party facilitator of the agreement, it declines any responsibility in its terms and conditions.
Kevin Ciabatti, the director of Cedar Rapids Building Services, admits regulations might be a bit behind. Ciabatti said if city officials see an influx in this kind of activity, they could pursue further regulation, such as ordinances that would regulate renting homes on a nightly basis.
Insurance
Homeowners listing properties on these websites inadvertently could be putting themselves at risk.
Airbnb provides a $1 million host guarantee for those renting out their homes. In the case of too-rowdy guests, hosts can file a payment request online if they can prove with proper documentation that guests have damaged their homes.
TechCrunch, a news website devoted to technology, reported that Troy Dayton, an Airbnb user, had his home trashed by a meth addict who stole his personal information. Dayton requested $1,000 and new birth certificates to cover the holes in his walls and other structural damage.
No one responded to his request. After a second request, Airbnb offered him a free month at Airbnb listings for up to $125 per night because he did not feel safe in his home.
The guarantee is not considered insurance, as the website warns. It advises that hosts should not consider it as a replacement or substitute for homeowners or renter's insurance. It does not cover cash, securities, collectibles, rare artwork, jewelry, pets or personal liability.
The Iowa Insurance Division recently warned Iowans to proceed into the sharing economy with caution. The agency said most homeowners' insurance policies do not anticipate homeowners hosting paying guests.
'They may unwillingly be leaving themselves wide open in the case of a liability situation,” said David Conner, vice president and chief claims officer at United Fire Group of Cedar Rapids.
The Iowa Insurance Division warning also extends to websites offering car sharing.
The agency said a commercial policy is needed for people who provide either vehicles or rides via apps like Lyft and Uber. Those using and providing the services could be at risk for lawsuits if an accident occurs because they are not covered under private policies.