THE VALUE OF CORPORATE HOUSING IN CANADA

EXECUTIVE SUMMARY

Corporate housing is fundamentally different from other types of short-term rentals. This well-organized industry provides a valuable service to businesses, employees, and others in need of temporary housing while having a sizable economic impact on the communities where it operates. It is important that policymakers and officials understand the industry’s importance and are cognizant of its particular characteristics and value when creating and implementing short-term rental policies. Corporate housing providers support fair and reasonable regulations.

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INTRODUCTION

The short-term rental industry has been around for many years and caters to various clients and needs. In recent times, with the growing sharing economy, short-term rental industries of all kinds have become a common topic. However, different short-term rental industries are often confused with one another. With the increased accessibility and popularity of short-term rentals, there are concerns from both individuals and organizations dedicated to protecting housing communities. To control these new industries and safeguard constituents, policymakers are implementing broad regulations that could inadvertently or negatively impact other short-term rental industries, including corporate housing.

Corporate housing is a well-established and growing rental market that serves a specific business purpose. As legislators try to keep up with the demand for regulation of the sharing economy, corporate housing industry leaders caution against knee-jerk policy responses that could unintentionally inhibit or prohibit necessary short-term rental housing. It is important for policymakers and government officials creating new short-term rental regulations to be aware of the corporate housing industry, its economic significance, and both its similarities to and differences from other types of short-term rentals.

Corporate housing is different from other short-term rentals in that it provides unique benefits to the business community and has a measurable economic impact on cities across the country. In Canada alone, corporate housing generated an estimated annual room revenue of $248 million in 2017. This type of housing is a business-to-business model for professionally managed units with an average length of stay of 54 days, which is substantially longer than other short-term rental units. Corporate housing is a fundamental part of many businesses' operations and is crucial for employees in transition. It differs from other short-term rentals in its clientele, how it is managed, and how it functions in the community. Due to these differences, it is less likely to create the nuisance and disruption that so many communities are trying to eliminate through new regulations and should be protected from unnecessary and potentially damaging regulations intended to solve problems created by unexpected challenges in other short-term rental industries.

Corporate housing is a vital industry that requires thoughtful regulatory consideration.

Many Names, Many Uses. The industry is known by a number of different terms such as:

• Corporate Housing
• Furnished Apartments
• Temporary Housing
• Serviced Apartments
• Executive Suites
• Executive Rentals

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SHORT-TERM RENTAL INDUSTRY OVERVIEW

There are various short-term rental industries that cater to different needs and customers. Short-term rentals are usually defined as units rented for less than a year that include furnishings and housewares and provide a more home-like environment than a hotel. They can serve the needs of families and large groups by providing more space than average hotel rooms and including kitchens so that clients can cook their own meals. These properties are often located in residential areas, providing clients access to residential areas they would not otherwise experience. Vacation rentals, a privately owned home rented out to vacationers by the day, week, or month for leisure purposes, are arguably the most common type of short-term rental. With the rise of the peer-to-peer model, it has become increasingly popular to rent one's own primary residence as a vacation rental, leading to regulatory questions and opposition from communities due to the nuisance that can sometimes accompany self-management. The most prominent community concerns surrounding short-term vacation rentals are allegations of over-occupancy, ill-behaved guests, large gatherings, revolving doors of different guests with very short stays, failure to run criminal background checks, and general lack of accountability. The corporate housing business model obviates these problems and community opposition, but this can be lost in the groundswell of political pressure and haste that can often surround new regulations.

Vacation rentals are typically privately owned homes used for leisure purposes.

CORPORATE HOUSING OVERVIEW & BENEFITS

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Corporate housing offers rented furnished homes to individuals, military personnel, and corporations, mainly for longer than 30 days and less than one year. It usually consists of apartments, condos, and single-family homes that people can use temporarily while traveling for work-related purposes. For employees who are being transferred to a new city, staying in the local area is very useful as it helps them determine where they will want to live permanently. An additional benefit for corporate housing clients is the ability to leave their personal belongings in the temporary home when returning home for weekends or traveling back and forth. This type of accommodation is more than just a place to stay; it is a much-needed service provided for employees experiencing a training or transition. It helps employers achieve their business goals by cultivating more engaged and focused employees. It is estimated that the annual inter-provincial migration volume for Canada is 280,847, many of whom are related to employment.

Vacation rentals are typically privately owned homes used for leisure purposes. In contrast, corporate housing offers the comforts of home coupled with full-service amenities and is handled through the convenience of a committed professional. Organizations generally allow their employees 31 days to complete a transfer once accepted, almost necessitating interim housing for a smooth transition. Oil and gas and insurance are the largest generators of corporate housing demand by industry. In addition to regular corporate clients like relocated employees, consultants, and employees in training, clients also include medical professionals, film and entertainment crews, patients receiving specialized care away from home, and those displaced by fire or natural disaster, among others.

Corporate housing has a positive impact on communities in a variety of ways, both direct and indirect. Property owners benefit by collecting dependable rental income from tenants comprised of vetted professionals and their families. Immediate neighbors of corporate housing benefit from living near well-kept and closely managed residences. Local economies also benefit from the strong economic impact that this often-unseen industry makes. This impact includes both the rental dollars paid for market-rate (often luxury) units, as well as visitor spending. The relocation industry directly contributes over $2.5 billion to Canada's economy and employs thousands of people across many diverse industry groups. In 2015, the average cost to relocate an employee within Canada was approximately $57,000. The Canadian inventory of corporate housing is estimated at over 6,700 units. It is a high-demand form of accommodation whose supply is rising faster than its nearest competitor, upscale extended stay hotels.

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CORPORATE HOUSING DIFFERENCES

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Corporate housing providers operate as professional business entities and do not use peer-to-peer platforms that have caused challenges for legislators and permanent residents. The business-to-business model used by corporate housing providers eliminates tax collection issues common to non-professional models. Corporate housing providers are familiar with and pay hotel occupancy tax and other financial obligations as required by law. They also comply with property zoning laws, health and safety codes, apartment community lease restrictions, and local regulations as they relate to short-term stays. Rental units are typically leased to a provider who then fills them as needed. The corporate customer often engages in twelve-month leases, or lease matches with building owners and property managers who are familiar with the corporate housing model. Most units are leased by the provider and then re-rented to the client, as opposed to individual leases with many different clients.

Corporate housing units are usually leased directly from the building owner, although providers may also lease from one another. Frequent changes in guests are unusual in a corporate housing situation, as evidenced by an industry standard of a minimum 30-day stay and an average stay of 54 days. This translates into a less boarding house-like feeling for nearby neighbors. Clients may sometimes be individuals visiting for a conference or training, but are more likely to be employees and their families who are recently transferred or considering a move from another employer location.

The corporate housing model is a business-to-business relationship. Employee relocations and project assignments make up 61% of corporate housing rentals in Canada. Corporate housing is typically larger than a hotel room or extended stay hotel. It does not attract the bad behavior that poorly vetted short-term rentals can sometimes draw, like large gatherings and over-occupancy. Vacation rentals tend to attract larger groups, with two-thirds of all stays involving at least three people, and more than one-third involving at least five.

Corporate housing clients are professionally vetted, are typically housed for employment reasons, and are often accompanied by their families. Experienced management ensures consistent contact for property neighbors. Professional managers are accountable for client behavior to property neighbors and the professional organizations that set industry norms and expectations. Many corporate housing industry professionals have industry designations and credentials that highlight their experience and knowledge.

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CORPORATE HOUSING PROVIDERS ASSOCIATION

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The Corporate Housing Providers Association (CHPA) is a professional trade association that supports providers of corporate housing worldwide. It has been representing this business-to-business industry for more than 20 years, setting service standards, providing a professional certification program, organizing annual and regional conferences, and offering a code of ethics to ensure providers maintain high standards of service. CHPA's membership comprises over 300 companies, including corporate housing providers and essential industry partners.

Corporate housing providers offer a comprehensive range of services that includes furniture, internet, and welcome packages, ensuring high levels of service and accommodation. These companies comply with various standards, such as Health, Safety, Security and Environment (HSSE) Compliance, Payment Card Industry (PCI) Compliance, safety and emergency plans, trained staff, 24-hour emergency lines, standardized products, centralized management, background checks, security precautions, and insurance carried by professional providers. They also provide clear options for recourse so that if a client is unsatisfied, they can be moved to another location. Additionally, these providers comply with federal, provincial, and local regulations.

These standard requirements ensure that corporate housing providers remain competitive and also help keep communities and clients more secure. Municipalities and provincial governments should recognize the importance of these standards and comply with them accordingly.

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CONCLUSION

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It's crucial for municipalities and provincial governments to support the growing corporate housing industry, which helps businesses and people in transition. Policymakers need to be aware of the specific impacts of corporate housing to ensure that legislation is appropriately designed to avoid negative consequences. This is particularly important given the new regulations aimed at other short-term rentals. Unlike other types of short-term rentals, corporate housing focuses on professional management, minimum stay of 30 days, and high standards of organization. Corporate housing is beneficial for both businesses and communities.