Chicago Restricts Vacation Rentals. Other Cities Likely to Follow Its Lead

Let me share a bit of personal history. About two years ago, when I was researching the second edition of Pauline Frommer's Hawaii, I jetted over to Maui County, going first to the island of Molokai. What I found there was, in a word, devastating. Vacation rentals had recently been outlawed, despite the fact the Molokai did not have nearly enough hotels to house those who wanted to visit. At a recent massive hula event, considered the most important in the islands, as Molokai is believed to be the birthplace of hula, so many attendants couldn't find places to stay that they had to camp out on the beach. Several months after I visited, the one luxury resort on the island shut down, due to a protracted legal battle on the use of some of its lands which sapped its finances.

All of Hawaii depends on tourism. Its the lifeblood of that community. And without it, little Molokai was literally withering away. Restaurants, tour operators and other businesses were shuttering, unemployment was far above the national average and many residents were living subsistence existences, fishing and scavenging for food to survive. No, I do not exaggerate.

A beach in Molokai by Chuck 55

This on a breathtakingly lovely island, with important historic sites to tour, idyllic beaches (see above) and wonderful hiking trails. An island, in short, that should have had a flourishing tourism industry, and would have had a better chance at it, if vacation rentals were legal. But because the hotel industry on the nearby island of Maui didn't want competition from vacation rentals (that's not proved, mind you, but its my theory), the island of Molokai was (and is still) suffering.

I've written in this blog about the foolish new law New York state has put into place banning rentals of less than 30 days beginning in May of 2011. I just learned, in a piece by Laura Bly in USA Today, that
Chicago recently enacted an ordinance restricting rentals of under 30 days. Bly quotes a member of the Chicago Vacation Rentals Association predicting that the 700-or-so currently legal vacation rentals in the city will be sliced by 40% to 70% when the new rule kicks in January 1.

Bly goes on to note that, according to the Vacation Rental Managers Association, similar laws are being considered in Sonoma County, Calif.,New Braunfels, Texas, and Isle of Palms, S.C.

What the heck is going on? Yes, I realize that sometimes renters cause problems for residents. But as a person who's lived in apartment buildings all her life, I'd guess actual neighbors cause just as many hassles over the years. (Who hasn't lived next to a neighbor from hell?)

Is this a case of "not in my backyard" syndrome? Or is it the case that the existence of rentals makes housing prices rise, as the backers of these laws content? Perhaps a bit. But from my own personal experience in New York City, I know literally dozens of locals who couldn't get along without the income they occassionally get by renting out their homes while they travel. They're able to afford their homes because they can rent them from time to time.

Do I expect all vacation rentals to actually disappear in these places. No. Many will go onto the black market. Meaning tourists will lose the protections they had when renting them. And the government will lose the tax revenue they once received on these rentals.There will certainly be fewer rentals in these places, which will hit the pocketbooks of the local restaurants and stores who rely on the visitors who may choose to spend their vacation dollars in more affordable areas (ie those that allow these cost-effective rentals).

I'd like to urge the residents of Maui County, New York, Las Vegas, Chicago, Paris, Sonoma County, New Braufels and Isle of Palms to think long and hard about whether these laws are really benefiting the people. Or are they simply lining the pockets of the well-organized, lobby-happy hotel industry?