The Impact of Airbnb on Employee Relocation Costs

by | Jul 9, 2015 | News

Each year, there seems to be a handful of new services that steal the media spotlight for their innovative business models and trending popularity amongst consumers. Last year it was Uber; this year it’s Airbnb—the online marketplace for people to list, find, and rent unique and personal lodging all over the world.

We’ve weighed the pros and cons of incorporating Airbnb in your employee travel policies, so you can be the judge of whether or not the “Worldwide Accommodations Leader” is a suitable replacement for your employees’ business travel, as well as relocation, needs.

relocation costs

While founded in 2008, Airbnb has been steadily gaining interest from corporations for business travel. According to CNNMoney, the number of corporations using Airbnb today for business travel is at least 1,000, and with the startup’s recent launch of its “Airbnb for Business” portal, which includes a centralized billing system and a dashboard for tracking employee spend, the number of corporate users is only anticipated to continue growing.

Like any successful startup, however, there’s a question of whether or not Airbnb, especially when provided as a service to your employees, is merely a trending perk or an impending addition to HR and relocation policies that’s here to stay.

What Airbnb Offers Business Travelers and Relocating Employees

  • Significant cost savings for large group travel
  • More flexible accommodations, such as parking spots, full kitchens, and office or meeting spaces for groups
  • More control over neighborhood location and the accommodations that work best for your employees
  • Can easily be added to your employees’ relocation Lump Sum policy for destination trips or temporary housing

Important Considerations for Business Travelers and Relocating Employees

  • Employees must feel comfortable and safe renting a personal home or apartment and with the neighborhood or street location
  • Particularly, female employees must feel comfortable and safe in the space if traveling alone
  • Opportunities for misleading accommodation information exists due to regulation issues, especially concerning shared parking spaces; use of Wi-Fi or cable or phone; A/C or heating capabilities; and safety features, such as smoke detectors, fire extinguishers, etc.
  • Property damage is possible (only certain items are covered under Airbnb’s insurance)
  • Unresponsive or fraudulent hosts have led to double-booked spaces or spaces rented out not by the actual owner

Whether your company is an Airbnb fan or not, special considerations must be taken before any new service is added to employee policy.

Helping Relocated Families Prepare for School

by | Jun 11, 2015 | News

For employers and transferring families, making sure the kids feel comfortable in their new school is critical, as ensuring the support and backing of the employee’s family is what can make or break the overall success of a transfer. After all, isn’t it “family first”?
relocation

Remember: A move isn’t over when all the boxes are unpacked, so here are 6 tips to help recently relocated families with kids of all ages get off on the right foot at school.

1. Get Organized

Any parent knows a smooth start at school begins with organization—knowing pick up times, drop off times, and after school activity times. This year, have the employee take things a step further by creating a family scheduling center. This should be something placed in the kitchen, mudroom, or other common area that houses everyone’s schedule for the week or even the month. List important contact information, and try color-coding for each family member. While the employee will be starting a new schedule at work, the spouse and children will have their own new routines to get used to as well. Stick to the schedule and keep it visible for everyone.

2. Stock Up

The weekend before the first school day, do some meal prepping and stock the refrigerator with school-friendly foods: snacks on the go, paper bag lunch items, and have employees consider stocking up on the family’s favorite foods. They call it “comfort food” for a reason! Nothing will help family members feel more at home than their favorite meals. Better yet, have the kids join in on grocery shopping and stocking of the fridge. It will give them a sense of control in their new surroundings.

3. Map It Out

How will the kids get to and from school? Suggest the employee plan any pick up or drop off routes ahead of time. While it may be as simple as a bus route or mobile navigation system in the car, it’s always a good idea for parents and the kids to know how to get from point A to B without any outside help, should any emergencies occur. Take a drive and really get to know the new area.

4. Get Involved

Lots of parents enjoy getting involved in school activities, but for new families to the area, it’s even more important. For the parents as well as the children, getting involved means surrounding themselves with others their age in the hopes of making community ties stronger and easier. However, if a tight time schedule makes getting involved at school for your employees more difficult, there’s always getting to know the neighbors. A recently relocated family should never underestimate the feeling of support from building a stable community of friends.

5. Think Ahead

For an even stronger chance of settling in at a new school, think beyond just getting through the first weeks. Have the employee ask his or her kids to set personal goals to accomplish by the end of the term. This can be a sport in which to participate, grades they want to achieve, or activities they’d like to do outside of school with new friends. Setting goals places a positive spin on a new situation and will give everyone something to look forward to while settling in.

6. Expect Roadbumps

Finally, make sure employees understand that—no matter how organized they feel about their family getting back into the swing of things—there will always be the unexpected. The best way to deal with the unexpected when the kids are still adjusting is to experience the associated feelings—anger, “home” sickness, etc.—so everyone can understand what is causing the most discomfort. This will help you make a plan to move on. Some things will be out of their control, but working through it together is the key to keeping everyone on the right track toward feeling at “home” again.

Getting ready for a new school year following a big move doesn’t have to mean chaos. The more you can prepare ahead of time at home to make things go smoothly, the fewer opportunities there are for things that can go wrong.

10 Common Myths of International Relocation

by | Apr 9, 2015 | News

Compared to U.S. domestic relocation, relocating internationally is a whole other process. Here, we’ve dispelled the top 10 myths often associated with international relocation. 

international relocation
Work visas are not required if the employee is going to work in a country for less than 30 days.
If the employee is going to perform productive work for an employer in a country where they are not eligible to work, then, regardless of the time spent, most countries will require them to obtain a work visa. While certain business trips are permitted, workers cannot technically work (exchange physical or mental labor for money) without a work visa.
Once you approve your employee's new position in the new country, it's OK for them to go there immediately and start working.
Organizational approval of the new position is only half the battle. A work visa approval grants your employee the permission to begin work in a new country immediately. Keep in mind that the visa approval process varies by country. Once the employee applies, they may have to wait weeks to months before receiving their visa to enter the country and start employment.
The employee will be able to get a very similar home in the new location.
A different location means different standards, including what is important in a home. This can mean larger outdoor spaces versus larger kitchens, or smaller everything in comparison to U.S. “norms.” Not to mention price differences: Housing issues vary around the world as economic standing, living conditions, and cultural norms come into play.
Everyone speaks English, so it will be an easy transition.
A common misconception is that English is the only language the employee will need to know, wherever they travel. Besides being wildly presumptive, it’s also completely untrue. Not everyone in every country speaks English, let alone fluently. Plus, learning a new language opens up other doors for embracing a new culture. By offering language training, you can ensure your employee is better able to acclimate to the new culture.
The employee may need to learn a new language for a smooth transition, but their family doesn’t.
Actually, relocating to a new country can often be more stressful on the family than the employee. The employee’s spouse is also leaving behind friends, family, and possibly even a career. Children, who are often seen as more resilient, can feel secluded in a new culture that they don’t understand. It is important for the company to offer language and cultural training, not only to the employee, but the family as well to ensure they are able to thrive in their new environment.
Trailing spouses leaving behind a career just need time.
Time, unfortunately, is not the heal all for this type of adjustment. Even when provided with allowances, spouses can feel lost and insecure when leaving their old career for the unknown. Not knowing the language, culture, or types of jobs available can be overwhelming and draining. Offering career support, resume building, and job coaching can help the trailing spouse find a new career path faster than when left alone, which will help them adjust to their new surroundings that much faster.
It is difficult for the employee to fit in and they often feel secluded in their new country.
Employees can feel these emotions, especially if they don’t receive any kind of cultural training. It is important that they assimilate into the new culture as soon as possible to avoid seclusion. Many employees join other outside activities that assist with meeting new people, learning the new culture, and language. The more cultural training they have, the happier they will be in their new position and new lifestyle.
Expatriates coming to the U.S. don’t need cultural training.
Yet another misconception is that expats coming to the U.S. do not need cultural training. There is a perception that the U.S. is easy to navigate, but, in fact, the U.S. is a very different culture, and visitors are often surprised about the differences they were not expecting. For instance, the way Americans conduct themselves at work, toward strangers, and even eat pizza or shake hands is not the same as the rest of the world.
Culture shock never happens when an employee is returning to their home country after an assignment.
Typically employees feel a sense of culture shock when relocating to new a new country, but it is often overlooked that they can experience these same emotions when going back to their home country. Employees will need to go through an adjustment period, just like they did when they first moved internationally. The employee made a new home in their new country, so they have to get back in the mindset of their old country being home again. A change in job role, along with family adjustments, and the new surroundings can all be overwhelming for the employee.
Offering tax equalization benefits to employees means they will not have to worry about taxes.
Tax equalization is the benefit that allows your employee to continue to pay taxes as if they hadn’t left the U.S., and the company would cover the cost of the difference from the new country. Even if you offer them this benefit, they will still need to be aware of their own tax situation since they are the ones held liable if anything were to be wrong. It is essential that employees remain tax compliant while on assignment or if they are permanently transferring to their new country.

10 Common Myths of U.S. Domestic Relocation

by | Mar 12, 2015 | News

If relocating is the third most stressful event in a person’s life, then there’s no surprise the amount of gray area perceptively surrounding the industry that strives to define and streamline it.

We’ve collected the 10 most common myths about U.S. domestic relocation and dispelled them, once and for all, to shed light on the thousands of successful and stress-free moves experienced by our customers each year.

domestic relocation
Relocation companies make money buying and selling houses.
Relocation companies provide a market-based offer for an employee’s home based on the appraisal criteria set forth by the Worldwide ERC®. Typically, two appraisals are ordered from independent companies, and the results are averaged for an offer on the employee’s home. Relocation companies do not make a profit on buying and selling the home, but rath­er are paid a fee for services regardless of the property’s eventual sales price.
If a relocation company makes pay­ments to vendors, it’s not a taxable reimbursement to the employee.
All payments made on behalf of an employee to a vendor can be considered taxable income to the employee. The exceptions to this are household goods move costs, final move costs to the destination, and any costs associated with a qualified home sale program.

Note: This article was written in 2015, prior to the Tax Cuts and Jobs Act. 

Home sales are taxable if they don't meet the IRS '50-mile test.'
Home sales fall under a different IRS tax rule than other relocation expenses, specifically Revenue Ruling 72-339. And while other relo­cation expenses use the “50-mile test” to deter­mine tax protection, the test does not apply to a home sale program. Organizations can treat home sales like any other business expense.
Short-term assignments lasting longer than 365 days do not need benefits taxed until day 366.
Short-term assignments less than one year are treated like any other business trip. However, once an assignment is required beyond 365 days in duration, travel reimbursements are taxable. If, for example, a short-term assign­ment was designated as 400 days in duration, all travel expenses are taxable from day one. If the assignment was originally designated as 325 days in duration but at day 250 is changed to extend beyond 365 days, then at day 250 all travel reimbursements become taxable. You cannot wait until the 365th day to account for taxability.
Relocation companies’ service pro­vider fees can vastly increase an orga­nization’s relocation spend.
Provider fees typically account for only 3 – 5% of total relocation spending. While a small amount in comparison to total cost, these fees can reap great rewards in cost savings, program struc­ture, and ensuring tax compliance. 
Employees receiving a lump sum benefit will need to find rental arrangements on their own.
Even if the transferring employee is not receiving destination assistance as part of their relocation package, there are still options that can help them when searching for a rental. Before an employee even sets foot in the new destination, they can begin their search online. However, if the employee is having difficulty finding or securing a unit on their own, the relocation company can set them up with a national rental finding agency or local brokerage to assist in the search. Each will offer different levels of service for a set fee or percentage of the monthly rent depending on location.
Finding a rental is easier and less time consuming for my employees than purchasing a property.
Signing a lease may be easier than closing on a new home, but that doesn’t mean it is less time consuming. Renting, especially in larger cities, is in high demand. Units go on and off the market in a matter of minutes in some areas, so it is important for employees to have as much time as possible to find a unit that will meet their needs.
Relocating with pets will be easy for employees moving within the U.S.
Relocating pets within the U.S. is much easier than relocating outside the U.S., but each state still has its own rules and regulations that must be followed. Finding a new home can be challenging when dealing with city breed restrictions or housing restrictions (such as apartment, condo, or HOA restrictions). Another thing to keep in mind is transporting a pet is a non-taxable expense per IRS relocation guidelines, but the employee will still need to figure out the best means for transporting their pet(s), whether that is personally by car, air, or a pet transportation service.
Business travel is not taxable for the employee and their spouse.
The only business travel expenses that are not taxable are the employee’s. Spousal travel expenses would be considered taxable. The only way a spouse’s travel expenses could be classified as tax exempt is if that spouse is also an employee of the company traveling for business purposes.
Employees are aware of the cost of living differential between their old location and new destination.
Cost of living can vary drastically between locations, which is why it is important to discuss with employees early on about what they can expect in their new destination. If the cost of living is higher, they will need to figure out what they are looking for in a new home and how much they want to spend. Offering a Cost of Living Allowance (COLA) to employees moving to higher cost of living areas can also help with their transition by gradually assimilating them into their new higher cost of living area.