In 2010, Doug Macnaught and Dave Hopcroft, co-founders of Instant Software, sold their vacation rental software company -including the software platforms PropertyPlus, V12, First Resort and Entech – to HomeAway, Inc., days before the VRMA Annual Conference in San Antonio, causing an uproar in the vacation rental industry.
Now four years later, as we approach the 2014 Annual Conference in San Diego, we recently learned Doug Macnaught’s extensive four year non-compete agreement has come to an end. We wanted to know more about what Macnaught has been doing, how he views the last four years in the industry and what is next for his future.
Macnaught: Not a tremendous amount “work wise.” After my year’s consultancy was up, I still had 3 years left on my non-compete agreement.
After some well needed rest, we traveled and spent time with friends and family. Heather & I had the opportunity to visit many parts of the country that I had been to and she had not – would you believe she had never been to the Carolinas (and I had been there more times than I could count)? It was great to visit theses places and see what they are like as a tourist.
I have played some golf and we have a couple of art businesses in Fort Lauderdale that have proved an interesting distraction.
Question: What motivated you and Dave Hopcroft to sell Instant Software when you did?
Macnaught: I learned many years ago not to speak for Dave!
Personally speaking, there were many things that led to the decision, not the least the existence of a willing and credible buyer! HomeAways’ offer was very compelling, and personally it provided financial security for my family that was very attractive. I was also looking forward to working with them to help provide a wide range of new benefits, stability and opportunities to our clients.
Another motivator was the VRMA Switch project: It was clear to me that the Switch would put Instant Software in an untenable position with its’ VRMA Member Customers. We would be expected to cooperate with something that was effectively being developed as competition to our own proven technology. I had no stomach for that fight as many of our clients were my friends and I just did not want to jeopardize the friendships. Although the project ultimately came to nothing, I still feel that the whole Switch Initiative was not the right thing for the association to undertake.
Question: Initially, you were going to stay on with HomeAway for some time. What happened to change that plan?
Macnaught: There were a number of things that just made that not viable, so I embarked on a 4 year early retirement.
Question: In assessing the evolution of HomeAway’s handling of Instant Software, how would you rate their software development progress?
Macnaught: That is a difficult one to answer. I have a lot of experience with taking over software companies and progress is never as fast as you would like. While I have no knowledge of their development plans, I am hopeful that the users will see significant progress in the months to come.
Question: Recently RealPage purchased both Bookt/Instamanager and Kigo. Instant Software had a history of purchasing multiple software solutions. What advice would you give to companies as they roll up multiple software platforms under one umbrella?
Macnaught: I think RealPage is slightly different than Instant Software. Although they are successful in the Long Term and Commercial space, they were not familiar with the Vacation Rental market, as such they did not have well known product to build on, and they were not well known by their newly acquired customers. Notwithstanding any of that and looking at the companies they have purchased, I would start by clearly identifying what made each one successful and build on it, change very little in the early stages. Customers are looking to see what the new owners are going to “take away” from them and it is important that this doesn’t happen.
They should provide investment, support, added value and a real sense of security while they determine the right migration path, assuming consolidation is the plan.
At Instant Software we recognized that there were places where consolidation was appropriate and those where it just was not viable. We provided a central internet product line built on ISILINK and a Common Support and Admin operation, however we maintained most of the PMS Systems, their development teams and client support right up to the day we sold.
Question: As you have had the chance to step back from the industry a bit, what changes to do you see taking place that affect property management software development?
Macnaught: I think the most important change is the natural evolution of the source of the reservation. The reservation process will be taken out of the hands of reservations staff and become a predominantly guest-driven technology from the web or mobile booking sites, these could be 3rd party sites or the actual clients own site. This will mandate that online booking engines are the driver rather than in-house reservation software. The PMS Software development will have to focus more on the back of the house and integration with various tools that make the Manager more efficient and drive alternate revenue.
Question: Along those lines, what software features do you see as becoming more necessary for property managers in 2015 and beyond?
Macnaught: Mobile & web-based functionality for owners and guests that really allow them to be in control of the relationship is an absolute requirement.
Internally – I think enhancements in Maintenance & Housekeeping are big areas, they can add value and profitability to a Managers business to replace costs for marketing that will undoubtedly increase. I think that delivering Mobile technology to staff in the field is a necessity.
Revenue Management or the much touted and badly delivered “Yield Management” have real potential in the 3rd party distribution space.
Finally 3rd party distribution is no longer a luxury. It is as necessary as having a check-in report. If property managers cannot reach beyond their own website then they will be left behind –and the software company must provide the tools to make sure that does not happen.
Question: We are seeing a lot of acquisition in the vacation rental industry (Wyndham, Vacasa, Resort, Vacation Rental Pros, et al.). Do you believe a national brand is viable in the vacation rental industry? What qualities would it take to be successful?
Macnaught: I think it is perfectly possible to have national brands but they must be cautious as they acquire companies, they should learn the ResortQuest lessons. Going back to my answer about software company acquisitions, the same is true – build on what made the local company successful and try not to assimilate them like the Borg.
Question: What do you believe will be the biggest challenges facing property management companies in the next 12-18 months?
Macnaught: I believe that there are two massive challenges:
1) As the industry garners wider visibility from the growth of companies like Airbnb & HomeAway, local regulators will start looking to impose more restrictions. This will need to be dealt with quickly and forcefully to ensure that managers and their businesses are not negatively impacted.
2) Getting your distribution right. With the announcement that Expedia are adding 100,000 rentals via their partnership with HomeAway; and presenting them as a specific segment it is essential that Professional Managers are in a position to take advantage of this, they simply cannot afford to ignore the importance of this development.
Question: What is next for Doug Macnaught?
Macnaught: This year I celebrated my 50th birthday and this month saw the end of my Non Compete Agreement with HomeAway. I am too young to stay retired, plus Heather is really keen to get me out of the house!
I do not believe that it is wise to try and replicate what we did before, but I love the industry and have a passion for making software meet a clients needs. I am working on something that I can’t yet announce so watch this space…. In the meantime I am available for consultancy to managers & technology companies to help them maximize their systems.
Doug Macnaught and his wife Heather will be attending the VRMA Annual Conference in San Diego, October 26-29.
By Amy Hinote, VRM Intel