The reactive maintenance approach, or “If it ain’t broke, don’t fix it,” is expensive and inefficient. Vacation rental property managers wind up spending more time and energy repairing items than they do inspecting and maintaining them. Some managers are even forced to shut down properties mid-season due to heating, ventilation, and air conditioning (HVAC) system malfunctions, losing thousands of dollars in rental revenue.
Vacation rental managers who invest in maintenance programs can reap huge dividends down the road and save their owners significant operating costs. Simple tasks like cleaning condenser coils and gaskets in a refrigerator help appliances run efficiently and extend their lives. In fact, studies have shown that preventive maintenance can reduce repair costs by 20 percent. But cost savings aren’t the only benefits here. Properties that function as advertised result in happy renters and owners, leading to repeat business and a trusted brand.
Still aren’t convinced? Let’s look at an example: On average, heating and cooling accounts for 54 percent of a residential structure’s annual energy cost (about $1,200). A well-maintained HVAC system can increase cost-efficiency by 30–50 percent, saving $360–$500 per year.
Define Your Maintenance Plan
The first step in creating an effective preventive maintenance plan is to define your goals. Ask yourself the right questions: Is your primary goal to reduce the risk of emergency repairs or to save money on recurring costs? What are the most important aspects of your property?
These parameters might depend on your geographic region. For example, homes in colder climates often sit unoccupied through winter months and will need to be winterized. On the other hand, coastal homes will need thorough exterior cleaning to remove corrosive sea salt from fixtures and amenities. This includes exterior light fixtures, power outlets, furniture, and grills.
HVAC filters are very important in most plans. The frequency with which you need to replace your filters will depend on numerous factors like filter type, air quality, pets, and occupancy rates. But regardless of your environment, every maintenance plan should include electric appliances.
Smoke and carbon monoxide detectors should be cleaned and have their batteries replaced every six months. Detectors can randomly fail, so it’s a good policy to replace detectors every ten years. Replacing light bulbs and inspecting fixtures for loose sockets or damage are also a must. Modems and routers should be cleaned and reset monthly, and batteries in wall clocks, alarm clocks, TVs, and remotes should be changed yearly.
Set Standard Operating Procedures (SOPs)
The standard operating procedures you create will keep your team organized. These guidelines will dictate how and when each item on your list is maintained. Meet with maintenance techs and discuss these requirements as well as the maintenance frequency (e.g., weekly, monthly, quarterly) and the estimated amount of maintenance time for each item.
Lastly, make a list of the supplies, parts, and tools needed to complete your program. This list will allow you to order parts in advance and save money with bulk discounts.
Understand Your Inventory
The next step in setting up a preventive maintenance program is compiling deep property data. Begin by recording the make, model, serial numbers, and condition of all electronics, appliances, and equipment within your properties as well as your office and work spaces. (This includes relevant information on company vehicles, such as oil change dates, tire replacements, battery replacements, and repairs.) Consider organizing your HVAC appliances and equipment in different zones and include where each zone is located. Be sure to record special notes on any unique items that include several parts, as these may require extra effort to maintain. A comprehensive list of these items will be invaluable to your company and to your homeowners.
Know Your Staffing Requirements
This is key to executing your preventive maintenance program. If your program is running properly, then your maintenance staff should be spending only 25 percent of its time on reactive maintenance. Instill a proactive mind-set in your staff.
Some companies find it useful to hire third-party vendors to meet their preventive maintenance needs. Outsourcing things like HVAC care and pest control can give you the expertise you need while saving you the time and money it would cost to train your staff. Having a list of vendors and contractors on call is a must, giving you peace of mind when issues arise.
Train the Team
Every member of your staff should be familiar with the SOPs for each maintenance item. If necessary, train staff on maintenance procedures prior to starting your program. The most important component of this training is data capture, as accurate reporting is necessary for owner billing, inventory control, and future process improvement. Thorough notes should include tasks completed, time spent on each task, location, room, item maintained, and parts used.
Schedule Your Plan
First, use the data from your inventory to establish your maintenance priorities. Doing so will help avoid overloading staff with busywork and will ensure that the important items are taken care of first. The highest-priority items are traditionally those involving safety or those that cost more money and time to maintain.
Next, establish what items are maintained at certain times of the year and define your maintenance windows (e.g., your off-season for annual/semiannual maintenance and the time between checkout and arrival for weekly maintenance). Only then should you schedule your priority items, as well as maintenance for your company vehicles—knowing your degree of access to certain vehicles can help prevent logistical delays.
Your lower-priority items can fill the gaps in your schedule. Be mindful about giving your maintenance techs lower-priority items in locations near their important tasks; this will reduce unnecessary travel time.
Analyze, Adjust, and Improve
Ditch the “set it and forget it” mind-set and look to improve your plan every step of the way. It takes time to develop a rock-solid program, so don’t hesitate to consult your maintenance staff on what’s working and what’s not. You can use the feedback you get to adjust your maintenance scheduling. Make note of the properties that are costing the most time and attention, and consider describing to the owners of these properties the upgrades and renovations that must be completed for their homes to remain in your rental program.
Get Homeowners on Board
Developing a preventive maintenance program works best when your homeowners participate. The best way to do this is to fully communicate the work that’s being done and what is necessary to maintain the property. Provide a full list of all services included in the program and explain why these services are cost-effective. Timing is everything—promote the program when it’s time to renew your agreement or when you’re taking on new clients. This transparent communication increases confidence in your property management services and improves owner relations.
In a competitive vacation rental market where managers are expected to provide service to their guests and owners, the efficiency gains of a preventive maintenance program are necessary to keep up with the workload—particularly in high season, when staff is stretched thin and there isn’t an hour to waste on a Saturday.
Today, Airbnb is taking yet another step to make it easier for professional vacation rental managers to add their entire inventory of supply to the company’s marketplace.
As part of its commitment to add more professionally managed vacation rentals to its marketplace, the company has built an Airbnb API (Application Programming Interface) to connect with vacation rental software companies around the globe. Using the API, vacation rental managers are able to add their entire inventory of vacation homes to Airbnb immediately instead of adding and servicing one property at a time.
Today, Airbnb will begin to further facilitate and expedite these integrations with communications that proactively provide vacation rental software developers with additional resources, including its inaugural API newsletter that highlights improvements to the Airbnb API, new tools, and overall improvements (see below).
According to Airbnb technology and B2B communications executive Tim Rathschmidt, “As part of that [commitment], we’ve been expanding our work with third-party software partners that professional hosts use to connect to Airbnb’s API.”
“We already have more than 100 integrations complete, with many more in the works,” said Rathschmidt.
Rathschmidt added, “The professional host API is free to access. It’s not open, per se, as we work with each software provider requesting access to ensure they meet our API requirements, i.e. security standards, etc.”
Airbnb’s new communications tool for software providers includes:
New Tools
Events dashboard to help monitor Airbnb integrations in real time: “Our new Events Dashboard provides visibility into your integration’s health so you can proactively address connectivity issues.”
Test sandbox: “A test application that closely mimics your live production app and allows you to safely test new code before deploying to production.”
Overall API Improvements
Faster publishing for professional hosts who aren’t already managing listings directly on Airbnb: “New listings added through your software are now automatically published without the need to visit the Sync page.”
Merging and syncing: A new API features allows users to merge existing listings and select sync settings directly in the software system. No more navigating to Airbnb to publish, even when connecting to an existing account.
Simplifying listing registrations: “We’re enabling a seamless transfer of listing registration info to Airbnb in markets that require it. Add registration details directly in your system and automatically sync this data to Airbnb listings.” This feature is live now for Japan and support for other markets will be released shortly.
If you’re starting a company, one of the first things you’ll hear is that you need a strong brand. People need to know who you are. They need to know what they can expect from you. They need to be able to distinguish what you offer from all your competitors in the marketplace.
Yet, there are few if any national or global brands in our industry. There are of course quite a few well-recognized US vacation rental brands—Meyer Vacation Rentals in Gulf Shores, Sun Realty in the Outer Banks, Southern Resorts in the Florida panhandle, or Taylor-Made Deep Creek Vacations come to mind—but they are typically local and mostly apply in drive-to markets.
Hotel brands are entering the market.
At the national or global level, 99 percent of vacation rentals are completely unbranded compared with 40 percent of hotels. The private accommodation sector has no equivalents to Marriott, Hilton, or Hyatt. Expedia, HomeAway, VRBO, or Booking.com are distribution channels.
Airbnb is a hybrid: while it clearly has built a powerful global brand, with its recent expansion in scope it is arguably becoming more of a distribution channel than a brand. The company is clearly trying to address this with the introduction of Airbnb Plus: Airbnb is qualifying and inspecting a subsection of its inventory and is thus now leveraging its brand at the listing level.
Then there are a few nascent brand contenders in the property management sector: Sonder advertises “deconstructed hotels” that are “modern and exciting.” Stay Alfred is offering “upscale” and “high-end” vacation rentals specifically in downtown locations of major cities. TheGuild, Lyric, and Domio are in on the act, too, and all these new companies are building a business model on the theory that an industry that lacks branding needs new brands.
What’s a brand?
Before I argue why creating sleek new brands isn’t necessarily the vacation rental industry’s next move, let’s take a look at what we mean by a brand. We’re talking about what distinguishes one type of product from another.
Strong brands are easy to identify on sight, and their offerings are differentiated: an Apple product is distinguishable not only because it looks like an Apple product, but because it operates like an Apple product and is backed by the service you expect from the Apple company. Because strong brands consistently deliver the experience their customers expect, their customers tend to be extremely loyal and to choose that brand over others.
Sounds desirable so far, and you can see why so many companies are striving to create the strong brand that guarantees such loyalty.
The problem is that vacation rentals, by their very nature, don’t brand.
Vacation rentals resist uniformity, but need consistency.
You can’t offer uniformity with vacation rentals because they are inherently unique. Uniqueness is the selling point—it’s why guests choose vacation rentals over hotels in the first place. They want to stay someplace that feels like a home, and every home is different.
Of course, identical vacation rentals sold in blocks like hotel rooms have existed for ages. They’re stocked with identical furniture, kitchen supplies, and decor. But those aren’t what people think of when they think “vacation rental.” Those are just hotel rooms that happen to have kitchens.
You will never be able to create a vacation rental brand that guarantees uniform spaces across all its properties, because vacation rentals are not uniform. There’s the ski chalet, the urban mid-century modern, the contemporary beach house, the quirky cabin, the treehouse, the houseboat, the family-friendly place for family reunions, the romantic spot for a weekend getaway, or the hyper-urban loft for the millennial on a business trip—their uniqueness is what makes them what we call alternative or private accommodation, cottages, holiday houses, baches, sleepouts, serviced apartments, aparthotels, or vacation rentals.
That’s the bad news about branding uniformity. But while our customers don’t seek uniformity, they do seek consistency. Consistency doesn’t mean that units necessarily need to look the same, but it does mean that they should all meet a set of expectations consistently.
Consistency of expectation is not uniformity of place.
Because of my work, I stay in vacation rentals and other private accommodation up to 30 times per year. I very much enjoy the variety of accommodations, which have ranged from a VW bus in San Francisco booked on Airbnb to an upscale, impeccably appointed Edwardian from Oasis Collections in London. I’m rarely, if ever, disappointed by the place; however, too often the experience doesn’t quite measure up to expectations.
When industry observers talk about convergence between traditional lodging and our industry—and the growth that can drive it—lack of consistency is often cited as a main obstacle holding our industry back.
Great expectations
Here’s a set of consistent standards that should be expected (and delivered) for every vacation rental:
Accuracy
Each listing is accurately described in detail, with a professional, standard set of photographs. What you see is what you get, every time. Great photography is available for each main room in the listing, the photography is up-to-date, and expectations are managed all the way from listing platform through to housekeeping. This means that the housekeeper stages the room each time exactly the way the guest saw it in the listing photos from your website, HomeAway, or Airbnb.
Health and Safety
Every home has both the attributes and the processes to ensure guests’ health and safety. This includes ensuring that smoke detectors, fire extinguishers, exit information, and first aid kits are available to guests, and processes are in place to ensure proper sanitation during cleanings, as well as regular checks that all health and safety attributes and processes function accurately and reliably.
Access
Guests can count on 24/7 access with backup access methods in place.
Amenities
Quality sheets, linens, and amenities are available to guests during their stay. Kitchens are stocked with key necessities and process fail-safes are in place to manage quality over time.
Utilities
Wi-Fi that always works, hot water, heat, air conditioning, TV, remote controls (batteries!).
Communications
Standard processes with confirmation, key code, welcome, post-arrival check-in, mid-stay check-in, post departure, etc.
Inspection processes
Inspection processes are in place for every stay—these inspections can be integrated with housekeeping or stand-alone processes.
Standard Operating Procedures
Standard Operating Procedures are in place for staff to follow to deal with everything that will go wrong.
Learning from hotels: soft brands
For a while now, hotels have somewhat unbundled distribution from the actual brand via soft brands. If a hotel is strongly established in an area and wants to maintain its diversity or uniqueness or has its own recognizable brand, the operator may choose a soft brand, such as Marriott’s “Tribute Portfolio Collection” or Hyatt’s “Unbound Collection.”
Hotels choosing soft brands get the same distribution, and guests choosing a hotel with a soft brand can expect very similar services as those offered by the main flag, if in a unique place. Interestingly, franchise fees for soft brands seem to be only marginally lower than for the main brand, indicating that much of the “brand” value doesn’t stem from the brand itself but from the distribution that comes with it and from the general expectation that such soft brands are curated and vetted collections that deliver a unique service experience, if each in a unique and diverse place.
The anatomy of a private accommodation brand promise
The brand promise can start with distribution: at one end of the spectrum is largely unbranded distribution (e.g. Expedia or Booking.com), where the key value proposition is around comprehensiveness and best price; at the other end of the distribution spectrum are more branded channels such as HomeAway or Airbnb, with stronger brands and exclusive inventory. Arguably, however, the branding power of distribution platforms is weakening as they add more diverse inventory. For example, in Airbnb’s case the “Live there” campaign theme strongly reflects its core inventory, but much less so for newly added boutique hotel rooms.
Next are curated collections: castles, family friendly, tree-houses, romantic getaways, and business-friendly are all examples of curated “light” collections, likely self-reported or with minimum inspection, that intend to give an additional layer of consistency.
Airbnb Plus is currently only using one-time inspections; this provides an additional layer of a brand promise by ensuring that a place has met certain requirements at least at one point in time. However, without control of management or at least of processes or brand standards, that’s still quite different from a hotel soft brand.
Next are property managers like Vacasa, which have comprehensive and consistent, fully integrated processes. Airbnb’s luxury brand “Beyond by Airbnb,” Oasis Collections, or AccorHotels’ Onefinestay also exercise granular control over most processes, even if a third party might deliver the latter.
Last is a new breed of VR brands, like Domio, Sonder, Lyric, or Stay Alfred, which fully control not just curation and processes, but also design. Here we have come full circle with traditional hotels—these brands can deliver both a consistent service experience and a standard space.
Why does it matter, and what does it mean for VR managers?
Private accommodation and vacation rentals are different from hotels—uniqueness of inventory is a very valuable attribute in our category. However, delivering consistent services and accurately describing listings against standard criteria are critical in meeting guest expectations, supporting convergence with mainstream lodging, and driving industry growth.
The hotel chains’ early experiments in introducing brands into the category are illuminating. Soft brands focus on distribution and a set of brand standards but don’t put much value on the brand itself. This might be perfectly sufficient for our industry. It is unclear that we need new brands; there are plenty of well-established brands out there.
Arguably, the real opportunity is in expanding distribution. The three main listing platforms are continuing to drive more bookings for many VRMs. As hotel chains get acquainted with this category, and as convergence continues, it would only be natural for them to source inventory from the VRMs just as Marriott did in its experiment with HostMaker in London.
This should provide welcome additional distribution channels to our industry. The entrance of the hotel brands should also further accelerate convergence, as it will drive further professionalization. One key question will be how the hotel chains will source inventory at scale.
Likely, those VRMs with the best standard operating procedures, delivered across the most interoperable platforms, will be the winners. They’ll have access to broader distribution channels and should capture brand premiums across multiple brand portfolios, whether Airbnb Plus or hotel and other travel brands. And the more we standardize and certify processes and inspections as an industry, the more we’ll be able to cater to broader audience segments and drive industry growth.
Booking Holdings-owned Booking.com has been fascinating to watch as it has emerged as a leader in vacation rentals over the last four years. The company launched Villas.com in May 2014 as a testing ground for what the company calls alternative accommodations, which includes homes, apartments, villas, and other unique places to stay.
In late 2016, the company shut down Villas.com and transitioned its alternative accommodations inventory onto the Booking.com platform. According to Tnooz, “the Priceline Group-owned [now Booking Holdings, Inc.] accommodations giant said there is no change in its strategy for alternative accommodations such as homes, apartments, and villas, but concedes that data has shown its consumers prefer having all their options under one brand.”
Since moving all its alternative accommodations inventory to Booking.com, inventory growth has exploded. With no traveler fee and with accommodations that are entirely instantly bookable, Booking.com has surpassed both Airbnb and HomeAway in reported supply.
We reached out to Booking.com’s vice president of the home division, Olivier Grémillon, to find out more about the company’s growth, business model, and industry outlook. Although Grémillon only joined the Booking.com team in January, he spent the previous five years at Airbnb, where he helped its transition from a short-term rental company to a more comprehensive hospitality company. Now he is helping Booking.com grow the company’s business across the homes and apartments sector and working with owners and managers in 220 countries around the world.
Industry Growth
AH: To what do you attribute recent vacation rental growth, and what do you see as your differentiators when compared to your competitors in this space?
Olivier Grémillon (OG): At Booking.com we have a relentless focus on our partners as well as the customers who book with us all over the world listening, learning, and driving continuous, rapid innovation that leverages technology to consistently ensure our product is the best in the space. Homes and apartments are a very big and important space for us, and we’ve been investing in both partner and customer acquisition for some time, which includes technology investments, to ensure we can remove as much friction from the sign-up, management, and booking processes as possible. Not only do we listen and respond to meet travelers’ needs—an effort that ultimately brings our property partners more guests through their doors—but we build easy, effective tools that allow our partners to simply list and manage their businesses with us, including a new process to sign up a property in less than fifteen minutes. With more than 5.4 million listings in homes, apartments, and other unique places to stay, we offer the largest potential source of inventory in this sector worldwide. This is a competitive industry, so building a product and experience that differentiates us from others in the space and that enables us to deliver the choice and diversity travelers crave is critical to maintaining a leadership position.
AH: In which markets do you see the most inventory growth now and in the future?
OG: We’re an incredibly global business with operations in more than 200 countries and territories. As such, we’re growing inventory in multiple markets that include Europe, the USA, China, and Japan as well as emerging markets across Latin America and Asia. We’ve been actively building our supply and business in the vacation rental segment for years, growing supply globally by 27 percent over the last year by recognizing the consumer demand for all types of accommodation, and we will continue to do so.
AH: Booking.com has a huge advantage in international markets. Do you see a path to leveraging your success outside of the United States to grow inside the United States? Or is there a reason that less of your attention is on US markets?
OG: We are a European company, and our long-term efforts across Europe have certainly led to strong brand awareness and growth internationally. However, the United States is and will continue to be a very important market for our business. We have twenty-seven offices and over 2,300 employees in the United States who are dedicated to empowering customers and supporting our partners with the commercial tools, technology, insights, and advice to grow their businesses via our platform. We’re also investing in additional and enhanced payment methods through partners such as Stripe to enable an even wider range of customers to book via our platform.
The opportunity is immense, and the more we collaborate, the faster we can have impact and further accelerate that growth. Property owners and managers can rely on companies like ours even more to invest in the technology, marketing, and infrastructure resources because that’s our expertise, and we can build the products and tools that will fuel more people through our platform that, in turn, drives more business for our property partners. We are better positioned than anyone in the space to bring significant incremental international travelers into the US market, given our global reach, and we absolutely intend to push that opportunity to make Booking a more scaled player in this market.
AH: Do you believe Google and/or Amazon will disrupt the vacation rental funnel?
OG: Google has long been a good partner of ours, and Amazon continues to build an impressively diverse ecommerce business. With the constant and transformative effect technology innovation and evolving consumer expectations are having on the way we travel, I’d say that any business in this space needs to be open to continuous learning and reinvention of its approach in order to keep pace.
At Booking we focus on what we do best and what we know customers want. For us, that means constantly testing, experimenting with, and optimizing the customer experience on our platform to solve the challenges travelers face and strip friction out of the process.
AH: With the global scope of your inventory, as the industry develops, how do you see the terminology relating to vacation rentals (holiday lets, self-catering, cottage rentals, holiday rentals, holiday homes, urban rentals, etc.) changing, and which of the terms will evolve to become the dominant one?
OG: That might be for the customer to decide. In recent research we conducted with more than 57,000 travelers across thirty markets, 30 percent said they want to stay in an apartment, aparthotel, or condo in 2018—further evidence that consumer demand for accommodation beyond the hotel remains strong. In fact, in other research conducted with 19,000 travelers in twenty-six countries, one in five (21 percent) said they would consider listing their own home on a travel accommodation site over the coming year. In that light, how exactly the industry defines itself is not that important. What matters most is what’s useful for customers. We currently have thirty property types on our platform, and we keep experimenting to ensure customers can easily find what they’re looking for. Defining those properties is one example of how we’re continuously testing and listening to what gives customers the clearest and best experience.
Booking.com Business Model and Technology
AH: Some of your competitors have gotten pushback from their core suppliers as they attempt to expand into other verticals or further monetize their platform. Why do you think your suppliers do not have those same struggles in working with Booking?
OG: We try to make it as easy as possible for all and welcome all types of property to our platform. We foster great relationships and ensure transparency to all our customers, partners, or suppliers so they know they can rely on companies like ours to invest even more in the technology, marketing, and infrastructure resources to bring them more business because that’s our expertise.
AH: Airbnb, HomeAway, and TripAdvisor do not appear to be backing off the traveler fee. Is Booking.com considering adding a traveler fee?
OG: We’ve never charged a booking fee to customers for our service, and this is something that we are extremely proud of. From our point of view, charging travelers is far from optimal for the customer. At Booking.com, we want to be as transparent as possible towards partners and customers, so that means that what you see is what you get. We believe our approach is much clearer for both travelers and partners than others in this space who charge in different places, making for similar fees once guest and partner fees are added. At the end of the day, we are committed to delivering the best possible consumer experience to ultimately win more business for our partners.
AH: In your US contracts, you require rate parity, but to date there doesn’t seem to be a way to enforce it. Are you looking for ways to enforce rate parity, or do you believe rate parity is a thing of the past?
OG: We believe our model guarantees a transparent and consistent price comparison experience for consumers, but at the end of the day, we will always look at what the right model is to ensure Booking.com customers can have the best possible prices. That will ensure we can deliver the customers and demand our partners expect from us as one of their most critical marketing channels.
AH: Where do you see your revenue management services going over the next year? In setting prices for alternative accommodations, is there a conflict of interest as you also look to promote your large hotel clients?
OG: To clarify, we don’t set prices; our accommodation partners do. We also see demand for all types of accommodation on our platform, which is why we look to offer the widest choices all in one place with millions of hotel listings on our website alongside millions of other unique types of property listings. When it comes to revenue management, we provide tooling to all kinds of property partners to support them in their individual pricing strategy and execution as well as data around seasonal or high demand dates (think increased interest for a beach bungalow during the summer months) and special events such as major sports competitions or concerts.
AH: Is there a difference in how you sell to and support professionally managed inventory versus owner-managed inventory?
OG: We have historically come from the more professionally managed side, but today we support the needs of both professionally and owner-managed. Each has its own unique needs. For example, professionally managed properties face particular challenges in managing a portfolio of several vacation homes with different owners, but evolving payment solutions and chat-bot-assisted messaging can help. We also know professionally managed inventory is often connected via software or channel managers, so we are actively building our products in a way that can integrate solutions seamlessly with the systems our partners use.
Individual homeowners listing for the first time may have more questions and need a different type of support and guidance, but we’ve worked on introducing simplified cancellation policies, different workflows, a fifteen-minute sign-up, and a specific online onboarding module to help support and empower owners here. Overall, we want to make it as easy as possible for any property manager or individual to sign up and manage one or more listings with us, so we work hard to provide the tools, flexibility, and insights that will help them grow their businesses.
AH: In terms of ranking, are there any changes to your algorithm that can help property managers improve their performances?
OG: We believe that every property that offers our customers a great experience deserves to be discovered. That’s why our default ranking is based on an algorithm built on customer feedback. It takes into account a variety of factors and data points to present initial search results in the most meaningful way for consumers. Beyond that, we have created a number of filters to help customers search for exactly what they’re looking for. That can help them quickly spot the properties that have what they are looking for, especially in destinations that have thousands of listings. The search behavior and preferences of travelers change constantly depending on the context of a specific trip.
So for property managers, it is key to ensure that properties stand out from the crowd. The attractiveness of the offer plays a vital role in making a property stand out in the search results as well as ensuring you understand your market and what drives the customer experience. Everything from high-quality photos to providing great rates, responding to customer reviews, and ensuring strong availability can help here.
AH: Regarding channel managers, how vital are third-party channel managers to the core OTA business? As you integrate with more and more software systems, do you believe the need for a “channel manager” as we know it today will disappear?
OG: Our goal is to make booking any type of accommodation anywhere in the world digitally as seamless and as easy as possible, and we work with a vast number of partners throughout the world. The travel industry is growing at great speed, and the opportunity is immense. We want to make it as easy as possible for all our partners to work with us, supporting their connectivity choices by working to ensure all our innovations are equally available for connected partners while also fostering our relationship with connectivity providers, including channel managers, to impact and accelerate growth in the travel ecosystem.
AH: Do you see blockchain technology as the next game changer?
OG: There is a lot of talk about the potential of blockchain technology at the moment and the many applications it might have for the wider travel industry. It’s still early, but there are definitely some potential opportunities, interesting ideas, and business models beginning to be debated and developed further. As with all emerging technologies, including cryptocurrencies like bitcoin, it’s something we keep an eye on. Right now, among several potential game changers, we think the bigger opportunity is in AI and machine learning, so we’re investing more on that front, but we have very smart people looking at if and when something like blockchain can solve customer friction in travel.
AH: Are there any new technologies you are adding or technology acquisitions you are considering to better serve your suppliers?
OG: Absolutely. We’re constantly experimenting with new technologies to take even more of the friction out of the overall travel experience and help deliver more customers to our property partners. For us, any application of technology must serve and enhance our partners’ and travelers’ experiences in some way. We don’t experiment with technology for its own sake—it must actively solve a customer problem, remove friction, and make our customers’ lives easier.
Right now we’re actively exploring various applications of artificial intelligence and machine learning to enhance the customer experience on our website and mobile apps, including everything from how we interpret search queries to providing recommendations on where to stay and where to go as well as automatically tagging photos uploaded by travelers. With our Booking Assistant bot, we’re currently using machine learning models and natural language processing technology that has all been built in-house to identify and respond to more than 50 percent of our customers’ most common enquiries automatically. Think simple questions like “Is there parking available?” or “Can I check in late?” That is immensely helpful for our partners because we can essentially handle their customer service for them. This not only saves time for our property partners, allowing them to focus on delivering incredible experiences to their guests, but it empowers travelers with seamless support. As these technologies and their applications advance, whole new levels of personalization at all stages of a customer’s travel journey will become possible as will decision-making, listing management, and optimization by property managers and hosts.
In September 2016, LeisureLink, a widely used channel management company, announced that it was ceasing operations and discontinuing use of its platform, leaving dozens of property managers unpaid for completed reservations.
According to a letter the company sent to clients, “While LeisureLink attracted considerable interest from many strategic buyers and investors, management has determined that none of these parties are likely to complete a transaction before late Q4 of 2016. This timing and the continuing cash needs of the Company has created a liquidity deficit which prevents the Company from continuing its daily operations.” The letter continued, “As a result, we have no choice but to stop operations and not process any new bookings as of September 27, 2016. At this time, all employees of LeisureLink are being terminated and the platform turned off.”
For property management companies using LeisureLink’s channel management services, the fallout from its demise was tremendous, leaving in its wake hundreds of unpaid reservations.
But the story did not end there.
LeisureLink’s chief product officer Joel Inman and vice president of business development Hal Widlansky had working knowledge of the strength and breadth of the failed company’s technology and did not want to see the baby thrown out with the bathwater, and they set out to salvage the working assets of the company to build a new kind of connectivity for property managers.
As a result, Inman and Widlansky raised capital, purchased LeisureLink’s technology, and founded Lexicon Travel Technologies. We reached out to Joel Inman to find out more about the lessons learned at LeisureLink and the duo’s vision for the new company.
Amy Hinote (AH): What did your team learn in your roles at LeisureLink that changed the way you look at the channel management business?
Joel Inman (JI): Our team has a lot of collective knowledge—and scar tissue. We know what works and what doesn’t in the vacation rental market. We have the privilege of not repeating the mistakes of our predecessors, and we are laser focused on doing what is right for the property manager.
Probably the two biggest lessons we learned at LeisureLink are these: 1) don’t try to be all things to all people—you can’t please everyone; and 2) do not oversell what you can and cannot do. Our customer philosophy is one of transparency and collaboration. If we can’t do something in an expert and professional way, we will tell our partners exactly that—immediately. In fact, we sometimes will recommend our competitors if we feel we are not a good fit. In this way, we can get past all of the gamesmanship and doublespeak that sometimes happens in a selling environment and forge a true partnership from the beginning.
AH: Are you the merchant of record (MOR)? Why is that important?
JI: No, never. Being the merchant of record as a channel manager is not advisable for a number of reasons:
Financial and fiduciary risk are issues. LeisureLink was the MOR (as are some of our current competitors), which means that the channel manager is directly charging the guest and taking responsibility for 100 percent of the booking dollars. In this model, the channel management company has possession and is able to use (or misuse) those funds for working capital. If we were ever to explore the MOR option, it would necessitate trust accounting to ensure that for every booking, the funded amount goes directly to the property manager’s bank account from the OTA. This is essentially what we already do but without taking possession of the total booking amount.
Being the MOR is actually a significant disadvantage in some channels because it can complicate access to affiliate networks and airfare bundling—two huge sources of potential bookings that are otherwise not available.
As MOR, collecting cash that does not belong to you can be an unnecessary and unhealthy temptation, which we don’t need, to fund other areas of the business. It’s always fun to imagine being a bank and charging interest on forward payments. LeisureLink did that, and it was tremendously popular. The problem comes, however, when one must also take on the responsibilities of cash management as if one were actually a bank. This is not our core competitive advantage, and we know it.
Collecting cash means staffing up in accounting. LeisureLink had a large team of AR/AP professionals to manage a large balance sheet (as do all channel managers who act as MOR). Again, this is not a core competency of a channel manager, nor should it be. Every property manager is able to collect cash for bookings—by definition—they already have the infrastructure required to support it and should take ownership over their own collections anyway.
AH: What sets Lexicon apart from other channel management services?
JI: Lexicon is not a channel manager; channel management is a phrase that has come to mean simply connectivity—that is, connecting rates and availability from a PMS to points of distribution channels. Connecting these information points is not enough to create a decent listing that anyone actually wants to book. Lexicon takes full responsibility for merchandising conversion on a channel—that means curating content, clustering inventory where appropriate, professionally organizing every listing, and actively collaborating with our partners on price and promotions to make sure the pricing is where it needs to be—every time. When you partner with Lexicon, room nights booked tend to increase substantially, and staffing costs tend to go down. In many cases, our customers have reduced their own time spent managing channels from weeks to hours while at the same time doubling or tripling their previous booking volume.
AH: There is a lot of speculation that channel management is getting more obsolete as software companies are building direct connections to OTAs. Do you think channel management has a future?
JI: The practice of channel management, as defined above, is already dead. When you think about the implications of posting a listing without curation or merchandizing, they are basically that no guests find the listing appealing, if they are able to find the listing at all buried on page fifteen of the search results. We see this happening in the marketplace all the time. When we ask customers how many bookings their channel manager got them over the last three months, the answer is often in the single digits. Ultimately, these are zombie listings that may book a handful of times a year but are certainly not effectively converting or driving higher occupancy in shoulder seasons—and they cause more work than they save.
However, as long as channels are relevant and continue to own the consumer eyeball, there will be a need for efficient and effective use of those channels. I think anyone with a connection (PMS software or other) will have to demonstrate the ability to convert listings to bookings and also save the PMC’s time and money on efforts to manage to effectively commercialize the OTAs. It’s not about whether you can build a connection—that’s the easy part. The challenge comes in making it work well for the property.
AH: Besides the technology connection to OTAs, what other services do you provide?
JI: Our software provides competitive intelligence and revenue management tools, and our account management team provides decades of revenue and channel management expertise and relationships. We act as an extension of the property’s revenue management team.
AH: Looking forward, do you think we will continue to see a traveler fee? And what is the future for rate parity?
JI: I can’t speak for the OTAs’ future plans regarding traveler fees. I think each one will choose his or her own path. But strictly speaking as a consumer, I find it hard to stomach when my final booking price is significantly higher than the daily rate. It feels a little bit like a bait and switch. Rate parity is an interesting concept. It is in many cases considered illegal or anticompetitive for companies to try to enforce rate parity, yet I believe it is a good business practice for property managers to adopt. Varying the price among different OTAs tends to confuse the market and is somewhat analogous to competing against oneself. The real enemy of the property is vacancy, and the biggest cost you can have is not going to come from a channel commission but rather from a room that passes the night with no guest in it.
It wasn’t his story that shook me. It was the way he fought back the tears.
On any given night, the US government and public affairs team at Expedia Group—made up of vacation rental policy and communications staff based in Washington, DC, Austin, and Seattle—host happy hour events in communities facing new vacation rental laws. They collaborate with property managers on the minutia of policy discussions and assist in building local alliances of managers and owners to push back against poorly crafted, and sometimes nefariously intended, policies.
On June 14, the team was in Crescent City for a happy hour discussion with over 110 HomeAway partners and members of the Alliance for Neighborhood Prosperity (ANP), a well-organized advocacy group for vacation rental stakeholders in New Orleans. Over cocktails and finger food, a lively dialogue took place covering the city’s new moratorium on vacation rental permits, the release of a new economic impact report from the University of New Orleans, and the ANP’s new video series entitled We Are the Faces of NOLA Vacation Rentals.
Once formal presentations were done, the fun started. We huddled with local managers and owners over pints of NOLA-brewed IPA and heard their stories of how they came to the vacation rental industry—some from real estate, others seeking a change from the cubicle farms of corporate America. One of those managers was East Coast Dave. Dave owns a management company that oversees properties across the city. Emigrating from the East Coast fifteen years ago and having a dangerous obsession with the city’s noodle food scene, David has come to call NOLA home. When he started telling me about his business and the impact a ban on vacation rentals would have on not only himself but also the individuals who work for him and the homeowners who rely upon him, the jovial conversation changed. Quickly, he began to get emotional when talking about all that was at stake. It wasn’t his story that shook me. It was the way he fought back the tears.
David’s story is not unique, is it? Over the last few years, the vacation rental industry has seen an explosion in the number of cities trying to implement misguided laws or harmful bans, and the toll it takes on members of our industry is real. This year alone, we have seen similar anti-vacation rental efforts pop up in cities from Los Angeles to Charleston to Washington, DC. To be clear, most of the vacation rental industry does not oppose regulations. Across the country, managers support reasonable regulations that protect property rights while addressing community concerns, but in too many of these cities, reasonable regulations have never been the goal.
Rather, opposition groups, sometimes well-meaning but misinformed and other times incentivized by special interests, are pushing for onerous restrictions or blanket bans on vacation rental activity. In Charleston, traditional nonowner-occupied vacation rentals have been outlawed. In Austin, they’re set to be phased out by 2020. In Boston, our nearly one-hundred-year-old industry is set to be banned. Oftentimes, the negative consequences of lost local revenue, loss of income to managers and homeowners, and the hindrance to the travel and tourism community are not adequately examined before local policymakers push through odious regulations. At the end of the day, it’s the vacation rental industry—more specifically its manager and owner community—that bear the brunt of these dangerous new laws. Whether through lost supply, increased costs, hard-to-follow regulations and registration schemes, or outright illegalization of traditional vacation rentals, rules made at city hall or the statehouse could have a dangerous impact on small and large rental management firms, platforms, and homeowners alike.
“Do what you can, where you are, with what you have.”—Theodore Roosevelt
As an industry, we know the intrinsic value that vacation rentals bring to communities and economies; it’s a part of our daily lives. But all too often we let the anti-short-term rental crowd define us. Newspapers across the nation are strewn with stories regarding “illegal hotels” and a perceived wave of fraternity men and bachelorette ladies coming into their communities. All too rarely do they hear from Dave or the millions of responsible managers who work tirelessly to welcome traveling families to their little slice of heaven. In an age of mass communication, instant digital updates, and constant social media conversation, it is critical that we take ahold of the narrative for our industry. It is up to us to take action and organize and set the record straight regarding the benefits that vacation rentals bring to our families and communities. Your simple engagement can help protect your business from an uncertain policy landscape.
Can we prevent negative policies from being proposed in your community? Maybe not. But we can take simple steps to be prepared when they do. As local vacation rental leaders, you can heed the advice of President Teddy Roosevelt by doing “What you can, where you are, with what you have.”
Every time I engage with policymakers at the local level, I hear a similar sentiment: local officials want to hear real experiences from their constituents. They care about your opinions on this issue, your personal story managing and operating vacation rentals. You are the one who elects them, and, consequently, your voice is the voice that matters most.
It was a small band of managers who helped shape a national best practice in Breckenridge, Colorado. It was emails from over 600 managers and owners in twenty-four hours in Nashville, Tennessee, that slowed the march toward poor regulations. It was the voice and collaboration of local managers in Palm Springs, California, who fought off a ban at the ballot box, securing 70 percent of the vote! An industry united can stand up to burdensome legislation and unite behind sensible policies.
There are many ways to get involved in local, state, and federal advocacy efforts today, and Expedia Group’s Government and Public Affairs team is here to help every step of the way. Here are simple ways to start getting engaged today:
Sign up to be an industry advocate: Simply sign up at https://actnow.io/VRMIntel to let us know you want to get involved, read more about your local regulations, and learn how you can start engaging.
Join or start a local advocacy alliance: There are over 200 active vacation rental alliances, groups, and associations in communities coast-to-coast. Reach out to fellow managers in your city, the Expedia Group policy team, or the Vacation Rental Management Association to explore what groups may already exist. If you are interested in starting a new group, Expedia Group can help you connect with fellow managers and owners in your community, develop a platform for communicating among members, and effectively leverage your collective voice with policymakers using digital engagement platforms.
Share your voice: We must stand up and bear witness to the incredible value we bring to our communities. The conversations around short-term rental policy are happening in local chamber of commerce and Realtor Association meetings, on community-based online forums like com, on Facebook and Twitter, at city council meetings, or just in the aisles of your grocery store. Making the effort to share your story in some or all of these forums not only sets the record straight but inspires others to do the same.
If Dave’s passion resonates with you, you think your vacation rentals are a travel industry asset worth protecting, and you want to be an active defender of your business from onerous regulations, now is the time to get involved. The threats to the vacation rental industry and the broader travel and tourism economy are real. By coming together and using our collective voice to define our industry and the value we bring to communities, we can change the narrative and help craft fair, effective, and enforceable policies. Now is the time to be a leader in your vacation rental community and protect it for future generations of owners, managers, and travelers to enjoy.
Please don’t hesitate to reach out; Expedia Group’s policy team is here to help.
The Baltimore City Council is considering a bill to impose the hotel tax of 9.5 percent on short-term rentals and require hosts to license their properties with the city. Under the current draft, each owner would be granted no more than two licenses, one for his or her primary residence and one for a secondary residence. Whole-home rentals in which the owner or host is not present during the guest stay would be limited to 60 rental days per year, among other rules.
Licenses would cost $100 each and must be renewed annually, and license numbers must be listed in all advertisements. The bill also lists requirements of hosting platforms, stating that they must verify that a host has a valid license with the city before listing the property, make and keep records of all short-term rentals listed on their sites, and make those records available to the city upon request.
The bill was introduced in February by Councilman Eric Costello and Council President Bernard C. “Jack” Young after a previous version was proposed and then pulled back last year. The council’s Taxation, Finance and Economic Development Committee held a public meeting yesterday to consider amendments.
Nearly 100 members of Baltimore Hosts, a more than 800-member nonprofit short-term rental advocacy group, attended the meeting in matching orange shirts to voice their concerns during more than four hours of public testimony. The coalition is in favor of paying taxes as long as it short-term rentals are represented on Visit Baltimore, the city’s tourism bureau which would receive 40 percent of any additional hotel tax revenues. The group is asking city council to remove the license cap and the 60-day limit on non-hosted stays.
“There is room in the market for all of us: home sharing, whole-house rentals, hotels, traditional B-and-Bs,” said Rachel Indek, testifying on behalf of Baltimore Hosts. “We should be afforded the same opportunity to operate and grow our legitimate businesses, particularly at a time when the city needs more business and investment, not less.” Indek helped start Baltimore Hosts when regulatory measures were first brought forth last year. She owns Bmore At Home Properties, through which she co-hosts guests at 11 properties with her brother, David Indek.
Earlier this week, the city’s Bureau of the Budget and Management Research recommended removing the 60-day rental and license caps. Doing so could generate between $1.6 million and $2.2 million in additional hotel tax revenues annually, compared to $587,000 to $1 million with the caps.
Visit Baltimore, the Baltimore Development Corporation, and the local hospitality industry support the measure. Proponents argue that short-term rentals should be taxed and regulated on the same level as hotels and bed-and-breakfasts.
A work session meeting to revisit the bill is slated for August but is not yet on the city’s official schedule.
All-in-one short-term rental software Guesty welcomes Vered Raviv Schwarz as its new chief operating officer to oversee the company’s global operations from its Tel Aviv headquarters. Raviv Schwarz brings more than 20 years of experience in leadership positions in both early-stage, mid-sized, private and public companies. In her role, she will support the company’s plans for growth and global expansion across North America, Europe, and Asia.
Established in 2013 by twin brothers Amiad and Koby Soto, Guesty is a cloud-based platform that simplifies property management operations and allows the management of listings from multiple accounts on Airbnb, Booking.com, and other channels. Guesty also provides a unified solution for tools, including: property management software, channel management, guest inbox, mobile app, automation tools, payment processing, booking website creation, a homeowner’s portal, and 24/7 Guesty communication services.
“The vacation rentals market is undergoing a transformation, and through the combination of cutting-edge technology and a customer-centric approach, Guesty is at the forefront of the shakeup,” said Raviv Schwarz. “In my role as COO I have always focused on the customer voice and journey, so I’m looking forward to bringing this passion for customer success through technology to Guesty and assisting the company in scaling its global operation and allowing our clients to grow and scale with us.”
“With Vered’s extensive experience in growth and customer success, Guesty’s users can expect even more attention to detail and attentiveness to their needs,” said Guesty CEO Amiad Soto. “We are committed to providing property managers with the best possible experience on our platform and I’m certain that with Vered as our COO, we’ll do just that. Turning a startup into a global enterprise is no small task and it’s easy to lose sight of certain details, but this appointment will ensure we stay focused on what really matters – our users.”
Prior to joining Guesty, Raviv Schwarz spent nearly six years as the COO of FiverrⓇ, the world’s largest marketplace for creative and digital services. During her tenure, Fiverr grew from less than 40 employees to approximately 400 and expanded its sales, offering, and brand reach. During her career, Raviv Schwarz has held leadership positions in several other technology companies such as Kenshoo, Radware, and MediaMind, and led financing rounds, M&As, and IPO amounting to hundreds of millions of dollars.
Earlier this year, Guesty obtained close to $20 million in Series B funding led by TLV Partners. The alumni of startup accelerator YCombinator is also backed by Magma Venture Partners and Buran Venture Capital. The company now has 150 full time employees, operating globally with most customers currently in North America and Europe.
I feel compelled to respond to David Angotti’s post on Matt Landau’s VRMB blog about the Guest Education Day held in February to educate consumers on the value of booking vacation homes directly with owners and managers.
Note: The Guest Education Day effort used a singular hashtag to promote the value of booking directly with vacation rental managers and owners. We have chosen not to use the hashtag here to avoid distracting from online traffic and diminishing the message for travelers.
David Angotti, founder and owner of the vacation rental marketplace SmokyMountains.com, presented two overarching themes in his post analyzing the Guest Education Day effort:
The message about price was flawed in that the OTA guest fee is likely going away, and vacation rental managers and homeowners/hosts should not attempt to compete in price with online marketplaces because it is a “race to the bottom” in pricing.
The Guest Education Day effort needs certain elements to be sustainable, including a centralized website, standardized graphics, a consolidated PR/media effort, and a uniform offering by participants.
At VRM Intel, we disagree on both points.
We believe that offering a “best-rate guarantee” for guests who book directly with you is the right thing to do—and promote. We also believe that the Guest Education Day belongs to the owners and managers, and creating yet another third-party website, developing a graphics package, and standardizing branded messaging was a confusing and unnecessary distraction that gets between owners/managers and their guests (which was counter to the whole message).
First, I want to personally say to readers that David Angotti and I are friends and colleagues, and he is a brilliant marketer and a valuable member of the vacation rental industry ecosystem. We are both passionate and seek to grow the industry. Although we disagree about some components in this effort, my respect for him is immense, and I look forward to working together and debating issues like these for years to come.
The Guest Education Day Objective
February’s Guest Education Day was designed to educate consumers about the fee that online marketplaces (e.g., Airbnb, VRBO, HomeAway, TripAdvisor, etc.) are charging to guests—and to give owners and managers a chance to inform travelers about the many advantages of booking a vacation rental directly.
We initiated a one-day event that sought to unify the supplier side of the industry and encourage both owners and managers to send emails to their databases and use a singular hashtag on social media with the goal of reaching vacation rental users with a cohesive message, using multiple touch points in a compressed time period for effectiveness.
Timing was everything on February 7. First, there was no mass education about a guest fee, and guests were confused. Second, Airbnb and HomeAway were in the process of making some bold business moves that had the potential to harm suppliers—without any cohesive pushback from owners/managers. Demonstrating to Airbnb and HomeAway that this industry could come together in a very short amount of time in a pure, meaningful, grassroots effort was critical. And it made a difference. (For example, check out Expedia’s Q4 2017 earnings call Q&A which took place the following day.)
As you can read in the initial call for action for the campaign, we asked owners and managers to communicate with their contacts and social media followers with core messaging: (1) book direct and save with best-rate guarantees; (2) when guests book direct, they have direct contact with the manager or owner: peace of mind is important; (3) the best price isn’t on the OTAs; (4) many of the best vacation rentals aren’t even listed on the major sites; (5) managers and owners have intimate knowledge about the destination; (6) if guests have special needs, a manager or homeowner can help; and (7) during nonpeak travel times, managers and owners may have special offers available.
Promoting a Best-Rate Guarantee Is Not a “Race to the Bottom” in Pricing
Using the Guest Education Day to promote a guarantee to travelers that they will get the best price by booking directly with the owner/host/manager is not, as Angotti described, a “race to the bottom.”
In fact, it is a tool used by the biggest brands we know. Hilton, Marriott, and Choice Hotels all currently offer best-rate guarantees. Even Best Buy and Walmart will match any competitor’s price. And there are countless examples other than these.
Angotti’s argument is that the traveler fee is expected to disappear, and that if the campaign is about avoiding the traveler fee, it is not sustainable. He said onstage at our VRM Intel Live event in Breckenridge that we might as well have called the campaign #booking.comdirect since Booking.com doesn’t charge a traveler fee. While he is right that the traveler fee is expected to go away (we wrote about this on VRM Intel), fees are not disappearing. If the traveler fee goes away, it will be passed on as an increased fee to the supplier (the owner/host/manager).
Regardless of who pays the fee, the cost of customer acquisition is higher for owners/hosts/managers when guests book on third-party marketplaces. Encouraging guests to book directly to save money is good for guests and good for you.
The traveler fee is not the only reason that managers and owners should offer the best rates to guests who book directly. When guests book directly, owners and managers have an increased ability to cater to guests’ needs and set expectations; and they don’t have to pay a commission to a third-party marketplace.
Angotti speculates that rate parity requirements are coming, but—in reality—our industry is a long way from being able to enforce rate parity agreements. In addition, because of the current sliding scale and testing of the traveler fee percentage, the fee is not consistent. Owners and managers do not know what guests are being charged and couldn’t offer rate parity if they wanted to.
Angotti proposes, instead, an if-you-can’t-beat-them-join-them solution: “Charge the same fee that the listing sites are charging and use it to do incredible things.” Basically, Angotti is suggesting that you should add the equivalent of OTA fees to your own bookings as an additional fee for guests. It is worth mentioning that Angotti’s vacation rental marketplace, SmokyMountains.com, adds a traveler fee. His business naturally benefits if you do not have a lower price than is displayed on his site(s).
Guests deserve to know that they can get a better rate by booking directly with an owner/host/manager, and we believe owners and managers can and should provide a better rate to encourage guests to engage and buy from them directly.
The Sustainability of a Guest Education Campaign
The second part of his advice for the campaign was that more was needed to create a sustainable campaign, including a centralized website, consistency of messaging, standardized graphics, and a consolidated media/PR effort. He also proposed that all participants should provide a standardized offering, saying that “every Book Direct guest should receive branded material through the mail when they book, a welcome amenity, a food experience (i.e., brunch one day of their stay), destination benefit (free paddleboards), and negotiated benefits.”
Sounds great, right?
The problem is that the vacation rental industry is not a standardized industry. To be fair, we strongly considered many of these ideas, but these actions require a level of industry consolidation that does not currently exist.
Also, who is going to pay for a centralized website, graphics, branded materials, and a PR campaign? Managers? Owners? In fact, when the hashtag was formed, we had to overcome a considerable dispute between the manager and owner community about what booking directly really meant.
Even if we had been able to get mass buy-in among the owner and managed communities, create a budget, identify resources and stakeholders, and raise funding for the campaign, owners and managers would passionately disagree about the content on a website. Furthermore, can any owner or manager even imagine what an agreed-upon, standardized offering among participants would be? Mailed branded materials? A welcome amenity? A food experience? A destination benefit?
If we had waited to launch the Guest Education Day until we had industry buy-in among owner-managed and professionally-managed providers that included funding for a website, graphics, collateral, and media blitz—along with a standardized benefit—we would still be in committee meetings several hours a week, with nothing to show for it.
Instead, knowing that the timing was critical, we found basic common ground for a simplified one-day campaign.
Although the effort was grassroots and centered on education, participants sent a reported 3.5 million direct emails and reached 24 million consumers on Twitter alone.
We also eliminated the middleman by not distracting from the message with yet another centralized website. Each participating vacation rental owner and manager was able to leverage the effort to drive guests directly to their home(s).
Value-Added Activities over Price?
In his blog post, Angotti included fantastic ideas to add value instead of discounting. As someone who has spent over a decade directly marketing vacation rentals, I believe in creating a value-driven vacation rental experience. Matt Landau has developed a Limited Edition Theory about how to make each and every home rental a limited edition experience that I 100 percent agree with.
Angotti proposed offering guided hikes, professional photography, walking tours, designated drivers, wine tastings, beach services, and more. While we absolutely agree that wow-offerings are important for vacation rental providers, when a guest is scrolling through dozens of websites and hundreds of listings, communicating a value-added “guided hike” to reward direct booking is unlikely to move the needle in the booking decision.
As a complex and nonuniform industry, differentiation is a significant challenge. While Kabino offers guided fishing trips, Sunset Vacations offers beach chair rentals. In crafting a simplified Guest Education Day message, we had to create a uniform, simple, relevant, timely way to communicate to travelers why they should book directly.
Stated a different way: In an unstandardized industry, communicating varied added-value offerings within a single campaign was simply not doable.
To Wrap Up…
I agree that there is more to do and that we must work together to find ways to make a Guest Education Day campaign sustainable, but creating more friction and more middleman marketplaces in the process is—in my opinion—distracting. (However, if owners/hosts/managers want to contribute to funding a Guest Education Day website, collateral, and media blitz as a resource for owners, managers and the media, we are happy to produce it.)
Regarding price—offering your guests a best-rate guarantee is not a race to the bottom. It’s a promise to your customers that you will reward them for booking directly with you, and when they do, you have a proven ability to offer them a better vacation experience.
HomeAway remains the undeniable leader in delivering third-party revenue for core vacation markets in the United States. Expedia’s purchase of the company in late 2015 resulted significant changes to the business model which caused friction among suppliers, but the company has recently shifted its philosophy to cater more to managers and owners and to preserve its leading position in whole home vacation rentals.
We reached out to HomeAway’s chief commercial officer Jeff Hurst to take a deeper dive into HomeAway’s trajectory, business model, and technology outlook. Hurst joined HomeAway in 2010 as the global director of strategy and planning and assisted the company in completing its IPO in 2011. In 2012 he transitioned to lead HomeAway’s commerce initiatives as the global VP of e-commerce where he was responsible for enabling easy and secure payments across the HomeAway sites as well as implementing online booking for travelers and commission-based pricing for owners. Hurst currently oversees strategy and growth businesses, including business development, global revenue, e-commerce initiatives and HomeAway’s activities in Asia Pacific.
Industry Growth and Competition
Amy Hinote (AH): HomeAway has a huge advantage in traditional US vacation rentals. Do you plan to put more focus on expanding internationally and where does HomeAway see the most inventory growth now and in the future?
JH: Growing in markets outside the United States has been our priority for several years, and we have made significant progress, especially in Europe. The transition to a transactional business model and consolidation of our European brands has allowed us to invest more in performance marketing, which has increased bookings in Europe.
To grow the HomeAway market, we are focused on not only expanding our inventory but also improving the experience for travelers as they are introduced to the idea of renting a vacation home. We see most growth opportunities in urban destinations around the world and in destinations outside the United States including emerging markets in Asia and South America. Our distribution partnership with Expedia makes both growth areas particularly compelling.
AH: Are there any key industry trends that HomeAway feels will dramatically affect the vacation rental industry?
JH: Although vacation rentals are growing in popularity, there is still a tremendous opportunity for meaningful growth: in the United States, private accommodations represent less than 20 percent of total lodging. Consistency in the vacation rental booking experience helps travelers who have been easily booking hotel rooms to become regular customers of HomeAway, and we will reach new potential travelers who may book on many different devices (mobile, desktop, tablet, phone). As vacation rentals become even more mainstream, we expect to see convergence on payment and cancellation policies. Technology and digital assistants will help vacation home rentals close the gap on concierge services and other amenities travelers enjoy at hotels.
AH: In looking at the growth of the vacation rental industry in traditional markets, as opposed to urban markets, do you believe the traditional vacation rental market is growing, maturing, or contracting?
JH: We believe there are still many growth opportunities in the traditional vacation rental industry. Just last quarter, HomeAway had $3.9 billion in gross bookings, an increase of 46 percent year-over-year. We have grown strongly and steadily for more than ten years. We expect that to continue as awareness grows about HomeAway.
AH: Is HomeAway planning to add shared housing inventory to compete with Airbnb?
JH: Travelers who choose vacation homes over hotels tend to do so because they want more space, more privacy, and more value for their money. These features are especially important to families and groups, our core customer base. For that reason, we do not allow shared spaces at HomeAway.
AH: Do you believe Google and/or Amazon will disrupt the vacation rental funnel?
JH: Our $130 billion industry has been in a constant state of disruption since HomeAway was founded. The vacation rental market has evolved, and we have seen all sizes of competitors come and go. We are confident we can grow substantially because of our ten years of success.
HomeAway’s Business Model
AH: Some of HomeAway’s recent policies have caused anxiety among your supplier base. Expedia CEO Mark Okerstrom said, “With respect to the property managers’ displeasure and how those are going… I would say that broadly speaking, the property manager and owner community are adjusting to the changes.” Do you believe that property managers will eventually adjust?
JH: As we invest more in marketing, these changes will give property managers more distribution, more data and insights, and ultimately, more bookings. Admittedly, we have made missteps, but we will continue using customer feedback to improve our service and increase its value for property managers who use our sites and products.
AH: There is a lot of speculation that the subscription model is going away in favor of a pay-per-booking (PPB) model? Is there any truth to this?
JH: The subscription model remains popular among our most loyal customers, and we will offer it as long as it continues to help us achieve our customers’ and our overall business goals. New customers seem to opt for pay-per-booking: owners and managers choose pay-per-booking when they list with HomeAway.
AH: Regarding the new off-platform attribution policy, under your terms of service, property managers are required to submit to HomeAway audits including access to their books, account records. Is there internal concern about the potential loss of supply based on the new policies?
JH: The only intent of the off-platform attribution policy is to ensure HomeAway is compensated for the value we provide property managers so they can receive bookings. We are always eager to hear feedback from managers that could improve our programs, products, and policies. In the case of audit rights, we listened to the feedback of property managers and have removed audit rights from our terms and conditions.
AH: In your Premier Partner Pledge, you require that managers and owners “keep their rates equal to or lower than rates listed on other advertising websites for the same property.” How can a manager or owner do this if he/she doesn’t know what traveler fee HomeAway is charging to guests?
JH: We ask Premier Partners to post the same nightly rate across all advertising channels so travelers can book the same property at the same affordable rate. This is consistent with the expectation that Premier Partners will provide the best booking experience for travelers.
AH: What percentage of bookable inventory on HomeAway do you expect to add to the Expedia platform by the end of 2018? What have been your biggest challenges in this integration?
JH: While we do not update the percentage of HomeAway inventory available on Expedia sites outside of earnings, we continue to test and learn from listing HomeAway properties on sites such as Expedia, Orbitz, and Travelocity. As anticipated, rate structures, calendar accuracy, manager response times, and pricing consistency have been challenges to adding additional listings to Expedia sites. But with the adoption of our new rates-editor tool, instant booking and other factors have accelerated, and we expect the availability of HomeAway inventory will also.
AH: In terms of ranking, are recent changes to your algorithm helping property managers and owners improve their performance?
JH: We continually give feedback in the Marketplace Feed to help managers and owners improve performance, and we plan to add even more tools and resources. We also regularly share educational content and have a team standing by to address any questions or concerns owners and managers have.
Software and Technology
AH: How does HomeAway see its software division? Are you looking to acquire more software companies or thinking about spinning off the division?
JH: HomeAway Software remains an important part of our business. Property managers provide an invaluable service to owners and a great experience for travelers. We will continue investing in HomeAway Software as part of our ongoing commitment to serving professional managers with world-class tools and services.
AH: Regarding channel managers, how vital are third-party channel managers to the core OTA business? As you integrate with more and more software systems, will channel managers disappear? JH: Third-party channel managers provide a valuable service to property managers; they ease the technical burden of working across multiple distribution channels. We support them and expect they will continue to help many customers access new travelers.
AH: The discipline of revenue management is still in its infancy. Do you see HomeAway educating property managers and homeowners about revenue management?
JH: We empower owners and property managers with data and insights so they can make the best decisions possible to accomplish their unique goals. Pricing is important for decision-making, and our tools help these professionals understand the dynamics of traveler demand.
AH: Are there any new technologies you plan to acquire that may better serve your suppliers and guests?
JH: We are interested in any technology that helps us deliver a world-class experience to travelers, owners, and managers, especially innovations that can make it easier to rent or manage a home and listings. For example, we are rolling out secure text messaging so managers and owners can quickly and easily communicate with guests, and we are introducing virtual reality tours of homes.
AH: Is blockchain technology the next game changer?
JH: Blockchain is an interesting technology with several potential applications that could improve how consumers transact in an online marketplace. We are evaluating it and other technologies to see how we can leverage blockchain to create better products and experiences for our users.
In a 6-3 vote Monday night, the San Diego city council adopted short-term rental regulations allowing a host to be issued one short-term residential occupancy license for the host’s primary residence and one additional license for an accessory dwelling unit on the same lot as the primary residence, effectively banning the traditional second-home vacation rental in which the owner does not live on site.
“HomeAway is extremely disappointed in the city council’s decision to ignore the mayor’s compromise and effectively ban short-term rentals in the city of San Diego,” said Philip Minardi, director of policy communications with HomeAway. “This outcome will not only negatively impact the local economy but will deny many San Diegans of their private property rights. We plan to evaluate next steps in the coming days to determine an appropriate path forward.”
Along with securing licenses, which must be renewed annually and cost $950, all hosts are now required to:
Secure a transient occupancy tax certificate
Collect and remit the city’s 10.5 percent transient occupancy tax
Comply with the Good Neighbor policy and include a local contact to immediately manage any problems
Display their license numbers in all advertisements
Collect and maintain detailed records on each short-term rental transaction for a period of three years
Pay new Affordable Housing Impact Fees of $2.73 per night rented for home shares and $3.96 per night rented for whole home rentals
Homes with four or more bedrooms must additionally obtain a neighborhood use permit.
New rules also apply to rental platforms such as Airbnb and HomeAway. As listed on SanDiego.gov, they must:
Provide notice of the STRO and TOT requirements to each host prior to their listing
Collect TOT and Affordable Housing Impact fees at the same time rent is collected
Ensure only licensed or registered hosts are using the booking service on the hosting platform
Collect and maintain detailed records on each STRO transaction for a period of three years
The new regulations will go into effect next July, along with a new enforcement structure outlined with the new ordinance. The city will create a new team of police and code enforcement officers specifically to handle short-term rental violations, a license and registration system, and a complaint hotline or app. If a host receives complaints, the first is considered a warning, the second may result in a citation, and the third in a 12-month period could result in their license being revoked.
Although the debate around short-term rentals in the city has been going on for years, Faulconer’s proposal released in June stirred new intensity leading up to the vote, including more than five hours of public testimony during yesterday’s city council meeting. Arguments ranged the full spectrum from no regulations of short-term rentals to entire bans, and advocates from several camps campaigned fiercely with ads, sharp op-eds, and passionate testimonies to the council.
Share San Diego led a major campaign in favor of regulations over a ban, showing up en masse in lime green shirts for yesterday’s vote. According to its website, the group advocates responsible property management and good neighbor policies for renters of any kind and residents themselves. “We do not support policies that will trample property owners’ rights and negatively impact the tourism that San Diego depends upon as a major part of its economy.”
The California Hotel and Lodging Association sponsored the campaign It’s Time San Diego to oppose short-term rentals, arguing that they are a danger to the city. “Between the revolving door of strangers, the drunken parties, and the skyrocketing housing costs caused by short-term rentals, San Diego neighborhoods are becoming increasingly unsafe and unlivable for families,” its website states.
Amending Mayor Faulconer’s Proposal
The new regulations amended Mayor Kevin Faulconer’s proposal in which a host could be issued no more than two whole-home short-term rental licenses, one for his or her primary residence and one for a secondary residence, excluding the Mission Beach community where there would be no license cap. His proposal also included a minimum three-night stay requirement in San Diego’s coastal and downtown neighborhoods including Pacific Beach and La Jolla.
In addition to banning of secondary residence rentals, the council removed the Mission Beach exclusion and minimum stay requirements in the adopted ordinance. Much of the rest of his proposal was left unchanged.
Booking.com has partnered with vacation rental influencer Matt Landau to produce of A Sense of Placeas the series enters its second season.
A show that vividly demonstrates the uniqueness of vacation rentals as an accommodations option, A Sense of Place combines the feel of premium television with the immediacy and versatility offered by modern digital distribution. Hosted by Landau and produced by his longtime production team at The TFP Company, the second season follows Landau to various corners of the world providing a visually-captivating “sense” of how short-term rental managers work tirelessly to make vacation truly special for their guests.
“Vacation rentals are starting to enter the mainstream of travel, and the show aims to get out in front of the wave and be the first voice that introduces our movement to the world,” said Landau. “Booking.com brings a direct line of communication to these travelers with their loyal fans and technology. With what we learned in Season 1, and with the strengths that Booking presents, we have a chance to change the way people travel. That’s a thrilling challenge!”
In its second season, A Sense of Place aims to add actionable tips for travelers looking to stay in vacation rentals. “Season 1 was really about depicting our amazing colleagues properly and showing what a vacation rental experience is capable of,” said Landau. “This season we want to introduce that formula to the mainstream traveler in a focused and actionable way. To do this, each episode will revolve around one specific style of vacation that can be enhanced with the choice of the right rental. We’ll also be using call-outs or tips that travelers can use to write their own stories, which in turn become the blueprints for best practices on behalf of hosts.”
According to Booking.com vice president Olivier Grémillon, “One of the most powerful aspects of the series is its ability to inspire both travelers and partners alike with the possibilities and opportunities connected to the burgeoning vacation rental movement. One of the most impactful aspects of the program is seeing how these home and apartment owners share so much of their first-hand knowledge of a destination with their guests. That special personal touch and the tailored travel experiences it drives are central to how we approach the overall trip experience at Booking.com, both for our customers and partners. We believe that hero-ing these exemplary hosts will help spark even more travelers to seek out a vacation rental option for their next trip, but also motivate even more home and apartment owners to consider renting out their properties, as well.”
Stuart Hooper, the show’s producer, believes that advancements in film making and distribution technology would allow a small crew to travel around the world and bring a truly cinematic experience to a large audience on the internet. “Season 1 proved that this idea could be a reality,” said Hooper. “The vacation rental professionals that we met on the road further reinforced the idea that a small independent shop could compete on a big-time level when it comes to quality and reach. Now, with Season 2 in full motion, we want to really push the boundaries of our style of filmmaking. We want everyone who travels to know about the magic of vacation rentals.”
Landau added, “There’s not a better company [than Booking.com] we could have chosen to do this with, and their respect and support of our vision feels like the ultimate dream-come-true relationship with a sponsor.”
Production of the second season of A Sense of Place begins today and will premiere across digital platforms in November.
Anytime NBC’s Jeff Rossen does a news report on vacation rentals, rental managers around the country shudder at the effect his report could have on their business. However, this past spring, the most recent, big story on protecting vacation homes from carbon monoxide poisoning and fire shouldn’t have been a wake-up call but a call for the vacation rental industry to unite worldwide to ensure basic safety codes are addressed in vacation rental homes. Now is the time for managers to offer safe rental homes, and it’s time to use that as an advantage and promote their business using safety as a selling point.
At the end of Rossen’s report following the death of the family in Mexico, NBC’s Carson Daly muttered aloud that the solution to the problem was to stay in a hotel instead. Rossen suggested that vacation renters travel with their own carbon monoxide detectors. Neither of these solutions address the problem.
All around the United States, vacation managers have slowly worked to address safety for their vacation rental homes over the past couple of years. Unfortunately, this has been mostly reactive to all of the deck collapses, fires, and drownings in pools that have caused renter injuries and deaths. However, these incidents should serve as wake-up calls to vacation managers that they need to protect their guests and do all that is necessary to ensure they have a safe stay. Some credit is due to managers who are making a great effort to care more. In Big Sky, Montana, Kirsten King, owner of Book Big Sky, joined in when the Kidde Fire Extinguisher recall came out last November and has been leading her agency through the difficult process of swapping out recalled fire extinguishers in all of its rental homes. Lori Smith, general manager at Seaside Vacation Rentals in the Outer Banks, North Carolina, has led her team in creating safety inspections to ensure all their rental homes meet basic safety standards. Others are following their example after attending safety presentations at VRMA and VRM Intel Conferences.
All three had been sleeping upstairs when the fire started in the vacation rental. Gilbert’s niece and nephew, then eight and four, were sleeping downstairs and woke up before the rest of the family. They discovered some matches and started playing with them. Investigators later determined that the couch caught on fire while one of the children was playing with the matches. The kids didn’t have access to matches in their own home, and family members had never really reviewed the dangers of matches with the kids. This is why matches or real, flame-burning candles should never be permitted in any vacation rental.
After starting the fire, the eight-year-old niece ran upstairs to Gilbert’s room, pounded on the doors, and said, “Everybody get out! There’s a fire! Get out! Bart, Lucas, Julie, get out!”
When Gilbert got up from the bed, the room was full of black smoke. Her niece ran back downstairs. The three of them reached the top of the stairs to follow her niece, but the stairs were already engulfed in flames.
Gilbert was able to escape out of a second-floor window, but her son and boyfriend were overcome with smoke and didn’t make it. Their bodies were discovered inches from the window.
Gilbert estimates that only fifteen to twenty seconds passed from the moment she woke up to the moment she jumped out of the window. “Twenty seconds and they died,” she said.
What Gilbert said next is something every vacation manager should read slowly and absorb. “There was no way to get through the smoke and the fire,” she said. “It comes at you like a black, crawling monster. It makes noise. It’s hot, and you feel it, but your adrenaline is going so much that I believe they did not really feel the pain.”
Gilbert was in a home she had only spent one night in and her surroundings were unfamiliar. This is how it is for all vacationers in a rented vacation home. Everything worked against her and her family to get out of the house quickly in an emergency. In addition, recently published studies show that newer homes, with more modern contents, burn faster and with more toxicity than ever before.
If you’ve ever attended one of my safety presentations, you know I begin by asking attendees to close their eyes and envision arriving at a rental home at 11:00 p.m., in the dark, after a full day of travel, with kids fighting, traffic, and wrong directions. Then imagine climbing into bed exhausted. Suddenly, you wake to smoke in your bedroom at 2:00 a.m. Open your eyes. Did you as a vacation manager do everything in your power to ensure that these guests, who trusted you to alert them to danger and guide them on what to do to get out alive? This is the most powerful message a vacation manager must absorb when deciding to offer a vacation rental to generate income. Ultimately, the vacation manager is responsible for ensuring guests have a safe vacation rental experience.
While investigators from the Maine Department of Public Safety said there had been three functioning smoke detectors in the house, Julie remembered hearing only one from a distance in the kitchen or somewhere downstairs. Why weren’t all the smoke detectors interconnected so they would all go off, regardless of the source? While laws don’t yet require this functionality, managers should make sure all of their homes have interconnected alarms. Shouldn’t your guests have the best?
The last thing Gilbert expressed when she discussed the events of the fire, which was also published in news stories across the northeast, is frustration. Gilbert said she “isn’t likely to rent another home through [name of website removed] or similar websites due to the rentals’ relative lack of regulations and safety features, like fire alarms and sprinkler systems, in comparison to hotels.”
Address the Problem. Make Them Feel Safe.
OTAs are improving their vacation rental safety outreach, but they have a long way to go. Unfortunately, professional managers have even further to go. RBO properties on Airbnb, VRBO, and FlipKey still show safety flaws, such as deck railings that are not up to code, pools without lockable gates, and bedrooms and hallways with no visible smoke detectors in marketing photos. Anyone can list a home on an OTA site without providing proof that the home is safe (there is no excuse for a professional rental agency to list homes that don’t meet national building code standards). Still, many of the big OTAs have web pages dedicated to safety. This is one area where the OTAs and RBOs are leading the professionally managed industry—they are starting to embrace safety and promote it. The deaths in Maine and the recent deaths in Mexico should be a call to action for universal safety standards in all vacation rentals, regardless of location or management.
As the vacation rental industry continues to grow, it’s inevitable that regulations will be passed requiring managers to have safety features similar to a hotel’s in rental homes. In fact, it’s already happening. Many localities around the United States already require vacation rentals to have smoke and carbon monoxide detectors, emergency exit lighting, and fire extinguishers in place. One popular vacation rental destination in Maine, the town of Cape Elizabeth, requires posted exit plans in the bedrooms of vacation rentals, much like a hotel.
So why not embrace safety? Instead of offering a 10 percent discount on a week at a rental property, why not sell the fact that your rental homes are inspected and will provide a much safer vacation experience for a family than one offered through an OTA or by a competitor? Volvo has been selling safety for years, and it works!
How about this slogan on your website homepage instead of announcing specials: “Our homes are thoroughly inspected for safety annually and prior to each arrival.”
Maybe have this conversation with a guest who wants a discount.
Potential renter:“I see the property is being offered for $2,000 a week. Is there any way you could rent it for $1,800?”
Reservationist:“That’s a great question, and I appreciate your asking it. We thoroughly inspect the homes annually to ensure our homes meet the highest quality and safety standards. Additionally, we provide some incentive to our cleaning and maintenance teams to make sure nothing is overlooked safety-wise prior to your arrival. Ensuring you and your family are safe in a home that you aren’t used to living in is our top priority. Now, let’s make sure you and your family are in a safe place on vacation and not let a few dollars keep us from doing business together.”
How about the following notes in picture captions?
Stairs with handrails lead up to the second floor, includes a washer and gas dryer, a gas and carbon monoxide detector are located in the laundry room, gorgeous king master bedroom with incredible views, a combination smoke/carbon monoxide detector is located in this room, and also includes a well-equipped kitchen with quality appliances and smoke detectors.
Highlighting safety items in property descriptions should be something that managers consider doing. HomeAway and Airbnb have sections in each web listing where RBOs can post safety features. Yet, a scan of most professional manager websites shows none are doing this yet. If it’s not easy to add a table to your property descriptions for safety, then find ways to include safety features in the property advertising and description. Here is an example.
“Surf’s Up” Rental House Description
Impeccable Interior Design, Safe Home within Walking Distance of the Beach
Exceptional style, spacious bedrooms, and a convenient location just steps away from both the beach and an array of local restaurants and attractions makes “Surf’s Up” a fabulous and safe choice for your family’s next vacation. This home is inspected annually for safety and features the top, Consumer Reports rated dual ionization/photoelectric interconnected smoke detectors throughout the home. Digital readout carbon monoxide detectors are located near all sleeping spaces.
Boasting three large bedrooms, each with its own deck and emergency escape ladders, this oceanside vacation rental home in Kitty Hawk offers something for everyone to enjoy. The large open-concept kitchen with ample dining space features a loud protective smoke detector, sharp cooking knives, and a fire extinguisher.
Access to the main deck is just off the kitchen. Inspected annually, the pressure-treated deck boards and support beams are all fastened using the best screw fasteners, and the deck is strong enough to support more than twice the occupancy of the home. Views over the railings, which are up to code and will ensure none of the little ones in your party can slip through, are of the distant lighthouses in the area.
The main level features sliding glass doors with alarms that will let you know if anyone too young to access the pool has entered the pool deck area. Just outside, the pool has a fence around it with a secure pool gate. Additionally, the pool has a floating alarm. The nearby hot tub faces the ocean and features locking snaps to keep the cover on.
Finally, the lower level features a bunk bedroom. There are two points of egress for your basement guests, and although the laundry and utility systems are located on the lower level, both have alarm systems in place to monitor for smoke and carbon monoxide.
While this description may seem a bit overboard, some of it can be used as an example to get started.
So, why aren’t professional managers focusing on safety? Vacation managers can do some things, like create a page that links off the main menu and list the safety items in each rental. Promote the inspections! Make and post a short, one-minute YouTube video for the page, and show the agency owner walking through a vacation home in its inventory and pointing out their dedication to safety. Here are some things a vacation rental agency should promote about safety.
Ocean Waves Vacation Rental Safety Commitment
Here at Ocean Waves Vacation Rental Agency, we are committed to ensuring you and your family have a safe and satisfying stay in our rental homes. If at any time during your stay you see something that isn’t safe in one of our homes, please call us immediately at 800-555-5555, so we can address the issue.
As part of our commitment to the safety of our vacationing guests, we ensure that each home in our rental inventory receives an inspection by a professional building inspector to ensure it meets national building code standards. After that, our maintenance team inspects each home annually. We require all of our homes to follow the recommendations of the National Fire Protection Association and only use smoke detectors that are less than ten years old and carbon monoxide detectors that are less than seven years old. In most cases, we go above and beyond to install more detectors than required by law. Finally, our cleaners are educated on how to identify new safety issues that need to be addressed before each stay. Here are some of the many things we check for in each home:
The decks and deck railings are securely fastened and designed to stand up to maximum weight loads.
Two options for egress are available from every bedroom in the home. The rooms preferred for use by children have easier egress options established.
Barbecue grills are located a safe distance from dwelling structures with proper instructions on their use.
Outside lighting is properly aimed to ensure access around the property is properly lit at night.
Property accessories, such as exterior chairs, hammocks, kayaks, hot tubs, pools, swings, and more, are checked for quality and to ensure they are safe for use. We place an emphasis on making sure pools are properly gated and hot tub covers are secure.
Appliances are all inspected to ensure they are clean and safe to operate, and this includes laundry dryer vents.
Electrical systems, including ground fault interrupters, are checked for proper operation.
Get the Guest Involved.
On the Water in Maine Inc. Vacation Rentals has posted preprinted post-it notes on mirrors in all of the bathrooms in its rental properties for several years now. This simple and inexpensive way to grab the guest’s attention prompts them to think about safety just for a moment and may save lives. These custom post-it notes can be made online and ordered from companies like Vistaprint for less than a hundred dollars to cover the whole season for any agency.
It Isn’t Just the Rental Home.
The summer of 2018 immediately started off with the death of a vacation home renter in Michigan, but the death didn’t happen at the property. This highlights an opportunity for vacation managers to share safety guidelines that guests should practice—even when guests are not in residence.
According to a Michigan Department of Natural Resources press release, “At about 3:30 p.m. Monday, June 5, 2018, regional dispatchers received a call from a man who said his son and a friend had taken kayaks from their vacation rental property out into Lake Michigan.”
The temperature of the water was fifty degrees and the wind was blowing hard, but the renters chose not to wear life jackets. The son’s deceased body was found near the kayak, in eight to ten feet of water.
Could a sign near the kayak or a message in the listing description have prevented this tragedy? What about a note from the rental agency stating that, although kayaks were provided, caution was needed regarding their use until lake temperatures warmed?
Give guests information on how to be safe. Should young children be allowed to use a kayak? Should they use a life jacket?
Caption on the listing photo: Two kayaks are included with the rental along with life jackets. Guests are required to wear life jackets when using the watercraft.
Sign by the kayaks: The provided life jackets must be worn when using the kayaks. Children, sixteen years and younger, should not go out unsupervised in the kayaks. All guests should review safety procedures and proper kayak operation.
Other items to address include advising guests against renting scooters from a local business, a source of injury for many tourists; informing them of dangerous rip currents in the ocean; and sharing which ski trails are best to begin skiing and avoid injury.
Finally…Befriend the Local Fire Chief.
As you begin the journey to ensure your vacation rental agency embraces safety and uses it as a tool to help your guests have a good rental experience, get your local fire department involved. Around the country, the fire chief is always at the table when it comes to creating local regulations for vacation rentals. Get your fire chief involved and take him or her on tours of your vacation homes. Show your fire chief that you are committed to good business with a strong commitment toward safety, it will benefit you. Later, when your local government tries to create regulations that may adversely affect your business, you’ll have an ally at the table who will hopefully speak up and point out that the professional managers in your town are already working to exceed any regulations that may be proposed.
The vacation rental industry has not seen a management company IPO since ResortQuest in 1998, but Vacasa is moving in that direction.
Following nearly $104 million in funding last October to help fuel expansion, a Vacasa spokesperson reported that the company has added 3,000 properties to its inventory bringing its total unit count to 9,000 homes, villas and condos under management. By comparison, North America’s largest vacation rental provider–Wyndham Destinations–reports managing nearly 10,000 homes.
Recently, Vacasa added Lisa Jurinka as its new chief legal officer in preparation for an initial public offering. Jurinka previously worked to bring Epocrates and CafePress to the public market and served as general counsel at Jive Software and Innovari.
“Lisa’s global legal affairs background and public company experience aligns well with Vacasa and our future plans,” Vacasa CEO Eric Breon said in a statement.
In addition, Vacasa announced last week it has created Vacasa Real Estate, a network connecting real estate agents with buyers and sellers of vacation properties. “Vacasa Expert Agents” will receive marketing and sales tools including access to the Vacasa Real Estate network featuring guests and homeowners that are interested in buying or selling vacation homes, rental income projections, market trends and insights, one-on-one consultations with Vacasa experts to help refine income projections and discuss what home improvements could be made to increase vacation rental income, and 3D home tours and HDR (high dynamic range) home photography to professionally market and sell vacation rentals.
This summer, Vacasa will move into new headquarters in Portland’s Pearl District in anticipation of adding hundreds more Portland employees.
VRM Intel Magazine’s summer issue is out the door and heading to subscriber’s mailboxes. In this issue, you will find interviews with HomeAway’s CCO Jeff Hurst and Booking.com’s VP Olivier Grémillon and several articles addressing regulatory issues and vacation rental industry trends.
You will also read an eye-opening article from Justin Ford about vacation rental safety, a study comparing noise levels from David Krauss, a discussion about preventive maintenance from industry veteran and FlipKey founder Jeremiah Gall, and a deep dive into the future of brands by Alex Nigg. This summer’s issue also addresses building trust, attracting new employees, managing guest expectations, and much more.
CanadaStays announced yesterday its partnership with Inntopia, a booking system for hotel and lodging managers. By distributing on CanadaStays, Inntopia property managers now have a direct connection to the largest vacation rental audience in Canada.
Toronto-based CanadaStays lists more than 140,000 vacation rental properties in more than 11,000 destinations across Canada, the U.S., the Caribbean, and South America. The new partnership enables hotel and lodging managers using Inntopia’s API to list and manage their rental properties on CanadaStays along with their other channels. The connection provides live quotes and ensures calendars, rates, and bookings are synced.
Rental properties listed on CanadaStays will also benefit from added exposure through the extended partner distribution network that includes HomeAway, VRBO, Tripping, HomeToGo and TravelAlerts. CanadaStays charges a pay-per-booking fee of 8 percent or lower, a fee that falls below many other OTAs.
“We’re in our peak booking season now and our travelers are looking for those easy-to-book properties,” said Nikki Stone, head of revenue strategy at CanadaStays. “It’s the perfect time to be launching this partnership, which enables us to connect more instantly bookable properties to our platform through Inntopia and allows our travelers to book their vacation rental much like they would book a hotel room.”
Headquartered in Stowe, Vermont, Inntopia integrates sales, CRM, and metrics systems for destination marketing organizations, lodging, activity, event, and transportation suppliers. “We’re excited to work with CanadaStays to help connect our clients to this channel and the extended partner distribution network through our platform,” said Trevor Crist, founder and CEO at Inntopia. “The partnership should help lodging managers using Inntopia Commerce improve their distribution mix and fill vacancies.”
Xplorie has hired Debi Steigerwald as its new vice president of marketing. Steigerwald previously served as the director of marketing operations for Vacasa and director of digital marketing and ecommerce at Vology, an I.T. services company.
“The vacation rental marketplace has become very competitive and cluttered. Xplorie provides an amazing opportunity for property managers to stand out in the crowd, provide great experiences for guests, increase their revenue, and help grow local business,” said Steigerwald in the company’s press release. “We’re crafting the strategy to drive significant changes to our industry, and we will enable property managers to provide experiences along with the perfect accommodations.”
Founded in 1996, Xplorie partners with vacation rental managers and activity providers to give guests free access to attractions around their destinations. The Florida-based company’s website currently lists 81 property managers and 4,027 properties across Alabama, California, Colorado, Florida, Hawaii, Tennessee, North Carolina, South Carolina, Texas, and Utah.
The hiring of Debi Steigerwald was aligned with an expansion of the company’s sales group, which includes the addition of Michael Thorwegen, director of regional sales – west, the promotion of Susie Cross, director of regional sales – east, and the addition of Ashley Alderman, regional sales representative.
Thorwegen was formerly in sales leadership at VacationRoost, RedAwning, and Lexicon Travel Technologies. His in-depth knowledge of resort towns in the west makes him a timely addition as the company expands services in the high demand areas of the western U.S.
“I’m most excited about the Xplorie team,” said Thorwegen. “They have laid the groundwork for our expansion. I look forward to learning from them and contributing right away.”
Cross has been with the company since 2009. She started as the marketing manager and has since transitioned to the sales and account management department. Fulfilling her new role as director of regional sales will allow for the quick expansion of the eastern sales team initiatives. “Xplorie remains the nation’s leader of free activity programs because we continue to change and adapt to the ever evolving needs of the vacation rental space,” said Cross. “I look forward to growing with Xplorie and taking on the next challenge in our industry!”
Alderman has twenty years of experience in sales and fifteen in the hospitality industry. Formerly the sales director of national lifestyle and culture publications, she understands the importance of the hospitality industry and the economic value it brings to their community. “I am excited to join the Xplorie team because I believe it’s the experiences you have that create memories that will last a lifetime,” said Alderman.
These additions will join David Kornblith, Xplorie’s VP of sales, leading the company’s strategic sales expansion with an eye on coast-to-coast coverage. “While guest experience and activities are becoming core focus points for property managers, it’s exciting to be part of a company which helps create the ideal guest experience while providing a connection to top local activities,” said Kornblith.
Once a regional brand, Xplorie has experienced substantial growth, especially over the past eighteen months, and now serves more than 50 U.S. vacation destinations. “We will continue to look for top industry sales talent to expand our team as we grow the brand and are excited about the future of both our industry and Xplorie’s position within it,” Kornblith added.
Barcelona-based vacation rental software provider Lodgify announced today that it has secured a $5 million round of Series A funding, bringing total funding to $7.3 million to date.
Lodgify’s blog announcement of the funding states “Our vision of the vacation rental is a decentralized one, whereby owners and property managers play by their own rules.” The capital “means we’ll be able to do things like scale our team, launch our mobile app, and continue developing API connections with the most significant channels.”
“Lodgify stands out from other software players because of our razor-sharp product focus,” said Dennis Klett, CEO of Lodgify in the company’s release. “We are not a property management system, which typically focuses on on-site administrative tasks. Instead, our software enables our users to easily build and grow their own online booking channel.”
“What really strikes us about Lodgify’s product is that, while other software players in this space solely focus on large, established property managers, Lodgify’s self-service software addresses the needs of both individual vacation rental owners and property management businesses,” said Jordi Viñas, partner at Nauta Capital. “At an industry level, 60 to 70 percent of properties come from long-tail, individual owners who need an easy and scalable solution to create an online presence and get more bookings.”
Lodgify plans to use the $5 million investment to drive its growth by expanding its development team to develop new features at a quicker pace.
“Our vision is to make our direct channel technology accessible to any lodging business, no matter the size or segment,” said Marco De Gregorio, co-founder and CTO of Lodgify. “Similar to how Shopify evolved, from a software for entrepreneurs to also cater to enterprise clients, in the future Lodgify will continue to be used by small-to-medium sized vacation rental operators, and also by large enterprise-level hotel chains who want to run their entire website on our platform.”
Following this investment, Stephan Marzen from Intermedia Vermögensverwaltungs and Lodgify COO Alex Vuilleumier will join Lodgify’s board of directors.
The national unemployment rate of 3.8 percent (as of May 31, 2018) is the lowest it has been since April 2000. With unemployment under four percent and the greatest number of jobs available since 2000, today’s strong labor market is putting many job seekers in the driver’s seat, which is starting to translate into increased turnover and pay increases.
With declining unemployment, it is even more important to communicate the value of your employees’ total compensation package so that they fully understand the value of the benefits the company offers to them and their families. Providing employees with total compensation statements helps businesses clearly communicate the value of their wages, paid time off, health insurance, retirement benefits, training and development, and other fringe benefits such as company cell phones, tablets, and laptops.
Most employees understand how much they make in wages. What they don’t understand and frequently miss out on is the value of the various benefits that you provide to them as part of their employment package with your company. The value of these benefits is often overlooked and is commonly referred to as your employee’s “hidden paycheck.” Total compensation statements are a great way to illustrate for your employees their full compensation package, including the amount you pay on their behalf. Your employees’ total compensation statement is one of the best employment marketing tools you can use to differentiate yourself as an employer of choice. You can use total compensation statements to do the following:
Provide your employees with a realistic picture of their total compensation, which leads to increased motivation, engagement, and retention.
Assist potential candidates to understand how strong your compensation and benefits are in comparison to other employment offers.
Communicate your company culture and how you value your employees through your compensation and benefits.
Creating these statements is an investment, but it is one that can really pay off. Don’t trust your paycheck stubs to communicate the value of your employees’ total compensation.
Several years ago, while teaching at Oregon State University, I asked students to create a presentation on their companies’ benefits. During one of the presentations, a student didn’t mention health insurance benefits, which I knew the company offered. When I asked him why, he explained that he didn’t think about it because it was 100% paid for by his employer and not reflected on his paystub. Imagine if this employee saw an employee deduction for health insurance of $0.00 and a company contribution for health insurance of $175.00 every two weeks on his paystub. That’s a powerful marketing message. Don’t miss the opportunity to communicate this value, both through total compensation statements and your employees’ paystubs.
What types of things should you include in a total compensation statement? Include anything and everything you can think of that your business provides as a benefit to employees, such as the following:
Base wages
On-call wages
Manager on duty wages
Overtime wages
Bonuses and incentives (annual and low-cost rewards and recognition)
Paid time off benefits (sick, vacation, personal days)
Training and development (conferences, seminars, workshops, tuition assistance)
Monthly subscription costs per person (apps, payroll, benefits administration)
Professional licenses and industry memberships
Cell phone/company computer/tablet
Internet/data plans
Mileage reimbursements
Company-provided lunches
Company-provided logo wear/uniforms
Company-provided vehicle/transportation
Company discount programs
Comped stays in your managed rentals
Gym memberships
What else?
How you communicate the value of the total compensation statements is key to ensuring your employees read and understand them. Listed below are five things to consider to be sure that your total compensation statements are compelling and attention grabbing.
1.Involve your marketing department.
A total compensation statement is a marketing communication to employees. Just like your communications to homeowners and guests, you are marketing your company to your current (and prospective) employees. Your total compensation statements should promote your company as an employer of choice. It’s your brand, after all.
2.Keep it simple, easy to read, and visually appealing.
Use a lot of color and blank space. Keep your language simple and clear. Try not to use acronyms such as PTO, FICA, FUTA, or other abbreviations that employees might not understand. If your statement is cluttered, boring, or difficult to understand, your employees will not easily comprehend the value of the benefits you provide. Remember, keep it simple for the greatest impact.
3.Use graphs and charts to tell a story.
If an employee’s annual wages are $35,000 and the value of the total compensation including benefits is $50,000, the hidden paycheck you are providing this employee is an additional $15,000, which is equivalent to 42.8% of the wages. Imagine what that might look like in a simple pie chart.
Another chart might illustrate the employee’s missed opportunity in not participating in a company-sponsored retirement plan that provides an employer match. An employee who is earning $35,000 and is not contributing to the company-sponsored 401(k) retirement plan could be missing out on an additional $1,050 of compensation annually. This example is based on a 401(k) retirement plan that provides a 3 percent match on the first 3 percent of the employee’s contribution. Nobody likes to leave money on the table. Show them the money they are losing out on by not contributing to the company’s 401(k) retirement plan.
1.Choose the right time to distribute your statements.
Each business is different, so carefully consider the best timing to distribute your total compensation statements to your employees. I recommend that employers consider creating and distributing total compensation statements to employees in February each year. There are a couple of reasons for this:
Employees receive their W-2s by January 31 and can easily be misled about their annual wages when they see their taxable earnings. Because taxable earnings are usually lower than annual wages due to the employee’s pre-tax, federal, and state tax deductions, employees can be disappointed with their current wages.
Creating total compensation statements takes work to gather data residing mostly in your payroll and accounting systems. Using your payroll information at year end to create statements in February is much easier than in other months during the year because you have already collected a lot of the data to create and distribute your employee W-2s.
Consider the following example: An employee earning $35,000 receives his W2 statement January 31 indicating that his taxable income is $30,000 after taxes, insurance and 401(k) deductions. Now imagine that this same employee receives his total compensation statement three weeks later, indicating that the total value of his compensation while working for your company is $50,000.
This paints a significantly different picture than the W-2 statement he received.
2.Choose the right method to distribute your statements.
The method you choose to distribute your statements to your employees is equally important. Whether you choose to deliver the statement in person, during a conversation, or by mailing it to your employees’ residences, up-front thought is required. Which delivery option provides the most value to your employees depends on how knowledgeable your employees are about their compensation and benefits.
I recommend using your total compensation statements as an opportunity for managers to have open dialogue and discussions with their employees about their pay so that they truly understand the value of what the company offers. Investing your time to help your employees understand their total compensation makes the process even more valuable.
Communicating through total compensation statements is a good business decision when it comes to showing employees the full extent of the value of working for your company. However, don’t just think about using total compensation statements as a one-time event. They can be a very effective marketing tool to communicate the value of working at your company when you are seeing a rise in turnover or lack of qualified applicants.
Total compensation statements are highly effective when recruiting talent to your company. Let’s say you’re interviewing an employee for a position that pays $42,000 a year. Think how powerful it could be to show applicants a projected total compensation statement that lays out, in simple terms, what their total compensation might look like if they joined your company vs. others they may be interviewing with. Using total compensation statements as a part of your recruitment process is a strategic business decision that differentiates your company from others competing for the same employees in your local areas.
Market your investment in your employees, increasing their motivation, engagement, and retention in your workplace, by implementing a regular system for creating and distributing total compensation statements. There is no better time than the present to begin sharing this information with your employees.
Recently, my wife and I spent our anniversary at a hotel on the Oregon coast. It was a unique date because it marked the first time in our lives that we have been married as long as we were single: twenty-four years.
One night, my wife called the front desk and asked for a maintenance technician to come to our room and fix the drain in the tub because it was not draining properly. Fast forward a few minutes later and the maintenance tech knocks on the door. My wife answers it. The tech says he is there to fix the drain and heads straight to the bathroom. After several minutes of plunging (yes, he brought a plunger when a Zip-It was also needed) and grunting loudly, he took apart the drain plug and promptly announced that the hair wad had been removed and that the drain plug in the tub would not work. He told us we would only be able to take a shower instead of a bath. Then, he abruptly left.
Here are a couple of items to note from this story:
The maintenance tech did not say hello to my wife. (Oh, she was super miffed about this!)
He only brought a plunger when he should have brought two tools: a plunger and a Zip-It.
While he worked, he grunted and groaned as he plunged the drain and took the drain plug apart.
When he left, he did not ask if there was anything else we needed or inquire how our stay was going.
The maintenance tech detracted from the marriage milestone my wife and I were experiencing. While the poor customer service did not ruin our time together, it will always be attached to our memories of our twenty-fourth anniversary at that resort.
Customer service is critically important for the back-of-the-house staff. In the podcast Sea to Ski with Sarah and T, the hosts Tim Cafferty and Sarah Bradford explain in Season 1: Episode 5 that the back-of-the-house-staff are the face of the company.
This is so true!
Think about it; who on the staff team do the guest spend the most time with and have a greatest chance of seeing? The back-of-the-house staff.
Customer service training must be a part of the initial training a new employee receives and part of the ongoing training that all staff members receive.
Companies should train employees on the following:
How to shake hands with clean or dirty hands
How to look someone in the eye
How to announce their presence when entering a property
How to interact with guests
How to stand with confidence
What to do with their hands and feet as they stand and talk with guests
Once the initial training is complete, then retraining needs to happen each week.
In a stand-up meeting, the group retraining that occurs before everyone heads out to work should include taking five minutes to review a customer service principle. Groups should celebrate and read the guest comment cards that mention instances of the great customer service given.
In a day when “old-fashioned” customer service is a rarity, making the effort, especially in the height of the season, to provide great customer service will set you and your company apart.
If you are looking for great customer service material, read The Neon Signs of Service by Holly Stiel. It was written for hospitality professionals by a hospitality professional. You can use each chapter for a two-minute customer service training in your group each morning. It can also help you create your company’s own customer service program.
When Used Correctly, Online Chat Provides a New Way to Convert Online Prospects
These days, more and more vendors are providing chat options for vacation rental companies. While this is a new medium for some companies, others have been using chat options for a decade or longer. Either way, it is important to recognize what a fantastic tool this is for reaching out and connecting with those web-surfing guests who might otherwise book with another vacation rental company or via an expensive third-party online travel agent (OTA).
When conducting reservations sales training for all types of lodging operations, I frequently get to peek behind the scenes and see firsthand the live chat exchanges taking place in real time and via chat logs.
From what I see, the majority of chats are regarding policies or procedures or are initiated by those who have questions regarding existing bookings. Examples include: “The reservation is in my name, but my sister’s family is arriving early. Can they check in before we get there?” or “I’m bringing a baby. Do you have a crib and, if so, what size sheets does it need?”
Other times I see those who are ready to book, but who still have simple questions such as, “Are there TVs in all the bedrooms?” or “Do we need to bring our own beach towels?” Occasionally the questions are a bit more complicated but are still fairly easy to answer via chat. For example, “I want to rent the Paradise Is Here home, which is just perfect. I see it doesn’t allow pets, but can you check with the owner and tell them about my dog? He never barks, he doesn’t shed, he has no fleas, and he never pees.” Of course, the response is “Unfortunately, no,” which is easy to chat back.
Yet, when I look carefully at these exchanges, what always surprises me is how many times prospective guests send over complex questions that potentially take up a great deal of time (and a lot of typing) to properly and fully respond. For example, “Which accommodation would you recommend for honeymooners?” or “What’s the difference between the standard and premium category homes?” or “Is this a good choice for families? I have a five- and fifteen-year-old and a grandma. What is there to do for all of them?”
In my training programs, I always advocate for a phone call in these situations. A few of my participants resist making the phone call at first. The most common response from participants is, “If they would have wanted to talk on the phone, they would have called us! These are ‘chat’ people, Doug!”
However, once they give my idea a try, they find out that some guests are very open to talking. It’s just that, for whatever reason, they started out via chat. Based on anecdotal evidence I garner from friends and family, either they don’t want to wait on hold; they don’t want to have to press a long sequence of numbers to navigate an auto-attendant; or they think their call will go to some distant call center agent who has no clue. I have yet to hear friends say, “It’s because I’m antisocial and don’t want to talk to a real person.”
When you think about it, we can be so much more effective in the vacation experience business when we engage an undecided guest via phone conversation than in a text-only format.
Yes, happy emoticons are nice in a chat, but we can share a real smile in our voice in old-school phone calls; we can show our enthusiasm and demonstrate empathy for their travel plans or circumstances. We can better read the guest when we can hear his or her reactions, vocalizations, and inflections. While this can also save us from spending a long time chatting back and forth, more importantly, it can have a huge impact on our ability to turn chat inquiries into bookings, which will turn web-surfing prospects into direct bookings. On top of all those reasons, we can better ensure that we are selling the right home or condo to the right guest and thus manage the guest’s expectations.
So, when you find yourself fielding complex questions that make it obvious that the sender has not yet decided to book, try clicking back a response like this: “That’s a great question! Are you, by chance, near a phone so I can give you a quick call to help you plan this vacation?” Of course, some might answer by saying, “No, I’m in a waiting room” or “No, I’m at my kid’s piano recital” or “No, I’m supposed to be working and my boss is in the next cubicle over!” However, you will also find that a good percentage of them say, “Sure! Call me!”
Chat should not be looked at as a separate medium for communicating with guests but instead as a new way to entice web-surfing prospects into an authentic and genuine conversation about their vacation plans.
The sale of your vacation rental business will be the largest and, in many cases, the most important transaction in your career. It is a material transaction that requires patience, knowledge, and diligence. Having your eyes wide open is a phrase often used in business and nothing could be truer than when selling your business. If you are considering an exit, success is determined by a number of factors. Obtaining the maximum purchase price is obviously a primary consideration, but equally important is reducing your risk before closing. When the business is sold, having contingent risk, or opening yourself up to personal liability, is a strong consideration when choosing the right buyer.
Risk can manifest itself in numerous ways. The most common risk component in the vacation rental industry is having a material portion of the purchase price tied to future unit count. As you enter the transaction, careful consideration should be paid to material issues that could arise after closing, and if a large portion of your purchase price payout is tied to the number of contracts on the program six months to a year down the road, then that may be too much risk to incur.
If you are considering a reduction in future purchase price payout for properties that terminate from the rental program, understanding the buyer’s business model and transition program is crucial. The following are just a few points to understand before moving forward:
Does your business model and that of the buyer align?
If your business is high touch, high service, or luxury in nature, both business models should be carefully reviewed if you’re considering a sale to a buyer who operates remotely, regionally, or nationally. Out-of-state call centers or operations and overreliance on technology, as opposed to people, are a couple of areas where the businesses may not match. If your homeowners are used to dealing with a specific person or place their trust in key staff, their allegiance may not survive the employee turnover that often times takes place subsequent to closing.
Is the buyer willing to charge the same management commission?
In numerous cases, buyers will change the management commission of properties under management after closing. Many owners will have significant issues with contract changes, especially changes in management commission.
Is your future purchase price payment properly secured?
Many sellers engage in some type of owner financing. Ensuring that you have a valid promissory note and guarantee is imperative. Buyers may have a clever response as to why they cannot provide a note or guarantee to ensure the purchase price is paid in full. When constructing a promissory note, special consideration should be paid to external parties who may have a first mortgage on the buyer’s business. In the event of a default, other lienholders, partners, or lenders may be legally ahead of your note position. This will reduce the seller’s eventual recourse in the event of a default. If you decide to engage in any seller financing, it is important to ensure that your promissory note is in first position in the event of default. Second, ensuring that you are receiving a guarantee from an entity with assets and an operating business is equally as important. We’ve seen buyers willing to offer a corporate guarantee only to find out that an LLC was set up weeks earlier to limit any recourse or shield liability from the buyer’s operating business.
In any case, if the risk seems too great to proceed in the sale of your business, it is best to keep the business. It’s better not to do a deal than to do a bad one. Selling a vacation rental business is a material event that should be thoughtfully considered before moving forward. Prior preparation and a focus on certain key business areas will ensure the business is poised for maximum value. If you’d like more information about selling your business, please give Ben Edwards a call at Weatherby Consulting today. We routinely provide valuations at no cost to business owners who may be interested in pursuing a business sale.
The Atlantic Ocean claims several lives on the North Carolina coast where I live every year. Just last week, six visitors were swept out in a single rip current less than a quarter of a mile from where I am writing this article. One of them did not survive. Three other men died in separate back-to-back swimming fatalities a few weeks prior. In April, a four-year-old boy was swept away by a rogue wave. For these families, what was supposed to be a wonderful getaway turned into an unimaginably devastating loss.
Every season in every region brings with it tragic stories of guests getting seriously injured or dying while on vacation, and our hearts collectively break whether or not the guests or their families were our own. Each occurrence raises the questions “What if…?” and “How could this have been prevented?” Of course, what happens on beaches or mountain trails or other locations outside of vacation rental homes are out of property managers’ control, and fatal accidents can occur to even the most experienced swimmers, hikers, etc. Still, vacation rental management companies have a powerful voice that can play a critical role in guest safety in their larger communities.
The challenge in using this voice is balancing education with maintaining a positive image of the destination. How do property managers on the NC coast stress rip current awareness without discouraging guests to experience the otherwise quiet, family-friendly beaches? How do Hawaii VRMs promote island vacations while also educating guests on the widespread effects of the ongoing volcanic eruption? How do Phoenix-area companies convey both the awesome beauty and the cliffside perils of the Apache Trail?
There is no one right way to answer these questions. Safety concerns and their solutions vary by market and company, but every property manager can learn something new from another. Here are just a few examples of what some companies and destinations are doing:
In-home materials, such as refrigerator magnets, guidebook inserts, and handouts in check-in packets
In-office materials, such as signs or looping videos
Blog posts on general precautions, wildlife safety, or inclement weather procedures
Interactive learning sessions with local rescue squads or other professional groups
Real-time push alerts or robocalls for flash floods, dangerous surf, or other hazardous conditions
Even with tools like these, there are always opportunities to grow and improve. So, I pose this question to all VRMs for open discussion:
How do you educate your guests about staying safe in the local area without scaring them away from your destination?
Share your practices, challenges, and questions in the comments for a collaborative conversation. We’ve posted this question on social media, too, and will update this article with comments submitted there.
“The key is to Protect their assets e.g. life and limb. As a former meteorologist when I was living and working in the Destin area, I educated my guest services staff and gave them tools on weather days to watch for lightning within 5nm. At this point we should shut down all outdoor activities. We would then put the lightning detection center website up so they could see the danger. Obviously this is just one example but there are many that can be had. Educate, educate, educate.”
As the vacation rental summer season heats up, so do many of the costs paid by owners and management companies. But before you have a meltdown, know this: PointCentral’s property automation system has solutions that can reduce energy, equipment, and labor costs while at the same time increasing guest satisfaction.
Occupancy-Based Thermostat Rules (OBTR)
Guests want their vacation rental property cool and comfortable as soon as they walk in the door. Owners don’t want to pay to cool vacant properties, nor do they want guests running the HVAC system too hard (i.e., keeping the property excessively warm or cold). Property managers also don’t want owners controlling thermostats remotely and annoying guests. PointCentral’s connected thermostat brings harmony to these three groups by utilizing our OBTR rules to coordinate with your property management system and enable every one of your properties to automatically begin the cooling cycle before the guest arrives, resulting in a comfortable temperature preset by you.
Once inside the property, guests have full control. As soon as the guest departs, PointCentral will automatically return the property to an energy-saving temperature. Guests love this attention to detail, and owners love the 10 to 15 percent energy savings and system preservation.
Heating, Ventilation, and Air Conditioning (HVAC) Health Check
One of the major vacation rental expenses, both in terms of capital and maintenance, is HVAC. When HVAC systems fail, it’s all hands on deck to fix the problem as swiftly as possible, especially if the property is occupied by unhappy guests. But what if your HVAC could show you when it’s not performing well? PointCentral Smart Home solutions can do just that—thanks to HVAC analytics.
If a guest calls to complain that a unit is not cooling, your maintenance staff can analyze how the system is performing from any location before having to roll a truck to the property. Assuming the guest isn’t setting a ridiculous temperature compared to the outside temperature (PointCentral temperature limits can help protect HVAC units from this abuse), your staff can determine if there is a problem and get the right person out to fix it before it becomes a more costly repair.
Later this year, in addition to the analytics data, you will start to see proactive notifications from the PointCentral system when we notice that a unit is not performing well—before the guest notices the problem. These proactive notifications are generated by our powerful AI system, which analyzes over twenty billion data points collected from the five million homes on our platform from the previous year. The system will help you get ahead of maintenance needs and take care of them at optimal cost points with minimal guest disruption (e.g., by scheduling maintenance when the property is vacant).
Refrigerator Blues
What do guests typically do when they first check in at a house? They stock the fridge with a week’s supply of food that they either bring with them or that they purchase at the grocery store on the way to the property. Of course, when you fill an empty fridge with warm food, it can take some time for the refrigerator to cool everything down. In the meantime, your staff may get a call from the guest saying the refrigerator isn’t working. You end up sending maintenance staff to check it out, only to find out there isn’t anything wrong with the fridge.
With a sensor from PointCentral, you can see the refrigerator’s temperature remotely and avoid having to send maintenance staff on a wild goose chase. When a guest calls about the fridge, you can access the sensor and assure them everything is working properly—except for their patience.
Open Doors Open Up Problems
When a guest leaves a door or window open, it can really cause your energy costs to spike. Sometimes the guest just wants to listen to the ocean. Other times, housekeeping or other staff forget to close a door or window. Either way, you and your owners pay dearly, not only with higher utility bills, but also with greater wear and tear on your HVAC system.
PointCentral door and window sensors are an economical solution to this problem. When the sensors detect an “open,” the system will automatically shut off the air conditioning after a grace period (you get to set the grace period to balance the guest experience). Once the guest closes the door or window, the system will automatically restart the air conditioning. This results in significant energy and appliance wear and tear savings.
Don’t Sweat the Humidity
Another common problem of many vacation rentals, especially in the South, is humidity. Excess humidity can cause mold and mildew problems, which can affect the health of your guests and result in damage to the property.
PointCentral smart thermostats end this problem by monitoring humidity levels in unoccupied homes. When levels approach a point that would invite mold growth, the system automatically activates the air conditioning for a short while to bring humidity levels down, saving your guests and owners from health concerns.
Smart home solutions from PointCentral help make hot summers less costly for you and your property owners and will give your guests a much cooler experience. To learn more about why we are the leading provider of property automation technology, please visit us at PointCentral.com.
As you begin the journey to ensure your vacation rental agency embraces safety and uses it as a tool to help your guests have a good rental experience, get your local fire department involved. Around the country, the fire chief is always at the table when it comes to creating local regulations for vacation rentals. Get your fire chief involved and take him or her on tours of your vacation homes. Show your fire chief that you are committed to good business with a strong commitment toward safety, it will benefit you. Later, when your local government tries to create regulations that may adversely affect your business, you’ll have an ally at the table who will hopefully speak up and point out that the professional managers in your town are already working to exceed any regulations that may be proposed.
Headquartered in Stowe, Vermont, Inntopia integrates sales, CRM, and metrics systems for destination marketing organizations, lodging, activity, event, and transportation suppliers. “We’re excited to work with CanadaStays to help connect our clients to this channel and the extended partner distribution network through our platform,” said Trevor Crist, founder and CEO at Inntopia. “The partnership should help lodging managers using Inntopia Commerce improve their distribution mix and fill vacancies.”
Barcelona-based vacation rental software provider 
