VRM Intel Magazine Spring 2018 by Amy Hinote

SPRING 2018

TurnKey’s

John Banczak

Discusses $31M Funding

Sarah Bradford Let’s get Hygge!

Doubling Down on the Guest Experience

Long Live the OTA?

VRM Intel Magazine | Spring 2018

Voice-Enabled Tech for VRMs

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VRM Intel Magazine | Spring 2018

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VRM Intel Magazine | Spring 2018

PaaS

(partnership-as-a-service)

As I sat in Valerie Hawkins’ class at our Partner Conference this year, watching her shine on stage and teach other partners about phone reservation skills, I found myself thinking back to the very first time I met this tenacious property manager. It was just a few months after her company, Perdido Key Realty, joined LiveRez, and we were in her area visiting a few other Florida partners. We sat down together in her cozy office and I mentioned we were meeting later with a brand new LiveRez partner in her area who hadn’t yet gone live. Valerie got this burst of energy and said, “We would love to go help them out with the transition!”

“

We see this firsthand from partners in San Diego who are sharing their resources and experiences battling tough vacation rental legislation. From managers in Mexico who like to visit with all the new LiveRez partners in their area and help them master the software and talk best practices. And, just this past year as the LiveRez family joined forces to create LiveRelief, a movement to support partners going through tough times. Having suffered massive losses in a past hurricane, Valerie was front and center again, helping lead the charge on the LiveRelief silent auction, where LiveRez partners raised more than $80,000 to support other partners devastated by the recent hurricanes.

I’ll never forget the look on that new partner’s face when I told them about Valerie’s offer. You see, when you join with LiveRez, you quickly realize our partners are YOUR partners.”

I’ll never forget the look on that new partner’s face when I told them about Valerie’s offer. You see, when you join with LiveRez, you quickly realize our partners are YOUR partners. You become part of this passionate network of local professional property managers, that are all driven to grow their business, learn from each other, and stand united.

Sharing ideas, visiting other partners’ operations, marketing each other’s properties, and working to build each other up… That’s the norm for our community of partners. And, it’s why all of us at LiveRez believe so strongly in the power of partnership with professional property managers. Tina Upson, COO

VRM Intel Magazine | Spring 2018

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VRM Intel Magazine | Spring 2018

Contents On the Cover

SPRING 2018

66 TurnKey’s John Banczak Discusses $31M Funding 34 Sarah Bradford: Let’s get Hygge!

TurnKey’s

John Banczak

Discusses $31M Funding

55 Build Your Brand with Remarketing & Retargeting 58 Doubling Down on the Guest Experience

Sarah Bradford Let’s get Hygge!

Voice-Enabled

Doubling Down

Tech for VRMs

on the Guest Experience

Long Live the OTA?

Build Your Brand with Remarketing & Retargeting

CUSTOMER SERVICE | HOUSEKEEPING | MARKETING | TECHNOLOGY | AND MORE..

71 Voice-Enabled Technology for VRMs 62 Long Live the OTA?

Customer Service

Marketing

21 Engaging Prospective Web-Surfing Guests Via Chat

40 Blurring the Line Between Marketing and PR

23 Friendly Upselling One Call at a Time

55 Build Your Brand with Remarketing & Retargeting

46 The Rise of the Instant Satisfaction Guest and How it is Transforming Operations

61 Creating a Sustainable Advantage with Automated Distribution

58 Doubling Down on the Guest Experience

62 Long Live The OTA!

83 France, England, and Spain: A European Adventure

VRM Intel Magazine | Spring 2018

66 34

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VRM Intel Magazine | Spring 2018

Contents Technology

Business

51 Technology-enabled Property Management Lodging Platforms

26 Positive Employee Experiences Start with Your Culture

71 How Amazon, Google, and Apple Will Revolutionize Vacation Rentals

31 Urban Short-Term Rentals and Traditional Vacation Rentals

74 Why You Can’t Afford a Data Breach

34 Let’s get Hygge! with Sarah Bradford

Education 82 Vacation Rental Women’s Summit 2019 85 VRM Intel Live: London Recap 88 Calendar of Events

43 5 Mistakes VRMs Make When Selling Their Business 66 TurnKey Raises $31M: Interview with John Banczak 76 Top 10 Changes from the Tax Cuts and Jobs Act

87 Creating a Standard Appearance Document

83 62 12

VRM Intel Magazine | Spring 2018

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VRM Intel Magazine | Spring 2018

Dear Readers, Welcome to the spring issue of VRM Intel Magazine. The pace at which business conditions are changing in the vacation rental industry is staggering. As you may have read on vrmintel.com, I published an editorial, “My Jerry Maguire Moment,” so I won’t rehash those dramatic sentiments here, but the overall point remains true. The demand for vacation homes is healthy. The enormous advantages of staying in a home instead of a hotel resonate with consumers. Margin compression, consolidation, business model shifts, the wave of regulations, and plenty of investment-propped-up noise are making things seem chaotic; but ultimately, the industry is still about providing safe, welcoming, privately owned accommodations and services for travelers. As a result, much of this spring issue is dedicated to the core day-to-day operational and marketing challenges vacation rental managers face. From taxes to company culture to data protection to guest relations to taking responsibility for standards and inventory, the following pages contain valuable insights from industry leaders about building and sustaining a successful vacation rental management company. One interesting piece of news from the first quarter of 2018 was Wyndham’s announcement that it is selling its European vacation rental business for $1.3 billion, and industry experts will be combing through the details to determine how the valuation affects the industry. According to John Banczak in the article on page 66 about TurnKey’s recent $31 million funding round, “It is a positive sign for the industry overall . . . Five years ago, it was tough to explain the business to the investment community. Now folks understand just how appealing the business is. There is far more money running through the PM space than there is through the consumer websites themselves. The Wyndham deal is just another sign that folks are starting to wake up to this.” With increasing investor interest in the industry, new platforms and models are emerging that challenge the traditional ways of doing business. For example, the online travel agency (OTA) business models are evolving in front of our eyes. We’ve seen listing fees and pay-per-lead models shift to transactional fees, and now we’re seeing the introduction of charges for off-platform bookings. This type of charge is unparalleled in modern ecommerce marketplaces, and it will be fascinating to watch how the experiment evolves. On page 62, David Angotti provides a different perspective, outlining how OTAs are positively affecting the vacation rental sector. Also in this issue, Jeremiah Gall talks about how guests demand instant gratification, and Steve Milo lays out his vision for the new technology-enabled vacation rental manager. In addition, Sarah Bradford’s article on talking to owners about updating properties is a must-read. And if you haven’t listened to her podcast with Tim Cafferty, Sea to Ski with Sarah and T, check it out. They are unafraid to talk about the current issues facing vacation rental managers, and they provide empowering ways to leverage changes to grow your business. Also, mark your calendars for the inaugural Vacation Rental Women’s Summit on February 19–20, 2019, at The Ritz-Carlton in New Orleans. This is going to be a special industry event designed to celebrate the many women who have built the industry and to discuss topics of particular concern to this group. Thank you again for your continued support of this magazine. I hope you enjoy this issue, and as always, I look forward to your feedback and to seeing you this spring at one of the upcoming industry conferences. Sincerely,

Amy Hinote

Editor-in-Chief 18

VRM Intel Magazine | Spring 2018

VRM intel magazine Editor-in-Chief Amy Hinote

Director of Design and Production

Donato Berbelja

Contributors David Angotti

Sue Jones

John Banczak

Doug Kennedy

Sarah Bradford

Amber Mayer

Ali Cammelletti

Kelly McClellan

Shea Courtney

Andy McNulty

Ben Edwards

Steve Milo

Jeremiah Gall

Alex Nigg

Jessica Gillingham

Alexa Nota

Durk Johnson

Amiad Soto

David Thompson

Advertising Tracy Adams, tracy.adams@vrmintel.com

Address VRM Intel Magazine LLC

1222 Chicago Avenue, Suite 604, Evanston, IL 60202 To subscribe to VRM Intel Magazine to request additional copies, contact info@vrmintel.com or go to www.vrmintel.com

© Copyright 2018 VRM Intel Magazine LLC. All rights reserved. We cannot accept responsibility for any mistakes or misprints. Reproduction in part or whole is strictly prohibited without written permission from the publisher. We cannot accept responsibility for unsolicited manuscripts or photographs damaged in the post. Material sent on speculation, unless enclosed with a stamped addressed envelope, will not be returned to sender. VRM Intel is not responsible and will not be held liable for the opinions expressed by contributing authors. VRM Intel Magazine LLC reserve rights of ownership.

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Engaging Prospective Web-Surfing Guests via Chat

Offer to Call If It Gets Complicated

ow that so many technology companies have provided the means to chat online with customers, an ever-increasing number of vacation rental companies have yet another way, beyond email and phone, to engage both prospective and existing guests. Maybe this is a new medium for your lodging company or perhaps you are well into the process. 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 hotel, resort, or vacation rental company—or book via an expensive third-party travel agency. While 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 popping up in real time. Most of the time, I see guests who have already committed to a booking sending over basic questions such as, “The reservation is in my name, but my spouse is arriving early, can he check-in?” or “Do you have a crib and high chair for my baby?”

Other times I see those who are ready to book, but who still have simple questions such as, “How many parking spaces are included?” or “Besides the rental fee, how much money will you be holding on my credit card?”

phone so we can share our enthusiasm and show empathy for their travel plans or circumstances? Can’t we read guests better when we can hear their reactions, vocalizations, and inflections?

However, what always surprises me is how many times prospective guests send us complex questions that potentially take up a great deal of time (and a lot of typing) to fully respond to. For example, “Which accommodation would you recommend for honeymooners?,” or “What’s the difference between the standard and premium category homes?,” or “Is this one a good choice for families?”

However you will also find that a good percentage of them say, “Sure! Call me at . . .” and your chances of converting the inquiry into a sale have just increased many times over.

Occasionally, the questions are a bit more complicated but still pretty easy to answer via chat such as, “Hello, I already booked a reservation, and I know you don’t take pets, but can I bring my dog? He never barks, doesn’t shed, and has no fleas.” Of course that’s “Unfortunately, no!”

So when you find yourself fielding complex questions that make it obvious that the sender has not yet decided to book, try replying, “That’s a great question! Are you by chance near a phone so I can give you a quick call to help you plan?” Indeed, some might respond back by saying, “No, I’m in a waiting room,” or “No, I’m at my kid’s piano school,” or “No, I’m supposed to be working and my boss is in the next cubicle!”

In my training programs, I always advocate for a phone call in these situations. Participants resist at first, and the most common response is, “If they wanted to talk on the phone, they would have called us! These are ‘chat’ people, Doug!”

Managers seem to be biased towards using pre-written templates to respond quickly by simply answering the question rather than personalizing the messaging to push for a sale. Yet, once they give my ideas a try, they find that some guests are very open to talking. It’s just that, for whatever reason, they started out on chat. Hey, it’s worth a try, right? Isn’t it better to engage an undecided guest via

By Douglas Kennedy, President Kennedy Training Network KennedyTrainingNetwork.com VRM Intel Magazine | Spring 2018

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VRM Intel Magazine | Spring 2018

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866-478-8969

Friendly Upselling

One Call at a Time By Ali Cammelletti

here are many ways to upsell in today’s world, yet before talking about upselling, there is a foundation to dig into. Are your sales representatives comfortable with the pricing they are quoting currently? If they are not at ease with the base price, they are not going to be comfortable upselling, whether it is friendly or not.

Recently, I listened to a reservation sales call in which the caller asked the sales representative to clarify whether the price on the website was per night or for the total stay. When the representative confirmed that the price was for the total stay, it was challenging to tell by her tone whether the caller felt it was too much or a deal. The next recommended step in such cases is to ask what price the caller had in mind. Instead, the representative made an assumption that the price was too much and offered a price reduction. Afterward, the caller shared that she thought the overall pricing was a deal and was excited. This is a perfect example of when not to assume and to ask more questions. I often come across situations in which sales representatives don’t feel like they personally can afford such a stay, so they are not com-

fortable quoting higher prices. I find that lack of value building and overall confidence in the homes they are selling come out in the sales representatives’ tones when quoting pricing. The reservation sales agent often will also be quick to discount or will not ask for the reservation and quote only the lowest pricing available. In these situations, I recommend coaching the sales representative to give three pricing options. Start with a home that is an extra treat for the caller—maybe the home has a game room, mountain view, or hot tub—followed by quoting the price, being careful not to pause, and asking the caller how the home feels for his or her family. Callers will then share if the price is more than they are looking for or not. The next step is to go to the second pricing level based on the caller’s response, and then follow the same steps until getting to an agreed-upon fit for the caller. Once you are confident that your team is proud of the product and the pricing, move on to coaching on friendly upselling. As consumers we are used to the occasional upselling technique when making purchases. I usually think of the upsell offering insurance on products or complementing products to the one being purchased. VRM Intel Magazine | Spring 2018

I am the consumer who is quick to deny the upsell because I usually have done my research and already have a specific price in mind; I don’t want to spend more. How do we overcome the mind-set of a set price?

He speaks to breaking it down into forms or elements:  Recommend I think you should also consider . . .  Suggest You might also want to add . . .

Sales guru Jeffrey Gitomer, author of The Sales Bible, The Little Red Book of Selling and The Little Gold Book of Yes! Attitude, shares that when upselling is done right, it builds deeper relationships with your customers. His quote is: “Tell me how I win. When I win, you win.” I absolutely agree with Jeffrey and believe in relationship-building sales. If we educate the consumer on the benefits of the upsell, our ability to overcome the price objection solidifies. Here is an example based on traveler’s insurance when renting a vacation rental. The Mt. Hood Vacation Rentals team in Oregon quotes the final price, with and without the insurance, followed up with why it would benefit the guest (talking about older family members who are ailing and taking them for a final vacation). When you speak to the specific benefit for the potential guest, the situation shifts to relationship sales, and guests feel taken care of.

Another example of an ideal upsell is during the redemption of a vacation rental stay gift certificate purchased at a nonprofit, black-tie gala (Geronimo Solutions partners with Vacation Rental Management companies to facilitate such gift certificates). Instead of jumping straight to redeeming, ask how many people will be joining during the stay, and offer the option of a larger home, more desirable dates, or an upgraded home with a better view. This is a great way to leverage nonprofit fundraisers, especially post slow-season and with middle-tier offerings. Have a menu of upgrades to offer to holders of these certificates, with each upgrade carrying an associated fee. Certificate holders often welcome these upgrades, and this creates incremental revenue for companies and homeowners.

 Consult I have personal experience with this, and I recommend you . . .  Question Have you thought about . . .?  Use power phrases My experience has shown me . . ., the best value is . . ., the most profitable way is to add . . .  Make it a deal If you extend your stay to five nights, there is a deal to get the sixth night free . . .  Comfort them Most people like . . .  Ask Do you want . . .? Would you like . . .?

When we can step back from thinking about the next call coming in or the customer in front of us, we can be more strategic in our relationship building and make the guest feel taken care of as well as generating additional revenue.

“

Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves. –Steve Jobs

”

Some vacation rental companies offer concierge services. Stony Brook Cabins in Tennessee offers rose petals sprinkled in the bedroom along with a bottle of champagne chilling in the refrigerator. A guest planning a wedding proposal was thrilled that he didn’t have to run around getting items and hiding them for the surprise proposal. I remember traveling and staying at a vacation rental with Sea to Sky Rentals in Washington; they offered early check-ins and late checkouts for an additional fee. They made this offer in their online agreement and then followed up with a phone call, including additional upsell services. Steve Strauss, author of The Small Business Bible, recommends additional suggestions for upselling:

 Make it affordable. Offering a 5 percent upsell feels manageable, whereas a 30 percent increase in an offer might not. It is important to think about the percentage of the upsell instead of the dollar price.  Be casual about it. You are extending an offer in a friendly, non-pressuring way. Keep in mind that doesn’t mean you say, “No pressure.” Instead, have an upbeat tone and extend the offer. Jeffrey Gitomer recently shared in an article that “the customer is in a buying mood and has already made up his mind and is open to suggestions that will help him. It all rests on the ability to engage, combined with how much trust you have built.”

VRM Intel Magazine | Spring 2018

Ali Cammelletti of Cammelletti Consulting has more than 28 years of experience in the hospitality industry. She has served in many capacities within the industry, from working as a frontline restaurant and lodging employee to building and owning a successful event-planning business. She currently runs a consulting company that coaches and trains frontline staff and managers and helps them improve their leadership skills. Visit www.cammelletticonsulting.com for more details.

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Positive Employee

Experiences Start with Your Culture By Sue Jones

roviding great experiences for your guests and homeowners is key to the success of your property management business. But what about your employees? How would you rate their experience? Just as marketing has moved beyond looking at guest satisfaction to looking at the total guest experience, it is now time for businesses to refocus their efforts on strategies that build on and continuously improve their employees’ experiences. Understanding your employees’ experiences, what they encounter, what they observe, and how they feel on their path in your business is a vital trend for 2018. Employees’ experiences begin with their first touch point and carry through to their last—recruitment, onboarding, daily activities, ongoing education and training, career opportunities, succession planning, and termination. The experience is more than what annual employee surveys or performance evaluations reveal. It is the employees’ daily journey and whether they like it or not. Providing an engaging employee experience is a differentiator for you and your business. Strong employee experiences drive employee engagement, which in turn helps you attract and retain a skilled workforce.

Culture Culture is what we call the office vibe. Once thought to be a fluffy idea, creating the culture you want has become a business priority. It plays a significant role in how your employees feel and whether they enjoy or hate coming to work each day. Culture includes organizational structure, leadership style, compensation and benefits, conflict and resolution management—anything that impacts your employees and their interactions in the workplace.

Your objective is to create a road map that people can follow. Organizational culture plays a key role in your success. What do you value in a leader? What do you value in the people who work for you? What are the most important characteristics you want to embed in your business to create a culture for success? A great culture is aligned with your company’s business goals and is well communicated. A few warning signs that might indicate lack of alignment include the following: 26

VRM Intel Magazine | Spring 2018

 People make excuses and blame others for lack of progress.  If you ask for opinions on a business decision, people don’t speak up.  In meetings, people bring up issues that you thought were resolved. From a cultural viewpoint, one of the greatest challenges is to unite employees from diverse backgrounds and experiences to work together to achieve the desired results. Creating a positive and productive culture gives you a competitive advantage.

Step 1: Define Core Competencies Do you know which key competencies are required for success in your business? For example, success might look like an employee who delivers on commitments to goals and results consistently. These employees take risks when appropriate and persevere through daunting obstacles. Ultimately, these employees are intrinsically motivated to work long and hard to achieve the needed results. What other competencies are required to create a positive and productive culture in your business? Take time to identify what is most important to you, your business, and the culture you want to create to determine which competencies are core to your business. Core competencies such as business ethics, integrity, innovation, problem-solving, and customer service typically rise to the top of the list. What’s at the top of your list?

Step 2: Assess Your Current Employees Do they have what it takes? What are your non-negotiables? Remember, you are seeking the right people with the right competencies in the right place at the right time. There are many personas in the workplace—underachievers, good performers, strong managers, and high-potential leaders, to name a few. Developing an evaluation form to assist you with assessing your talent is a great place to start. The objective is to measure their success based on core competencies: how they perform, their areas to strengthen, and their potential for future growth.

Another approach to consider when assessing your employees’ performance is to think about it from a succession planning perspective. Do you have the people you need to move into other positions, or do you need to look externally? You can assess your employees’ potential for future growth in the company by identifying their performance as one of the following: too new to assess, fits best in position, promotable to a new position, or replaceable. This information will provide you with a road map for succession, identifying if you have the skill sets and talent in house to develop or if you need to look externally for certain positions.

Have a clear set of capabilities. What skills do people need to

Step 3: Find the Right Fit

Give clear feedback. Provide timely and honest feedback. With

Good training will not make up for bad selection. A key motto in the small business world is to hire like your life depends on it—because it does. Tim Ferriss, author of The 4-Hour Workweek, says that hiring the right people can make or break a company. Hiring is a time-consuming process, one that pays dividends when done right. Be patient. Even though you need to hire quickly, don’t be hasty.

Share clear consequences. If you have been clear in these areas,

One of the most important decisions you make is who to hire. Your new hire represents you and your company. Defining company core values in advance of designing your hiring plan is a critical component for success. Start interviewing for core values and not just the essential functions of the position and the experience of the candidate. Create a realistic hiring timeline that plans for being patient; it takes time to find the right person. Don’t be afraid to hire someone who knows more and has more experience than you. Often, we think of employment diversity as those employees who are of a different race, sex, or age. Diversity can also mean differences in thinking, ideas, perspectives, and personalities.

Having diversity in the workplace has benefits. Incorporating diversity into your daily operations broadens your thinking, generating different ideas and perspectives. Each employee’s perception, approach, ideas, capabilities, and resolutions will be varied. These differences will produce an outcome that is more likely to reach a broader audience and capture new customers than one or two employees who think similarly.

Step 4: Manage Performance Hold employees accountable. Identify expected performance levels, and encourage high levels of performance. Measure individual performance, evaluate, and provide meaningful and timely feedback. Provide employees with assistance, and reward or discipline when necessary. Holding employees accountable is essential to managing performance.

What is accountability? Accountability is delivering on commitment. It is the result of responsibility for an outcome beyond tasks. And it is necessary in all roles within the organizational structure. How do you create a culture of accountability? Harvard Business Review published “The Right Way to Hold People Accountable” by Peter Bregman, who states that there are five “clear areas” to hold people accountable the right way—expectations, capability, measurement, feedback, and consequences—and often these areas lack clarity in the workplace.

Begin with clear expectations. Be clear about the outcome you

want, how you’ll measure success, and how people will achieve the outcome. Have a conversation, and plan for your people to be a part of it. Great employees will offer ideas and strategies to achieve. After talking about it, write it down and share it.

meet expectations? Do they need resources? Do they have the skills? If not, can you provide or teach them? If they don’t have the capacity, find someone else. Set your people up to succeed, not fail.

Create clear measurements. Failure is preventable. During the

clear expectations part of this process, agree on weekly milestones meetings to monitor progress. If they are not meeting their targets, then act immediately. Brainstorm a solution, then respond to get each employee back on track. clearly defined expectations, capabilities, and measurements, feedback is factual and easy to deliver. Are employees delivering on their commitments? Are they working effectively with other people? Do they need to increase their capabilities? Provide feedback weekly. Helpful feedback is more useful than being nice. then you have reasonable cause to act. You have three actions: repeat, reward, or release. If you do not feel confident in your leadership, repeat the five clear areas to clarify. Reward people if they succeed. If you are certain you have followed the five clear areas, and the person has not been accountable, then he or she is not fit for the role, and it’s time to release (change roles, termination, etc.).

Focusing on improving accountability will increase your employees’ performance and productivity.

Step 5: Train and Retrain the Right People Foster a culture of training and development. Create and maintain a culture that values and respects individuals. Identify future needs and how to develop individuals to fill these needs. (This is succession planning at its finest.) Providing ongoing training and development opportunities is a key strategy to grow and retain your talent.

Key Takeaways The power of employee experience shows that its return on investment may be more than you think. Employee experience programs must directly link to your business’s mission, core values, and goals and objectives. Finding ways to continually engage employees in your business has a direct return on investment on the loyalty, productivity, profitability, and retention of your guests, homeowners, and employees. Make your employees’ experiences a priority, and watch magic happen. Sue Jones, owner of HR4VR, is passionate about creating human resource programs and services that are strategic in scope and consistent with the goals and objectives of vacation rental clients. Sue’s innovative approach to HR and extensive experience encompasses businesses of all sizes in multiple industries. When addressing the needs of her clients, Sue is especially skilled at transferring her knowledge, skills and abilities across business channels in a personable manner. Sue is a veteran of the U.S. Navy, holds a Master’s Degree in Business Administration from Northeastern University and is both SHRMSCP and SPHR certified. VRM Intel Magazine | Spring 2018

VRM Intel Magazine | Spring 2018

A Learning Experience Urban Short-term Rentals and Traditional Vacation Rentals

By Amiad Soto, Cofounder and CEO, Guesty

The Growth of Urban Short-term Rentals

ver the last few years we have seen a significant rise in the number of property management businesses operating in urban global business and tourism hubs and coming into existence solely because of Airbnb. In cities like London, Paris, and Hong Kong, entrepreneurial businesses, often run by young millennials, saw an opportunity to take the pain out of hosting by individuals and began offering combined professional hosting and management. Airbnb hosts started many of these businesses themselves and quickly saw that other hosts were struggling to make sense of earning income through the platform, understand how to professionalize and scale a business, and meet both guest and owner needs.

Urban hot spots such as Paris and London have been thriving over the last few years. France alone has 400,000 Airbnb listings. Offering a professional service to manage and maintain bookings with such a large number of properties clearly offers opportunities. Airbnb’s recent announcement of a cap on listings in central Paris to 120 nights has meant that competition for maximizing revenue from each property has increased. Many urban short-term rental businesses have evolved to both help professionalize and secure the relationship between guest and host within the Airbnb space. But what has been the secret to success for these up-and-coming urban entrepreneurs? What can the wider vacation rental industry learn from this growth? And, just as importantly, what might be missing from these urban property management businesses that the established and more mature vacation rental property management businesses have? In this article, I hope to answer these important questions and show what each can learn from the other.

Being Totally Tech-Enabled First, it is clear that it is because of the advent and rise of Airbnb that these urban short-term rental businesses have been made possible. Without Airbnb, the rapid expansion we are witnessing just would not have happened. But clearly there has been both a need

and an opportunity for providing more variety of relevant accommodations in the world’s urban hot spots. However, one of the real driving forces and key secrets to the success of urban vacation rentals has been the natural predisposition toward, and the rapid take-up of, technology as a (the) key tool for scale, operations, and growth.

Successful urban short-term rental businesses are truly tech-enabled, 24/7, 365-day-a-year property managers. Technology drives each business and enables everything—owner relations, inventory management, guest communications, reporting, review collection, staff management, and marketing—to work effectively, efficiently, and profitably. Many of these urban property managers are our clients and use our software to manage their businesses. We know and understand the challenges faced in the urban markets, and our solution has also grown and developed to meet their needs. Without proven technology at the heart of urban property managers’ businesses, the scale and growth we have seen would not be possible. The urban market can be tough. Lengths of overnight stays can be short, cleaning turnarounds are tight, properties are often geographically spread out with plenty of traffic in between, and expectations from sophisticated travelers can be high. Value-adding technology is the core of the solution to meet these challenges.

Many of the more traditional vacation rental property managers in nonurban locations are using technology to improve their management and communication functions, but how many can truly say that they are fully tech-enabled and that robust technology is at the heart of their business and drives their operations? A few certainly can but not all (yet).

Bringing Innovation to the Marketplace Another key aspect to the success of fledgling urban property managers has been their ability to be agile and transform their businesses to meet the changing opportunities of a market that is going through rapid change and disruption. Maybe it is because many of these businesses are still so young and not yet entrenched in their VRM Intel Magazine | Spring 2018

ways. Or maybe it is an innovative mind-set. Either way, this ability to adapt and bring agility to the market is something urban property managers have embraced. In fact, we started out life as a hosting management business in San Francisco until we quickly saw that there was a need for a fully integrated, cloud-based, forward-thinking, all-in-one software solution to make property managers’ working lives both more manageable and more profitable. We used our strengths and findings to adapt to market conditions and successfully pivot.

Industry Experience and Longevity Matter I’ve talked at length about the strengths of the new breed of urban property managers, but what can these businesses learn from their more mature, experienced, and established traditional counterparts—the businesses that have been in operation for sometimes decades?

First, what more traditional property managers have over their “younger” urban cousins is in fact age and experience. A property manager that has been around for many years, and even through a couple of generations, has seen so much! Trends and phases have come and gone, and these established businesses have weathered the relative storms of economic downtowns, changes in legislation, and consolidation in the industry. Many have come out if not stronger then certainly still standing. Time and experience also bring with them both an established and trustworthy reputation and a solid customer base. A business providing guests with, let’s say, a vacation home in South Carolina may have been doing so every year for many years. Repeat guests and a solid database of customers are gold for any business. This kind of established baseline only comes with time.

Longer-standing vacation rental businesses also know (or at least should) that it is never wise to put all your eggs in one marketing basket. Relying on one marketing channel might work in the short term, but it is rarely sustainable for the long haul.

Understanding Hospitality All of the property managers that have grown from the Airbnb sub-economy are, by their nature, new. They are also often new to hospitality and the tourism industry. Truly looking after guests— from inquiry to post stay—is something that requires certain skill and needs to be imbedded in a company culture. Most vacation rental companies that have been around the block a bit have come to learn a thing or two about the importance of both the guest experience and old-fashioned hospitality.

The success of a property management and guest-facing business is dependent on both longevity and sustainability. The vacation rental industry has valuable experience to offer tech-enabled urbanites. Technology and automation need to be balanced with a human touch and top-notch service. Making sure that needs are met and exceeded consistently, and knowing how to manage a more challenging guest, are matters that many vacation rental property managers are skilled at. There is clearly much knowledge to share between urban shortterm rentals and the more traditional vacation rental businesses that would benefit both markets. It was great to see so many of the newer urban-based businesses attending the VRMA National this year and witnessing perhaps the beginnings of a merging of knowledge and sharing best practice experience.

VRM Intel Magazine | Spring 2018

About Amiad Soto Amiad Soto is the cofounder and CEO of Guesty, a cloud-based SaaS platform established in 2013 and designed to simplify property management businesses. With Guesty’s all-in-one solution, managers can operate listings from multiple accounts including Airbnb, Booking.com, and other vacation rental booking channels.

#ManageBetter Welcome to a New World of Property Management Guesty provides property managers with smart technology and full 360Â° .coverage for all of your vacation rental management needs

www.guesty.com VRM Intel Magazine | Spring 2018

LETâ&#x20AC;&#x2122;S GET HYGGE! An article about property dĂŠcor from a VR company owner, not an interior decorator By Sarah Bradford

VRM Intel Magazine | Spring 2018

HGTV home. And, you’re afraid to broach the subject with your homeowners because what if they walk and sign on with one of the new virtual managers who will take anything?

We feel your pain. That’s why Tim and I did a two-part podcast on this very dilemma. You can listen to us debate this in two thirty-minute segments on our “Sea to Ski with Sarah and T” weekly podcast for the vacation rental manager. I have also summed up our points here, so you will hopefully be inspired to make that phone call and set your standards higher. Here’s why and how you can make it happen.

The Why You want more bookings and revenue. Property photos have become your ticket to get there, and HGTV has changed everything. For those reasons, décor matters. And not just whatever décor your owners fancy. A certain “look” is booking better than others. Guests have come to expect that their vacation home will be as nice—or nicer—than their homes. They come from larger cities where every restaurant worth visiting is hip, cool, and very 2018, not 1998. And they choose where they will stay from thousands of vacation rentals based entirely on the photos. If your 1999 pastel fish house is listed next to the cool West Elm one, you know who is going to get the booking. Or, you’ll have to lower rates significantly to get the booking but will still have the same costs to clean, host guests, and maintain the home.

The Dilemma How do you explain that to owners and convince them to spend money to make money? How do you protect your brand by enforcing a look without turning away lucrative properties? And, when you do convince them to go for that Joanna Gaines redo, how do you manage making it happen?

Four Steps to Achieving Hygge over Ho-Hum. B First, convince yourself and your team.

et’s face it. I bet 99 percent of all vacation rental companies of any size out there have at least a few properties that they turn a blind eye to when it comes to how the home is decorated. We all know which ones they are— the home with the old oily couch, too many bears and moose on the walls, furniture, and curtains, or outdated 80’s pastel fish on the thin, worn out bedding. But, you’re stuck. The home performs “good enough” and guests don’t leave horrific reviews, they just don’t leave glowing ones. You don’t get a lot of return guests to that home, but you’re still filling it, albeit at lower rates than your

This is easier for some than others. Not to stereotype, but a thirty-year-old woman usually gets it right away, but she’s not the typical VR company owner or homeowner. The sixty-year-old man is closer to our demographic, and usually the toughest sell. He thinks it’s just a fad and it doesn’t matter to him, so it doesn’t matter to guests. In that case, show him the numbers and do actual studies to show the revenue difference. At our company, we have two properties that are identical— same layout, same complex—all but the décor. Over the past twelve months, the one that is decorated in an updated, clean, and fun way has been garnering over 35 percent more in revenue. VRM Intel Magazine | Spring 2018

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I also recommend that the unconvinced person look at the magazines in stores and tune in to the ever-popular HGTV channel. There has been a “design awakening” in the past five years, and it is shifting at the speed of iPhone technology, so we all need to keep up. Still not convinced? Here’s the fact that can’t be disputed (just ask a guest): Guests want to feel they are in a comfortable, new, clean, and fun place. New and updated décor tells the guest that this place is more luxurious than the one decorated in 1999, and that equals “special,” which is what travelers want now. And, perhaps the most important point to convince that design curmudgeon: Your company’s brand needs to be as consistent as possible. This is tough to do in our industry. If guests stay at a circa-1999 property once, they rightly assume all of your homes are the same. They’re not coming back. How about them apples?

C Now that YOU are convinced, It’s time to convince

your homeowners. For existing owners, you first need to internally meet with your team and identify the biggest offenders. Tackle them first. Be willing to lose the property. It is a lot easier to approach the issue when you have that mind-set. Go back to Step 1 if you are struggling with this reality. Remember, having a tired, poorly decorated property hurts your brand, which hurts your return guest rate and your long-term profitability as a company. I think the best first step is to include a direct article in your owner newsletter or even a mass email on this topic to all owners, so when you call offenders, it doesn’t feel like you’re targeting them. Then

take a deep breath (5, 4, 3, 2, 1) and make the phone call. This cannot be done with a direct email to the owner. This subject can be sensitive, so do not start with an impersonal medium such as email that could be misinterpreted. Plus, you then have to hope they read it and respond. Make the call.

What to say? Keep it simple and don’t apologize. Here are three ideas of how to approach the conversation:  Technology has changed everything. Photos are all that matter and online bookings have skyrocketed to 60 percent of our bookings. The Instagram moment is what we are trained to look for, the brag factor. True for dating, true for restaurants, and especially for vacation rentals.  It’s a competitive market. If you want to get the highest rate possible, or even get the actual booking, you have to stand out from the crowd. In our market alone, there are more

than 1,600 VRBOs, not to mention those not on VRBO. In Steamboat, it’s over 2,000. Your worn-out, bear-patterned chair ain’t gonna cut it.  Give examples. This is where revenue studies help (see Part 1 above). Share with them how much more you think they would make if they upgraded. Many owners will be persuaded by the ROI. A few reminders when you are taking that deep breath before calling the owner. Most owners want to “keep up with the Joneses” even if they say they don’t. I recommend not talking cost at first, otherwise you’re stuck. Let the twenty-four-hour phenomenon kick in. I have seen this time and again when I broach the topic with owners. Owners can be defensive and resistant at first, but VRM Intel Magazine | Spring 2018

by the next day, they are at the local furniture store buying more furniture than they have in years! Give owners time to accept and dwell on what you’ve suggested to them. Also, explain to owners that you don’t mass order. Our goal is not to have every place look the same, unlike what some more condo-tel operators have gone for. We want each place to look unique and fit the space. Finally, it’s important to remember that many owners have not even been to their own properties in years. They bought the unit as an investment years ago and kind of forgot about it. It’s your responsibility to bring up the fact that they have to continually invest in it. If you don’t remind them, they’ll keep chugging along thinking everything is hunky-dory. If you are signing a new owner, it is vital to clearly explain the “Upgrade Every Year Philosophy” before they sign on the dotted line. Make sure every owner—even if their place is decked to the nines—clearly understands that they will have to upgrade and invest in their home every year. Share with them that the style that’s there now will not be the selling style in ten years, much less the wear and tear that will inevitably happen. I would recommend to them that mattresses be replaced every five to seven years and sleeping pillows every three years.

We also feel strongly that quality vacation rental companies should not take on properties that aren’t decorated to their standards. Ever. Here’s why: in two years, when it’s not booking well, the conversation blaming the décor becomes a much harder conversation to have. Create a Décor Requirement document that you can share with the new owner so it doesn’t seem like a personal attack. Be sure to include before-and-after photos in that handout so owners can understand what you are looking for, and what you’re hoping to avoid. Nine times out of ten, owners will respect you more for 38

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speaking the truth rather than being the vacation rental manager who is desperate and just says, “Oh yes, this is ready to go!” In fact, by your being picky, the homeowner often will want to work with you over the non-picky company.

D What should you be recommending? What décor sells? What has the biggest bang for the buck, and which style should you choose?

The simple rule is that if the upgrade will significantly affect photos of the property in a positive way, give it a thumbs-up. If it will significantly improve the guest reviews, then it also gets a thumbs-up. If it does both, it’s a double thumbs-up. The upgrades that have the best ROI are usually new bedding, art, and new living room furniture with fresh, updated throw pillows that are not from Walmart. For art, try to find items that have visual impact (usually with color).

 Idea: At both of our locations, Winter Park and Steamboat, we purchased $2K worth of art (the wrapped canvas kind, no frames) and decorated our Winter Park and Steamboat offices with it. All for sale to owners. Average price is $125. We have already sold a lot of it and had to make another bulk purchase. For furniture, it’s important to choose durable, yet comfortable fabrics that are treated with stain protection. I agree with others in the industry who have suggested you avoid Ikea or other cheap alternatives. Their items look cheap, won’t last long, and you’ll soon be picking up the phone to ask the owner to redecorate when the trends change. Simple, clean lines are what will look good in photographs.

E Ok, the owner is ready to upgrade. Now what?

The Process For those owners who live far away, lead busy lives, or—maybe most important— those for whom “décor” isn’t their thing, the task of updating is daunting. They can’t even imagine how to proceed. Unless you have found more hours in the day than I have, I strongly recommend that vacation rental companies not put themselves in the position of doing the upgrading themselves. Find a decorator with style and VR know-how you can trust and who won’t break the bank. We work with Dori Weiss, a decorator from Steamboat, and she knows smart buys for a vacation rental property—plus we love her style. She deals with having the tough conversations with owners about why the brown antique couch from their aging mother’s home is not the best choice, and she handles the details of shipping, delays, and billing. I highly recommend finding someone like Dori!

 Idea: Offer up moving and assembly labor for free if it’s worth

it. In some cases, you can consider going in on the cost if the owner commits to an acceptable level of contract years. Or you can go with a partnership deal such as the owner buys the table/chairs, beds, and side tables, and the vacation rental company foots the bill for the new bedding.

Three Steps in the Process: B Set Clear Expectations: Agree in advance how it will all work.

Another tip to give owners is to invest in game tables. A foosball table, or at least a card/poker table, makes for a great photo and tells a potential guest that fun will be had here. It is also important to offer plenty of seating and bedding options. The largest dining table possible is a must, along with plenty of seating in the living room. Remind owners that this isn’t just a family of four living in a four-bedroom home—it’s often eight to ten adults!

Other big bang-for-the-buck items are EZ Beds (from Frontgate) for additional beds that are not uncomfortable pullout sofas, and of course, anything technology related—larger flat screen TVs, charging stations, multi-plugs, and an easy way to play music in the common areas. Remind owners that these folks are on vacation and want to have a good time together.

The best arrangement is an owner who just says, “Here’s $10K, buy the biggest bang for the buck and you pick everything.” It’s rare. So, you have to clearly set up the rules of the game up front:  Who handles ordering/approving? A decorator/owner/you?  What is the budget?  Who is paying/reimbursing?  Have the decorator do the work, not your company.

C Delivery/Setup/Removal: How will deliveries work? Who will

pay to let the delivery service in? Is there furniture setup and unpacking involved? Who is responsible for removing the old furniture? What is the plan when furniture shows up while the property is booked? (Hint: You need a storage facility that can hold large bulky furniture, and you’d better not damage it when moving it in and out.)

And by all means, get rid of the big fake plants and the knickknacks that make the home look cluttered. Replace with fake succulents if you must, and a cute gold orb from West Elm.

D Photography: The fun part—taking pictures! Be sure to stage

Rattan is so popular again that my decorator jokes that it will soon be an endangered species. Metallic is the new neutral and yes, wallpaper is cool, but not the kind you had in 1967. A gallery wall is a fun way to hang photos versus the one picture on one wall. Keep walls white or neutral and drop the beige and browns. Those colors do not photograph well and look drab. My knowledge ends there. Educate yourself or hire a decorator. Walk through a West Elm or Restoration Hardware store, or watch a few HGTV shows to get your hipster-self inspired.

Sarah Bradford owns Winter Park Lodging Company and Steamboat Lodging Company with her husband, Chris. Both companies focus on higher-end luxury vacation rentals, and they are currently updating several to bring them out of 1999. Sarah also is the cohost of the popular professional vacation rental podcast, “Sea to Ski with Sarah and T,” along with Tim Cafferty, owner of Outer Banks Blue and Sandbridge Blue.

As far as what trends are selling best, I have seen anything that embraces “hygge” (hue-gah) to be a winner. That’s the Danish word for expressing the feeling of cozy intimacy and simple pleasures (think large-scale knitted blankets) because Americans are looking for a simple, quiet, disconnected break, especially on vacation. It’s all the rage.

the home so it shines, but don’t add too many elements that don’t belong at the home. Get those photos out there as soon as you can, and start watching the revenue skyrocket.

VRM Intel Magazine | Spring 2018

Blurring the Line between Marketing and Public Relations By Alexa Nota

epending on whom you ask, marketing and public relations (PR) are either two distinct functions that don’t have much to do with one another, or they go hand in hand. The traditional view separates them. Marketing is strictly focused on the promotion of goods with the goal of earning revenue. PR is focused on the controlled and strategic sharing of public-interest and news information with various stakeholders (most often staff, owners, and guests), building and maintaining a positive brand reputation, and earning media exposure. Marketing sells the product; PR sells the company.

But as technology has connected much more deeply with each department’s previously distinct audiences but also those audiences with each other, the line between marketing and PR has blurred. This is especially true in the vacation rental industry where the company is the product when you are recruiting new owners to your program. As a marketing professional served every day by her degree in journalism and PR, I could not be more excited for this increased intermingling that generates results greater than the sum of its parts. And at least anecdotally speaking, I have found that the more integrated marketing teams are with PR and vice versa, the more success they find in their respective areas.

The benefits of having your marketing and PR efforts working in tandem crystallize once we dig in to see how this plays out on a daily basis in property management. For example, consider the case of a recent partnership with a new vendor to offer your guests a new amenity. You must tell your owners about the benefits of having the amenity. If it’s their choice whether to offer it, this campaign will take a promotional approach (internal marketing); if it’s required or automatically offered to your entire inventory, this campaign will be more educational (internal PR). You’ll educate your reservationists and customer service agents about the feature (internal PR) so they can answer questions and talk it up to potential guests (marketing). Maybe you will distribute a press release or publish a blog post an40

VRM Intel Magazine | Spring 2018

nouncing the new feature to inform your stakeholders and drum up excitement for its release (PR and marketing). Then, of course, you will need to teach your guests what it is and sell it to them across your website, social media, email, OTA listings, and advertising to encourage them to book your homes (marketing). Through this entire process, potential owners may take note as they research and ultimately choose a future property manager (marketing). Now, multiply that scenario by every new feature or program, every social media video, every newsletter, and every evacuation notice, and the need for marketing and PR’s teamwork becomes clearer (or blurrier?) Whether you decide to keep these functions separate or more mindfully integrate them, there’s a great deal to be learned and gained from how each can be used to amplify the other.

Social Media One of the biggest areas of overlap is social media, where we build and maintain relationships with guests long before and after their stays. Here, we keep our properties and destinations at the front of guests’ minds, stirring up memories of their vacations and creating positive associations between them and our brand, distributing blog posts, announcing new products and flash sales, or sharing critical information about evacuations or other urgent situations, among many other activities. Social media often falls under the purview of a marketing specialist or department, but in many ways it is closely tied to PR. We are creating a community—a captive audience—around our brand, and with the exception of private messages, the public can view interactions with fans and followers. Even when you are talking oneon-one with someone, such as a potential guest asking for fishing information, think of this interaction as a Q and A with a journalist that will be broadcast on TV.

Your social channels also provide a huge opportunity to project your company as the thought leader in your market, and some companies miss this opportunity for owner recruitment. Now, sharing owner-focused content in a guest community won’t do much good and could backfire, but there are other ways to leverage your social presence. You could create a Facebook group for owners in your area to serve as a forum, host live chats about industry news such as OTA policy changes, or join vacation property owner groups on LinkedIn and offer your insight in their discussions.

Review Responses Responding well to positive and negative reviews is both a PR effort on the edge of customer service and a marketing opportunity. A tenet of both marketing and PR is to listen to your audience, and when we respond to reviews we say to the reviewer, “We hear you.” The content of our responses should be like the elements of a press conference: state the facts, correct any misinformation without placing blame, acknowledge and apologize for ways you may have let the guest down, state how you’re correcting the situation now to prevent it in the future, and then speak to what future guests can expect with your company. (Don’t stick around to field questions from the crowd—get that conversation offline as soon as possible afterward.)

Emergencies and Business Interruptions Informing your stakeholders about critical situations, such as natural disasters or other emergencies that interrupt business and vacations, is a delicate balance. It’s a tightrope of expressing urgency, firm direction, concern for safety, and protection of property with a carefulness not to turn guests off to your destination entirely or offend those seriously affected by the situation, such as an owners who lost their homes. Every property management company should be prepared for this scenario—consider creating a designated PR professional or team or taking a crisis communications course and running periodic drills to make sure you can distribute the right message in the heat of the moment. As a silver lining to these situations that we hope we and our peers never have to face, the situations also offer hidden gems of marketing opportunities. Throughout your communications, you can address future guests about what to expect or not expect during their upcoming stays. You can also highlight how expertly your staff responds to these situations for both owners and guests, rally your troops and the local community in spearheading recovery efforts, and celebrate the reopening of your location with a special campaign or offer. Just remain mindful of the long-term stress and grief that your stakeholders and neighbors may be experiencing.

Employee Communications The benefits of combining marketing and PR are two-fold. First, if you approach employee communications with the same thoughtfulness that you would a press release or marketing campaign, you will help ensure that your team receives the right information at the right time in the right way, no matter its content. Striking the right balance is particularly helpful with news that could be perceived negatively and take a toll on morale. Good PR and marketing-driven messaging that illuminate the reasons for and implications of an announcement soften the blow of bad news and generate excitement about good news. Consult your marketing and PR staff when you need to make internal announcements regarding sensitive subjects, whether they are positive or negative.

For example, let’s say the Townville City Council passes regulations to ban vacation rentals, so all property management companies in the area will lose their inventories there and be forced to lay off staff. Company A sends out an email memo stating, “Following the vacation rental ban in Townville, we will lay off thirteen staff members effective this Friday.” Company B sends a video message from its founder stating, “With the new regulations in Townville banning vacation rentals and our subsequent loss of 128 homes there, I am saddened to share that we can no longer support the employment of our thirteen colleagues in this area. This was an incredibly difficult decision we hoped we would never have to make. We did not want to lose these valued team members, and we are working with each of them personally to do everything we can to help them find new employment opportunities. I apologize that we lost our fight against this ban—we know we let you all down. Employees in other areas should not worry about further staffing changes, and we hope you will join us in our continued efforts to overturn these regulations and prevent similar bans from being passed in the other areas we serve.” Which company would you rather work for? Furthermore, which company would you rather represent on the front lines? By communicating negative news to your employees compassionately, you can amplify your results because each staff member can become a more effective brand ambassador. Communicating well with your team demonstrates your respect for them and earns their respect for you, and this is a critical foundation in making your employees intrinsically want to be positive marketing and PR reps of your company, on and off the clock.

There are, of course, many other functions in which teaming up your marketing and PR practices can benefit your company. No matter where you are in your rental season, now is a good time to take a close look at how you can create your own marketing and PR symbiosis.

Owner Communications In a single conversation with an owner, you can switch between being a marketer and PR specialist—not to mention customer service rep, crisis responder, therapist, salesperson, sounding board, best friend, and many other roles—all within a matter of sentences. To share policies and procedures effectively, help owners make the best decisions for their properties, introduce new programs for their buy-ins, and bear good and bad news, you should do so with PR delicacy through a marketing lens. Everything you say and do in those conversations or newsletters should be an extension of positive brand management, but as soon as that information or action spreads outside your company (which it will), it becomes a reflection of your products and services to others.

Alexa Nota has worked in travel and marketing for nine years, including two years as Outer Beaches Realty’s Marketing Manager in NC’s Outer Banks. She is also the cofounder and Editor of Travel Well Magazine and the founder of Canary Design, a boutique marketing and design studio.

VRM Intel Magazine | Spring 2018

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VRM Intel Magazine | Spring 2018

By Ben Edwards

The Top Five Mistakes People Make When Selling A Business

he purchase and sale of vacation rental companies continues to be the most effective way to increase inventory and grow the value of an existing operation. If you are a vacation rental manager considering purchasing or selling an existing operation, we have several recommendations to help you get the most out of this time-consuming and difficult process. Fundamentally, the purchase or sale of vacation rental companies requires a process that involves careful planning, preparation, professional financial reporting, proper understanding of market-rate terms, and negotiation expertise. Company owners and senior management personnel who are unfamiliar with purchasing and selling can make common mistakes that result in less favorable deal terms, lost purchase price value, or an unsuccessful transaction altogether. B Not having a professional non-disclosure agreement—or not having one at all Often, company owners engage in conversations about or entertain offers to purchase their business without the use of a non-disclosure agreement. Do not engage in any conversation without utilizing a professional non-disclosure agreement. If you are asked about the prospect of selling, it is reasonable for you to mandate the use of a non-disclosure agreement before moving forward. Professional non-disclosure agreements include a term, non-solicitation provision, and clear legal terms surrounding confidentiality to help protect all parties involved. C Not having professional financial reporting Financial reporting continues to be the Achilles’ heel of most vacation rental operations. Not having an accurate or consistent property management system and/or financial accounting reports indicates an unorganized business and will often lead to a lower purchase price or value of the operation. In many cases, a purchase price dramatically decreases if the business is not clearly articulated through the financial reporting process. Use of well-constructed, clear, and correct reporting underscores the worth of an operation and helps to ensure the maximum purchase price is realized.

D Not hiring a transaction consultant If you are relying on the buyer to provide a fair price and deal terms, expect to be disappointed. In numerous cases, a transaction consultant with vacation rental-specific experience can generate tremendous value. A qualified vacation rental transaction consultant can drive the deal process,

provide access to market-rate terms, and ensure that all points of the deal are fair and reasonable. Transaction consultants will do the following:  Prepare a confidential offering memorandum that conveys the qualitative and quantitative attributes of the business and serves as a foundation for value.  Present the opportunity to qualified buyers and provide a keen understanding of prospective buyers who have the wherewithal to close a transaction.

 Showcase a wealth of knowledge, hold extensive industry contacts, and assist in negotiations.

 Present comfort for buyers who might otherwise hesitate to pursue the purchase of an unknown entity. E Not hiring the right legal counsel A general business attorney is not typically familiar with the nuances of a vacation rental company. Further, the vacation rental industry is unique as a buyer does not typically purchase assets. Legal counsel should understand the legal terms associated with these types of transactions and hold experience with earned revenue, advanced deposits, and business operations. Lack of expertise in these areas creates significant issues when negotiating a successful transaction. Lastly, having a well-drafted purchase agreement reduces risk and ensures expectations are met on both sides of the transaction. F Not having patience In certain cases, buyers or sellers get emotional during the transaction process. Emotional outbursts, heavy-handed dealing, or the need to over-negotiate deal terms increases the likelihood that a transaction will be unsuccessful. Buyers and sellers are used to calling the shots in their day-to-day operations, and it is tough to trust the process. Patience is the key, but diligence and focus are also paramount for transaction success.

There are a number of pitfalls and mistakes to be avoided throughout a transaction; however, these five issues seem to be the more prevalent ones as of late. In any transaction, fair, reasonable, and professional dealing can overcome insurmountable hurdles. If you have questions about the purchase or sale process of your business, please feel free to contact Ben Edwards with Weatherby Consulting to learn how to make your next transaction a successful one. VRM Intel Magazine | Spring 2018

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The Rise of the Instant Satisfaction Guest and How It Is Transforming Operations R By Jeremiah Gall

emember when providing linens or cleaning the property post-stay entailed additional charges to the customer? And renting linens didn’t mean the beds would be made when you got there? In many markets, this was common even within the last ten years.

This is an industry in the midst of rapid evolution. Much like the way marketing shifted away from brochures, which were once the property manager’s most important marketing tool, to more comprehensive and detailed marketing programs, the operational role of a property manager, for both the guest and owner, has expanded dramatically in the last decade. In this article, we take a brief glimpse into the expansion of property management operations and service over the last decade and discuss why the trend to “do more” is here to stay.

VRM Intel Magazine | Spring 2018

considered as part of the charm. Often the cleaning was left to the guest, and if the property was not left in the same condition as when they arrived, an extra charge might be incurred. According to Tim Cafferty, president of Outer Banks Blue and Sandbridge Blue Realty Services, “When thinking of vacation rentals in the past, there was almost a feeling of waxing eloquent when thinking of how homey and simple accommodations were. People actually never complained about crate furniture, or if something broke, they would do without it or fix it themselves many times.”

Adapt or Fail If you are one of the many new managers who have started in the past few years or became aware of the business through the rise of Airbnb, the above scenario may sound completely foreign. You may even believe that the “sharing economy” is something new.

Many new managers became aware of the business only through the rise of Airbnb and the “sharing economy.” However, the vacation rental business is not newly invented, and the vast majority of rental management operators have existed for decades, growing their businesses, changing with the times, and adapting to market conditions.

And yet, despite many changes to the vacation rental market, this time the change feels a bit more extreme. As consumer awareness has grown, vacation rental inventory can be found side by side with hotel inventory on TripAdvisor, Expedia, and Booking.com. At the same time, Airbnb is opening their own hotel in Florida—further blurring the boundaries between vacation rental supply and hotel supply. With greater consumer exposure and convergence with hotel inventory comes a brand-new wave of rental guests of the instant-satisfaction variety. These consumers come preloaded with a set of high expectations, which force managers to expand their services. Welcoming a traveler into a property that is not guest-ready not only opens the door to a subpar guest experience (often resulting in refunds or a negative review), but offers unnecessary distraction and headaches for your team as they work to turn the guest experience around while they are still in house. The old adage “we have always done it this way” no longer applies.

Embracing Efficiency

A Cottage Industry Vacation rentals were a cottage industry, pun intended. Booking wasn’t online; a friend would recommend a house or a number to call and inquire which homes and times were available for the coming vacation season. It was common to scout properties for the next year, simply writing down the address and even stopping in to have a look inside. Often when looking at a new vacation spot, customers would have to pick a home only having seen an exterior picture of the property and would either be delightfully surprised or a little depressed by the interior. As for pre-arrival interactions, that typically meant guests packed up their own linens and towels from home, went shopping to purchase groceries for the week, and then met the manager to pick up the keys. During the stay, all the small quirks of the home were

To improve operational efficiency, property managers needed to solve a common but serious issue: a lack of efficiency and accountability in the field. On a busy turnover day, back-of-the-house teams have a six-hour window to complete the cleaning and inspection of a property while also reporting and repairing any issues found in the property. A significant void in communication exists, which often results in an inability to correct the issue prior to a guest’s arrival. The solution to this common issue rests on the adoption of technology. Having insight into what and where your team is throughout the day affords a manager the opportunity to make quick scheduling adjustments and reprioritize tasks and shift responsibilities. The addition of real-time scheduling and communication software creates a massive change in management, improving both the efficiency and accountability of your team. Although technology has always been prevalent in the vacation rental industry and companies have been able to vastly improve their businesses as a result, the options for operations lagged behind the adoption of technology, which focuses on marketing, distribution, and accounting solutions. The evolution of vacation rentals and increased guest expectations has required managers to come VRM Intel Magazine | Spring 2018

meet the demand of the ever-increasing instant-satisfaction guest. Property managers must be outfitted with a wide range of skills and initiatives: hospitality provider, social marketer, asset manager, trust accountant, maintenance department, and more. Whereas property managers are responsible for preparing individual homes and delivering a guest experience that competes with hotels, they must also know how to expertly manage homeowner relationships.

The importance of relationship building with our owners, guests, and staff is more important now than ever. There are simply too many options available today for our customers. As keyless entry continues to become the norm, the back-of-the-house staff is front-of-the-house and is often the only company representative that interacts with a guest. Every single member of a vacation rental company should be trained in customer service. As an industry, we have a responsibility to continuously adapt, to improve, and to adopt creative technology to be a formidable competitor to OTAs, Airbnb, and hotels.

together to address the ever-changing needs of the industry and has resulted in the creation of purpose-built software and technology that improves efficiency. New policies and practices required adjusting expectations for both guests and owners while helping owners understand the need to update their rental properties to meet the demand of instant-satisfaction guests.

Commenting on this topic, we invited Michelle Williams, director of Marketing at Atlantic Vacation Homes, to offer her insight. “From a guest perspective, managing a change in services or process is relatively straightforward, especially if we are delivering something that they have been asking for. On our end, we look at cost-benefit and what are the implications of not providing XYZ amenity or service. As guest needs and wants have changed over the decades, so have those of the homeowners and their properties. Homes now have more amenities, and more gadgets and electronics to keep up. And homeowners also want more options for communication, whether it be by text, owner portals, email, etc.” "When it comes to homeowners, one of our big responsibilities is communicating with them when changes are being made and educating them on why we think they are necessary. Years ago, it was requiring a TV, then changing to flat screens, requiring wireless Internet, etc. How is it that something ‘small,’ like the type or size of the TV, can affect the bottom line? Another example was instituting shorter stays (less than a week). Some owners who have been with us for decades were resistant at first to the idea of moving away from a strict Sat–Sat rental schedule. It’s on us to communicate the benefits of a change like that as well as the impacts and how Atlantic Vacation Homes is going to successfully manage the new process and keep owners in the loop.”

The Complexity Continuum There is an ever-increasing need to evolve, to stay on top of rising technology offerings to compete in the vacation industry, and to 48

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According to Tim Cafferty, “Today, I find the vacation rental industry’s pursuit of competition with the hotel industry has brought us hotel industry expectations. It is simply no longer acceptable not to have the house in top condition with trendy décor and maintenance services on call virtually at all times. Treating customers like you did a decade ago in this business will put you out of business today.”

To continue to be successful, property managers need to focus their marketing efforts toward the guest experience and adopt new, focused technology to improve the pace of operations. One thing we can be sure of is that the tasks of cleaning, inspecting, and maintaining a property will always require hands-on attention. It is our job as professionals to ensure that attention is focused on doing the daily job duties as well as delivering exceptional customer service. And we simply cannot afford to outfit our operational staff with anything less than the best technology.

About Jeremiah Gall Jeremiah Gall is the founder and CEO of Breezeway and former founder of FlipKey. Together with the team that grew vacation rentals into a world-class product at TripAdvisor, Gall is currently building technology tools that will define the future of how property managers interact with the property. Backed by leading investors in the real estate space, Breezeway makes it simple to manage property care and maintenance operations. Their mobile solutions are designed to help property managers and owners coordinate cleaning and maintenance tasks, improving quality and ensuring the job gets done right the first time.

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Technology-enabled

Property Management

Lodging Platforms Bridging the gap between online rental marketplaces and traditional vacation rental management companies By Steve Milo, CEO, VTrips

he vacation rental industry is undergoing a rapid transformation in terms of both market growth and in the operational and lodging side. With the fast-paced changes, the market is ripe for disruption and for a new breed of technology-enabled property management lodging platforms to bridge the gap between online rental marketplaces and traditional vacation rental management companies.

The real cost of working with OTAs In the light of the significant changes taking place, the greatest challenge for property managers has been the lack of standardization in the industry for dealing with third-party booking sites, and that challenge creates issues for when property managers attempt to distribute their inventory. The difficulties predominantly lie in the rules and configurations required to list properties, which vary from channel to channel. In many cases, those challenges have been compounded by the employees working for OTAs who aren’t experienced in dealing with the vacation rental product or the requirements to properly deploy them on their sites. When it comes to the real cost for property managers working with OTAs, there are two areas to consider.

First is the amount managers need to outlay for distribution, which varies depending on the OTA third-party booking site, but it is

typically a percentage of the booking to the OTA, a cost that is fairly well quantified.

Second is the additional layer of outlay involved and the resources it takes to create the connection with the OTA as well as monitoring the bookings to make certain they don’t violate booking rules, length of stay, or pet fees, and that they match your approved rates. Additionally, there are channels like Airbnb that are pro-guest and whose company’s Terms of Service supersede any agreed to House Rules or Guest Contracts. Here are some examples:  Guests can use “extenuating” circumstances to cancel up to the last minute without penalty. That means you lose all revenue and all cancellation fees.  Guests can ask for a refund up to sixty days after their departure. That is long after the property manager has dispersed funds to the owner of the property.

 Airbnb is not collecting Sales Tax and Bed Tax uniformly, and Airbnb does not support “other” fees, except cleaning. In the case of HomeAway, additional complexity results from its obsession to “match back” offline bookings. That attempt to monetize offline leakage is flawed because it lacks the tools to properly and fairly track true leakage, and it arbitrarily creates capricious rules to match back offline revenue, even if it was your own repeat guest or the guest booked on another channel like Airbnb or VRM Intel Magazine | Spring 2018

Booking.com. HomeAway also created disparate treatment for its best HomeAway Software customers in the form of automated offline attribution of revenue.

Match back is neither new nor unusual in the travel industry; there are plenty of examples of it, but the percentages are typically much lower than HomeAway’s published attempt of 10 percent of the gross. In addition, there is usually a mutually agreed upon holdout percentage with fees capped and both parties sharing in the making of the rules and qualifications. For match back to work, the first end dates are usually taken into consideration. Repeat guests are often taken out of the equation, and if a guest books on another channel, they are also excluded. But HomeAway’s recent match back policy created terms that were unacceptable to the vast majority of professional managers. Only after a huge protest by property managers who threatened to delist their exclusive inventory over match backs did HomeAway retreat from its policy. In late January, HomeAway published a memo saying that offline match backs would be made by property managers on the honor system. It is unlikely that other OTAs will be following HomeAway in that fiasco because their roots have never been in the subscription model, and their monetization was never about offline bookings.

The other online travel booking platforms that are entering the vacation rental space such as Airbnb, Booking.com, VTrips, Expedia, and mega sites like Tripping.com, are pure play online transactional models. That is the direction of travel that these leading OTAs excel at. It’s all about instant booking—especially with mobile—and HomeAway is still trapped in the past due to its legacy system and customer base built on a classified listing model.

The opportunity of technical disruption In today’s vacation rental property management space we have what is considered classic disruption. We have new technology that has entered on the distribution side in the form of transactional third-party sites. That technology is a dramatically different model from the old classified listing sites such as VRBO and HomeAway of three years ago when guests could use phone numbers and email addresses to communicate with the property managers and their reservation staffs.

That technical disruption of instant bookings on the distribution side has effectively changed the paradigm of how property management companies need to market themselves and the level of expertise required within companies to succeed in the marketplace.

Bridging the gap between OTAs and traditional management companies For many smaller property management companies, it is simply not viable to attempt to work with all the different OTA systems. From a transactional standpoint, a lack of standardization means that the property management company needs to spend a large amount of resources to configure the database and build an application program interface (API) that can port to transactional players. That simply isn’t a viable option for smaller companies with limited resources and nontechnical skill sets.

With that in mind, smaller property management companies have no choice but to work with their property management system (PMS) or with an OTA middleman. But the problem with that approach as a model is that it is inherently inefficient, expensive and, in many cases we've seen, causes more trouble. For example, Airbnb 52

VRM Intel Magazine | Spring 2018

and HomeAway do not play well together, so it is no surprise that there is no direct API connection between HomeAway Software (HASP) and Airbnb. And several other PMS systems have severely limited their API options to third-party sites.

The importance of exclusivity of contracts—the supply and demand dilemma It’s worth remembering when discussing OTAs and third-party booking sites that those portals are simply marketplaces; they are not boots-on-the-ground property managers. They don’t clean properties; they don’t service properties; and they don’t provide guest check-ins or the ability to manage large numbers of owners.

The OTAs are simply third-party intermediaries between travelers and the boots on the ground management companies. Unlike the OTAs, tech-enabled property management lodging platforms like VTrips are, at their cores, still traditional property management companies in that they deliver operational services including housekeeping, maintenance, and guest services in labor-challenging resort locations as well as all the managing of owner statements, tax distribution, and income distribution. That operational competency is what creates the stickiness for companies, and that’s what creates exclusivity of contracts with owners. It’s that exclusivity of the inventory that gives the lodging property manager ultimate leverage and power. It gives us the power to leverage the OTAs and, ultimately, the power to pick and choose where the inventory is distributed as well as—to a large extent—leverage OTAs against each other. There is still plenty of room on the property management side for consolidation, and I believe we are only in the early stages of a pendulum swing toward the lodging side in terms of financial capital and investment pouring in. Over the past ten years we’ve seen a three-fold increase in category awareness for vacation rentals, thanks, in part, to the OTAs, but at the same time, the supply has not increased. In many cases, the supply is also managed by operators who lack the ability to distribute the inventory to the OTAs and third parties because of the challenges of standardization and API issues that result in even more issues in the supply-demand dilemma.

As a result, there is an opportunity for new players in the vacation rental industry to enter the lodging side. We already have seen that happen in the urban markets, and it will happen in the traditional core resort vacation rental market as well.

Is there a future for property managers? There is always a future for companies that can run their businesses in a cost-efficient manner. When we talk about disruption, we also have to remember that margins—commission rates—are shrinking. When commission rates drop, it means you have less and less margin to operate effectively. For the smaller property manager who is good at controlling costs, including those related to salary, marketing, and IT, there will be a future. Smaller vacation rental management companies also will be able to compete in a similar way that boutique hotels are competing against large brand hotels. If the smaller vacation rental management companies can embrace distinctive marketing, personalized service, and unique attributes such as luxury, pet friendly, or alternative lifestyle, then they will be able to compete and grow strong businesses. Unfortunately, the majority of the existing smaller firms in the vacation rental industry have not yet made that transforma-

tion. Instead, they tend to be offshoots of real estate companies, in house condo association rental agencies, or have principals who developed business models in previous decades. Ironically, the smaller property managers of the future may not be the smaller companies of today.

The next 10 years—a wave of new inventory Currently, we are in the initial stages of the next wave of vacation rental inventory that will revolutionize the product as we know it and will attempt to fill the scarcity of supply.

Over the next ten years we will see a sweeping change as investment capital creates hundreds of thousands of new vacation rental properties, overhauling decades-old and worn vacation rentals with new, purpose-built inventory that will allow the category to sustain its growth.

agement company for thousands of new vacation rentals—all purpose-built to meet consumer demands. Partnering with developers for the new creation of inventory requires significant front-end business development and legal contractual resources. Those developers also will expect property managers to assist in the sales cycle and new unit set ups with potential new buyers. Those new development projects can take years before rental income is generated.

The once sleepy vacation rental industry is rapidly transforming. It is an exciting time for firms that can embrace and leverage change. Technology-enabled property management lodging platforms— including VTrips with our centralized resources, operational efficiencies, and core technical competency—are uniquely positioned to transform the supply and demand of private accommodations as we know them.

That situation results in a win for developers, property managers, and OTAs who can partner together to create what the consumer demands. The North American market is wide open for resort development after well over a decade of supply retraction during the housing recession. An even greater opportunity may be Southeast Asia, which is untapped for purpose-built vacation rental development. VTrips is working with a large international resort developer on new, purpose-built vacation rentals that would be surrounded by world-class amenities. We also have partnered with an international OTA to examine consumer demand data and then take that data to the design board. We will soon be the exclusive property man-

About Steve Milo

Steve Milo is the founder and CEO of VTrips, a growing and innovative property management and rental reservation platform that leverages a proprietary technology system to maximize occupancy, revenue growth, and profitability. VTrips manages 2,000 exclusive vacation rental properties in traditional resort destinations ranging from Florida to Hawaii. Steve is a recognized thought leader regarding the evolution of the highly fragmented vacation rental industry, and he is a regular keynote speaker at leading conferences in North America and Europe.

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VRM Intel Magazine | Spring 2018

By David Thompson, ICND

Build Your Brand with Remarketing and Retargeting I

n the world of digital marketing, the “Big 4” strategies dominate: SEO, PPC, email, and social media. For these latter three, however, the remarketing and retargeting approach is underutilized and often pushed to the side.

Most digital marketing plans aren’t set up to fully use every means possible to target consumers, especially when it comes to remarketing and retargeting. We talk all day long about attracting new consumers to interact with our brand, but what happens after someone gets to know us? How do you market to people who know who you are already but haven’t quite booked yet?

This is where a proper remarketing and retargeting strategy can work wonders for a digital marketing plan and, without a doubt, increase your conversions and bookings! Back in the day, it was all about impressions, and if you could make the right person see your ad enough times, then eventually they would buy from you. (Think billboards.) Although that is still true, don’t you think we can be a little more tailored when it comes to the impressions that are made? The answer is yes, we can. It’s funny how Amazon keeps reminding you that you were interested in that Egyptian cotton bed sheet set that you looked at two weeks ago, or that you left something in your cart and just forgot to buy it. Well, the same thing can be accomplished in the vacation rental industry, and its effectiveness is astounding. A digital marketing plan without remarketing is like dating someone but never proposing . . . if you like it, you better put a ring on it!

Remarketing versus Retargeting What’s the Difference? People use the terms remarketing and retargeting like they are interchangeable, but they really are different. Remarketing involves

marketing directly to a captive audience, such as a list of contacts. Most remarketing you see is in the form of email campaigns, but, even then, many people miss the opportunity to truly create an offering specifically for that audience. Remember, these are people who already know your brand; they may even follow your social channels. So offering them a basic email, newsletter, or ad might not entice them enough to book. You need to offer something more—something specific to them. Retargeting is when you are targeting people who have taken an action or shown some interest. A good example of retargeting would be conveniently seeing an ad on Facebook of the product you were just looking at on Amazon. We don’t necessarily know exactly who the audience is, but we know that they visited our website and showed interest, and that is all you need. Both strategies have their place in a digital marketing plan, and they are very different from each other. We all know that marketing is about knowing your audience, and the same idea applies here. Don’t make the mistake of lumping your remarketing and retargeting audiences into the same pool as everyone else because it won’t work. Think of it this way: if you give a speech to 500 people, and one person comes up afterward with a question, your answer is unique to that person. Make your remarketing and retargeting campaigns unique to that audience.

Remarketing and Retargeting Avenues The question of where to start is often answered by deciding on which avenue of marketing you want to focus. If you are having trouble narrowing down your direction, think about what you want to accomplish. Obviously, directing a consumer back to your website is your top priority. However, is it for a specific property, is it for a special, or maybe for a specific page like “pet-friendly rentals?” VRM Intel Magazine | Spring 2018

These sorts of questions will help you decide which direction you want to go and, in turn, what type of marketing you will want to do, either retargeting or remarketing. You also want to consider where your audience is the strongest. For example, if you have a mailing list that has good open and clickthrough rates, that might be a good place to start. If you have an audience on social media that engages well, that might be a strong starting place. It really depends on your audience and what you are trying to accomplish.

Avenue #1

Adwords Google AdWords is great when you want to retarget people who have already visited your website. You can do this several different ways, either by creating a display ad or a search results ad. Whatever direction you choose to go with your ad type, it is important to remember that you are marketing to someone who has already been on your website, and, if you are doing it right, you are marketing to someone who has visited a very specific part of your site and for some reason, left. An example would be a person who performed a property search. With that in mind, you have to think about what the buyer is looking for. Another example is, if they visited the specials page, maybe they were looking for a discount, so pointing out a discount, a percentage off, or a special that could save them money will most likely get their attention and draw them back in. An example of what not to do? If someone is visiting the real estate portion of your website looking for properties to buy, don’t serve them up a rental ad. It’s also best practice to never send someone back to the homepage of your website. Send them to the search results page, or the pet-friendly page, so they can continue down the booking path along the shortest route possible.

There are many different strategies when it comes to creating retargeting and remarketing ads in Google AdWords. One strategy that seems to be underused is remarketing lists for search ads, better known as RSLA. By automatically adjusting the bid amount in your remarketing campaign, you can agree to pay more for that specific audience. The idea is that you are willing to pay more for someone who has already been to your site and interacted with your brand than someone who has not. This allows you more visibility when it comes to ad placement and a better chance of that ad bringing someone back to your site to convert.

Avenue #2

Social Media Setting up a remarketing or retargeting ad on your social channels is extremely easy and quite effective. When it comes to social ads in the vacation rental industry, Facebook is definitely at the top of the list. With its robust ad platform and reporting, you really can see how your ads are performing and adjust accordingly. One major advantage of doing a remarketing or retargeting campaign on a social channel is the ability to catch a user off guard. By using visually striking images and videos that highlight an experience or feeling, you can draw the consumer back in and sell those aspects, rather than selling the vacation itself. Social channels are all about experiences, excitement, and engagement, which is why this type of remarketing and retargeting strategy works. What not to do would be trying to sell a specific property 56

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or get a booking from a social ad. Yes, we are trying to get more bookings and drive conversions, but the ultimate goal with any ad, including social, is to drive traffic back to your website. The important part when it comes to remarketing and retargeting is driving the traffic to the correct location. Again, if you had someone who was interested in your pet-friendly page and you send them to the homepage of your website, you’re not really creating any relevance for them. Social media is also a great avenue to ensure potential guests learn something new about you. In a busy world, social media ads historically have the highest bounce rates, so use social media as a branding tool, rather than a booking tool. Great examples of Facebook remarketing ads would be customer testimonials to make potential guests feel better about booking with you. Or bring them to a page on your website they might not have seen before, such as a specials page or a page dedicated to new rentals for 2018. This will entice them more than a generic “hey, book with us” ad. And let’s not forget about the #BookDirect initiative!

Build a page on your website dedicated to educating potential guests about book direct advantages and educate them via a social media ad.

Avenue #3

Email Marketing Last, but definitely not least, we have the tried and true method of email marketing. Although some naysayers say email is dead, that is not the case, especially when it comes to vacation rental marketing. Email marketing is a great way to remarket to people who have given you their contact information and shown an interest in your brand. If there is any advice to give when it comes to good email remarketing, it would be to have a defined message with a clear call to action. You really have to tell the consumer what to do next and be very clear. Examples? Large buttons that say “Search for PetFriendly Rentals” or “Perform a Rental Search” rather than “Click Here” or “Book Now”.

Think about it this way—you are asking consumers to stop what they are doing (checking their emails) to come look at your website for some reason, so that reason better be good and give them an incentive to stick around. Leading someone to a generic page that requires thought or further actions will only get you higher bounce rates.

Building Brand Value One of the positive aspects of proper remarketing and retargeting is building your brand’s value in the eyes of your consumer. All consumers want their wants and needs to be understood without requiring them to tell you what those wants and needs are. By setting up remarketing and retargeting campaigns, you are telling your audience that you know exactly what they want and providing them with a clear and direct way to get it. Even if they don’t convert, you are building brand recognition with your audience. Remarketing and retargeting are powerful methods of digital marketing and can add real value to your marketing plan. Take this as an opportunity to market to your audience as individuals, find out what they want, and provide an easy way for them to get it.

VRM Intel Magazine | Spring 2018

DOUBLING DOWN ON THE GUEST EXPERIENCE A

By Andy McNulty, Cofounder, Guest Hook and Touch Stay

s I listened to Simon Lehmann at the European VRMA Conference explain why he always brings a set of sharp knives when staying at a vacation rental, I turned to Jessica Gillingham of Abode PR and asked:

Sadly, it seems that in-property amenities and poor content are still very real issues. (I’d also add that writing property descriptions is still the most frequently requested service we see at Guest Hook.)

I was reminded of an earlier session at the same conference when a panelist said, “The number one requirement for everyone should be great content, which means photos and descriptions,” to which Simon Lehmann responded:

Here’s my point: sharpen your knives, communicate your value proposition clearly and quickly, and deliver on excellent service throughout the guest stay cycle. Grab the 91 percent of guests who are clearly open-minded and looking for a brand that resonates with them. And then retain them.

“Are we really still talking about poorly equipped kitchens?” She nodded.

“Are we really still talking about photos and descriptions?” 58

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Consider this finding from Google:

“Only 9 percent of travelers have a brand in mind before they start researching.” (Source: Google’s Javier Delgado Muerza at the VRMA Europe, 2018)

It’s time to double down on the guest experience.

Pre-booking Experience “Never has there been a time in our industry when your content needs to count more.” Wes Melton, smokymountains.com

Consider the 91 percent of guests looking to be inspired by a vacation rental brand. If they find you on HomeAway, will they be served a headline that screams or seduces? Will they see photos that depress or energize? Have you clearly explained your value proposition? And what about your website? PhocusWright predicts that 72 percent of online bookings will be from the OTAs by 2020. Does that mean you should abandon your website? Absolutely not.

Instead, be ultra-picky about where you invest your time and money. Focus on content that counts. Ask yourself the same question before updating anything on your website: will this photo/video/text/graphic reflect my brand as well as be helpful and/or inspiring for my guests?

We know many businesses, just like our friends at Beside the Sea Holidays, who consistently achieve more than 50 percent of bookings directly on their websites. It’s no coincidence that they have identified what they stand for, have embedded that into everything they do, and have committed to brand-relevant content that helps or inspires.

Define Your Brand and Stay Consistent “Vacation rentals are just places to sleep.”

I’ve heard that said more than once recently. Take that stance at your peril. Booking a vacation isn’t the same as buying paper towels or ordering a quick lunch—it’s intensely personal.

In an industry that’s expected to grow to $170 billion by 2019 with millennials unleashing part of their estimated $1.4 trillion travel spend, you can no longer afford to blend into the crowd if you want to thrive.

Capture that 91 percent by standing for something. Define your true identity. What are your genuinely unique selling points? How do you communicate those through your content? What brand voice do you use in your property descriptions and website content? When there are dozens, hundreds, or even thousands of rentals in your destination, it’s not enough to be a comfortable, cared-for accommodation. Decide what sets you apart, and then embed it in all your marketing.

That includes both the OTAs and your website. A guest who finds you on VRBO should discover the same brand on your website. VRBO is simply an entry point to your brand. So when you write your property description for the listing sites, use the same brand voice—and explain the same selling points—as you do on your website. And don’t forget the valuable opportunity that still exists to promote your business in the “Property Manager” section of your HomeAway listings. Who knows how long that brand potential will remain? Steve Milo of VTrips makes the undeniable business case of using OTAs to your advantage:

“In 2014, only $500,000 of our revenue was generated by instant booking on OTAs. In 2018, over $36 million of our revenue will be generated by OTA Instant Booking. We spend a lot of money working directly with OTAs to bring in new guests.” And my pet-peeve: enticing people and then failing to deliver. Take the website newsletter process. There is nothing more value-destroying than gaining an opt-in—someone who has signaled strong interest in your offer—who you then serve dreadful information to or ignore. The same holds true for social channels that are often seen as box-ticking activities. If you offer potential guests the opportunity to interact with you and consume your content, then make the entire process a joy—inspire your guests with content that is true to your brand.

Post-booking Communications “Leading the guest through a mapped-out process from booking to arrival ensures a win-win for both the guest and owner. The guest feels cared for, and the owner/manager frees up mental energy knowing that there is a process in play.” Elaine Watt, holidayletsuccess.com Booking secured. Now comes another complex task: figuring out what, how, and when to communicate with your guest. As a guest, here’s where I consistently see things unravel. Not because the owner/manager lacks professionalism or doesn’t care, but because it’s a bloody complex process.

What’s the first communication you have with your guest post-booking? Is it an automated email from your PMS? Is it an Airbnb message? An SMS? Perhaps it’s even a phone call. Regardless of the mode of communication you use, it’s what you communicate that counts. That first impression the guest has needs to be consistent with their pre-booking experience. Video can be a perfect complement to your written communication. It’s not simply about engaging guests who don’t read; it’s also a moment to share your brand in a typically faceless, email-driven, pre-stay experience. Try a 90-second video overview that welcomes your guests and explains what you’ll be sending them and when. No need to personalize each one—a canned video that pairs with your first written communication will do. And in your first email, don’t merely stick to the formula of pushing information. Try a little pull as well. For example, pose a question in the first sentence: “What brings you to X?” or “What are you most looking forward to during your stay at Y?” Of course, not all guests will reply, but for those who do, you will have built a foundation to provide a great guest experience.

Finally, write that process down and make it available for any new person who joins your organization. Documenting is tedious, but it’s the basis of every excellent and consistently repeatable process. Think of the opportunity cost of your own time or a member of your team’s time that would be required to train someone new.

Pre-arrival Communications “The ongoing provision of information/advice/insider knowledge to bring the guest as close to us and, importantly, to raise their level of anticipated gratification, is key (i.e., ‘This is going to be a brilliant holiday!’)” Bob Garner, casaldeifichi.com Don’t burden yourself or your guest with six attachments, twelve paragraphs of email text, and complex pre-arrival forms. Your only goal in this regard should be to ensure your guest has received—and knows VRM Intel Magazine | Spring 2018

how to access—the important pre-arrival information: address, access instructions, check-in time, contact details, and similar items.

a personal business, they treat the offer of communicating as genuine (welcomed, in fact) rather than throwaway.

If tech is a part of your brand, then a guest welcome app is probably the right choice. We have thousands of properties using Touch Stay to manage that process, but there are many alternatives including Hostfully and YourWelcome. Alternatively, you may have a highopen-rate email series in your PMS that delivers the important information in a pre-branded way.

Post-stay communications

Don’t forget your brand at this stage—the way you send the information, the format of that information, the tone of voice you use. Those are all absolutely necessary factors in maintaining brand consistency and keeping that guest experience on brand.

During Stay Not every guest wants communication with you during their stay. And not every business has the resources, or even the desire, to open a dialogue with its guests. Nonetheless, there needs to be a way for communication to take place. What’s worse than a negative review that could have been avoided by a simple conversation during that guest’s stay? There’s a lovely anecdote that a client recently relayed to me that illustrates that point perfectly. A guest had sent a text message to Richard of Beside the Sea Holidays at 11 p.m. on the day of check-in: “I can’t make the sofa bed work; can you please come and help?”

Richard’s wife went around, was invited in, and went upstairs to set up the sofa bed. All was well—until Richard received another text at midnight: “When are you coming round to fix the sofa bed?”

Two sets of guests had a nearly identical phone number, and the wrong house had been attended. What makes that anecdote so wonderful is what happened the next day. Not only was the guest with the real sofa bed issue delighted at having had things fixed within an hour so late at night, but the wrong sofa bed guest left a five-star review that follows: How did that happen? Richard and Sophie visited them the next morning, apologized, explained the situation, and left a bottle of prosecco. But that wasn’t the reason for the five stars. Beside the Sea’s brand, aside from offering properties “beside the sea,” is rooted in personal service at every stage of the guest journey. The guest subliminally understood that the prosecco and apology were genuine rather than hastily concocted ideas. Just look at the review title: “Service.” 20/03/2018 19:03

Service      I've just returned from a lovely, relaxing stay in Camber and couldn't recommend Beside the Sea more highly. The accommodation itself was immaculate, with everything we could possibly need plus lots of additional touches that went above and beyond. I hope to return myself but will be telling my friends and family about it in the meantime as it really was a perfect trip, a perfect experience in a perfect location.

Richard explained to me that they don’t directly engage guests during stays. Instead, they give guests their own space but make it clear how they can be contacted—text message, email, phone, or even a knock at the door. And because the guest understands this is

VRM Intel Magazine | Spring 2018

Beside the Sea manages forty-four properties. Like most PMs of such size, balancing personal connection with efficiency is a challenging task, yet they prove that being personal doesn’t have to mean physically talking to each guest at each stage of their journey. It’s about fostering the relationship through their website, their auto-emails, their sense of family, and their passion.

How do you maintain a relationship with the guest after they’ve left so that they book with you again or recommend you? The first step is to ensure you have collected your guest’s email address and have the required approval to add them to your newsletter list. Don’t destroy the brand equity you’ve accumulated by letting them disappear or run afoul of anti-spam regulations. A list of emails is great, but if you’re able to tag each email with some simple additional information about the guest, it’s worth multiplies.

Jeanette Lawson of Kiawah Island Getaways illustrates that perfectly. Prior to confirming a reservation, Jeanette’s guests are required to fill out a simple online form. Names of guests staying, reason for visit, options to purchase add-ons like bike rentals, and so on. That simple form has an obvious advantage in the guests’ minds, and it ensures that Jeanette gathers some powerful data to help her create valuable content for her email list. Perhaps a guest is celebrating a birthday or enjoying a honeymoon. Perhaps they are taking part in a local marathon or annual convention. This information allows you to communicate with guests prior to the anniversary date, tailoring emails to specific groups of guests. With the right email platform and templated messages, none of this has to be time consuming. As Bob Garner explains, “Through social media, blogs, and email/ newsletters, we ensure guests are kept aware of our ongoing interest in their lives and how we would like to once again have a chance to help them have another brilliant stay.”

It is worth noting that Bob has a repeat rate of 55 percent and a referral rate of 20 percent. In his words, “We certainly have our ‘skin in the game’ in doubling-down on the guest experience, which makes the work of finding those remaining 25 percent of new guests each year less arduous.”

Don’t Cherry-Pick Doubling down on the guest experience isn’t about mastering the one week they are physically with you. It’s about their entire journey. Steve Milo puts it like this:

“Our goal is to pay only one time for the acquisition of the guest. After that, our goal is to communicate to them the value of booking directly with VTrips for the best information, the best selection, the best reservation staff, and the best pricing.” That clear business goal—pay only one time for the acquisition of the guest—depends entirely on excelling at every stage of the guest journey. Reflect your brand with every guest interaction in a genuine and natural way. The prize is repeat and referral guests. Help shift your guests away from the 9 percent crowd who don’t have a brand in mind the next time they are considering a stay in your area. And let’s not talk about blunt knives, dull photos, and flat copy ever again.

Creating a Sustainable Advantage

with Automated Distribution By Shea Courtney, Bluetent

here is no doubt that distribution and the increasing prevalence of online travel agencies (OTAs) have caused a significant disruption in the vacation rental industry. Yet, the debate regarding the effectiveness of manually managing listings versus automating with a third-party channel manager is still relevant. Critics argue that commission fees are too high, that manual inventory management is just as effective as automated distribution, and that using a third-party sacrifices brand integrity because professional managers can lose control of their best practices. However, the overwhelming success of professional managers utilizing third-party distribution managers has proven that it is necessary to have a powerful, automated distribution strategy that complements direct-booking initiatives and attracts new guests, drives reservations, builds viable return on investment, and saves time for their team. Although there is no one-size-fits-all solution, property managers can use third-party distribution, along with the knowledge of their particular market and clientele, to customize their strategy, protect profit margins, and leverage the visibility OTAs offer to drive revenue. As a direct result of partnering with third parties, property managers experience significant increases in overall revenue that quickly outweigh commission costs and raises their bottom line. In many cases, an automated distribution strategy can help professional managers efficiently capitalize on a previously untapped share of the market, enhance brand visibility, and create long-term, sustainable growth. One of the most significant benefits of automation is that travelers can instantly book, which accelerates conversion rates exponentially by capitalizing on travelers’ increasing need for instant gratification. On Airbnb, Instant Book listings are ranked higher in search results, which means that profits can double just by having listings that are bookable in real time! When searching for accommodations, Instant Book is a prominent filter that guests can use to differentiate properties—a missed opportunity for those who are manually managing their listings.

An automated distribution strategy eliminates the time and resources involved with manual maintenance as well as the risk of duplicate reservations. It is a full-time job for property managers to regulate their records, update calendars, and respond to inquiries across all distribution channels; it costs not only time but also revenue. It is a considerable benefit that third-party providers can integrate all of the data in property management software, automatically blocking out and updating availability immediately, so rates and availability are always accurate and 100 percent up-todate, all of the time, and on every channel. Property managers can accept more direct bookings and focus attention on their prospects and guests, all the while generating a healthy return on investment.

With third-party, API-driven solutions, property managers retain control of their reservations with tools such as customized rules, minimum night stay, and price scaling per channel; additionally, reservations sync right back into their property management software. Property managers can also override rules in their software to apply specific restrictions and set custom booking windows for certain OTAs, providing the flexibility and control professional managers deserve. Instead of losing valuable time on manual reservation management, property managers can save more than forty hours per week by automating distribution! They can exceed previous results, raise visibility, and confidently accept direct bookings from OTAs. A robust and automated distribution strategy provides professional managers with dynamic tools to target their direct-booking initiatives, engage with new guests, increase reservations, accelerate conversions, and create sustainable growth while saving time.

Rezfusion Boost, Bluetent’s distribution solution, efficiently connects vacation rental managers with two of the world’s largest online travel companies, Airbnb and Booking.com, to create accurate, compelling, and automatically managed listings. Bluetent offers all Rezfusion Boost customers access to dedicated implementation specialists who not only guide the setup process, including training and listing optimization but provide continuous support to deliver professional managers a competitive advantage in the marketplace. With advanced pricing tools, comprehensive capabilities, and reliable support from a team of distribution experts, Rezfusion Boost allows property manages to retain control of their brand, increase efficiency, and drive revenue. Bluetent has almost two decades of experience in the vacation rental industry partnering with professional vacation rental managers. The very same data connections used to develop Rezfusion Boost have built over 175 direct-booking websites that represent more than 31,000 individual properties in more than eighty countries. Enjoy the confidence that comes with a team that books more than $350MM in online reservations each year on a tested and proven platform.

VRM Intel Magazine | Spring 2018

Long Live

the OTA! 5 Major Issues Listing Sites Solve for You By David Angotti

VRM Intel Magazine | Spring 2018

tâ&#x20AC;&#x2122;s time to have a difficult conversation: listing sites are not the enemy. If we choose to form an alliance rather than complain, online travel agencies (OTAs) can be one of our strongest allies. The return on investment (ROI) these channels produce is nothing short of amazing.

The OTAs and listing sites are a huge part of our success. In fact, many of us would not have successful businesses without them. Letâ&#x20AC;&#x2122;s explore a few of the many ways OTAs contribute to our ongoing success in this always-changing industry.

B Brand Discovery and Web D Benefit from Big Brand SEO If you believe you can easily outperform an OTA’s search engine Standardization Issues In a world without HomeAway or Airbnb, how would a potential guest efficiently find your brand or a vacation rental? Although I’m familiar with the industry, I still turn to listing sites to find rentals for personal and business travel. Why? When I’m shopping for a vacation rental, airfare, or a hotel, I don’t want to go through the hassle of visiting dozens of sites to compare my options. Instead, I want to quickly find an upscale property with a specific number of bedrooms, a private pool, and a great location. Even if I wanted to book direct, the lack of usability on many websites is a major deterrent. How quickly can I quote and book a property on your site? When I start on the homepage of VRBO, I am less than thirty seconds away from a huge list of properties that are organized with the most relevant listings first. In addition, I can see transparent and full pricing as soon as I click each listing. The entire checkout process, if fully optimized, can be completed in two to three minutes. VRBO, Airbnb, and the other major listing sites employ the best machine learning and conversion optimization minds in the business to maximize the chance of converting a website visitor into a sale.

C Effortlessly Solve Confidence Challenges Even if a potential visitor finds your site and usability great, there is a brand confidence challenge that must be overcome to produce a booking. People inherently distrust reviews displayed on a brand’s own products for good reason; those reviews are often cherry-picked or manipulated.

As most property managers know, removing a negative review from a listing site is nearly impossible. But removing a review on our own website can be as simple as clicking a “hide review” button. When guests land on a highly-trusted brand like Airbnb, they assume the reviews they see are authentic and representative of the property. In addition to the problems with reviews, consumers are understandably uncomfortable entering credit cards online with brands they have never used. The advertising campaigns and branding efforts of companies including Airbnb, HomeAway, and Booking inspire confidence with consumers and add legitimacy to our entire industry.

optimization (SEO), you are dead wrong. As an SEO expert with over a decade of experience, I assure you that this is a complex lead channel that is more about branding than just paying a few thousand bucks for an “SEO-friendly website.” In 2018 and beyond, building a sustainable brand must be the foundational element of your SEO campaign. Don’t believe me? Ask any small e-commerce brand that competes with Amazon how those meta descriptions are working out. Google understands that consumers’ needs are much deeper than title tags, meta descriptions, or alt attributes.

Today’s online shopper wants quality reviews, a great selection of products, fair prices, and fast shipping. When a consumer shops for a television, Google’s data, machine learning models, and algorithms all know that the consumer would rather see Amazon than a small company.

By design, Google and the other search engines want to serve the absolute best content for a given query based on the user’s intent. If a user searches “vacation rentals in Destin,” the likely intent is to find a vacation rental that perfectly meets the user’s needs at the best price. No matter how big your brand is, it pales in comparison to the 5,000 listings that VRBO offers in Destin. VRBO is the Amazon in Destin. At the aggregate level, users strongly prefer the predictable inventory quality and shopping experience of VRBO over smaller brands. Search is a zero-sum game, which means there are an extremely limited number of winners. For your brand to win, another brand must lose. There are over 200 factors that determine a ranking on Google, and the listing sites have whole teams with one job—ranking for the best terms that produce bookings.

The huge success that listing sites inevitably log due to budget, skill, and brand experience will definitely benefit each property manager who chooses to list properties.

E Leverage Economies of Scale for Growth The average vacation rental manager fails to utilize dynamic retargeting, triggered emails, email remarketing, and psychographic targeting. Why? Most companies do not have the budget to hire inhouse talent for those roles or to hire qualified consultants. Listing sites use all of those tactics and then some.

With pay-per-click (PPC), the more properties you have, the higher your chances of conversion success. The property manager who only offers twenty-five properties may only have five with availability and none that are pet-friendly for a given set of dates. Because the appropriate inventory is 100 percent booked, that property manager has zero chance of converting the pet-lover into a paying reservation.

On the other hand, a site like Booking.com may have hundreds of pet-friendly properties available for the same dates. That economy of scale nearly guarantees that the large listing sites will be able to drive more bookings using PPC at a lower cost than smaller companies can. With economies of scale, television advertisements on the biggest stage become a reality. Super Bowl ads cost more than five milVRM Intel Magazine | Spring 2018

lion dollars each for a thirty-second spot, a staggering amount. But thanks to economies of scale, each of our businesses can benefit when a company like Airbnb runs an advertisement that paints the entire industry in a positive light during the big game. The larger a listing site becomes, the more powerful the brand can become and, ultimately, the whole industry benefits. Today, search engines report that the term “Airbnb” far outpaces the term “vacation rentals.” The economies of scale are bringing additional awareness for our industry and shifting the supply and demand curve in a way that benefits us all.

Even though they had never seen my profit-and-loss statements, worked late nights, or dealt with the operational challenges of the business, property owners were motivated to believe that my split was unfair. Their disillusion was primarily based on greed; they wanted higher income for themselves, even if it prevented my company from earning a reasonable profit. Unfortunately, many property managers lack a proper understanding of the business model, and that lack of understanding leads them to falsely assume that listing sites fail to provide value or that they result in obscene fees.

F Enjoy Stabilized Growth and Lead Diversification Combat Entitlement with Action and Understanding As our brands grow, we need to ensure they can survive and thrive independent of any one lead channel. We must learn to focus simultaneously on direct bookings, phone bookings, distribution strategies, repeat bookings, guest experience, and anything else that can contribute to our long-term success.

At a recent VRM Intel Live event in Florida, VTrips founder Steve Milo said the following regarding diversification: “What are you doing to diversify? If you don’t have a good marketing director, [it’s] time for a new one.” When we inappropriately depend too much on any one demand channel (listing sites included), we place our brands at significant risk.

Unfortunately, too much reliance on a direct channel that we own also can be dangerous. For example, owning a website that drives 60 percent of your demand is incredible, but what happens when the Google algorithm shifts and your visitor volume is instantly cut in half ? The brand could be instantly crippled.

According to Brian Sharples’s 2016 letter to owners and managers, the average owner or manager generated a whopping and unsustainable 3,300 percent ROI. Even though direct competitor Airbnb also charges a 6–12 percent booking fee, HomeAway users immediately and vehemently resisted the idea of a similar traveler fee. Why? The property managers were used to spending $1 and producing $33, and the resulting sense of entitlement has proven difficult to overcome. When guest fees and property manager fees are combined, Airbnb and HomeAway produce an equivalent revenue-per-listing with similar total cuts. So why does HomeAway receive the majority of the negative attention? Entitlement. The owners and managers were not concerned with HomeAway’s ability to compete with Airbnb. Instead, the fear of a reduced ROI drove a severe backlash against an equivalent fee. Similar to the owner in the example above, property managers were financially motivated to revolt rather than consider the big picture.

By utilizing multiple listing sites and constantly trying new niche sites, you are protecting your brand long term. Including listing sites as part of your strategy does not mean that you get a free pass on delivering exceptional experiences and marketing effectively to past guests. The most successful property managers use listing sites to drive initial bookings, and then they deliver exceptional vacations that drive repeat bookings.

Instead of focusing on the fees listing sites charge or complaining incessantly, focus that energy on growing your own brand into a powerful force. It is much easier to adopt the herd mentality, feel victimized, and complain than to build a brand. But spending time on diversifying lead channels and building a sustainable brand that you own is the only way to reduce your long-term dependency.

Property Managers Are Like Owners

Without a proper understanding of the business model, it’s easy to point fingers at “ridiculous fees” that the listing sites charge. Listing sites, guests, property owners, and property managers all benefit from healthy relationships with each other. For our industry to continue its enormous growth, all of us must contribute in meaningful ways to its long-term success.

During my time as a property manager I had many conversations with property owners who thought the commission we charged was ridiculous. Why did we need to charge them such a large percentage merely to manage their property? All we did was answer some phone calls and send a few emails, right?

Why did owners feel that way? In their opinion, owners were contributing more to the relationship than I was. Rather than appropriately analyzing the decision to list with my company based solely on profitability or opportunity cost, they looked at only one line item on the sample statement and felt the relationship was one-sided.

I intimately understood my fixed and variable costs at the unit level, and those costs ultimately supported our commission. It was fair to all parties. Those potential owners did not intimately understand my vacation rental business, but they allowed their desire for higher income to influence their analyses. The reality was that our fees were worth every penny. Every single owner on our program, even those who had previously self-managed, reported higher net income with us than with their previous arrangement. 64

VRM Intel Magazine | Spring 2018

Proper Perspective Moving Forward

David Angotti is a serial entrepreneur who founded and exited an EdTech startup, consulted with Fortune 100 brands, wrote for Search Engine Journal, and recently sold one of the fastest growing property management brands in the country. He is laser-focused on developing SmokyMountains.com into the premier niche listing site in the country. David’s primary strengths include business development, branding, high-level marketing, search engine optimization, and public relations. In addition to his business background, he was a commercial pilot and is certified to fly the fastest passenger jet in the world.

VRM Intel Magazine | Spring 2018

TurnKey Raises $31 Million Cofounder and Executive Chairman John Banczak Provides Insight into TurnKey's funding, and a Glimpse into the Company's Future Plans

VRM Intel Magazine | Spring 2018

ast month, TurnKey Vacation Rentals announced it had secured $31 million in Series D funding led by current investor Adams Street Partners, with participation from existing investor Altos Ventures and two new institutional investors. This financing round brings Austin-based TurnKeyâ&#x20AC;&#x2122;s total capital raised since 2013 to $72 million.

With just under 400 employees, TurnKey, led by former executives from Hotwire and HomeAway, now manages approximately 3,500 vacation rentals in 52 markets in the United States. We had the opportunity to catch up with TurnKey cofounder and executive chairman John Banczak to gain more insight into the companyâ&#x20AC;&#x2122;s strategy, outlook, and opportunities for growth.

Amy Hinote (AH): What are your key objectives with this injection of capital? John Banczak (JB): The capital is going to be used for two main purposes. The first is expansion—it costs money to add markets and local teams. TurnKey hires the local team before a single property is added, and if we plan to grow at a fast pace, additional capital comes in handy. The second purpose is to improve our technology. We’ve been the most technologically advanced property manager (PM) for years now, but that doesn’t mean we can’t improve. We’ve had products built for years such as our noise monitors, in-home tablets, captive portal, housekeeping and inspection apps, our TurnKey FieldSync system and the proprietary digital locks we have developed, but there is more to come. AH: You raised money from existing investors instead of going outside. Do you see that as a testament to the trajectory of the company or a reflection of slowed interest from outside investment in the vacation rental industry? JB: We raised money from existing investors and two new investors this time around. That is a great testament to the trajectory of the company. Insiders know it better than anyone. It always makes sense to work with existing investors first if they have the funds available and further investment is even possible. In many cases, outside investors are needed as the size and stage of the company changes. We think we have a great mix of investors who are early-stage-growth-focused, along with some who start to look at later-stage businesses. AH: Will TurnKey be looking to grow internationally in 2018? JB: This is probably the most popular cocktail question I get. I think most casual observers love the idea of TurnKey having properties in exotic locations around the world. At this point, we have no plans to do so. Our organic growth in the United States has continued, and with such a large market, our priority is to stick to what we know well. AH: In what markets are you seeing the most inventory growth opportunity? JB: We are seeing incredibly consistent growth across most of our markets. There really isn’t much of a difference between beach, ski, or metro for us. The real difference we see is when we have a great local team. Even though we are a technology-driven company, hospitality is won or lost based on people, and we have great people. I think our folks can succeed just about anywhere. AH: Are you investing in revenue management (RM)? With this discipline still in its infancy, has TurnKey been able to significantly move the needle for bookings using RM strategies? JB: As you know, revenue management is near and dear to my heart. I started my career at Northwest Airlines doing RM. The team I joined at Northwest are some of the smartest people I’ve ever worked with. Countless people from that group have gone on to incredible careers. I was the junior guy there and was lucky to get that role. Not only did I learn how important RM was, but I also saw it in action from some of the brightest airline folks ever. So RM was an enormous factor at TurnKey from the start. We don’t talk about our exact strategies, but we have a large RM and business intelligence team here that have built an array of demand forecasting and decision support tools. The head of our RM group came from Zilliant and is one of the most respected pric-

ing and decision support consultants worldwide. We are constantly improving how we manage our data science and our pricing, and I believe we are the most advanced in the industry. AH: Late last year, you appointed Jen Ford, former senior director of investor relations at HomeAway, to the CFO role. What kind of impact has Ford made on the company, and besides Ford, have there been any other key additions to your executive team or board? JB: Jen has been an immediate difference-maker at TurnKey. We had been recruiting her for over a year. I don’t think there is anyone in the country who is more qualified or a better fit for the team here, and we are very fortunate it worked out for us. The board has remained the same since the addition of Jeff Diehl (managing partner at Adams Street Partners). Little known fact—Jen, Jeff, and I are all from Wisconsin, so the board meetings usually start with a serious discussion of the Packers. AH: As you know, Wyndham agreed to sell its European vacation rental division for a reported $1.3 billion and change. Does this valuation have an impact on how TurnKey is looking at the future? JB: Not really, other than it is a positive sign for the industry overall. I’m not sure what the underlying metrics were, so it is hard to read too far into it. I think the main impact is the awareness it has brought. Five years ago, it was tough to explain the business to the investment community. Now folks understand just how appealing the business is. There is far more money running through the PM space than there is through the consumer websites themselves. The Wyndham deal is just another sign that folks are starting to wake up to this. AH: Are there any emerging listing channels you are using to market your properties that are starting to show promise? And do you believe Google or Amazon will disrupt the vacation rental funnel? JB: The big players are still the big players. We’ve really only added Booking.com and Expedia in the past couple of years, and both are performing well. I think Google will have a meaningful impact on the business, particularly on the consumer websites. With vacation rentals slowly being integrated into maps, consumers will have another option to find them. I don’t believe they will have an impact on the service side of things. Amazon has the potential to have an impact on fulfillment, but we believe a positive impact. I don’t think owners who use managers are going to stop doing that because of Amazon’s new technology, but it may make it more practical to manage homes over a wider geographic range with some of the tools they are releasing. AH: At the VRM Intel Live London event, there was a lot of talk about professionalism and standardization in the industry. How is TurnKey looking at creating standards and leveraging trust in a brand? JB: We’d like to think that TurnKey actually created the standards. From day one, we’ve always said that homes need to be consistent— that is our brand promise—and that is what enables us to have guest NPS (Net Promoter Scores) over 50, and in some recent months in the 60s. We believe that guests must have homes with digital locks, accurate photos, floorplans and tours, fully vetted and rated housekeepers, easy payment and cancellation policies, worry-free damage, and immediate 24/7 support. We’ve created those standards and stick to them, and we are the only national player to do so.

VRM Intel Magazine | Spring 2018

AH: TurnKey has grown organically instead of through acquisitions. To what do you attribute your success in organic growth? With this funding, has TurnKey identified any key acquisitions? JB: To grow organically, you need a product that can stand on its own with industry-leading merits at a fair price. TurnKey has this. We truly manage homes better than others in the industry. We drive the revenue, and we do it with a better guest experience at a lower cost. Homeowners are smart—they have a choice, and when they are making that choice, TurnKey stands out among the crowd. When they choose you, they choose your business, your processes, and your people. We think this makes the best fit.

AH: In a Skift article about your latest funding, TurnKey cofounder T. J. Clark said that he anticipates the rise of “micro-hoteliers” or homeowners who choose different “flags” or brand promises to fly just like hotel owners choose among franchises to affiliate with today. What types of brand promises is TurnKey looking to create? JB: We are starting to see this already. As we grow, our direct and repeat bookings increase and so has our NPS. While we are not exclusively a luxury manager, we focus on the upper-half of the market. We manage units that have at least some kind of unique feature, whether it be a perfect location, incredible amenities, or a luxury finish-out, or other desirable attribute. We recognize that our guests’ travel purpose often changes, and the units that appeal to them change as well. If they are traveling with a couple of friends in a metro market like Austin, a smaller downtown location might be the most appealing. If they travel to Breckenridge with two other families, a larger home is what they have in mind.

They are going to be able to find them both with TurnKey—and what really appeals to them is that in both situations, they are going to have the same seamless experience. We truly provide unique homes in unique locations, all with the same reliable expectations and experience. This is what matters to guests—knowing that they are going to get exactly what they expect across a wide range of locations and home types. AH: Are there new technologies that you’ve added in the past year that you believe will become standard for the industry? JB: There are a few about to launch that I’m not going to talk about, but yes, we’ve made some progress in the past year. Recall that we were the first in the business to build noise monitors back in 2013. We followed that quickly with photo inspections in early 2014 (we've now reviewed and verified more than 1.9 million photos). We were the first to launch a Wi-Fi captive portal and the first to make widespread use of SMS for both vendor management and guest support. While we were not the first to develop digital locks, we certainly were the first and only company to use them nationally.

We’ve actually done several acquisitions, though, and when the fit is right, we are very competitive. Scott Gerber, a long-time industry veteran, runs our acquisition program now. Acquisitions have worked pretty well at TurnKey when we emphasize the fit. If a PM is simply looking to get out of the business for the absolute highest dollar value without a lot of concern for who is taking over their owners, then we may not be the best fit. For PMs who are interested in becoming a part of a winning team and sticking with TurnKey, we are a great fit. We’ve kept virtually everyone who has ever worked with any PM we have acquired.

PMs who are looking to exit the business but have deep ties to owners and want them to have the best management going forward at a reasonable cost also do well with TurnKey. We just recently completed an acquisition where the owner of the business was not looking to squeeze out a couple of extra bucks from their owners because this person was going to continue to be in real estate and part of the community. They were interested in balancing the monetization of the business with the long-term impact on their clients. In situations like this, we are a great fit. Overall, we are active in the market. If a PM is looking at exiting the business, they really need to give us a call. If nothing else, we will make it a much more competitive market for them. If you are looking to sell your home, would you rather have one buyer or three or four? TurnKey is definitely an active buyer, and we have the resources we need to compete with anyone. AH: Where do you expect TurnKey will be by the end of 2020? JB: Probably not international yet! We think we will easily move up from the No. 3 provider in the United States to No. 2 and, if our organic growth continues the way we have planned, possibly up to the largest in the United States. We also hope to open our platform up in ways we had never thought of before. We expect to offer services in a number of different ways than we are doing now. That is a discussion for later this year!

Last year, we were the first company that I know of to make an unprecedented offer to homeowners—we guarantee against fraud now, while maintaining credit card processing rates at or below HomeAway, PayPal, and Stripe. Our identity verification and fraud prevention has gotten that good. I believe that needs to become the standard for the industry. Fraudsters need to know they are not welcome—not just at TurnKey homes, but at any vacation rental.

By Amy Hinote 68

VRM Intel Magazine | Spring 2018

Your Statewide Vacation Rental Managers Association The Florida VRMA represents the professional management of vacation homes, condos and resort units throughout the state of Florida. We are your statewide vacation rental management industry association dedicated to supporting and protecting the $31,000,000,000 per year economic impact realized through the Florida vacation rental industry. The new Florida VRMA continues to deliver the educational programs, legislative advocacy and member benefits to help you to grow your segment of the industry throughout the state of Florida and beyond. Explore what our new regional chapters can mean for your business as a professional in the Florida vacation rental industry. The Florida VRMA is the largest statewide association in the US market today supporting property managers with tens of thousands of vacation rental units. From major Florida attractions to local supporting tradesman, the Florida VRMA has various participation levels for all businesses and industry partners.

Find out what the new Florida VRMA can do for you at

www.fvrma.org or call us at 407-218-6600 THE OPMA DIFFERENCE Constant focus on the future and the shaping of the lodging industry Controlling our own destiny through leadership initiatives and not simply relying on advocacy and secondary support roles Targeted growth and strategy: Aggregating the most condo hotel rental inventory in the most popular vacation destinations. REPRESENTING

THE BEST OF BOTH WORLDS

CONDO ACCOMMODATIONS

& HOTEL AMENITIES

877.870.6510 THEOPMA.ORG

Assisting our members in measuring and delivering their collective economic impact in the local markets they serve Develop and introduce training programs that provide uniform messaging and that enhance the sales and service levels and the proďŹ tability of the membership Minimize the number of suppliers in any product/ service category translating into more signiďŹ cant long-term relationships with OPMA onsite managers VRM Intel Magazine | Spring 2018

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How Amazon, Google, and Apple Will Revolutionize Vacation Rentals By Alex Nigg, CEO, Properly

doption of voice-enabled smart speakers with artificial intelligence (AI) assistants have seen a rapid increase in popularity. Led by Amazon and Google, according to CIRP, the number of units installed in the United States reached forty-five million by the end of last year, with almost twenty million devices sold in the fourth quarter of 2017. The interest in these devices—Amazon’s Echo line, Google’s Home products, and Apple’s HomeBot, in particular—is driven by the voice-powered AI assistants and the increasingly broad array of services they deliver.

Whether that means calling an Uber, getting a weather forecast, ordering a meal from a restaurant, ordering groceries from Whole Foods, listening to the news, being guided through a seven-minute workout, or setting an egg timer, Alexa, Google Assistant, Siri, and their cousins, Cortana and Bixby, deliver.

Amazon’s Alexa has captured the lion’s share of the smart speaker market (70 percent by many estimates), but Google and Apple have been acquainting the masses with this new technology: Today, Siri and Google Assistant have been installed on almost half a billion devices each and are being used by hundreds of millions of people. According to Google, up to 30 percent of searches are initiated by voice. In the race to capture market share, Amazon and Google have focused on offering smart speakers at very accessible price points, often significantly below fifty dollars in the United States. Voice technology and AI, packaged with a broad bundle of local services, are clearly a major technology wave. The question is, how will this wave affect the vacation rental (VR) industry?

VRM Intel Magazine | Spring 2018

Convergence Delivered If convergence with the traditional lodging industry is the engine driving the growth of private accommodation, then the services delivered by Alexa and her AI peers could well become key drivers of this convergence. Who needs room service when Alexa can deliver meals from dozens or hundreds of local restaurants? Who needs a front desk when Alexa is the hub that controls smart locks, and guests can access their rentals with their phone? Who needs a minibar with overpriced items when Alexa can organize two-hour deliveries from Whole Foods? Who needs archaic hotel in-room entertainment networks when Google, Apple, and Amazon can deliver massive libraries of movies and music? Furthermore, who needs a concierge when Alexa can deliver up-to-date information on local events and activities; book trips and activities; and provide restaurant menus, traffic updates, and notices of flight delays. Who needs a concierge when Google Assistant can help translate, find local movie times, and uncover virtually any tidbit of information available on the internet?

Of course, guests may have their own Alexa/Cortana/Siri/Google Assistant traveling with them on their phone or device; but the advantage of a smart speaker installed at the rental is that services can be set up to be locally relevant. For example, how does a traveler know to choose Whole Foods in San Francisco, Uber in LA, MyTaxi in Milan, Ocado in London, Countdown in Wellington, and Amazon Prime Now in New York City? And have accounts with all of these providers to boot? More intriguingly, AI assistants might someday soon deliver the holy grail of guest experience and personalization. Imagine checking into a place saying, “Hi, Alexa, it’s me,” and-based on your voiceprint, being logged into your Amazon/Google account, and having all your Spotify stations loaded-your calendar and reminders are set up. Your movie watch lists are preconfigured, your Audible books are queued to where you left off, the temperature is set to your preference, and all your accounts are connected, including your Uber and Prime accounts. Also, grocery shopping lists and your favorite news sources are lined up for your morning news radio. Imagine.

Not only could this brave new world allow VRs to catch up with many of the services delivered today by hotels; it could allow our industry to leapfrog the traditional lodging providers. Of course, this technology is available to hotels, too; and indeed, one of Amazon’s first reported hospitality trials was at the Wynn Hotel in Las Vegas. Even so, it may not have been lost on Google and Amazon that VRs might make for much better partners: while a hotel may not be too keen to find alternatives to room service, the activities desk in the lobby, the minibar, or the gift shop, our industry may be much better prepared and incentivized to leave these in the past.

The Anatomy of a Smart Speaker Amazon’s Echo, Google Home products, and other smart speakers are really eight to nine products in one. They include an array of microphones and speakers; voice recognition and an AI assistant delivered from the cloud; account and payment mechanisms; an ecosystem of third-party apps or “skills” (and an environment to build, deliver, and provide custom skills); digital entertainment services such as music and movies; physical services such as the delivery of goods; smart home integration either in the cloud (by linking accounts) or as a physical hub connecting locks, thermostats, and lights locally; and, last but not least, an enterprise platform to configure, provision, and remotely manage multiple devices at the same time. 72

VRM Intel Magazine | Spring 2018

Apple HomePod The different providers each have their strengths and weaknesses. As one would expect, Google is most focused on its search engine, Apple on entertainment, and Amazon on shopping. Only Amazon currently delivers an enterprise device management platform, Alexa for Business. It is important to recognize that smart speakers were originally conceived for individual consumers. As a result, deploying them in a VR context leads to complications. It is one thing to configure one device, but how about configuring one hundred? How does one clear the settings from the previous guest for the next one (in particular, that pesky 4 a.m. wake-up alarm)? How does one restore each device to its original state after a guest has added his or her own preferences? Having an enterprise management platform is a requirement for use in a commercial setting, and only Alexa for Business currently delivers that functionality, allowing the VR manager to automate certain actions, such as a complete “reset and restore” after each guest checks out.

Rose-Colored Glasses . . . Voice-powered assistants might indeed make for a bright future for VR managers. They could provide an opportunity to establish a direct relationship with guests, even when guests book through a listing site, because the bundle of on-site services may require them to give the VR manager their payment and contact information. An on-premise presence can also serve as an antidote to the increasing disintermediation by apps provided by the listing platforms. As a versatile communication device (some devices even have screens), a voice-powered assistant can even serve as a platform for delivering concierge services.

These assistants may also unlock new revenue streams. VR managers should be able to participate in their guests’ on-premise revenue streams, whether this means a commission on the sale of a local experience or on the delivery of a restaurant meal or a power adapter. Amazon, Google, and others could also create subsidized device packages for VR managers, as VRs are arguably the perfect showcase to introduce this new technology and its associated services to new customers. Amazon and Google are both assembling portfolios of smart home solutions, from Google’s Nest thermostats and cameras to the Amazon Keys access and home security packages. Signing new customers up for service offerings such as Google Shopping Express, Amazon Prime, Prime Now, or Fresh could also generate attractive commission payments.

These devices are already becoming natural hubs for smart home and home automation. The adoption of smart home components in VR has generally been slower than expected, but this new push by technology titans may significantly accelerate adoption, improve interconnectivity, reduce costs, and—as discussed above—create new funding models.

Lastly, Alexa and company can help with significant operational improvements. They can provide smart lock access to cleaners, report arrival and departure, report on-site problems, act as an intercom connecting each unit with the VR manager’s office, and even allow for preconfigured restocking lists, allowing cleaners to simply order what is missing on site.

A Dystopian Vision: The Devil and the Details Unfortunately, the devil is in the details, and there will be bumps along the path to a future like the one described above. Having said that, the future is not far off; all of the elements described above already exist today.

The first bump, though, is that these devices were designed for consumers, not for commercial use. There are some serious privacy issues raised with a device that always listens, and can even “drop in” (including with video). Consequently, receiving opt-in, explicit, and informed consent is critical. In a consumer context, where device owners install the device in their own homes, obtaining informed consent is straightforward, but a VR context is quite different. A great deal of work will need to be done to establish the legal and privacy framework regarding using these powerful devices. For example, most providers give the account owner access to the usage history. This is straightforward if the account owner and device user are one and the same but not if the account owner is the VR manager and the user a guest. Only Amazon has started to address these issues with Alexa for Business. The second bump also relates to account ownership. In theory, a VR manager could today set up a “house account” with each of the major service providers (Amazon, Uber, and Google Shopping Express), let guests order services, and then bill them back. But this would be a crude approach indeed. For starters, it would probably violate the providers’ terms of service. Second, it would expose the manager to risk: What if the guest orders a diamond ring on the house account, and his or her credit card is bad? Third, today it would be a labor-intensive and highly manual exercise to track each transaction back to the right person and bill accurately. This is just the tip of the iceberg. The conclusion here is that these are still the early days of this technology and that scalable solutions and frameworks will need to be found, but Alexa for Business demonstrates that at least one of the major platforms is working on those solutions.

Third, it’s quite likely that the platforms’ preferred long-term solution to managing access to services is to allow users to log into a smart speaker with their own (Amazon, Google, Apple) accounts. A voice signature can be used to authenticate the user. “Alexa, it’s me” may not be far off. But this raises a different set of questions. If users log in with their Amazon or Google accounts, once again VR managers are cut out of the transaction and disintermediated. In other words, they are no better off than if the guest relationship were directly with Airbnb, Expedia, or Booking.

Lastly, Google and Amazon have made great strides in creating interconnectivity among the thousands of different devices that make up the smart home. With the battle for dominance heating up, Apple, Google, and Amazon are starting to build their own ecosys-

tems. Google’s acquisition of Nest and Amazon’s recent acquisition of Ring are examples demonstrating that the future will probably be less interoperable—which is not in the interest of VR managers.

What’s Next, and What to Do? In summary, the rapid evolution of AI and voice recognition combined with aggressive investment by the technology titans Amazon, Google, and Apple has led to a perfect storm: consumers are adopting voice-powered services in unprecedented numbers, creating a technology wave that cannot be ignored. There is much to like about voice services in a VR context: it is an intuitive way of interacting with technology, hundreds of millions of customers are already accustomed to it, and it provides a technology platform to leapfrog hotels and deliver a highly innovative guest experience on the premises. As such, it can be a major factor in driving convergence and hence be a major growth driver for our industry. It also has strategic implications. On-premise service offerings can help stem the disintermediation VR managers are experiencing from the listing sites. Also, in the face of likely margin compression in the future, it can open new, meaningful sources of revenue. We are at the beginning of this revolution, and there are many tricky questions that have not been resolved yet. This technology wave will not go away, however, so the time for experimentation is now. Experimentation today is cheap; device costs have plummeted, and because the vast majority of device value resides in the cloud, there is a low risk of obsolescence: the core hardware components (speakers and microphones) are basic and are on a relatively flat development curve.

The real cost is thus not the hardware but rather the teething pains of implementing these solutions with scalable processes against the background of an enterprise framework that is either nascent (Amazon) or missing altogether (everyone else). But that is also where the value in early experimentation lies. Ultimately, a successful implementation of the world of opportunity ahead relies on a robust framework of great processes, and the VR managers who excel in process management will be well positioned to capture that opportunity.

We also need to become more active as an industry to shape the future, rather than just being spectators on the sidelines. Our industry is arguably an ideal showcase for this new technology wave, and if convergence with traditional lodging is driving our growth, then opportunities to reshape the guest experience will be critical to our future. But while maneuvering our path between eight hundred-pound gorillas (the listing platforms) and the technology titans, we need to participate in setting the rules of engagement. The future will be bright, but only if we take an active role in shaping it. Alex Nigg is the founder and CEO of Properly, the operations platform for the short-term vacation rental (VR) industry. Properly is the first platform in the VR industry to support Alexa for Business, allowing automated management of Amazon’s Echo devices based on guest check-in and checkout dates. Alex and his partner Tammi are frequent speakers and panel moderators at VR conferences in North America and Europe; their sessions have been attended by thousands of property managers and owners. Alex is a self-proclaimed geek and the proud owner of over a dozen Alexa, Google Assistant, and Siri-enabled devices used in Alex and Tammi’s rentals and homes in Seattle, San Francisco, and New Zealand.

VRM Intel Magazine | Spring 2018

Why You Can’t Afford a Data Breach And What You Can Do to Avoid It By Amber Mayer, VP of Product, NAVIS

ast November, the ride-sharing service Uber announced that it had suffered a data breach in 2016. (It then made the mistake of paying the hackers $100,000 to delete the information and keep the breach a secret.) But it wasn’t Uber’s internal system that was hacked; it was actually GitHub, a service that Uber’s software engineers use to collaborate on software code.

In 2015, HomeAway suffered a breach of critical homeowner data via their third-party payment processor, Yapstone. Although guest data wasn’t at the heart of this breach, what’s essential to understand in both of these cases is that when it comes to accountability for data security, vacation rental companies are equally, and frequently more, responsible for the breach, even if it occurs on third-party technology. The costs of breaches such as these come in the way of fines, lawsuits from government entities and consumers, significant brand damage, and the risk of having your ability to process credit cards taken away. Therefore, vacation rental companies must make every possible effort to ensure that every one of their vendors that handles customer data is compliant with national payment card industry data security measures, also known as PCI Compliance. 74

VRM Intel Magazine | Spring 2018

The Actual Cost IBM’s 2017 Ponemon Cost of Data Breach Study showed that the average cost of a data breach was $3.62 million. That is $141 for each lost or stolen record. The report further noted that the average size of data breaches has increased to more than 24,000 records. For vacation rentals, the financial liability can have devastating consequences. To demonstrate the extent of a data breach situation, look at the small Florida hotel group Rosen Hotels & Resorts. The group, which owns seven properties, experienced a data breach in 2016. According to a lawsuit filed against Rosen by its insurance company, the group saw “a $1 million fine each from Visa and MasterCard; a $128,830 fine from American Express; $50,000 in attorneys’ fees; $40,000 in costs to send notifications to clients; $15,000 in fees to a crisis-management firm; and a bill for $150,000 to a data-forensics team that identified the breach. The costs could continue to grow if Rosen faces additional legal claims from customers, according to the lawsuit.” Our country and our industry are still, in the grand scheme of things, fairly inexperienced in dealing with security breaches. There is little standardization when it comes to recourse. So companies

like Rosen see fine after fine and are challenged by their insurance companies—and still they face possible lawsuits from the affected guests. This is a recipe for disaster, and one that’s not going anywhere.

As industry insider Tim Critchley notes, the hospitality industry provides “high-value targets for cybercriminals because they not only hold payment card information on guests, but also a wealth of other sensitive personal data that can be used to steal their identity.”

Complicating matters is what lawyer Robert Braun calls “cross-contamination.” Frequently, data security breaches in the hospitality world are at the point-of-sale, which is almost always a third-party system. Because so many data systems of vacation rental companies are interconnected, this means that all of the systems become a target, not just the point-of-sale technology. Vacation rental companies must take extreme precautions, not only with their on-site security processes but also with their third-party systems, particularly point-of-sale systems where guests give credit card information via a call center or a booking engine. PCI Compliance is one of the few standards vacation rental managers can use to gauge the safety of their third-party point-of-sale providers.

Level One PCI Compliance is extraordinarily challenging to obtain, and any technology provider that does so is demonstrating their dedication to the security of their vacation rental companies. Vacation rental companies are at even greater risk for a truly damaging impact of a breach than the big hotel companies. Hotel brands tend to have deeper pockets than vacation rental companies when it comes to rolling out crisis campaigns and paying all the hefty fines.

For the hospitality industry, the impact can be worse than other industries due to the nature of the relationship. Matt Rizzetta, CEO of brand communication firm North 6th Agency, notes, “The brand crisis is exacerbated in the hospitality industry when a data breach happens . . . the communication strategy needs to reflect the intimate nature of the guest/brand relationship.”

Make Security a Part of Your Brand There is only so much you can control, and data breaches can happen no matter how careful you are. It’s a fact of modern life. Vacation rentals must rely on multiple vendors to serve guests in an increasingly technologically savvy and complicated world. There are many ways to head off data breaches at the pass, however:

B Initiate a comprehensive review of more than just internal

security measures, with priority given to the reservations department.

C Assess call centers and booking engines for compliance. D Review all platforms/providers that integrate with point-ofsale technology to ensure PCI Compliance.

E Here’s the big one: Once you have invested in security and compliance, make it a part of your brand.

According to Ponemon, companies that report a data breach experience, on average, a 5 percent decline in stock prices. However, “companies that self-reported their security posture as superior and quickly responded to the breach event recovered their stock value after an average of 7 days.” Companies that had what was identified as a poor security posture had a stock decline that lasted more than 90 days. The takeaway: take security seriously and integrate it into all aspects of your vacation rental business so that, even in the event of a breach, brand trust is recoverable.

In an ideal world, though, you should avoid a security breach altogether with proactive security measures applied to your internal and third-party systems. Although the steps to securing your data systems may seem overwhelming, doing nothing is far more costly. It’s not a case of whether a breach will happen, but when. Ensure you are partnering with vendors that take security seriously to minimize the chances of a breach and to control the breach (i.e., how much data is compromised).

The Hidden Cost Although the financial repercussions of a data breach can take a toll—and for some will be devastating—the hidden cost of a security failure comes from the degraded brand and the subsequent decline in customer loyalty.

As the New York Times noted about Uber’s cover up, “the handling of the breach underscores the extent to which Uber executives were willing to go to protect the $70 billion ride-hailing giant’s reputation and business, even at the potential cost of breaking users’ trust and . . . state and federal laws.” A survey by Ponemon showed that 31 percent of consumers said they discontinued their relationships with a company that had a data breaches, whereas 65 percent said they lost trust in the breached organization.

About Amber Mayer The combination of a rapidly evolving marketplace and a growing list of innovative solutions mandates someone watch our roadmap closely. Understanding market and use trends, identifying and prioritizing product requirements, and defining the user experience are the responsibility of Amber and her team of product managers. Before joining NAVIS, Amber held executive leadership positions for such notable brands as Wyndham Vacation Rentals, Instant Software (now HomeAway), and TravelStorm. She also brings valuable hands-on experience, having served as director of rental management for Seascape Resorts, where she was directly responsible for creating and growing the Resort Vacation Rental Division. VRM Intel Magazine | Spring 2018

Top Ten Changes from the Tax Cuts and Jobs Act

By Kelly McClellan, CPA, Hutchins Canning and Co. PA

t this point, I am sure you have heard that President Trump signed the Tax Cuts and Jobs Act (TCJA) into law in December 2017. News stations have touted this tax bill as the largest revision to the tax code since 1986. Okay, big deal. What does this mean for vacation rental management (VRM) company owners, and when do these changes take effect? Great questions! Almost every company, including VRMs, as well as individuals, will be impacted by some aspect of the recent tax law changes. However, the real question of interest—“Will I pay more or less in taxes next year?”—involves a more complicated answer. As accountants love to say, “It depends” on the specifics of every individual’s unique circumstances. With that in mind, and without getting into specific tax situations, we will discuss the top ten tax changes attracting media attention that will likely impact the most Americans. Almost all of these new provisions will take effect on January 1, 2018, and expire at the end of 2025. Commentary written in ev76

VRM Intel Magazine | Spring 2018

eryday language has been included below to describe what has changed—saving the reader from code sections, regulations, and technical jargon. Excluded are the details and nuances of the new law (there are always nuances) for brevity’s sake. The purpose of this article is to bring awareness, not to offer specific tax advice. We encourage you to speak to your tax professional to better understand these changes. To simplify the examples, only the dollar amounts for deductions, limitations, and thresholds have been given for the filing status of single and married, filing jointly, taxpayers.

10 Reduction in the corporate (C-Corporation) tax rate Although this is a major change in the corporate tax world that greatly impacts the amount of taxes these corporations pay to the United States, how these changes impact the rest of us is still just

economic theory. A “C-Corporation” is a business entity structure where the actual company pays income tax on the income it earns (e.g., Coca-Cola, Walmart). The income and tax liability does not “flow through” to the individual owners of the business. The TCJA reduces the corporate tax rate from 35 percent to a flat 21 percent, including professional service corporations. This change begins January 1, 2018, and it is permanent. The intent of this reduction is to keep corporations operating in America, thus keeping jobs and cash invested in the American economy. In addition, the TCJA incentivizes companies to bring cash and other assets held overseas back to America by reducing the tax paid on these assets from 35 percent to 15.5 percent on cash and 8 percent on other assets not easily converted to cash.

9 Mortgage interest deduction The new law limits the amount of deductible interest on your primary residence, or a qualifying second home, beginning in 2018. This is not a major change from the old law, which allowed taxpayers to deduct the interest paid to purchase, build, or substantially improve their primary residence, as long as the total debt on their home didn’t exceed $1,000,000, excluding home equity indebtedness. If taxpayers had a second home, then they could also deduct the mortgage interest paid to buy, construct, or improve their second home, as long as the total debt incurred for both homes didn’t exceed the $1,000,000, again excluding the home equity indebtedness threshold. The new law reduces this amount to $750,000, with the exception of grandfathered mortgages that were in place on or before December 15, 2017.

8 Home equity debt is no longer deductible Starting in 2018, interest paid on home equity loans and lines of credit will no longer be deductible as qualified mortgage interest, unless the money borrowed was used to buy, build, or substantially improve a primary residence or second home. In addition, the total debt for these two homes cannot exceed the new mortgage limits of $750,000, or $1,000,000, including home equity indebtedness, for mortgages in place prior to Dec. 15, 2017. This means that interest paid on home equity debt used for any purpose other than to build, buy, or substantially improve a qualified home is not deductible as qualified mortgage interest. A recent release from the IRS stated that this home equity interest must be secured by the home in question. For example, if a taxpayer uses a home equity loan secured by his or her primary residence to purchase a second home, the interest paid on this home equity loan will not be deductible because it is not secured by the second home. However, if the interest on the home equity loan or line of credit was used to purchase an investment or loaned to a taxpayer’s business, this interest is not deductible as mortgage interest; rather, it is deductible as “investment” or “business” interest if it can be traced directly back to the home equity loan. To claim this interest deduction for investment or business purposes, be prepared to provide support and keep good records. Taxing agencies may challenge this claim and require documentation. Additionally, home equity debt can no

longer increase the total qualified mortgage debt by $100,000 (e.g., $850,000 or $1,100,000). Prior to the change, a taxpayer could deduct qualified mortgage interest on a first and second home on debt up to $1,100,000, including home equity debt.

7 Expanded tax brackets and lower marginal tax rates Generally, the tax brackets are modified each year by a factor adjusted for inflation; this amount is usually between 1 and 2 percent annually. In 2018, it will be no different. The tax brackets for 2018 are showing about a 2 percent increase over the brackets listed in the 2017 tables. In addition to the dollar threshold increase for each of the seven tax brackets, the marginal tax rate for six of the seven tax brackets, with the exception of the lowest bracket (10 percent), has also been reduced (see tables below). The 2018 tax brackets have also eliminated the marriage penalty tax for all but the top two brackets (35 and 37 percent). 2017

2018

TAX RATE

SINGLE

MARRIED FILING JOINTLY

TAX RATE

SINGLE

MARRIED FILING JOINTLY

10%

Up to $9,325

Up to $18,650

10%

Up to $9,525

Up to $19,050

15%

$9,326 to $37,950

$18,651 to $75,900

12%

$9,526 to $38,700

$19,051 to $77,400

25%

$37,951 to $91,900

$75,901 to $153,100

22%

$38,701 to $82,500

$77,401 to $165,000

28%

$91,901 to $191,650

$153,101 to $233,350

24%

$82,501 to $157,500

$165,001 to $315,000

33%

$191,651 to $416,700

$233,351 to $416,700

32%

$157,501 to $200,000

$315,001 to $400,000

35%

$416,701 to $418,400

$416,701 to $470,000

35%

$200,001 to $500,000

$400,001 to $600,000

39.60%

$418,401 or more

$470,001 or more

37%

$500,001 or more

$600,001 or more

6 Elimination of personal exemptions A couple of provisions in the recent tax change have gained nothing but negative press, and this is certainly one of them. There is no way to put a positive spin on this change, or on any other change that reduces a taxpayer’s current tax deduction, when considering them individually. Instead, we must determine the impact of all the changes netted against each other before we can obtain a better understanding of the overall impact of the new law. When we consider these major changes to the tax law, we often hear that there are winners and losers. What does this mean? Simply stated, this means that, for every change that reduces tax revenue, there must be another change that increases tax revenue. In this particular case, the personal exemption is a loser, and the lower marginal tax rates are a winner. So maybe the question should be, “Am I better off as a whole under the new law?” Your response to this question may VRM Intel Magazine | Spring 2018

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depend upon your perspective. What do I mean? Well, the answer could be based on your time frame. In 2018, while you don’t like losing your personal exemptions, your overall tax bill is lower; and your tax burden, the percentage of income required to be paid toward income tax, has also been reduced, so you are probably pretty happy. However, if these changes do not spur economic growth in America, and we continue to add to our ever-increasing national debt, your long-term perspective may be a little less enthusiastic. These same parameters should also be considered when looking at the impact of the limitation of state and local taxes, discussed below, which is being capped at $10,000.

5 Increase in the child tax credit and new non-refundable credit One way the new tax law tries to offset the loss of personal exemptions is by increasing the current child tax credit of $1,000 to $2,000 on eligible children, and increasing the refundable portion of this credit from $1,000 to $1,400. An eligible child is one that is 16 years old or younger, is a dependent of the taxpayer, and meets the other qualifications—relationship, citizenship, support, and residence tests. In addition to the dollar increase of this tax credit, the new law has also increased the income taxpayers can earn before this tax credit is phased out for those making too much money. For example, in 2017, taxpayers filing a joint tax return would begin to lose their child tax credit once their adjusted gross income exceeded $110,000. In 2018, the income phaseout for those same taxpayers now begins at $400,000. For single taxpayers, the income threshold has been raised from $75,000 to $200,000. This means that many more Americans will now qualify for the child tax credit. In addition, the TCJA has also enacted a new $500 non-refundable tax credit for other dependents who do not qualify for the child tax credit (e.g., a qualifying child 17 or older, or a qualifying relative).

4 Expanded depreciation deductions In recent years, the tax code has been generous in allowing businesses to immediately deduct the costs of placing new business assets into service to reduce taxable income, versus taking these deductions over several years (class life of the asset). This provision encouraged firms to reinvest cash back into their business for new equipment in the hope that it would lead to economic growth. The updated provisions in the TCJA increase these limits even more. The Section 179 limit, previously $510,000, has now been increased to $1 million on purchases of eligible property, up to $2.5 million in 2018. (The old limit was $2 million.) In addition, Section 179 can now be applied to tangible personal property used in connection with furnishing lodgings, aka rental properties, starting in 2018. Changes to bonus depreciation allow taxpayers to immediately expense 100 percent of the purchase price on eligible property and equipment, compared with only 50 percent in 2017. Now bonus depreciation also includes qualified “used” property for the first time.

3 Increase in the standard deduction amount This is one provision in the new tax law that will simplify taxes for many Americans. According to the most recent information pulled from the IRS (2013 tax returns), approximately 30 percent of American households currently itemize deductions on their individual tax returns. With the standard deduction amounts almost doubled, early estimates predict that this number could drop to as low as 10 percent. The standard deduction amount for single taxpayers in 2018 is $12,000, compared with $6,300 in 2017; it is $24,000 for married taxpayers filing a joint return, versus $12,700 in 2017.

2 Limitation on state and local taxes to $10,000 No change in the recent tax law has caused as much controversy, or warranted more air time, than the $10,000 limitation on state and local taxes. This one change has several states suing over the constitutionality of the new law as they try to figure workarounds for their residents and workers affected by this limitation. As I stated earlier, there is no way to be in favor of this kind of change, or any change that reduces individual current deductions, especially when considering the effects of the new law’s total package. Have you run your numbers? Will you pay more or less tax in 2018 versus 2017 if everything else stays the same? If not, you may want to crunch the numbers before you push for changes. Nevertheless, don’t be surprised if this provision is tweaked over the next couple of years because of the public outcry.

1 20 percent deduction for qualified business income (QBI) For tax professionals and small business owners, this item has by far attracted the most attention and raised the most questions about how it will actually work and who will actually qualify for it. It is also probably the most complex provision in the new tax law. For now, I will only try to explain the very basic parameters within this new deduction. The 20 percent deduction is available to all business owners who report their business income on their individual tax returns, subject to certain income limitations. If these income thresholds are met or exceeded, the amount of the deduction could be limited or eliminated. The businesses qualifying for the deduction include sole proprietors, single-member LLCs, individual rental property owners, shareholders of S corporations, and partners in a partnership. In general, the 20 percent QBI deduction is calculated by multiplying a business’ net income by 20 percent to determine the amount of the deduction. For example: $100,000 of net income x 20% = $20,000 deduction. When determining the QBI of the taxpayer’s

VRM Intel Magazine | Spring 2018

business, be aware that this amount does not include the wages paid to a shareholder of an S corporation or the guaranteed payments made to a partner. After calculating the 20 percent QBI deduction, the next step is to see if the taxpayer’s income level exceeds the taxable income threshold placed on this deduction before other limitations apply. Limitations are placed on the 20 percent deduction when a single taxpayer’s taxable income reaches $157,500 and the taxable income of a married taxpayer filing jointly reaches $315,000. Once these taxable income levels are reached, the taxpayer’s 20 percent deduction is limited to the lesser of the 20 percent QBI, or the greater of 50 percent of the wages paid by the business, or 25 percent of the wages paid by the business plus 2.5 percent of the original cost basis of depreciable property owned by the business. Simple, right? Unfortunately, we are just getting started.

If the taxpayer’s QBI derives from a specified service-related business, such as those operated by doctors, lawyers, accountants, and so on, the taxpayer’s 20 percent deduction begins to phase out once these same income levels are reached—$157,500 for single taxpayers and $315,000 for married taxpayers filing jointly. They completely disappear once the business owner’s taxable income exceeds $207,500 for a single taxpayer’s specified service business, or $415,000 for a married business owner filing a joint tax return.

Because this provision is so new, and authoritative guidance has not yet been issued, some caution should be exercised when projecting your future 20 percent QBI deduction. One area of concern applies to rental property owners who rent out their property on triple net leases. Will they qualify? And what is a triple net lease? With a triple net lease, the property owner requires the tenant to be responsible for all ongoing expenses of the rental property, such 80

VRM Intel Magazine | Spring 2018

as real estate taxes, maintenance, insurance, utilities, and so on. At this point, experts are predicting that triple net lease properties will not qualify for the deduction because they are not considered an active trade or business.

Have you had enough of tax simplification yet? Don’t hold your breath waiting for your tax postcard to arrive in the mail before filing your 2018 tax returns.

Although many provisions in the new tax code are far from simple, overall we believe that most taxpayers will see tax savings in 2018. Some will see large savings, whereas others will pay more. Be proactive, be prepared, and plan for your tax day. We hope that we have you thinking and asking yourself questions about these changes. Of course, as always, we encourage you to talk to your tax professional.

About Hutchins Canning & Company, PA

Hutchins Canning & Company is a certified public accounting firm located on the Outer Banks of North Carolina, a region that is a proven leader in the vacation rental industry. The firm has been servicing the industry for more than 35 years with accounting, consulting, income tax preparation, and financial advisory services. Their VRM-specialized services include a financial statement and chart of account design services, monthly and quarterly profitability consulting, trust account reconciliation and review, and QuickBooks implementation and support. Our Mission . . . Your Success! info@obxcpa.com

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Inaugural Vacation Rental Women’s Summit February 19-20, 2019 The Ritz-Carlton New Orleans New Orleans, Louisiana

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Join us for an incredibly special event celebrating women in the vacation rental industry with inspiring keynote speakers, presentations from industry leaders, unique events, workshops, and content tailored to the conversations professional VRM women are having about the industry. Plans for the inaugural Vacation Rental Women’s Summit are being prepared with great care, and we promise you will be treated like the queens and princesses you are. Located on the corner of Dauphine and Canal, the Ritz-Carlton New Orleans is a truly extraordinary hotel, and they have given our group a very special room rate of $239 to $259 per night (or upgrade to the Club Level for $339). Use code VQLVQA when making your reservations. Space is limited, so register and book your room early to secure your spot.

France, England, Spain A European T

his winter, I set off for Europe to attend VRMA Europe, host VRM Intel Live! London, and learn more about the differences between how vacation homes are managed in Europe and the United States.

Vacation Rental

Adventure

Overall, the European property managers are laser focused on the hospitality component of the business, and they made traveling abroad a little easier at every locationâ&#x20AC;&#x201D;I was met at the home by either the management company owner or a company greeter, who demonstrated how to use everything. They also provided 24/7 phone numbers and were quick to help with any questions I had or services I needed. In my limited experience, there was less utilization of technology than in the US. In fact, the only location I visited with keyless locks was Barcelona. Two of the homes were centuries old and had gorgeous keys, which I was strongly cautioned not to lose. There were no apps to download, and the homes had extensive guest binders with instructions, recycling tips (they all mandated recycling), and restaurant and shopping recommendations. In England and France, the homes also had extensive selections of travel books, cards, puzzles, and games.

Another key differentiator was standardization. Keeping in mind that the places I visited were professionally managed, all of the holiday homes in which I stayed had professionally laundered, white duvets and high-quality sheets on the beds. The towels were professionally laundered as well. In ad-

The Pinot Apartment Managed by: Paris Perfect Paris, France

VRM Intel Magazine | Spring 2018

dition, dishes and pans in the kitchens were standardized across the management companyâ&#x20AC;&#x2122;s rentals. In Barcelona, My Space Barcelona even had standardized appliances, including dishwashers and washers/dryers, saying it is too difficult to service fifty different makes and models of appliances.

The Little Orchard Managed by: Honeypot Cottages Chipping Campden, Gloucestershire, UK

Across the board, management companies utilize third-party websites more broadly than their US colleagues, listing on multiple channels, with an exceptional focus on regional marketplaces. In talking to these managers, I learned that they are less concerned about where bookings originate. The homes were exceptionally clean, and even though they were certainly not new, they maintained their character while providing pristine, comfortable places to stay.

I want to send a huge thanks to Paris Perfect, Honeypot Cottages, Mendham Mill Cottages, and My Space Barcelona for their hospitality. I canâ&#x20AC;&#x2122;t wait to return!

The Lodge Managed by: Mendham Mill Cottages Mendham, Suffolk, UK

VRM Intel Magazine | Spring 2018

Gracia Pool Center Apartments Managed by: My Space Barcelona Barcelona, Spain

London Calling VRM Intel Live!

By Jessica Gillingham

his spring, VRM Intel Live! landed in the UK for the very first time. The one-day conference, held in the heart of central London at the Millennium Hotel Mayfair, brought together an interesting mix of industry insiders, property managers, vendors, owners, and even media— from Europe, North America, and, of course, the UK.

Vacation rentals, or “holiday lets,” as we Brits tend to call them, are also big business over on this side of the pond. We love our self-catering holidays (the other name for VR), and whether we’re renting a cottage in Devon, a castle in the Highlands, a gite in France, a villa in Spain, or a farmhouse in Tuscany, vacation rentals are, and have always been, a core element of the travel and tourism industry, both domestically and internationally.

affair” with Airbnb is still going strong, even if it is more emotional than logical.

In an afternoon keynote, Alex Nigg from Properly interviewed Javier Cedillo-Espin, the dynamic CEO of onefinestay. Nigg asked detailed questions about the luxury brand’s strategy and vision, and Cedillo-Espin was open to sharing. Founded in 2009, onefinestay caters to the 1 percent of highest earners and, since being acquired by AccorHotels in 2016, the company now offers private rentals in over two hundred destinations—a vacation rental company in a league of its own.

London’s VRM Intel Live! attracted many noted industry speakers who covered a range of relevant topics, including the future of vacation rental marketing, issues around regulation, revenue management, automating business processes, best-practice websites, using PR strategically, improving guest communication, and using data to improve inventory acquisition and customer retention.

As is common when you fill a room with vacation rental professionals, there was a great deal of discussion about the future of the vacation rental industry and the role of OTAs, Google, and Amazon in the shaping of that future. The use of third parties to market products to consumers and guide the traveler prior to arrival is nothing new. Before the internet, you’d likely pop down the local high street and visit a travel agency to buy your flights, package holiday, tour, or rental. Today, those travel agencies are no longer friendly faces across the counter gently guiding you through your options, but rather are the faceless “book now” buttons of the Big Boys. However, like many aspects of the travel industry, the details may have changed, but the concepts have not.

VRM Intel Live! was a good day on many levels. Highlights for me personally included Steve Milo, CEO of VTrips, giving an excellent overview, drawn from his own experience, of the benefits and costs of working with each of the OTAs. Although he drew on North American experiences, the issues for European property managers navigating the world of booking platforms were unsurprisingly similar. He also touched on the impending revolution of VR marketing, once Google truly begins its journey to the center stage. In his opening keynote, “The State of the Vacation Rental Industry: Past, Present, and Future,” Simon Lehmann posed a question: If Booking.com has the lion’s share of instant bookable properties in London, why does everyone talk about Airbnb? I have my own theory here. It’s quite simple, really. Airbnb is sexy. We all love talking about Airbnb because it has a great story and, as a community of guests and hosts, we connect with it emotionally. As a brand, it is dynamic and full of surprises. Think of the recent introduction of Airbnb Plus and the seductive promise of Airbnb Beyond. It doesn’t seem to matter that the app is seriously flawed (ever tried to change your reservation?), or that the reviews are a little suspect, or that the service fees are verging on ridiculous. The consumer “love

VrTech, the mobile “meet-up” for professional and technology companies aiming to accelerate innovation within the vacation rental industry, cohosted the event. Founder Vanessa de Souza Lage also launched the first round of the second annual “start-up battle competition,” in which six companies had three minutes each to present their pitch decks. The variety of business ideas being introduced on the market to service both guests and owners was really inspiring, and it will be exciting to watch each company develop. Later in the day, Nigg moderated a property manager panel session that included Steve Milo of VTrips along with Air Agents cofounder Mark Hudson. Air Agents is “London’s best loved holiday lettings and property management team” and is a rapidly growing London-based company with around 260 properties in the city. Founded just over three years ago, Air Agents has grown from within the Airbnb ecosystem, and over 90 percent of its bookings come from the app. The two management companies have different business models and operate in different spaces, but both are very successful in their own markets. There was a bit of a collective inhaling of breath when Hudson shared the company’s figures from Airbnb. However, this is the model it is working with, and Airbnb is the channel that its customer base predominantly connects with. It’s been working very well—for now, anyway. Again, remember the love affair with Airbnb. It’s exciting to have Amy and VRM Intel develop a presence in Europe with a yearly conference planned for London and increased distribution of the magazine. The entire continent is crying out for more professionalism and more collectivism, so the more opportunities for the industry to get together and collaborate, the better. VRM Intel Magazine | Spring 2018

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VRM Intel Magazine | Spring 2018

Creating a Standard

Property Appearance Document

ll of you have been to your favorite restaurant and ordered your favorite item. Once you placed the order, the kitchen began a dance of preparation and presentation. Your completed order was brought to your table and placed before you. There are many reasons why this dish is your favorite; one of them is that it is created the same way and presented the same way each and every time. The work of a housekeeper is no different. The housekeeper’s objective is to take a property that is in total disarray and put it back together for the next guest, all while cleaning and presenting the property to the standard that has been set. This allows the product to be consistent, just like a favorite meal. The “Standard Property Appearance” document creates the standard guests and property owners expect. It is one of the vacation rental company’s most important documents. This document sets the standard for the housekeeper, reservationist, owner relations manager, business development team, maintenance tech, and front desk associate. This is the standard product that everyone is working toward. To create this document, all the departments in the company will have to collaborate. There will need to be discussion about everything in the property. Some of these items include:  Where do the remote controls go?  How are the towels hung?  How are the beds made?

 What guest amenities will be used and where are they left? How are they arranged?  What magazines are left and how old can they be?

 How is the toilet paper left in the property? In the wrapper? Folded to a point? As the standards develop, so does the document that everyone in the company is working toward:  Housekeepers clean to it.

This document is a foundational piece of everything that happens in the property management company. It aligns every department!

To create one, here is what you do: B Select a property C Go through the property and set it up the way you think it

should look.

D Bring a representative of each department to the property and go through each room, discussing how it is staged; once everyone agrees on how it should be, that sets the standard.

E Take pictures of everything as it has been placed. F Now take the pictures and put them in a Word document;

next to the picture, write a brief description of everything the picture displays.

G Have multiple people review the document to verify every

thing is correct.

H Make any changes suggested during the review process. I Review everything one more time to make sure the

document accurately reflects your wishes.

J After the review process, you can add a second language by

using translation software; However, some translations will be incorrect, so watch for and make any necessary changes.

K Now distribute the document and train your staff, verifying

the standard is being followed, and then hold staff account able to the standard.

Yes, it will take some work to create or reevaluate your “Standard Property Appearance” document. Each company will have its own, so no two companies will be alike. It is a personal document. With this document in place, everyone can work together to accomplish the common goal.

 Inspectors inspect to it.

 Reservationists sell to it.

 Owner relations staff work with the owners to it.  Business development sells to it.

By: Durk V. Johnson, Industry Consultant and Executive Director, Vacation Rental Housekeeping Professionals VRM Intel Magazine | Spring 2018

MAY

 Amsterdam  Beurs van Berlage  www.phocuswrighteurope.com

VRM Intel Magazine | Spring 2018

1920

VR SUCCESS SUMMIT

 San Antonio, TX  The Westin Riverwalk  www.vacationrentalsuccesssummit.com

MAY JUNE

MAY PHOCUSWRIGHT EUROPE

VR MASTERED 1 DAY MINI BOOT CAMP

SEP

1517

 San Antonio, TX  TBD  www.vrmastered.com

MAY

APRIL

 Wilmington, NC  The Ballast Hotel (Formerly The Hilton Riverfront)  www.virtualresortmanager.com

OPMA SPRING EXECUTIVE SUMMIT

 Miami, FL  Sonesta Coconut Grove  www.theopma.org

VRM UNIVERSITY LIVE!

APR

1618

SEPTEMBER

 Blaine, WA  Semiahmoo Resort  www.nwvrp.org

MAY

(NWVRP) ANNUAL CONFERENCE

MAY

NORTHWEST VACATION RENTAL PROFESSIONALS

MAY

2325

MAY

APRIL

APR

Calendar of Events 2224

FVRMA XTRAVAGANZA

 Orlando, FL  Westgate Lakes Resort & Spa  www.vrmxtravaganza.com

06  Breckenridge, CO  Doubletree Hilton  www.vrmintellive.com

1012

STREAMLINE SUMMIT

 Phoenix, AZ  Westin Kierland Resort & Spa  www.streamlinesummit.com

 Lake Como, Italy  Teatro Sociale  www.vacationrentalworldsummit.com

(VRHP) SEMINAR

 Park City, UT  TBD  www.vrhp.org

DEC

DECEMBER

(VRHP) SEMINAR

DEC

VACATION RENTAL HOUSEKEEPING PROFESSIONALS

VACATION RENTAL HOUSEKEEPING PROFESSIONALS (VRHP) SEMINAR

 Steamboat Springs, CO  TBD  www.vrhp.org

VACATION RENTAL HOUSEKEEPING PROFESSIONALS

 Big Island, HI  TBD  www.vrhp.org VACATION RENTAL HOUSEKEEPING PROFESSIONALS (VRHP) SEMINAR

FEB

 Oahu, HI  TBD  www.vrhp.org

1920

INAUGURAL VACATION RENTAL WOMEN’S SUMMIT

 New Orleans, LA  Ritz-Carlton  www.vrmintel.com/womenssummit

MAR

NOV

 Los Angeles, CA  JW Marriott at L.A. Live  www.phocuswrightconference.com

1719

VRMA EUROPEAN CONFERENCE

 Prague, Czech Republic  Grandior Hotel Prague  www.vrma.com

APR

PHOCUSWRIGHT CONFERENCE

FEBRUARY 2019

1315

 Maui, HI  TBD  www.vrmintellive.com

DECEMBER

VRMA NATIONAL CONFERENCE

MARCH 2019

NOV

VACATION RENTAL WORLD SUMMIT

2730

 Las Vegas, NV  MGM Grand Las Vegas Hotel & Casino  www.vrma.com

NOV

 Boise, ID  TBD  www.liverez.com

0607

NOVEMBER

OCT

OCTOBER LIVEREZ PARTNER CONFERENCE

(VRHP) SEMINAR

 Orlando, FL  TBD  www.vrhp.org

NOVEMBER

0204

NOVEMBER

SEP SEP

SEPTEMBER SEPTEMBER

OCT

OCTOBER

REZFEST

 Marco Island, FL  TBD  software.homeaway.com/education/events

OCT

OCTOBER

211023 12

VACATION RENTAL HOUSEKEEPING PROFESSIONALS

APRIL 2019

OCT

OCTOBER

DEC

DECEMBER

1516

VRMA SPRING CONFERENCE

 Charlotte, NC  Charlotte Convention Center  www.vrma.com

VRM Intel Magazine | Spring 2018

VRM INTEL MAGAZINE

Business Directory ASSOCIATIONS

CREDIT CARD PROCESSING

Florida Vacation Rental Managers Association (FVRMA)

Ascent Processing

www.fvrma.org 407-218-6600

www.ascentprocessing.com 888-721-9301

PAGE: 69

PAGE: 86

Vacation Rental Management Association (VRMA) www.vrma.com 202-367-1179

PAGE: IBC

PAGE: 1

TRACK www.trackhs.com 866-757-8229

PAGE: 65

PAGE: 20

FINANCIAL AND ACQUISITION CONSULTING SERVICES

PAGE: 50

Weatherby Consulting www.weatherbyconsulting.com 888-304-1405

PAGE: 42,43

INTERACTIVE FLOOR PLANS AND PHOTOGRAPHY

PAGE: IC

INTERNET SERVICES AND VACATON ATTENDANT Silicon Travel

Red Awning

PAGE: 16

www.truplace.com 301-972-3201

Lexicon Travel Technologies

www.redawning.com 888-733-2964

www.ruebarue.com 617-216-8488

TruPlace

CHANNEL MANAGEMENT www.lexicontravel.com 453-631-2391

PAGE: 78

RueBaRue

www.c2gadvisors.com 850-699-1828

NAVIS

C2G Advisors

CALL TRACKING AND LEAD MANAGEMENT www.thenavisway.com 866-608-6431

www.lynnbrookgroup.com 919-761-1560

DESTINATION GUIDES

Vacation Rental Housekeeping Association (VRHP) www.vrhp.org 252-455-4121

PAGE: 2

Lynnbrook

Onsite Property Managers Association (OPMA) www.theopma.org 877-870-6510

VRM Intel Magazine | Spring 2018

PAGE: 49

www.silicontravel.com 800-459-2256

PAGE: 70

INDEX

INTERNET MARKETING AND WEBSITE DESIGN

CiiRUS www.ciirus.com 321-251-8020

BizCor www.bizcor.com 877-736-4250

PAGE: 70

Blizzard Internet Marketing www.blizzardinternet.com 888-840-5893

PAGE: 13

Bluetent www.bluetent.com 970-704-3240

PAGE: 19

InterCoastal Net Designs (ICND) www.icoastalnet.com 910-575-6095

PAGE: 57

Beyond Pricing

Booking.com

www.beyondpricing.com/property-managers 415-854-0804

Livations www.livations.com/pro 321-662-1732

PAGE: 29

www.dormakaba.us/oracode 877-468-3555

PAGE: 22

www.pointcentral.com/vrmintel 888-532-3032

TECHNOLOGY CONSULTING SERVICES TomK Consulting Group

PAGE: 36

www.tomkconsulting.com 443-310-5110

PROPERTY MANAGEMENT COMPANIES

The VRM Consultants

Vacasa

www.vrmconsultants.com 970-456-4564

PAGE: 44,45

PAGE: 92

PAGE: 17

PAGE: 14

PAGE: 30

PAGE: 53

PAGE: 81

PAGE: BC

TRAVEL INSURANCE

PROPERTY MANAGEMENT SOFTWARE

Red Sky Travel Insurance

Barefoot

www.redskyinsurance.com 866-549-5283

www.barefoot.com 877-799-1110

PointCentral

Breezeway

www.vacasa.com/ready 844-333-3789

PAGE: 6,7

SMART HOME AND KEYLESS ENTRY

PROPERTY CARE TECHNOLOGY www.breezeway.io 857-600-2799

Dormakaba

TripZ www.tripz.com 866-478-8969

PAGE: 15

REVENUE MANAGEMENT

OTAS AND LISTING SITES PAGE: 11

www.streamlinevrs.com 888-590-1946 www.virtualresortmanager.com 866-721-6642

PAGE: 4,5

Maxxton

NoiseAware

www.booking.com (888) 850 3958

www.liverez.com 800-343-2891

Virtual Resort Manager PAGE: 56

PAGE: 25

LiveRez

NOISE MONITORING

www.kigo.net 855-977-0843

Streamline

www.noiseaware.IO 978-566-9178

PAGE: 33

Kigo, a RealPage Company

HR4VR PAGE: 28

www.guesty.com 202-409-7489

www.maxxton.com 214-559-7158

PAGE: 8,9

Guesty

HR CONSULTING SERVICES www.hr4vr.com 541-213-2075

PAGE: 3

VRM Intel Magazine | Spring 2018