VRM Intel Magazine Summer 2017 Issue 8 by Amy Hinote

SUMMER 2017

An Inside Look

at Stay Alfred and Vacasa

Are you a Tech-Enabled VRM? The New Era of Regulations Developing a Successful

PR Strategy

8 Tips to Turn

Leads into Lifelong Guests

VRM Intel Magazine | Summer 2017

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VRM Intel Magazine | Summer 2017

Contents On the Cover

50 An Inside Look at Stay Alfred and Vacasa 76 Are you a Tech-Enabled VRM? 26 The New Era of Regulations 43 Developing a Successful PR Strategy 74 8 Tips to Turn Leads into Lifelong Guests 54 3 Types of Business Intelligence for VRMs

Business

COVER PHOTOGRAPHY COURTESY OF MOON CREEK STUDIOS AND 360 BLUE, BASED IN SANTA ROSA BEACH, FL. THE PHOTO WAS TAKEN AT "HERE COMES THE SUN," A 30A VACATION RENTAL IN SEASIDE MANAGED BY 360 BLUE.

23 The Side Effects of the Sharing Economy 25 VRMs Give Back: Mt Hood Vacation Rentals 31 Using a Professional Helps to Mitigate Personal Risk for Homeowners 40 The Only Consistency in the Vacation Rental Industry Is Its Inconsistency 50 Vacasa: An Inside Look at Its Fast Growth and the Lessons Learned 62 Stay Alfred: Transforming Urban Short Term Rentals

Regulations 26 The New Era of Regulations 49 A Commercial Insurance Requirement Is Good for the VR Industry

Customer Service 29 Proactive Hospitality Requires Knowing Your Product 80 A Rising Tide with Matt Landau

VRM Intel Magazine | Summer 2017

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VRM Intel Magazine | Summer 2017

Contents Technology

Marketing

66 The Dangers of a “Good-Enough” Platform

43 Developing a Successful PR Strategy

76 Are You a Technology-Enabled VRM?

68 Direct Bookings at a Predictable Cost of Acquisition

84 A Smart Day with a Smart Home VRM

Human Resources 32 Coaching Employees to be Resilient Givers with Boundaries 34 People Analytics: Making Decisions Based on Facts and Figures 70 Millennials in Vacation Rental Management

Education and Community 46 VRHP and VRM Intel Live Team Up for Special Conference in Gatlinburg, November 6-8 90 Calendar of Events

74 8 Tips to Turn One-Time Leads into Lifelong Guests

Revenue Management 54 3 Types of Business Intelligence for VRMs 58 Revenue Management: Considerations Before You Get Started

Property Care 60 Using Smart Property Data, the Critical Raw Material of Property Management 86 An Energy Approach to Attracting and Retaining Homeowners

VRM Intel Magazine | Summer 2017

74 80

VRM Intel Magazine | Summer 2017

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VACATION RENTAL SOFTWARE

directly connected

VRM Intel Magazine | Summer 2017

Dear Readers, It is hard to believe that we are more than halfway through 2017. This issue marks two years of VRM Intel magazine, and words cannot express my gratitude for your readership and support. In industry news, the rate of acquisitions and funding has slowed significantly this quarter, partially due to seasonal conditions. And HomeAway caused quite a stir with its prime-season announcement of masking customer information until bookings have been confirmed. Also, the American Hotel and Lodging Association (AHLA) has brought some good news and some bad news. The bad news is that AHLA has stepped up its efforts in the battle with professionally managed vacation rentals. The New York Times uncovered internal AHLA documents that outline a well-conceived, strategic plan to sway consumers and legislators about the “dangers” of short-term rentals, also known as vacation rentals. On the other hand, the good news is that AHLA has also initiated a strong campaign to push back on Online Travel Agency (OTA) dominance. It will step up its lobbying and public relations attack on Expedia and Priceline Group in the hope of convincing consumers and members of the Trump administration that these travel-booking giants are monopolistic. In conjunction with these campaigns, hotels have also stepped up their efforts to fight OTAs with “book direct” messaging and incentives. A group of influential vacation rental managers has also come together to create a similar campaign in our industry. If you are interested in participating in this effort, email me at amy. hinote@vrmintel.com. At VRM Intel, we launched a comparative reporting tool, VI Reports, for professionally managed vacation rentals, and I couldn’t be more excited to share it with you. This dashboard tool will allow you to compare your key business metrics with your market’s aggregated metrics to conduct strategic, forwardlooking marketing and revenue management decisions based on accurate, realtime data. VI Reports does not rely on self-reporting, historic data, or scraping competitive and OTA sites. Instead, you will be able to view and compare realtime aggregated data collected from subscribing property managers. You will also be able to select custom date ranges and filter by multiple attributes. On November 6–8, we are joining the Vacation Rental Housekeeping Professionals (VRHP) to combine a two-day VRM Intel Live event with the VRHP Annual Conference in Gatlinburg, Tennessee. Because November marks one year since the Gatlinburg fires, we wanted to come together to support the area and hear about their inspiring story of recovery and community resilience. We have already scheduled thirty-six educational sessions and social events during the conference, wrapping up with our enthusiastic participation in the Gatlinburg Annual Downtown Holiday Lights Kick-off and Chili Cook-off Fundraiser, which we are all looking forward to entering. Several vacation rental managers and vendors already swear they have the best chili recipes, so we’re ready to take Gatlinburg by storm! This will be a special event for our VRM community that you will not want to miss. In addition, VRMs will have numerous opportunities to learn and network this fall. HomeAway Software, Streamline, LiveRez, and Barefoot are all hosting user conferences for their clients and prospects, and the Vacation Rental Management Association (VRMA) is holding its Annual Conference in Orlando. You can find information about all of these and more in the Calendar of Events on page 90. In this issue, you will also find an inside look at Vacasa and Stay Alfred, updates on the regulatory environment, and twenty-four other articles written by industry experts to help you increase revenue, stand out from the crowd, and improve operations.

VRM intel magazine Editor-in-Chief Amy Hinote

Director of Design and Production

Donato Berbelja

Contributors Jordan Allen

Sue Jones

Danny Bradford

Doug Kennedy

Eric Breon

Matt Landau

Ali Cammelletti

Doug Macnaught

Matt Curtis

Amber Mayer

John Dalton

Andrew McConnell

Stan Earnshaw

Alexa Nota

Jeremiah Gall

Jim Olin

Edgar Garin

Darren Pettyjohn

Jessica Gillingham

Matt Renner

Cliff Johnson

Clark Twiddy

Advertising Amy Hinote, amy.hinote@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

Thank you for reading, and I hope to see you at one of the upcoming events. Sincerely,

Amy Hinote Editor-in-Chief 18

VRM Intel Magazine | Summer 2017

© Copyright 2017 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 Magazine LLC reserve rights of ownership.

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The Side Effects

of the Sharing Economy By Jim Olin

always enjoy listening to TV and radio commercials for prescription medications. I find it humorous to listen to all of the possible side effects that are spouted off one after the other. It makes me not want to take the medicine for fear of the side effects! Our industry received its first large dose of the sharing economy with HomeAway and then with Airbnb. With any new drug, there are side effects—good and bad. The newly introduced high created by the sharing economy is no exception. I want to talk for a few minutes about the good side effects of the sharing economy on the mergers & acquisitions (M&A) sphere. Although HomeAway did a fantastic job of letting the world know what the vacation rental industry is, Airbnb has taken it to a new

level with both good and bad consequences. The bad ones are easy to name—scammers, unprofessionalism, knee-jerk reactions by local governments, and confusion in the marketplace are a few.

What it has also done is expose our industry to those who never thought of it as anything but an offshoot of the timeshare market. The interest in our industry from an M&A standpoint, a lending standpoint, and an overall-desire-to-learn-more-about-it standpoint has made for a vibrant time for opportunities to grow through acquisition. Before the sharing economy, acquisitions were funded predominantly by personal capital, seller financing, or arm-twisting a personal banker to provide a loan the bank didn’t want to provide. VRM Intel Magazine | Summer 2017

Now, those same banks are buying vacation rental companies to place into their own portfolios (e.g., Towne Bank). How ironic! The world has definitely changed. It was unheard of for private equity funds, hedge funds, and other institutions to invest in our industry. Now, it is commonplace to see them either invest in vacation rental companies or actually become major equity players, immersing themselves in the operational aspects of the companies. Such actions are occurring in not only the companies seeking to establish a national footprint but also local vacation rental companies in one local market.

In the early 2000s we had local companies growing organically and a few major publicly traded players such as ResortQuest, Vail Resorts, and Intrawest. Fast forward a decade or more, and now we have companies such as Natural Retreats, Vacation Rental Pros, Vacasa, StayAlfred, InvitedHome, Turnkey, Grand Welcome, and a host of others establishing multimarket footprints and funding their growth through the capital markets. Some in the industry may not like the additional competition, but it has, without a doubt, opened up a plethora of options and opportunities for local vacation rental company owners. If it is time to exit the industry, there is a very good chance that there will not be a problem finding a suitor or suitors. If it is time to increase market share in a local market, funding options are more prevalent. If it is time to create a multimarket footprint, mid-size and large cap funds are out there looking for opportunities. There are options like never before. This doesn’t mean that if you want to build it, they will come. We are not at the Field of Dreams stage yet by any stretch. Here are five precursors to consider before you venture into the money markets:

Have Your Act Together

Three years of detailed profit and loss (P&L) statements showing growth or a good explanation for why you did not grow.

A Relatively Clean Balance Sheet

Our industry is hard enough to figure out because we deal so much with other people’s money—we can’t make it harder by having a confusing balance sheet.

An Easy to Understand Set of Company Metrics

Include unit growth, occupancy, and ADR, shown both in chart and graph forms.

An Organizational Chart

Showing not only the positions, but how they are funded, especially if you also do Association Management. Remember, a private equity fund that normally invests in a widget manufacturer does not understand HOA pass-throughs, independent contractor cleaners, owner payout and the host of other unique line items we deal with as an industry. You have to lead the horse to water.

A Story

Why you want to grow. Your expertise. The opportunities. What will your company look like 3 years from now once you receive your cash injection? All of this is vital. Remember, most of these money folks have heard of HomeAway and Airbnb, but they have no idea about the difference between these companies and a true vacation rental company. 26

VRM Intel Magazine | Summer 2017

Now, here are five warnings: B

Don’t try to do it alone.

This is not a solicitation for business. Besides C2G advisors, there are people at several strong companies who know how to deal with the capital markets. The larger the dollars you want, the more expertise you need.

Know what you are willing to give up.

Many of these investors are not looking to loan you money simply like a bank does. These groups want to “ride the upside” with you and acquire equity in your company. How much control are you willing to give up? Will you be okay if you are not the majority owner anymore? Are you ready to have a partner, even one in a minority position?

Read the fine print.

Many of these deals have covenants that require you to hit certain targets (profit, unit count, or others). Make sure those targets are realistic and have “outs” for unusual circumstances (hurricanes, oil spills, low-snow seasons, etc.).

Have a great lawyer.

Get out your wallet and secure a lawyer with expertise in dealing with acquisitions, capital infusions, and corporate restructuring. It is okay to hurt your local lawyer-friend’s feelings by reaching out to an expert—your local lawyer will still play golf with you on Saturday. If you don’t have a qualified lawyer on your side, you are in for a rough ride.

Talk to your CPA before you do anything else.

If you don’t, you may be paying Uncle Trump more than you thought. Let your CPA guide you on the best way to acquire capital and what the tax effects will be on the various ways investors may be showing interest in your company. The 2017 year has started off impressively in terms of the “opportunity landscape” for our industry. Securing capital for growth has become a very positive side effect of the sharing economy “injection” we have received—we might as well take advantage of it. James Olin

A leader in the vacation rental industry for close to 30 years, Jim is the former CEO of Abbott Resorts, ResortQuest, and Sterling Resorts. He has overseen as many as 20,000 vacation rental units, 250 resort real estate agents, and 200 homeowner associations. Jim has also been involved in more acquisitions within the vacation rental space than anyone else in the history of the industry. A Broker in four states, Jim is one of only eight real estate professionals in the entire United States that is simultaneously an invited member of the Counselors of Real Estate (CRE) and the Council of Real Estate Broker Managers (CRB).

VRMs Give Back

Mt Hood Vacation Rentals A

s part of our ongoing series, VRMs Give Back, in this issue we are spotlighting Mt Hood Vacation Rentals in Mount Hood, Oregon.

Under owner Betsy LaBarge’s leadership, Mt Hood Vacation Rentals created a unique program in November 2015 designed to give its guests the opportunity to join in with the company’s ongoing philanthropic efforts. LaBarge’s philosophy at Mt Hood Vacation Rentals revolves around community, relationships, and social responsibility, and the team works to integrate philanthropy, sustainability, diversity, human rights, and responsible business practices into their daily culture. This is how it works. When guests book a reservation through Mt Hood Vacation Rentals, they have the option to add a $5.00 donation with the payment of the reservation. Mt Hood Vacation Rentals then matches the donation, and each quarter, the company donates all charitable funds received plus the matching dollars in equal amounts to its identified charities.

“We have always donated to a variety of charities, local auctions, and local food banks, or when there was a specific crisis and funds were needed immediately,” explained LaBarge. “However, it has been random and when a need was recognized. We saw that Travel Oregon’s Forever Fund requests that participants ask their guests for a small optional donation, and then the company matches it. I liked the idea of matching what guests contribute, making this a little simpler to manage.” “I had this idea in my head for a couple of years, and after [NAVIS founder] Milt Buehner passed away, I was motivated to get this going in his honor,” LaBarge said. “He was a very giving man— ask anyone who knew him—whether he gave someone his current favorite business book or donated, not only money, but time to many charities that he was passionate about, especially orphanages in third-world countries.”

“I remember Milt saying that he felt God had made him a conduit for giving, and he had the means, so he believed it was the right thing to do,” LaBarge continued. “This struck me, and I knew I had to make this happen so we could give continuously throughout the year to charities and causes that are meaningful to me and our team.” LaBarge solicited feedback from her team, asking them about their favorite charities so that the company could honor those organiza-

tions the team was passionate about.

“We try to mix it up between local agencies and national organizations. We also tend to focus more on charities that benefit children,” said LaBarge. “We research all charities to make sure they do not spend too much on administration and that they actually do good work.”

Operating with a small staff, the team at Mt Hood Vacation Rentals does not have a lot of excess time to volunteer, so the charitable giving program allows them to contribute in a meaningful way.

LaBarge explained, “While many charities can use people power and specific expertise that someone may have to offer, we do not have a lot of time to actually volunteer. So, if we can at least donate funds that these charities and causes can use in the areas where they have the most need, we feel like we can help them accomplish their goals. For example, the Christmas Basket fund receives a lot of donated food, but sometimes there is a gap in a category of food, so they will use cash to purchase those items. They also deliver fresh meats and produce, which obviously need to be purchased at the last minute. Our donations help them do that.”

To date, Mt Hood Vacation Rentals has donated close to $10,000 to their identified charities, which have included Ant Farm, Autism Speaks, Central City Concern, Doernbecher’s Children’s Hospital, Go Red for Women, Hoodland Community Christmas Basket, Mt Hood Learning Center, National Alliance on Mental Illness, No Kid Hungry, OHSU Patient and Family Support Services, Oregon Humane Society, St. Jude Children’s Research Hospital, and Travel Oregon Forever, among others.

“Most of our guests are happy to donate $5 per reservation,” LaBarge noted. “By making donations quarterly, the program is pretty simple to implement and manage, and it feels good to know that we are doing something that will help other people with much bigger problems than the ‘how are we going to get all of those houses cleaned’ types of issues.” In the series VRMs Give Back, we are sharing stories of programs that vacation rental managers have created to help others. The Mt Hood Vacation Rentals Charitable Giving Program serves as an inspiration to other VRM companies looking for new ways to give back. Is your VRM giving back? We would love to hear about it. Email amy.hinote@vrmintel.com. VRM Intel Magazine | Summer 2017

The New Era of Regulations The days of regulations not affecting vacation rentals are in the past

loved listening to my Springsteen tapes when I was a kid—all in all I probably had 200 different rock-and-roll tapes that I listened to on a cassette player. I hauled those tapes around in a box for years, but eventually I realized those days are gone, never to return.

The main concerns FOR POLICYMAKERS ARE:

Welcome to the new era in which governments will create regulations as part of the exploding trend of local rules meant to address the new phenomenon called the “Sharing Economy.” These regulations are being discussed to address something that policy makers perceive as new but are also adversely affecting so many vacation rentals—many of which have been operating for decades.

 Insurance

So too the old, unregulated days for vacation rentals are gone.

The good news is that vacation rental managers tend to welcome fair and effective regulations that work well with their years of experience. Those rules provide a roadmap of professionalism for the industry that managers have been practicing for years. In many cities in which regulations are discussed, vacation rental managers can respond, “We’re already doing that.” 28

VRM Intel Magazine | Summer 2017

 Nuisance  Tax remittance  Registration

 The ability to audit the success of the program  A nearby point of contact  Cooperation with those who are facilitating the rentals. What’s good about this? Vacation rental managers are members of the community and run good businesses based on peoples’ experiences—and those experiences need to be memorable for guests to want to return to the rental or write a positive review. How can you ensure successful local regulation in your area that benefits the industry and the community? One easy way is to be-

come personally involved, or hire a professional to become involved, with the creation of local rules. Policymakers want to hear from impacted stakeholders, and a vacation rental manager or representative can work with city staff, mayors, or council members to create fair and effective regulations.

Nuisance For many people, the nuisance issues break down into noise, parking, trash, occupancy, or parties. Every community in the United States already has laws on the books to address these issues, so enforcement of existing regulations is one easy way for a community to meet the goal of compliance. And because vacation rental managers work to ensure guests understand the rules—and the penalties for violating those rules—the professional manager is a natural first line of enforcement for local regulators.

What to Keep in Mind The United States Conference of Mayors has already spoken on issues relating to shortterm rental regulations when it issued this statement:

“Regulations of shortterm rentals that establish a reliable way for a municipality to identify and contact the shortterm rental owner, make the tax collection and remittance obligation clear and treat the short-term rental owner the same as long-term rental owners can achieve the highest level of compliance.” Some communities are discussing the idea of creating an additional layer of regulations specifically for vacation rentals. One government has issued this statement:

able with the idea of a simple registration program; cities can have contact names in case of problems and a way to reach out to the responsible persons with any notifications. Taxes—sometimes called hotel occupancy or transient taxes—are an obligation in most parts of the country. We hear time and time again that vacation rental managers are in complete agreement with the need to remit appropriate taxes, and they often add tax remittance as a service they provide to their owners.

How Can City Policymakers Feel Comfortable with Tax Remittance Success? By working with vacation rental managers to create a process to track and gauge tax remittance, policymakers have a greater likelihood of success. Managers are more readily prepared to work in a collaborative effort with governments to ensure appropriate taxes are being paid, and they often work with accounting firms who can aid in the process. There are a variety of options for cities to pursue tax dodgers and delinquent tax payments—many of these methods include delinquent fees which bring more funds into city coffers.

Just like my old Springsteen tapes, the days of regulations not affecting vacation rentals are gone. The nice memories of listening to tunes from my tape player are in the past, as are the memories of a time when regulations did not apply to you. The “Sharing Economy,” or “New Economy,” has accidentally scooped up an old practice for vacation rental managers. But by working in a collaborative and cooperative manner with government policymakers, vacation rental managers can create fair and effective regulations. And by understanding the variety of tools and options a city can use to achieve compliance, city officials can make regulations much easier than some fear. Once policymakers learn how to achieve compliance, we can all go back to listening to music and creating pleasant experiences.

“No additional laws or ordinances are necessary for dealing with neighborhood or nuisance issues. Existing laws and ordinances should be equivalent to an equal in application and enforcement as to full-time residential properties.” —The American City-County Exchange (ACCE) If additional nuisance regulations are needed, those rules will have a much greater rate of success if they are implemented through a stakeholder engagement process that includes area vacation rental managers. It is through the process of bringing together stakeholders and policy minds that innovative solutions will be found, new technologies and practices will be discussed, and appropriate ordinances will be created.

Registration and Taxes Registration of vacation rental homes is in place in many corners of the United States and in discussion in many more. It is often proposed as a simple process to encourage vacation rental operators to add their names and contact information into a local database in case of nuisance concerns. However, in some cases local governments view a registration process as a means to collect additional fees to fund the processing of all the government paperwork. What’s the upside? Vacation rental managers tend to be comfort-

About Matt Curtis

Matt Curtis is the founder of GPS Policy Group, a government consulting firm focused on assisting local governments to create effective regulations for the “New Economy.” Matt served for years as the deputy to two mayors of Austin, Texas, spent years as a leading voice in the “Sharing Economy” regulatory discussions, and sits on the board of the Vacation Rental Managers Association. VRM Intel Magazine | Summer 2017

VRM Intel Magazine | Summer 2017

Proactive Hospitality Requires

Knowing Your “Product”

n e common theme of most hospitality sales and service training programs is an emphasis on encouraging frontline associates to be proactive in anticipating guest needs in advance and in voluntarily offering details about area attractions, activities, and entertainment. Yet to deliver proactive hospitality, frontline associates must first possess a strong working knowledge of their “product.”

This requires them to answer the question, “What is your product?” Unfortunately, what I have found while conducting training workshops for dozens of vacation rental (VR) companies every year are too many associates who think they are in the “unit rental” business. They fail to understand that although guests are actually paying us for “time” spent in our “space,” what they are really buying is their own unique travel experience—an experience impacted by the destination, location, points of interest, attractions, and the unique features and amenities enjoyed in a vacation home versus a traditional hotel. Travel disrupters such as Airbnb know this, which is why they are training their “hosts” to proactively offer suggestions on how to live like a local and are putting forth a “hosting beyond the home” campaign. The theme at their last annual conference was “Make travel magical again.” Similarly, TripAdvisor has introduced a “Things to Do” link on their toolbar, which allows users to book local activities and accommodations. Unfortunately, too many vacation rental companies leave their staff unprepared to provide basic information about the most common points of interest. Perhaps managers automatically assume that if someone has grown up in the area or lived there a long time, he or she will automatically be an expert versed in things to do.

However, what I find in my workshops is exactly the opposite. Most of the people who live in tourist areas have rarely experienced their hometown as a tourist would. Personally, I can relate to this from my own experiences. For example, I spent the first twenty-two years of my life living in Lexington, KY, also known as the thoroughbred horse racing capital of the world. Yet I have never ridden a horse or attended the Kentucky Derby. After college, I lived in New York City for about four years, yet I never went to see the Statue of Liberty or to the top of the Empire State Building. Now I live in Florida, and my home is about fifteen minutes from some of the world’s most beautiful beaches, but I rarely sport a tan. The last time I went to the beach was about eight months ago when we had family visit for the holidays. Additionally, I have never been scuba diving or deep-sea fishing. VR managers cannot assume that “locals” know best. Instead, it is important to make a concerted effort to train your team on all

of the many selling points of your destination. Start with the basics such as the most popular attractions, but be sure to train your team to provide the “uniquely local insider’s tips” that tourists covet. Here are some suggestions:  Cover the details about upcoming local events and activities at weekly pre-shift meetings.

 Conduct familiarization (FAM) tours of local area attractions and entertainment complexes.

 Conduct “virtual FAM tours” through websites for locations you can’t visit.

 Solicit guest speakers from local businesses that provide services of interest to your guests.

 Ask chefs from local, popular restaurants to hold food tastings.  Ask spa directors to talk about their unique treatments and therapies.

 Create “product knowledge trivia contests” to test participants’ working knowledge of their product.

 When guests have unique, first-time questions or requests, document the question and the answers or solutions and share them in a report for others to learn from.

By conducting training on your product, you’ll provide your frontline staff with the tools they need to answer questions and proactively volunteer additional, relevant details that can make the guest’s stay more enjoyable.

By Douglas Kennedy, President Kennedy Training Network KennedyTrainingNetwork.com VRM Intel Magazine | Summer 2017

VRM Intel Magazine | Summer 2017

SERVICE

Personal

Risk for Homeowners “A little known but very important variable in the equation is personal risk.” –Clark Twiddy

CORE CUSTOMERS Individual homeowners who rent their homes (in part to maximize revenue)

Paying guests who spend money for the privilege of calling those spots home for a period of time.

In making competitive selections, guests and homeowners make decisions on four pillars—marketing, service, revenue, and costs. A little known but very important variable in that equation is personal risk.

COSTS

Mitigate

n the professional vacation rental industry, we frequently discuss the right mixture of the fundamentals of the business— service, selection, risk, and value. We have two core customers who weigh these mixtures, of course—the individual homeowners who rent their homes (in part to maximize revenue) and the paying guests who spend money for the privilege of calling those spots home for a period of time.

REVENUE

Helps to

VALUE

SERVICE

Professional

RISK

MARKETING

Using a

SELECTION

To make the broad notion of risk personal, let’s begin with a simple question. If something should go wrong during a guest’s stay, who will be sitting next to you in the courtroom?

For example, a recent vacation rental case in Dare County, North Carolina’s District Court was dismissed on the grounds that the material issues would have been avoidable had the plaintiff chosen a professional property manager and not an individual homeowner who was a regulatory amateur (by definition) in the industry. This is an important conclusion from the bench—a professional property manager would have been sitting next to the homeowner in this litigation and would have shared the tenancy risk as opposed to an online travel channel (OTC) that bears little if any risk of actual tenancy problems. In other words, OTCs transfer risk to the homeowner and as a result charge lower fees. To make that even more clear, OTCs aren’t necessarily cheaper— because they just transfer risk and potential courtroom costs to the homeowner. That’s not a comment designed to bash OTCs; I think there is a great niche for them. I just think the idea of risk is fundamental to the selection of a property representative. Only homeowners can make decisions about their risk profiles and can select from their conclusions the right business partners to market and service their investments. From a professional manager’s standpoint, however, the regulatory and litigation risks are all too often discovered too late.

If you’ve just skipped to the bottom to read the last line (and I thank you for reading this far), here it is: Revenue and costs are inseparable from risk, although risk is harder to capture on a profit and loss statement. It is the absence of risk from this statement that should give pause to the amateur and comfort to the professional. About Clark Twiddy

Clark Twiddy is a director of Twiddy & Company on the Outer Banks of North Carolina celebrating 40 years in 2018 (www.twiddy.com). In addition to his role in the family business, he is active in the community and is currently a candidate for Lieutenant Governor in North Carolina. VRM Intel Magazine | Summer 2017

Coaching Employees to be Resilient Givers with Boundaries By Ali Cammelletti

oaching employees is often associated with directly affecting revenue or customer satisfaction. Yet, to achieve customer satisfaction and increased revenue, underlying behaviors exist that are important to coach.

An example might be employees who work long hours and are always the first to take on additional responsibilities. These could be viewed as your perfect employees. Unfortunately, these employees, whom I call Selfless Givers, most likely get sick often, even though they do not call in sick. As a result, they cause other team members to get sick, and the team’s overall performance to suffer because of the illness. In turn, these employees face the biggest risk of burning out. When these employees do not set healthy personal boundaries, their work goals fall short and they potentially encounter stress and conflict at home. In an article called “Beat Generosity Burnout,” Adam Grant and Reb Rebele wrote, “Selflessness at work leads to exhaustion—and often hurts the very people you want to help.” Grant published Give and Take, a book in which he talked about how generous “givers” succeed in ways that lift others up instead of cutting them down as well as add more value to organizations than selfish “takers” or “matchers” do.

VRM Intel Magazine | Summer 2017

The key is to be a “giver with boundaries.” When Grant and Rebele researched teachers who are Selfless Givers, they found that the students of these teachers performed at a lower level than the students of “givers with boundaries.” I find the challenges of working with the Selfless Givers to be significant in the sense that they are:  burning out;

 holding teams back from producing at their highest levels;  being bad examples; and

 trying to be experts in all areas. Selfless Givers also do not coach team members to be “givers with boundaries” so that the employees, in turn, do not exhibit the above traits.

How do we break the generosity burnout cycle? We pay close attention to the Selfless Givers and coach them on healthy boundaries; after all, when you are a true leader, you are developing leaders. This can look like the following: noticing when team members are burning out and giving them extra time off for their needs; talking with them about self-care, healthy eating habits, exercise, and six to eight hours of sleep a night; and surrounding themselves with people who build them up.

Industry leaders are prone to generosity burnout in the service sector of the hospitality industry. I have found that Selfless Givers are attracted to the hospitality industry because they love to give, and this industry can take from all directions. It does not have to be this way, though. Personally, I feel that millennials are getting a bad rap because they do not want to live this lifestyle. Yet, as far as I am concerned, we as a culture need to rethink how we are being Selfless Givers and shift to being “givers with boundaries.” A good amount of research has been conducted that shows how much more effective teams are when they work forty hours a week instead of sixty hours a week. How can we as service providers give to our guests or coworkers when we do not have anything left to give? Imagine what your team members would look like if they only worked forty hours a week. Would they be healthy, able to spend time with family and friends, exercise, and get a full night’s sleep? The chances are that they would jump to help their guests and coworkers rather than be resentful and burned out.

The next step is to coach employees to be resilient. Few individuals manage to live their lives without experiencing some type of grief or struggle with challenging customer interactions. We experience grief any time we go through change. We experience changes in our jobs, homes, and relationships as well as technology. As Sheryl Sandberg and Adam Grant share in their book Option B, psychologist Martin Seligman found that three P’s can stunt recovery:  Personalization—the belief that we are at fault

 Pervasiveness—the belief that an event will affect all areas of our life

 Permanence—the belief that the aftershocks of the event will last forever This self-talk can spiral employees into dark places. If they can shift their self-talk into believing that they are not entirely at fault, that it will not affect all areas of their life, and that it will not last forever, they will recover more quickly. Everyone has their own timeline when it comes to grief and their own map of denial, anger, bargaining, depression, and acceptance. Some skip over one area, whereas

others get stuck in another area for a long period of time. As I like to say, “Everyone has their own journey.” It is not to be judged or rushed. This is where self-compassion comes in. If an employee is grieving and something triggers them, causing them to cry, they should be able to go to a place where he or she feels safe and let it all out. Employees are humans and emotional people. I was once told that I would never be promoted within a company because I was too emotional. At the time, my self-talk had a field day, and I beat myself up over being too emotional. I was having health issues, which the company was aware of, and my hormones were all over the place. Yet, after I left this company, I embraced my emotions, and now I am grateful for being emotional. When we can recognize that some people’s ideas of imperfections are part of what makes us who we are, we can have self-compassion and be able to recover from hardships quicker. In her book, Sandberg discusses soldiers who returned from war in Afghanistan and Iraq. She said those who were kind to themselves showed a significant decline in symptoms of post-traumatic stress disorder. She states that self-compassion is associated with greater happiness and satisfaction, fewer emotional difficulties, and less anxiety. We are not talking about brushing off situations like they are not our responsibility; instead, we are not negatively self-talking ourselves into a hole where we damage our future.

Grant’s research has shown that offering support to employees through personal hardships helps employees become more committed to their companies.

Sandberg also talks about how to help your team embrace learning from failure. She uses the United States Marine Corps as an example because they appreciate the need to be debriefed after missions. They see failure as a learning opportunity that allows them to remove the personal connection. When you are open to criticism, you usually get more feedback, which you can use to better yourself. To build resilient teams as a leader, it is recommended you do the following:  Coach your team on self-compassion.

 Have team debriefs on company failures, embracing the opportunity for growth.  Encourage team members to focus on three areas of gratitude each day.

One of my favorite clients shared with me that he felt his responsibility as a leader was to support his employees in their personal growth. If we all had this mindset, the world would be a beautiful place. Ali Cammelletti of Cammelletti Consulting brings over 28 years of experience in the hospitality industry. Having served in many capacities within the industry, from a frontline restaurant and lodging employee to building and owning a successful event planning business, Cammelletti now runs a consulting company. She currently coaches and trains frontline staff as well as managers growing their leadership skills. Visit www.cammelletticonsulting.com for more details. VRM Intel Magazine | Summer 2017

People Analytics— Making Decisions Based on Facts and Figures I

t is no longer a secret that people analytics can play a vital role in your business as you deal with the challenges of managing your workforce. People analytics is a data-driven approach to managing people at work that helps business leaders make objective decisions about their people based on data analysis versus traditional decision-making methods dependent on personal relationships, experience, and gut instinct.

 Cost per Hire: It is easy to calculate the cost of hire when you look at hard costs such as job postings, background checks, testing, applicant travel, and relocation, but are you calculating in all your soft costs? Don’t forget to factor in your time, and the time taken by others involved, developing recruitment plans, preparing for and interviewing candidates, and making hiring decisions. Calculating the value of time is an important piece of this metric.

Imagine making a business decision to change your PMS Software without using financial reports and other data analytics to guide your decision. Most companies would not make this type of decision without fully understanding their return on the investment. Yet that is exactly what most companies do when making key decisions that affect employee recruitment, engagement, and retention.

 Cost of Turnover: Understanding your turnover costs is a key driver to retention. Just like cost per hire, there are soft costs to consider as well. Think about the time you spend in meetings to make the decision, the time you spend consulting with third parties, the time spent disabling system access, etc. Although these factors are costly, they are just a drop in the bucket compared to the cost of lost productivity, performance, and revenue-generating opportunities that result from turnover.

You can easily create people analytics with an Excel spreadsheet to provide you with the same kind of predictive insight and data analysis that you rely on when you make business decisions based on your profit and loss statements and industry analytics. Applying people analytics to make soft-skill decisions regarding people-related issues is both a competitive advantage and key strategy for your business. If you are using metrics now to gather data related to managing people, you are one step ahead of the competition. If not, now is a good time to start basing your “people” decisions on “fact and figures” versus traditional subjective decision-making methods. The following are some examples of people analytics that you should consider using: 36

VRM Intel Magazine | Summer 2017

 Cost of Meetings: Everyone agrees that meetings can be a waste of time, but they are a waste of money too. According to a study by Wharton Center for Applied Research, managers found that 56 percent of meeting time is unproductive. Calculating the cost of meetings on your business can be an eye-opener.  Cost of Unproductive Conflict: Although healthy conflict is good for business, the cost of unproductive conflict can be staggering. Relatively minor conflicts are the most damaging and lead to workplace issues such as office politics, miscommunication, employee frustration, and disengagement. Do not pretend that con-

flict only affects the people directly involved—it devours anyone’s time who will listen. A study from CPP stated that managers spend 20–40 percent of their time managing conflict. Employees involved in conflict spend even more time.  Cost of Disengaged Employees: Research from McLean & Company states that disengaged employees cost your business 34 percent more, which equates to $3,400 for every $10,000 in salary. Did you realize that a disengaged employee earning $40,000 costs your business an additional $13,600 a year? That is a lot of money to be spending on employees who are not connected to your business.  Workforce Productivity: You can measure the revenue per fulltime equivalent (FTE) to learn how much time each FTE spent on generating a given amount of revenue. Another measure is profit per FTE, which provides an indication of how much time each FTE spent on generating a given amount of profit. Looking at these two metrics on a regular basis will give you a sense about the productivity of your workforce. To get started with people analytics, I recommend focusing on the metrics that provide you with the most insight into recruitment and retention opportunities. Understanding how much it costs your business to hire a position, as well as what the cost is to your business when you terminate a position, is key when making people-related decisions. Today, one of the biggest and most problematic restraints to growth faced by companies is the lack of appropriate talent. As more businesses expand their operations, the need for talent has skyrocketed to a point where there is not enough skilled labor to fill the demand. The national unemployment rate is the lowest it has been in more than a decade. As the labor market continues to tighten, you can expect wages to rise because of the competition among employers to attract qualified job candidates from limited talent pools. The situation and two scenarios below help to illustrate the relevance and value of using key people analytics to guide your decision-making regarding recruitment and retention. Please note that the costs presented are actual costs provided by a business owner in the vacation rental industry who manages approximately 220 properties.

Situation: Jennifer is a guest services representative who has been with your company for two years. She is a team player who performs well at her job. Recently, she let you know that although she loves her job and working for your company, she is pursuing other opportunities because she needs to earn a higher wage. Jennifer shared that she is looking for an increase of $2.00 per hour, increasing her hourly rate from $13.00 per hour to $15.00 per hour. Jennifer is one of three guest services representatives, each earning $13.00 per hour.

Scenario 1: You consider Jennifer’s request and decide that although she is a good employee, if you were to increase her salary, it wouldn’t be fair to the other two guest services representatives who do a good job as well. Your experience in these decisions, and your gut instinct, guide you to make the decision not to offer Jennifer an additional $2.00 per hour. You justify your decision based on paying Jennifer an additional $4,160 a year (based on 2,080 hours worked per year).

You figure out that if you include the additional benefits the company provides to Jennifer, it would increase her annual salary expense to more than $5,000. You also feel that if you were to give an increase to Jennifer, the other two employees would come knocking on your door, ultimately increasing your salary expense by an additional $15,000. You know that there is absolutely no way you can justify an additional $15,000 in salary expense to the business owner for the sake of retaining one employee. Sadly, you let Jennifer know that you will not be able to provide her with an increase.

Scenario 2: You recently attended a conference on people analytics led by Sue Jones, an HR leader in the VR industry. When Jennifer approached you about her situation, you reviewed your notes from Sue’s session and decided to calculate what it would cost the company if Jennifer left and you had to hire a replacement for her position. You looked at “soft costs” such as your time and the time of others involved in the process, along with “hard costs” such as the cost to post the position and conduct background checks, tests, and assessments. You factored in not only recruitment costs but also the cost of onboarding, orientation, and training. You were surprised to learn that the number was $7,500. You didn’t stop there; you then calculated the cost of turnover. You looked at separation costs, along with the loss of knowledge, productivity, and revenue-generating opportunities, and were astounded to learn this would cost the company $24,000. When you added the cost of Jennifer’s turnover with the cost to replace her position, you were shocked to learn the cost to the company would exceed $30,000. You considered it a no-brainer to have further conversations with the company’s owner about ideas on how to retain Jennifer by providing her additional income. As you can see from the examples above, using analytics helps to take the guesswork out of subjective information and provides you with insights for long-term decisions versus making decisions in the moment based on gut reactions and estimations.

Gathering the data for these analytics is not difficult. You already have many of the core components available through your financial reports and payroll registers. Start harnessing the data you already have to provide analytics to guide better decision-making when it comes to your people-related decisions.

Sue Jones, Founder and Managing Director of KLS Group, is passionate about creating strategic human resource programs and services to effect positive change in organizations. She is an innovative HR leader experienced with both large and smaller businesses. Sue has worked in many different industries and is adept with transferring her knowledge, skills and abilities across business channels. An experienced HR professional, Sue brings a fresh approach to her clients, addressing their needs in a personalized manner. Sue is a Veteran of the US Navy, holds a Master’s Degree in Business Administration from Northeastern University and is both SHRM-SCP and SPHR certified. VRM Intel Magazine | Summer 2017

NOT JUST MORE BOOKINGS. A BETTER BOTTOM LINE.

Kigo provides vacation property managers with industry-leading

Our subject matter experts are

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revenue. Our vacation rental software platform gives visibility into all guest communication, before, during, and after the stay in just a few clicks. Vacation rental management companies around the

while keeping a watchful eye on your bottom line. Learn more and request a demo at Kigo.net, or call us at 855-977-0843.

world trust Kigo to provide value to their guests and owners with easy-to-use products that are ahead of the industry innovation curve. VR SOFTWARE

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ÂŠ2017 RealPage, Inc. All rights reserved. Kigo and RealPage and associated logos are registered trademarks of RealPage, Inc. or its affiliates. All other trademarks and registered trademarks are property of their respective owners.

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HOW LOW-COST CAN BE COSTLY What started as a $9,000 savings ended up costing $1,360,000 THE VACATION RENTAL CHALLENGE Seabrook Cottage Rentals, a 180-unit vacation rental (VR) company in Pacific Beach, WA, is not unlike others in the VR industry. They rent a wide variety of beautiful, privately owned homes to vacationers in a popular location. As property managers, Seabrook is responsible for promoting properties, booking reservations, handling guest inquiries, collecting payments, checking in guests, serving them while on property, checking guests out, and cleaning each home with a quick turn between rentals. It’s a herculean effort requiring many staff and military-like logistical precision to provide exceptional guest experiences. But despite being responsible for all of the costs of these services, Seabrook only keeps a small portion of the rental income. The majority goes to the homeowner. Thus, managing costs is one of the only levers they can pull to improve profitability, and is a constant challenge.

SEABROOK’S SITUATION Seabrook was approached by a startup technology company claiming to do “all that NAVIS does at half the cost.” The salesperson said all the right things and promised that any visible shortcomings were already being addressed. As a costconscious business, they decided to make the switch to save an expected 22 percent with the new system. Problems stacked up quickly. The new solution was not what was promised. Guest calls dropped roughly 10 percent of the

VRM Intel Magazine | Summer 2017

time, and call sound quality was poor. System server errors occurred at least once a week, kicking all staff out of the system— sometimes for more than an hour. No training was provided. The system didn’t recognize different inquiries from the same guest, causing multiple follow-ups that left guests confused and angry. And the lack of PMS integration rendered reporting useless, making it very difficult to stay on top of their business.

THE RESULTS Reservation team performance plummeted. In fact, Seabrook lost $1,360,000 in rental income in 2016, the same year they used the low-cost platform. They attribute this loss to using a system they feel is inferior. Their agents converted fewer reservation inquiries because they weren’t able to manage leads as effectively. Management lost the business visibility to make course corrections in season to effect revenue performance. With less revenue, Seabrook had less rental income to share with their homeowners, requiring some very difficult conversations with owners.

THE SOLUTION After learning that a $9,000 savings resulted in a $1.36 million revenue loss, Seabrook quickly decided to return to the NAVIS Narrowcast™ system. During the first few months of 2017, their team’s performance has rebounded in a big way. Agents’ reservation booking rate has increased by 18 percent, they’ve nearly doubled revenue captured by making outbound phone calls, and they’re on track to regain more than $675,000 of the 2016 revenue shortfall.

OUTBOUND REVENUE $700k

50%

$600k

40%

$500k

REVENUE $

6o%

30% 20% 10% 2012

“

2013

2014

2015

2016

2017

$400k $300k $200k $100k 2012

2013

2014

My agents love using Narrowcast because they have the tools to be more successful. Watching them enjoy their success makes me a very proud leader. Carol, Reservation Sales Manager

2015

2016

2017

“

CONVERSION %

AGENT CONVERSION RATE

NAVIS delivers a very valuable solution to our VR business. Their system is worth every penny.

Christophe Chabaud, General Manager

WANT TO INCREASE YOUR PERFORMANCE AND PROFIT? Go to TheNavisWay.com or call 888-608-6431 to get started.

The Only Consistency in the Vacation Rental Industry

Is Its Inconsistency By John Dalton

onsumers appreciate consistency regardless of the products or services they seek. For example, competitive fast-food chains provide consistency by posting entire menus, both inside and outside of their establishments. Customers know what to expect before they arrive, and they appreciate this consistency. Countless national branded retail chains all look alike, regardless of where they are located. This consistency in style enables repeat and prospective customers alike to feel comfortable the moment they enter the premises. Hotel chains have accomplished a consistency on behalf of travelers. Consistency in appearance and in delivery of services cultivates repeat business. The properties and staff appeal to guests’ particular lifestyles. Whether they stay at a Ritz Carlton or a Motel 6, customers demonstrate their loyalty by consistently spending their travel dollars at these properties. Individually, repeat guests prefer one hotel chain above others as they rack up their loyalty program points.

The 1960s—A Decade of Innovation Over the years, I have had the privilege of working with the entire tourism industry. In the late 1960s, the industry had very little consistency but understood that travel was something most people enjoyed and their appetite to venture away from home would increase in the years ahead. Independent hotels/motels dominated the accommodations landscape. Airlines were moving from props to jets and shrinking the world. Cruise lines transported people between continents and were basically designed for the rich and wrinkled, 42

VRM Intel Magazine | Summer 2017

as first-class passengers were treated like royalty and stowage passengers were basically on their own. Meanwhile, upstart cruise companies envisioned a new market and began taking passengers to the Caribbean regardless of their incomes or station in life. Tour companies started to define themselves and targeted a new group of travelers with different types of vacations in mind. Motor coach tours led the pack by developing “hand-holding” programs around the world.

The 1980s—A Decade Seeking Consistency During the 1980s, the entire industry matured as partnerships were formed to deliver higher levels of customer service. Cruise industry companies worked together to develop consistent, customer-friendly policies and procedures to grow the entire market. They sought new destinations and teamed up with airlines to fold airline prices into cruise rates, offering “Free Air” cruises to attract people living in the Midwest and other points of origin and develop new markets. These cruise offerings also allowed airlines to set aside a percentage of their seats, which they knew would be sold, for cruise ports. The Cruise companies worked together to create uniformity in port specifications, safety, and other long-term essentials required in the future. The airlines took on new routes and created and developed frequent flyer programs. Knowing that the price of fuel would always dictate their probability, they started dropping costly services such

as meals on short hauls, initiating a migration to cutting back on in-flight customer service. A new model had to be put in place to survive in the future, and airlines were desperate to create it.

Hotel chains moved to expand. When I started consulting with Marriott, in 2005, they had fifty-two properties. Fewer than fifteen years earlier, they had been a major supplier of in-flight food to the entire domestic airline industry. As airlines reduced food orders, Marriott needed to start focusing on a new business model. Other hotel chains, in turn, began to expand to new communities around the country and, for some chains, the world. Travel companies increased their marketing budgets to attract travelers to the destinations they promoted and to use their brands. The 1980s was a decade leading to the understanding that the industry needed to move in new directions to increase the number of travelers.

Has the VR Industry kept pace with the rest of the travel industry? Has the VR sector followed the behavior of airlines, hotels, cruise lines, and tour operators? Over the decades, have they worked together as an industry to provide consistency for VR vacationers? Has the VR industry provided VR travelers the same level of consistency that travelers expect and receive when they stay in hotels, take cruises, take organized tours, and go on other types of vacations? Do VR travelers encounter a variety of unexpected “what’s in store” experiences? I have been involved in the VR sector for fewer than three years, but I can state, without hesitation, that the only consistency in the vacation rental industry is its inconsistency!

When vacation travelers book their accommodations, they have certain expectations. When they arrive and pass through the door, they have one of three reactions:  “Wow, this is outstanding!”  “It’s okay.”  “Who do we talk to so we can move to another place?”

This reminds me of Forrest Gump’s “momma,” who said, “Booking a vacation rental is like a box of chocolates. You never know what you're gonna get.” OK, I admit I took the liberty of changing the word “life” to “booking a vacation rental.” By the same token, booking a vacation is a part of life. Life has its ups and downs—and so does booking vacation rentals. Why, then, does this inconsistency continue in the VR sector?

The Inconsistent Rush to Obtain Inventory All companies want to increase their inventory. Owners have that inventory. The entire VR sector is in hot pursuit to secure the accommodations of owners. The common logic seems to be that the more listings a company has, the more revenue it will generate.

In their haste, many companies are offering lodging they would never have their own families or friends occupy. The inconsistency of product offerings is alarming. The result is that immediately upon arrival, many unfortunate VR guests feel they have been swindled. They blame the company and spread the word to everyone they know. And they echo their comments on TripAdvisor and other social media networks, where negative PR can run rampant.

There are few quality assurance programs to inspect VR properties before they go to market. A photo or two is all it takes to begin renting a vacation home. Accommodations standards have never

been incorporated throughout the VR industry. Cleanliness is an absolute necessity for airlines, hotels, cruise lines, tour companies, auto rentals, and even RVs. Unacceptable décor, be it furniture, carpeting, paint, or any other visible item, is quickly replaced before the next traveler arrives. But these standards aren’t consistently applied in the VR industry. The inconsistent behavior of the VR industry, unlike in consistently high-quality vacation sectors, ranks the quantity of accommodations far above the quality of accommodations. This trend must discontinue immediately. It is time to methodically discard owners who do not upgrade their properties to meet the standards of their guests. It’s time to turn away owners who do nothing but lower the overall quality of VR accommodations.

I have a recommendation I hope the entire VR industry will adapt: Never sacrifice the quality of your brand for short-term revenue gain. In the long run, your company will suffer by offering subpar accommodations to valued guests. A discipline is required to focus on owners to upgrade and continuously maintain the quality of their properties. The terms of your rental and management agreements with owners should clearly identify quality standards, and owners should strictly adhere to those standards in the months and years ahead. It all starts and ends with the quality of the accommodations VRs offer.

The number of listings should never be more important than the consistency of the quality of the accommodations we have in our inventory. Years of invested time and dollars will evaporate very quickly as more and more unsatisfied guests spread their negative stories about the VR companies in the social media world while never mentioning a word about the property owners. Your future is directly related to your owners’ respect for their properties.

It’s Time for Your Commitment By working together, we can provide guests with the consistency in accommodations that hotels and cruise lines deliver every day. All it will take is your commitment to being consistent and saying goodbye to unacceptable owners who give the VR sector a bad name every time someone rents one of their properties.

About John Dalton John Dalton has consulted and trained in almost every aspect of the

travel industry. He served in the management ranks of TWA for 10 years. He managed their largest reservations center in LAX, developed the first industry sales and marketing travel agency training courses and participated in the development of PARS, one of the first GDS system.During his tenure at the headquarters of AAA John was responsible for the development and marketing of travel agency programs for all AAA clubs in the U.S. and Canada before becoming a trainer, consultant and negotiator for the entire tourism industry. As Director of Training for Travel Trade magazine he was instrumental in creating the Cruise–A–Thon and Tour trade shows which were the highest attended travel functions in North America.He was the first to use video for training travel industry personnel. His most widely circulated videos were John’s innovative sales and marketing approaches contained in his Cruise Lines International Association (CLIA) video training. Over the years John has consulted to almost every major cruise line, tour operator, car rental firm, travel agency consortium and franchise in the industry. John has also provided consulting services, developed training programs and has been a featured speaker at the conferences of many of the franchise and independent hotel companies. John is a frequent speaker at travel industry conferences addressing both corporate and vacation travel. His ability to stay ahead of the trends has helped travel organizations to introduce innovative concepts and to offer differentiation, target marketing and provide cost leadership to better serve their clientele and to increase their profits.

VRM Intel Magazine | Summer 2017

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

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877.870.6510 THEOPMA.ORG 44

VRM Intel Magazine | Summer 2017

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

Successful PR Strategy to Attract New Owners and Guests

eveloping a strategy is the first step in the right direction toward implementing successful PR that has positive outcomes for vacation rental businessesâ&#x20AC;&#x201D; outcomes that deliver both short-term wins and longterm growth. But first, what exactly is PR? How can PR benefit vacation rental businesses, and what are some of the key elements you should include in a workable PR strategy?

What Exactly is PR? Primarily, the purpose of PR is to receive third-party endorsements of your vacation rental business. This should happen publicly and through sources trusted by your desired audience: The owners and guests you are looking to attract.

PR communicates with your target audience both directly and indirectly through the media, bloggers, and other influencers, with the aim of creating and maintaining a positive image and building strong long-term relationships. Essentially, the desired end result of good PR is getting earned (as opposed to paid for) coverage for your content. For a vacation rental business, this content would include your website, your inventory, your assets, and, importantly, your call-to-action. This coverage, especially when it is achieved online, has hugely beneficial outcomes for vacation rental businesses. Modern PR isnâ&#x20AC;&#x2122;t just about coverage: itâ&#x20AC;&#x2122;s about putting that coverage to work. VRM Intel Magazine | Summer 2017

By Jessica Gillingham

Developing a

Benefits of PR There are several key benefits in engaging in sustained PR activity, and the ones to note include the following:

• Attracting owners and increasing your inventory Being proactive with your PR is very attractive to prospective owners. If increasing your inventory, or improving the quality of your inventory is a key objective for you, then being able to demonstrate that you are a business that takes its PR seriously and has secured coverage is a tick in the box for owners searching out for a property manager with which to work. This can be an especially positive attribute if your rental business is in a competitive market with little to differentiate management businesses.

• Reaching new markets/channels/guests PR can help you reach new markets that might otherwise be tricky with which to connect. For example, your strategy might include positioning your vacation rental business as being great for younger families who can travel outside of school vacations. A PR campaign targeting young families through blogs, media outlets, and social media accounts they are influenced by would be key to this. If you currently only attract guests within a two-hour drive from your properties but now wish to expand and hit the lucrative market of a city three hours away, a PR campaign localized to that city could result in big gains.

• Enhancing your SEO activity Most national and regional media are also published online. Being featured in a glossy travel magazine or within the pages of a prestigious national weekend newspaper is a fantastic reputation builder, but the real gold is to be featured online. Think about it. An article in print, while being powerful, can have a short shelf life lasting a day—or a month if it’s in a glossy. Meanwhile, online coverage can have a footprint that lasts indefinitely. An online article can directly lead to your website long after the article was originally published, maybe even years later. Online coverage is the gift that keeps on giving, and it helps greatly to improve your search engine optimization (SEO) through link building and ranking. Arguably, the most important part of SEO is generating links from other sites across the web as Google takes these links as endorsements of your website. Good PR can sometimes be the only credible way of gaining the most credible links.

• Building your reputation and brand awareness Good PR does wonders for your reputation and brand awareness. People believe the positive (as well as negative) things that others say about your business with greater levels of trust than they believe what you say about your business. Perhaps the most valuable business commodity is trust. Remember, relationships matter. Being included in a feature article, being endorsed by a travel blog, or being the subject of an accommodation review increases your value with both owners and guests who will be inclined to believe that if soand-so media rates your properties, then so can they.

• Better quality leads and increased conversions The most important outcome of PR for any vacation rental business is how it affects your bottom line. Can PR actually add value to the number of dollars coming in? Yes, it can and does. Good PR that is targeted to the right sources of media can ensure that the leads coming into your website are quality ones, and that those 46

VRM Intel Magazine | Summer 2017

leads have higher conversion rates to bookings because of the targeting, reach, relationship building, and trust generated.

Building a PR strategy Ideally, the first step in developing your PR is to underpin your activity with a robust strategy. A decent strategy becomes the guiding light and blueprint for moving your PR forward. It’s the roadmap to follow, and the document that can keep your activities accountable. This strategy will cover the nitty-gritties of the issues involved, including who your target audiences are, your overall goal, your objectives, the key messages, and the tactics or actual activity that you or your PR agency will undertake. An effective strategy will also look at the challenges facing your business as well as identify key metrics for evaluation. The PR strategy will work closely with your existing marketing plan and will underpin your overall business goals.

PR Goals and Objectives A good plan always starts with the end in mind. Therefore, defining the overall goals for your PR activity is an important first step. The goals will tie in with your overall business plan and may be similar to one of the following:

• Our PR goal is to establish our reputation with our target au-

dience as the number one choice for vacation rentals in Greece (or The Hamptons, in Rio, Ana Maria Island, etc.).

• Our PR goal is to reach potential guests in markets we have

previously not reached (LGBT, single-parent families, guests from beyond a 3-hour drive, Australians, etc.).

• Our PR goal is to increase inbound links to our website from reputable travel media and other third-party content sources.

Your objectives, which should be SMART (specific, measurable, agreed, realistic, and time based), are designed to help you reach that goal.

Audience Really thinking hard about who and where your target audiences are is very important. Try and get specific if you can. For instance, are you looking for homeowners who have investment properties in South Florida? Families living in the Tri-State region who vacation in the Poconos or honeymooners who want the privacy and space of a luxury rental over a hotel? It’s fine to have several different audiences. Once you have identified your audiences, the next step is to compile a media list and spend time researching the right media, journalists, bloggers, and other influencers with whom you may be able to work.

Messages Next up in the planning process for a successful PR strategy is to develop your key messages. These messages will be the key points about your business that you need to get across. They will become the essence of all communication and PR work: the pitches, press releases, tweets, blogs, and content that you use when writing or talking about your vacation rental business. For example, a key message might be one of the following: -My Tuscan Farmhouses handpicks exclusive farmhouse rentals across Tuscany for international guests looking for a unique Italian experience.

-My Luxury Rental Apartments matches owners of unique city center apartments in the most celebrated cities in the world with discerning guests to create memorable vacation experiences.

One key message should also include a strong call-to-action with a clear idea of what you want readers/consumers to do.

Tactics

The tactics, or the actual activity that you or your PR agency will undertake, will include defining your story or news; developing an engaging campaign; pitching stories, ideas, and content; preparing and distributing press releases; hosting press stays; working alongside a social media campaign; and conducting other means of creatively getting your name out there.

Challenges and Opportunities It’s important to identify any PR challenges that you may encounter as well as to be honest about any shortcomings that your vacation rental business may have. A challenge could be that you only offer properties in one location—this will exclude you from many general articles, but this could also be seen as an opportunity when you are able to pull the niche and specialist destination card. Be aware of your PR competitors. These will include other accommodation providers, hotels, B&Bs, and other vacation rental businesses in your area that you may also be vying with for media attention. Look to your strengths. The more unusual properties that you manage—the largest, the oldest, the most colorful—can all be turned into potential pitch ideas.

Evaluation Finally, make sure you include a metric for measuring the success of your PR activity and for evaluating what is working and what isn’t. Evaluation, like research, is an important part of any PR program.

What does success look like? What would success look like based on strategic and sustained PR efforts? In my view, success would look like a vacation rental business gaining a growing body of links from a variety of reputable online media sources. These sources would be both directing traffic and enhancing online rankings. PR success is a vacation rental business that is reaching new guests in new markets, that is building a strong reputation with a solid brand story that converts leads into bookings with enviable percentages, and that has a host of media logos and “as seen in” endorsements to include on the press page.

About Jessica Gillingham Jessica Gillingham is the director of Abode PR, a PR agency specializing in servicing the international vacation rental industry. Jessica started her career in the travel industry working for a Canada specialist tour operator. Over the years, Jessica has worked with many brands, big and small (some travel and some not), and is a member of the Chartered Institute for Public Relations (www.abode-pr.com). VRM Intel Magazine | Summer 2017

VRHP Annual Conference 6-8 & VRM Intel Live Nov

Combined!

Gatlinburg, Tennessee Gatlinburg Convention Center $329 Early Registration through September 15 vrhp.org and vrmintellive.com

4 Educational Tracks & 32 Sessions Plus…The Rebuilding of a Destination, One Year After the Fire: Gatlinburg's Success Story Mark Adams, President & CEO, Gatlinburg Convention & Visitors Bureau

VRHP’s 2017 Executive Housekeeper of the Year and VRM Intel’s 2017 Best VRM Website Award Presentation The Vacation Rental Housekeeping Professionals’ Annual Conference and VRM Intel Live! have joined together in Gatlinburg to create an special vacation rental community event like none other. With a high-level educational lineup that includes industry leaders, operational experts, hands-on workshops, group sessions, networking, and a special Gatlinburg community event, this is one of the vacation rental industry’s can’t-miss events of 2017.

VRM Intel Magazine | Summer 2017

Nov 6 | Nov 7 | Nov 7 | Nov 8 | Nov 8 |

6:00 pm – 8:00 pm 8:00 am – 5:00 pm 6:00 pm – 8:30 pm 8:00 am – 4:00 pm 5:00 am – 8:00 pm

6-8 Nov 17

Welcome Reception Breakfast, Lunch, Sessions and Networking Vacation Rental Family Reunion BBQ and Award Presentation Breakfast, Lunch, Sessions and Networking Gatlinburg Winter Magic Kickoff & Chili Cookoff Community Event

GENERAL SESSIONS AFTER THE FIRE: THE REBUILDING OF A DESTINATION, GATLINBURG'S SUCCESS STORY WITH MARK ADAMS THE RELATIONSHIP BETWEEN HAPPINESS AND LEADERSHIP IN BUSINESS TODAY WITH CHRIS MCLEAN THE REAL COST OF OTAS AND LISTING SITES WITH STEVE MILO BEST PRACTICES FOR SUCCESSFUL VR HOUSEKEEPING DEPARTMENTS WITH STEVE CRAIG

VRHP’S HOUSEKEEPING AND MAINTENANCE SESSIONS BUILDING AN IN-HOUSE LAUNDRY FACILITY GUEST SERVICES TRAINING FOR YOUR HOUSEKEEPING STAFF HOUSEKEEPERS: GUARDIANS OF THE BRAND HOW TO CREATE AND MANAGE BUDGETS AND FINANCIAL STATEMENTS INCREASING INCOME FOR YOUR DEPARTMENT WITH CARPET CARE AND WINDOW CLEANING LINEN LIFE EXPECTANCY AND DIFFERENT TYPES OF LINENS (A SHOW AND TELL) LIVE PRODUCT DEMONSTRATIONS Q&A WITH 2017 EXECUTIVE HOUSEKEEPER OF THE YEAR SETTING UP PIECE RATES SUSTAINABLE PRODUCTS AND OTHER GREEN CERTIFICATIONS WHAT MAKES AN EFFECTIVE MANAGER AND AN EMPLOYEE WORKING WITH CONTRACTORS: KNOWING THE LAW HOUSEKEEPING AND MAINTENANCE ROUND TABLES CERTIFICATION TESTING

VRM INTEL’S MANAGEMENT SESSIONS ARE YOU A TECHNOLOGY-ENABLED VACATION RENTAL MANAGER? CHANGING YOUR PROPERTY MANAGEMENT SOFTWARE? WHAT YOU NEED TO KNOW…AND PROTECT CREDIT CARD PROCESSING AND TRAVEL INSURANCE UPDATES HARNESSING BUSINESS INTELLIGENCE FOR VRMS PEOPLE ANALYTICS: MAKING HR DECISIONS BASED ON FACTS AND FIGURES THE COST OF DISENGAGED EMPLOYEES WHAT DOES STANDARDIZATION MEAN FOR VR IN 2018? REVENUE MANAGEMENT 101 AND 102

VRM INTEL’S MARKETING SESSIONS BUILDING A VR BRAND TO GAIN A COMPETITIVE ADVANTAGE IN 2018 ALL THINGS GOOGLE CAPTURING AND CONVERTING LEADS IN TODAY’S DISTRIBUTION ENVIRONMENT CREATING A SALES & MARKETING CULTURE EMAIL MARKETING WORKSHOP INCREASING VRM WEBSITE CONVERSION RATES THE UNIVERSE OF DIGITAL PROPERTY DISPLAY

VRMintel

VRM Intel Magazine | Summer 2017

By Darren Pettyjohn

A Commercial Insurance Requirement

is Good for the VR Industry O n October 22, 2015, Airbnb announced its Host Protection Insurance that provides one million dollars in commercial liability insurance to all US hosts and owners who book through the Airbnb site. The coverage applies during the booked period, and it’s free of charge.

Nearly two years later, on May 8, 2017, HomeAway announced its one million dollar commercial liability insurance program for owners who book through the HomeAway sites. The coverage applies during the booked period, and it’s also free of charge.

What exactly is going on here? My entire professional career is in the insurance industry, and as a salesman, I can only make a professional assumption. It’s one part great marketing, and one part incredible industry intuition. From a marketing standpoint, both Airbnb and HomeAway understand insurance is historically slow to adapt to new and emerging markets, and insurance is a barrier to entry for both because many large domestic insurance carriers do not insure short-term vacation rentals. So why not provide free liability insurance for everyone? It makes sense when revenue comes from bookings and both are competing for the same bookings.

The business industry taught me that nothing in life is free. Under closer examination, there does appear to be major gaps in coverage such as no property coverage, no personal and advertising injury, no assault and battery, no liquor, and much more. Only owners can decide whether to rely on the free liability insurance or to purchase a policy with their name on it. Being on the insurance side of this industry, we see the things most do not. Such events as the Gatlinburg, Tennessee, fires that burned more than one thousand vacation rentals last December, hail storms, theft, burglary, party destruction, or falls on the winter ice in the Sierras guarantee that you want insurance with your name on it. As far as intuition, maybe Airbnb anticipated the regulation side of the industry and knew a commercial liability insurance requirement was inevitable. Granted, cities like Nashville that have a one million dollar insurance requirement do not accept the Host Protection as evidence of insurance for a permit. Perhaps Airbnb was onto something.

In 1946 the LaSalle Hotel in Chicago, the Canfield Hotel in Iowa, and the Baker Hotel in Dallas all caught fire within sixteen days and claimed the lives of ninety people. Those fires changed the national attitude about the government’s authority to regulate public safety and, ultimately, set a precedent for the different hospitality laws we have today. Hospitality Law is the body of law relating to the foodservice, travel, and lodging industries. That is, it is the body of law governing the specific nuances of hotels, restaurants, bars, spas, country clubs, meeting and convention planners, and more. Hospitality law does not involve only one area of law. It encompasses a wide variety of practice areas including contracts, antitrust, tort law, and more. Our industry needs to understand that when an owner of a property allows someone to stay on a property for a short period in

exchange for money, the owner is subject to the hospitality laws. Vacation rentals are no different than hotels in that the hospitality laws include requirements to provide for privacy and for safe premises. The Duty of a Hotel is to provide safe premises. This concept is based on the common law duty owed to business and social invitees of an establishment. Under common law, hotels must exercise reasonable care for the safety of their guests. Hotels owners may be found negligent if they knew, or should have known upon reasonable inspection, of the existence of a danger or hazard and failed to take action to correct it and/or warn guests about it. Accordingly, hotels have an affirmative duty to inspect and seek out hazards that may not be readily apparent, seen, or appreciated by patrons and guests. In addition, hotels may have an affirmative duty to warn guests of dangers or hazards. If the risk of harm or damage was foreseeable and the hotel failed to exercise reasonable care to either eliminate the risk or warn guests of its existence, the hotel may be liable for any resulting harm or damage caused by its negligence (“proximate cause”). *

(*This duty is the reason Proper Insurance requires our insureds to display a “Swim at own risk sign” if they have a pool, to provide helmets if they offer bicycles, and to perform a post-stay inspection, and so on.) One of the first regulations for hotels was commercial liability insurance and, in my opinion, it should be a requirement for vacation rentals as well. It is good for the city, good for the owners, good for the neighbors, and good for the industry. Commercial liability is readily available to vacation rental owners and is reasonably priced. Not only does it cover the owner, but it extends coverage to property managers as well.

When owners purchase commercial liability they will go through underwriting of the property as every insurance carrier has different requirements and standards for purchase. Some of these underwriting requirements may include wiring inspections for older properties, fire extinguishers in kitchens, and depth markers for swimming pools. By its very nature, insurance underwriting will suffice for much of the hospitality laws.

A commercial liability requirement also gives the vacation rental industry political capital when arguing against bans and other unrealistic regulations. As the industry continues to mature, proper insurance simply makes sense. Darren Pettyjohn is the Cofounder of Proper Insurance®, which offers custom-penned, all-inclusive insurance designed for vacation rental owners. References: https://www.homeaway.com/lp/liability-insurance https://www.airbnb.com/host-protection-insurance

VRM Intel Magazine | Summer 2017

Vacasa Founders

Eric Breon and Cliff Johnson: An Inside Look at Vacasaâ&#x20AC;&#x2122;s Fast Growth and the Lessons Learned along the Way

By Amy Hinote

ith 1,400 employees, Vacasa is making headlines as the fastest-growing technology-enabled, full-service property management company in the vacation rental industry. Currently the second-largest vacation rental management company behind Wyndham Vacation Rentals, Vacasa has raised $40 million, manages more than 5,200 vacation rental units across 150 markets in ten countries, and is projected to have an inventory of 8,000 units in fifteen countries within the next year. 52

VRM Intel Magazine | Summer 2017

Based in Portland, Oregon, Vacasa was initially launched as a booking service in late 2009 by Eric Breon and Cliff Johnson. The pair quickly realized that the booking service model, without exclusivity over the management of the properties, would not be able to deliver the quality experience that their guests were seeking. Even though they had scaled up very quickly on the booking service model, in 2010 they made the decision to pivot and scale back down to focus on a full-service property management model.

I had the opportunity to sit down with CEO Eric Breon and co-founder Cliff Johnson to discuss a variety of topics, including their business model, rapid growth, future plans, and the lessons they learned along the way. First, though, I wanted to know how these two power players came together to launch the company we now know as Vacasa, and I was surprised to learn that these two met on Craigslist. Johnson laughed and said, “To be fair, back then, Craigslist was a legitimate way to find a job.

“Eric had posted a role on Craigslist looking for someone entrepreneurial,” Johnson continued. “At the time I was working as a tax attorney. I had three hundred clients, many of which were small to midsize businesses, and I found myself more fascinated with the entrepreneurial side of business without knowing how to dive in headfirst. So I responded to that ad and went to meet Eric. We had a nice conversation in his living room, and I quickly discovered that we were remarkably philosophically aligned in what we thought a business could accomplish. I was in a legal profession that was stoic and resistant to technology and change. So for me, it was refreshing to meet someone who was eager to disrupt that, and even outside of the vacation rental business specifically, we were aligned ethically and morally.” Breon began his career out of college working in venture capital and moved into the subprime credit card industry before starting Oregon Green Solutions, a company centered on making homes better for the environment.

“That was my penance after working in the subprime credit card industry,” Breon said. “I learned a great deal in the credit card industry, but adding fees on subprime customers wasn’t what I wanted to do with my life. I wanted to do something that actually contributed, first on the environment front, and then on something I think is very important—opening up vacation homes to give great experiences to guests for their time with family and friends.” In their initial meeting, the two discussed Breon’s vision for the company. Breon was frustrated with trying to find someone to manage his vacation home and with his attempts to book vacation rentals for himself.

“Eric’s focus wasn’t on making a ton of money, selling, and retiring,” Johnson said. “Instead, his focus was, ‘How do we make this thing that we love—staying in vacation rentals—an easier process?’ At that time, finding a vacation rental was anything but easy.” Breon gave examples from his personal experience: “Once, I tried to book a rental in the Seattle area, and the manager sent me a twenty-two-page document—which included all of Seattle’s landlord-tenant laws—to initial and sign. I then had to find a fax machine to send it back to him. In other instances, I sent multiple inquires on VRBO, and no one would get back to me. Instant booking didn’t exist. It was much too hard to find and book a vacation rental, and I thought, ‘We can do better at this and make finding a vacation rental a more relaxing experience.’” Johnson and Breon decided to join forces. It was actually Breon’s wife who came up with the name Vacasa, and the newly formed company began adding vacation rental homes to its inventory. “From the start, we were accumulating inventory in a variety of destinations in Oregon, basically in any market we could drive to from Portland, including the Oregon Coast, Sunriver, and Mount Hood,” Breon said. “We had an owner on the Oregon Coast who was happy with the results we were giving him, both financially and on the service front, compared to what he had received from prior

managers. He owned another home in Truckee and asked us if we could manage his home there. Two weeks later, we hired someone in Truckee, and the move went incredibly smoothly for us. It probably gave us some false confidence in how easy it was to launch new markets, because within a short time we were adding ten properties a month. It was a very successful market launch for us and was the foundation that we followed many times over.”

I asked Breon and Johnson if they knew early on that they wanted to be the largest full-service vacation rental management company. Breon answered, “That is our goal now, but it came through a natural evolution. Initially, we wanted to do a good job in what we were doing, and then we added another market, and then another market, and so on. It was probably just two years ago that we started to see a pretty clear path ahead of us to bring our services to every market in the world.”

Bootstrapped in the Early Days During Vacasa’s first two years in business, Breon and Johnson took on all of the management tasks. “One of the things that we did well in the beginning is that we did all the work, including housekeeping, maintenance, owner relations, guest relations, and reservations,” Johnson recalled. “We did it all here in Oregon and learned how hard it was going to be to expand and how each market had its own nuances and regulations. That was both daunting and exciting at the same time.

“Being bootstrapped and being forced to stay lean for the first couple of years of the business taught us a lot of lessons about where the business succeeds or fails. At the end of the day, you have to have quality at the local level, or it doesn’t work.” Johnson continued. “There is a very large barrier to entry in this industry because of how complex operations are at a local level. If we had started fresh with outside funding and had a goal of rapidly growing from day one, I don’t know that we would have had that benefit of doing all that work ourselves. I always think it is interesting that Eric started out in venture capital in his first job out of college, but he chose to start his own business by bootstrapping the business for the first several years.”

Breon added, “I think there would have been a benefit to growing even more aggressively early on. The market has started to mature. At Vacasa, we are still a strong step above it on most fronts and in most places, but the level of the playing field has increased, which is a good thing for the industry. It was definitely far easier back in the earlier days due to a lower level of sophistication in the competitive set.”

Employee Growth By the middle of 2014, Vacasa was managing 1,200 units with 420 employees, but the company’s rapid expansion came with a few growing pains.

“The biggest hiccup came when we initially began hiring on a large scale,” said Breon. “We hired incredibly green people at entry-level positions, and we promoted them incredibly fast. Some of those who had started with us a year or two out of college would be managing one hundred people a year later. Conversely, we had employees who didn’t step up to the opportunity at the same level, and there was a bit of a sense of entitlement or disenchantment due to an expectation that they had been there six months and had not been promoted. So we definitely had a cultural problem. There was a period of time that we overpromised on the potential for career growth, and so many people were growing at such a fast rate. Not VRM Intel Magazine | Summer 2017

everyone is suited for that progression. We both accidentally created a sense of entitlement that we had to resolve. In 2015, we started making some cuts with people who were not in the right roles and who were not moving in the right direction. It took us some time to work through that.”

“It could be easy to get overwhelmed,” Johnson said. “In this industry, as a whole, there is always more you can do. You can always improve, you can always be better. But if you let the last call or the last issue stick with you, you’re done. Being able to compartmentalize and move from one thing to the next is a really important skill, regardless of the size of the company. Once you get to managing twenty properties, you have to balance owner needs, guest needs, property improvements, marketing improvements, tech improvements—there are a lot of things to balance. You can only tackle so many things at a time.”

manager’s manager is. A lot of our employees are pretty remote. So it comes down to how good their local team is, so we are always focused on having the right leaders. We don’t always get it right, but we know we need to move fast if we don’t have it right.”

To meet the demands, Breon built a custom workflow management system. “It was a key step for us to implement a custom system for on-demand incoming communications, where our team members can only look at one thing, and they have to resolve it before moving on. We should have done it six months earlier, but it has been really helpful for efficiency.”

Johnson added, “Now we focus on blind proactive employee surveys through which we learn whether we need to pivot or make changes or communicate better in certain areas before it becomes a real frustration. And a lot of it comes down to how good their manager is and how good their

“We have become much more conservative in how we speak to that,” Breon said. “And we hire people for the role we need now. The trajectory for growth is still there, but now it is earned and appreciated instead of part of the bargain.” “We just had our employee conference, and seeing that we’ve been able to maintain the culture and hire great people and give them great opportunities—that is the most inspiring thing to me,” Johnson said. “We have people who have started with us as housekeepers and are now running regions with two hundred–plus homes, so there is a lot of opportunity for people who work hard and learn along the way. I always love seeing those stories and seeing how much of a difference it makes to them.” With Vacasa’s exponential growth, I wondered if Breon or Johnson ever felt like they were in over their heads. They both laughed. “I’ve never felt overwhelmed, have you?” Johnson turned to Breon. “I think we both thrive off of having too much to do.” “It’s not my personal style to be overwhelmed,” Breon said, laughing. 54

VRM Intel Magazine | Summer 2017

Vacasa now has an internal minimum wage starting at fifteen dollars per hour for hourly roles, and its salaried positions pay a minimum of $47,500. The company also provides health insurance for all employees, along with a six percent 401(k) match.

Acquisition Model Vacasa now has a variety of ways it approaches entering new markets. 70 percent of unit growth at Vacasa is organic, and 30 percent comes from acquisitions. The company has completed fifty-two acquisitions and is still investigating new opportunities.

The company’s first acquisition was in December 2013 with a small company in Florence, Oregon, which was a logical extension of the Oregon Coast.

“Maybe it would have made sense to start doing acquisitions earlier,” said Breon, “but it was good for us to learn the industry a bit more before we started completing a lot of acquisitions. Integrating an acquisition properly is a lot of work. Now our process of inte-

grating a new company is something I’m very excited about. We’ve done fifty-two acquisitions, so we’ve gotten pretty good at that game. A lot of it is about the timing—making sure that things are done in the proper order. In one of our early acquisitions, we wanted to get ahead of the curve, so we started entering all the reservations into our system. So that, of course, triggered sending out e-mail confirmations to all of their customers. Turns out, they had not told their employees yet. You can imagine the confusion that followed. A lot of it is just about making sure that you know exactly the conversation that you are going to have with every constituent—the homeowner, the guest, the staff—and that you do it in the right order. And then there is more technical stuff, but I think the core is that the communications flow with the right information at the right time to the right constituent.” Breon added, “The majority of the people who have sold their companies to us are still employed with us. We like to retain the owners when possible.”

I asked Breon if there are common attributes among their acquisition targets. “There are really three major categories of the companies we acquire. The first is people looking to retire. There is a significant component there, and often these people will remain employed even if they are somewhat ready to retire,” he said. He continued, “Another category are the ones where their financials are becoming weaker, and maybe they aren’t able to effectively compete in today’s marketplace. And the third category is people who run great businesses who just want to be a part of something bigger. A lot of our best acquisitions fall into this category. “All of our acquisitions are cash. Occasionally there is a seller financing component,” he said.

Technology Vacasa began its operations by selecting Escapia as its software system and website provider, but it soon discovered that the system would not meet the needs of the technology vision they had for the company. “We were on Escapia for a little over a year, but we found that we kept building our own add-ons to do the things that Escapia couldn’t do, so we transitioned to our own software that Eric built in July 2011,” Johnson said.

Breon added, “We were starting to realize that our back-end system was doing more than Escapia was doing in the first place. It was pretty simple to then swap out the parts that we were relying on Escapia for. Now our technology falls into two main categories. The first set of our tech is all about making what we do possible. If we just tried to put all of our units in all of our different markets into Escapia, and hope that we can see what all of our staff is up to and how efficient we are in all of our markets, it is not going to run well.” “So the first part of our technology is making sure we are dialed in on the operational front, we know what we are doing, we are on top of every customer issue, everything is going to the right person so that we know it is going to get resolved, and we know when it was resolved. Workflow management is a big part of this. The second half is all about making more money for the homeowners and for the company. This is where we get into our yield management, our e-commerce, our channel management, and our algorithms to assign the perfect housekeeper to every job—technology that really improves our offering and improves our profitability and the revenue of our homeowners.” Vacasa has built proprietary systems to meet all of its needs—almost. “We use Matterport. We did not build our own three-D im-

aging software, but I think we built pretty much everything else that you see at the VRMA. At one point we even built our own payroll software, but we’ve now outsourced that. It turns out there are other people pretty awesome at payroll, and we don’t have to be the best at that.”

Using OTAs Vacasa has embraced the use of OTAs as a significant source of bookings, and approximately 50 percent of Vacasa’s bookings come from third-party channels. “We are channel agnostic,” Breon explained. “We want to do the right thing for our homeowners. If we can get them more guests through the Vacasa site, we are going to do that. If we can get more bookings through third-party channels like HomeAway, Booking.com, or Airbnb, we are going to do that. For us, it is all about doing the best possible job for the homeowner.”

Funding In April 2016, Vacasa announced a $35 million funding round led by Level Equity, and in November 2016 the company raised an additional $5 million from insurance provider Assurant. “It is a pretty big internal evolution when you are raising $40 million in that there is a standard of doing business, record keeping, and multiple structural shifts that we had to implement to prepare to raise money at that scale. I don’t mind fundraising, but I prefer focusing on the business,” said Breon.

Competition Vacasa is often compared to other companies in the industry, including Evolve, Wyndham, and TurnKey, so I asked Breon and Johnson where they feel like they stand in relation to their competitors. “With Evolve, they have a different business model, more like the one we began with,” Breon explained. “With the value proposition that HomeAway is evolving to with instant booking and the like, it is going to be a challenge for them.” In comparing Vacasa to Wyndham, Breon said, “On a revenue basis, we believe we will catch them this year. I think we have a higher take rate on our properties and a higher overall revenue per property in terms of our economics and our inventory. On a revenue basis, while they don’t publish it, I think we will catch them by year-end, and then the next year on the unit count front.” Breon added, “With TurnKey, my personal belief is that they are building something more for the short term, where we are building something more long term and sustainable. Will they be a competitor in the next two years? Yes. Will they be a competitor five years from now? I think that is unlikely.” “Looking at the competitive landscape throughout the field, I think that owners care about two things. They care about how much money they are going to make and who is going to take care of their home. Our goal at Vacasa is to win on both fronts. We are already incredibly good at optimizing revenue, and we do a great job at taking care of homes. The one big niche out there for property management companies is to be that high-touch property manager that has a pool of homes in which they do an unbeatable job at keeping their owners happy. There are owners out there who don’t care how much they are earning. That will always be a significant segment of the vacation rental industry.” VRM Intel Magazine | Summer 2017

Three Types of Business Intelligence for VRM s

hat exactly is business intelligence (BI)? Essentially, BI is an umbrella term that includes all the applications, infrastructure, tools, and best practices that enable vacation rental managers (VRMs) to access and analyze the information needed to improve and optimize their companies’ decisions and performance. As we move into the future, the ability for a VRM to access, understand, and act on multiple sources of data is the next frontier in establishing a sustainable competitive advantage. For VRMs, there are multiple advantages to optimizing the use of BI:  Creates a Knowledgeable Team By turning your team from report runners into informed decision makers, BI tools crunch the numbers and provide intelligence and analytical views in seconds.  Gets Your Team on the Same Page When reporting and analysis take place using one single version of the truth, the team is able to stay on task and speak the same language consistently, even when people come and go.  Provides Insight and New Information With an optimized BI environment, your team can view the business from new angles and gain better understanding of the business, which is something that is difficult to get solely from your software or revenue management system. 56

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 Helps Develop the Vision for the Future By analyzing recent and historical performance, your company can identify trends and apply this knowledge to the future to spot potential performance concerns while there is still time to take corrective action.  Measures and Improves Performance There is a saying in business that goes, “What gets measured gets done.” Analyzing key performance indicators (KPIs) over time enables VRMs to establish goals and track progress over time. In the vacation rental industry, there are three broad types of BI: B Internal Intelligence C Market Intelligence

D Comparative/Competitive Intelligence

B Internal Intelligence Internal BI focuses on your internal systems, primarily providing a view on internal operations and past performance. Some examples of internal intelligence include year-over-year gross revenue, rental revenue, occupancy rates, and expenses. For many property managers, internal reporting is still largely created and viewed by downloading information into Excel, slicing and dicing the information, and then presenting these reports to management.

Cost per acquisition, cost per click, conversion rate, ROI, open rates, cost per channel

GUEOW

Revenue per FTE, total labor hours, gross operating cost per available night

AND LES G SA RKETIN A

& HR ATIONS ER

ANY P M IDE W

D R AN CE NE SERVI ST

ADR, occupancy rate, RevPAN, revenue, total rent, total fees, booking window

Retention rate, net promoter score, reviews, guest and owner surveys, cost of care per unit

According to an Intelligencia training article, “Business intelligence must look at internal and external data.” This reporting style is both antiquated and time prohibitive: “In the early days, report filing was largely in the form of custom-made reports in excel, prepared by IT and delivered to executives and managers. Even editing a report—never mind building a new one—was a task that required analysis, project management, a lot of overhead, and many man hours.” Property management systems and add-on reporting tools have recently been enhanced to display certain metrics, and VRMs have access to a new generation of reporting tools that deliver the data from the software in a way that helps their customers understand their business. VRMs are now able to explore new, complex sets of data by simply clicking a mouse.

When properly implemented, these systems give managers valuable insight into all aspects of the operational process, from call center performance to guest and homeowner retention rates to the cost per unit for all aspects of property care.

C Market Intelligence Market intelligence includes identifying and analyzing a broad sphere of market conditions that affect numerous aspects of your destination:  Events and attractions  New developments in the local market  Environmental conditions  Economic and political factors  Competitive environment  Marketing/distribution environment

Local property management companies have an advantage over national companies in market intelligence. While national companies are able to factor in broad trends and major holidays and events, local companies often have insider knowledge of destination-specific intelligence. For example, a local VRM may know that an area of the destination has been affected by a new construction project, bridge/pass closure, or an area sports tournament. National companies are slow to discover these types of conditions and are even slower to capitalize on their impact.

D Comparative/Competitive Intelligence Knowing how your company is performing in relation to your local market and in contrast to your competitors allows you to make fact-based revenue management decisions, create and adjust marketing campaigns and initiatives, establish accurate revenue projections, and analyze your company’s performance in relation to the broader market. Comparative/competitive intelligence also gives you greater visibility into your marketing performance. By comparing your company’s performance to your market’s performance, you can quickly analyze whether any fluctuations that arise are pricing related or marketing related. Additionally, with comparative reporting, you can view, investigate, and compare your feeder market performance and determine if additional dollars need to be allocated in specific markets.

Comparative Reporting Executives and revenue managers in the hotel industry utilize a reporting tool known as the STAR (Smith Travel Accommodations Report) to benchmark their hotel’s performance against its competitive aggregate and local market. However, historically, the vacation rental industry has had a difficult time generating a similar tool. Five Reasons Comparative Reporting Tools Have Not Gained Traction in the Vacation Rental Industry B Reliance on Self-Reporting: Old attempts to create such a tool gather data via self-reporting. Each vacation rental company compiles and views its data in a different way. Consequently, relying on self-reporting does not yield accurate, consistent metrics across markets. C No Critical Mass of Data: No reporting tool has been able to achieve a critical mass of data across markets. Whether due to a prohibitive sales model or a hidden agenda, VRMs have not had access to an independent, unbiased model that they can trust. D Historic, Not Forward-Looking, Data: By the time a VRM receives market reports, the data is historic and no longer actionable. While there is still some benefit to evaluating historic performance, the vacation rental industry needs to be able to access information in a real-time way to optimize its marketing and revenue management strategies.

E Technology Challenges: Creating a reporting tool that displays apples-to-apples, accurate data requires integration with property management software (PMS), which has been difficult, time-consuming, and expensive. F Lack of Trust: VRMs need to have complete confidence that the company providing the reporting is independent and unbiased, is not gathering personal identifiable information on guest and homeowners, and is not using the data to sell its other technology tools. VRM Intel Magazine | Summer 2017

VRM Intel’s VI Reports

With VRM Intel’s VI Reports, VRMs can:  Compare key performance metrics against their local, regional, and state markets, including average daily rate, occupancy rate, RevPAN, booking window, and a dozen additional metrics;

At VRM Intel, we are hoping to change all of this with the recent launch of VI Reports for professionals. In a world where clean, unbiased reporting is necessary to make successful pricing and marketing decisions, at VRM Intel, we believe we are the only independent, neutral organization with access to thousands of professional VRMs and the expertise to provide legitimate, accurate comparative reporting. We have brought on former Instant Software COO Ted Miller to head up this initiative. Miller has extensive knowledge of the vacation rental industry, the data within the PMSs, and how to map data from multiple systems into a common and consistent database. We have also partnered with data scientist and developer Mike Van Thiel, founder of Known Factors, which provides advanced reporting tools for multiple industries, including travel and vacation rentals. Additionaly we have added industry veteran Rob Johnson to the team to head up the sales and marketing effort. Johnson has been bringing new technology products to the vacation rental industry for over twenty years and has a unique understanding of the technology challenges that professional VRMs face. Furthermore, we have worked with multiple property managers, technology providers, and industry leaders to develop the comparative reporting tool.

 Select and compare custom date ranges;  Filter results by multiple attributes, such as property types, property size, location, and widely used amenities; and  View data in a mobile-friendly, easy-to-understand dashboard. At VRM Intel, we are committed to our mission of providing affordable information, resources, and tools to the professionally managed vacation rental industry. VI Reports is the latest addition to the VRM Intel Toolbox, and the pricing is set to be affordable for every VRM, regardless of size. According to Doug Kennedy, founder of the Kennedy Training Network, “When the right organization that offers data privacy and an unbiased approach comes along and offers the VR segment of the lodging industry trend reporting similar to STR, embrace it fully. It is way past the time to add this to your toolkit.” We hope to provide just this kind of reporting tool to the industry.

For more information, go to www.vrmintel.com/vireports, or call or email Rob Johnson at +1 (410) 829-0711 or rob.johnson@vrmintel.com.

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VRM Intel Magazine | Summer 2017

Revenue Management By Edgar Garin

Considerations Before You Get Started

he vacation rental industry is, at last, about to cross a major threshold. Airlines were, of course, first to jump on the bandwagon and use massive amounts of data to make pricing dynamic subsequent to deregulation. And demand data points—both leading and trailing—which the hotel industry was first able to access in 1989 with the introduction of the STAR Report from STR Global, will now become available to the vacation rental industry. Yes, it is going to be exciting to help this industry implement the best practices, the strategies, and the tactics that helped the hotel side of the lodging industry grow profits.

As these new tools and reports roll out in the coming months from companies such as VRM Intel's VI Reports, we will introduce enhanced revenue management training for the vacation rental industry. Here are just a few points to consider as you begin—or continue—the journey to greater profitability. 60

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 Understand Your Own Product It is a more common mistake to overestimate what you have to offer than it is to underestimate it. This is normal human behavior. It took years in the hotel industry for Holiday Inn to understand that it was not Marriott. More important, it took years for them to realize that their customer was a different customer. Know precisely what you are offering. If you are five miles away from the beach, it is essential that you understand that although you may compete for customers with beachfront properties, the location criterion is not the one that will help you win the battle. You may prevail because of better facilities, friendlier policies, or more attractive pricing, so do not give up the fight.  Simplify There is a difference between a four-bedroom home and a five-bedroom home. But is there truly a difference between a four bedroom home with three baths or three and a half baths?

Each variable you introduce into the analytical process also serves to weaken statistical conclusions. The market is already rife with differences among properties and units, and creating more within your own inventory will not serve your best interests in making speedy decisions with the information you have at hand. Yes, speed is a factor.  Choose your Competitive Set Wisely If there is one topic on which a whole article could be written, this is it. We will be dealing with that issue in another article soon, but for now, let us just state the most obvious points.

You compete with similar products, which may or may not be in the same city, county, state, or, in rare cases, country. My hometown of Miami Beach, which by the way, is in the process of addressing how to deal with short-term rentals in residentially zoned areas, does not compete with Big Sky or Singapore, but it certainly competes as a vacation destination with Fort Myers, Myrtle Beach, and probably even Cancun.  Data Reporting Before even addressing the issue of data analysis, it is absolutely essential that you and your team provide accurate and adequate data to the reporting platform. The fact that the newer tools are addressing this through automatic sharing from information system to information system almost takes this requirement out of human hands—fortunately. When data was faxed in and hotel managers would fudge numbers, I remember thinking they would benefit. However, when data is incorrect, it will affect everyone’s information. And if your competitors’ information is wrong, that will obviate any strategic or tactical decision you may have made based on analysis of the data. Once again, do not be afraid to submit your data. All the companies providing reports on market trends will mask the data so as not to reveal a company’s confidential statistics.  Trailing Data It is said that the past is prelude to the future. And you must know the past, recognize it for what it is, and move forward to create your own future to the best of your ability.

Knowing and being disappointed that last year, and for many years before, you did not sell out for, let us say, a peak event week such as Easter, only provides part of the picture. How is your reaction changed by knowing that none of the competitive set sold out or that you had the lowest rates in the market but not the highest

occupancy? It could be that your competitors might have run a highly effective multipronged advertising campaign leading up to Easter booking periods. Or it could be that you didn’t respond to rate resistance. There are many factors to consider, but one of them—unlikely as it may seem—may be that your destination is saturated with product, and it will be some time before the words “sell out” and “Easter” are used together again. That being said, you must learn to recognize patterns that you can see. Some are more obvious than others, but understanding these will help shape your future.  Leading Indicators Just as past data will provide you with patterns, processing information already residing in the Cloud that relates to the future is essential to your success. Property management systems are able to provide information that seemed impossible to attain even a mere thirty years ago. How many arrivals are scheduled to come in on the fourth Thursday in October for three nights into a tenroom cabin? You are able to drill down to that level if you wish, but whether you want to drill down that far is another issue. But the mere fact that you are able to tell the volume of reservations and the number of units sold on any given night and at what price allows the savvy operator to “shape” his or her own occupancy and revenue curve.

And the last point is one that should never be underestimated:  Revenue per Available Night

(RevPAN)

Years ago the hotel industry struggled with metrics: Average Daily Rate (ADR) and Occupancy Rate. A hotel might run an impossibly high occupancy, but a closer analysis would show that significant revenue opportunities had been lost. Conversely, there was hubris, or pride, that came with bragging rights about the highest ADR in the market. And, again, one might find that this came at the cost of not maximizing revenues on behalf of the owner.

RevPAN (or whichever abbreviation for that metric we use going into the future) combines those two elements. Depending on the contractual agreements, the operator will almost always benefit by running the highest possible RevPAN. In the future we will address whether RevPAN should include incidental charges and fees incurred by you as the operator.

The seeds for effective monitoring of market performance have already been planted with products either already out or soon to hit the market. It is now incumbent on the operators to embrace this change to the landscape and learn how to get the most out of it.

About Edgar Garin

A veteran of the hospitality industry by age eighteen, Edgar Garin says, “I started my education after graduating from Cornell’s School of Hospitality Management.” Climbing up the ranks within hotels while earning his master’s degree in international business from FIU, he was appointed asset manager for a major real estate entity in 1985, where he focused on revenue management of a $3.2 billion portfolio and later settled in as a general manager. By 1989 he was back in a corporate environment, where he designed, trained, and oversaw the revenue management functions of a company with sixty-four hotels and resorts. In the 1990s, having participated in the rise of electronic reservations systems and distribution channels, he presented training programs throughout the country for HSA International while also providing consulting and marketing solutions to hoteliers in Central and South America and the Caribbean. Garin is a member of the Kennedy Training Network.

How well do you know your properties? By Jeremiah Gall, Founder, Breezeway

Using Smart Property Data, the Critical Raw Material of Property Management

onsumed by users on unlimited plans, analyzed by scientists, leveraged by marketing teams, and the basis of informed management decisions from the largest hotel down to the smallest property manager, data is at the center of our digital lives and the raw material that our modern businesses are built upon. This is not new information. Many rental managers use data and sophisticated processes for dynamic pricing, guest engagement, website and search optimization, and driving marketing budgets and lead generation efforts. However, few managers leverage or appreciate the value of rich property data when it comes to their back-office operations, property care programs, and maintenance efforts.

Few managers leverage or appreciate the value of rich property data when it comes to their back-office operations. Data-driven, organized property care and maintenance are the best methods for property managers to grow their inventory and revenue. In this article, we will discuss what intelligent property data is and why itâ&#x20AC;&#x2122;s important. We will also note three areas of your business where prioritizing data leads to real value and revenue for managers.

Comprehensive and Actionable Property Data When managers first think of property data, they associate data with the marketing profile: beds, baths, and descriptions of amenities. However, there is so much rich data that managers can useâ&#x20AC;&#x201D; for example, the nitty-gritty operational data that drives a successful property care program, from appliance serial numbers, history of HVAC maintenance, and last chimney cleaning, to trends in pH levels and lengths of driveways and filter sizes. Combined with additional data, such as the linen count necessary for a turn day, average time to clean, digital records of inventory, and routine inspection reports and seasonal checks, you can create a comprehensive record of the property.

These data points, historical care, and in-the-field interactions with the property are only valuable if used effectively. To do that, especially for true management of a property, all these details need to be: (1) accessible and (2) organized. Without both characteristics, the data lives in a silo. Picture a file cabinet with no folders, just paper checklists and maintenance work orders for each property. Records like these are not just messy, they are not accessible to staff and impossible to share externally with vendors and owners.

For many property managers, their property data lives in the digital equivalent of a disorganized file cabinet. When it comes to back-of-the-house operations, this is a familiar scene for property managers. Many have moved parts of their operations to digital records and work orders for their maintenance 62

VRM Intel Magazine | Summer 2017

staff. However, these digital files are typically a series of Google docs or custom fields in property management software that are disconnected from maintenance and inspection records and your team and provide little insight. For many property managers, their property data lives in the digital equivalent of a disorganized file cabinet.

With truly organized property data, managers continually add to a robust property profile. Instead of silos, now the property data looks like an ever-growing, interconnected web of information that serves multiple purposes across the company. Actionable data, available to the whole team, are the real trick to unlocking the full value of property management services.

Actionable data, available to the whole team is the real trick to unlocking the full value of property management services. When the entire team can access information, and work effectively, back office operations become more efficient, quality improves, and opportunities to offer additional services are created. Efficiency gains alone should lead to a 20–30 percent reduction in overhead costs, which is the industry average for facilities managers using maintenance management software. In addition to substantial operational savings, this is the service quality improvement that rental managers should be seeking. With actionable data and intelligent workflows, managers can be proactive, ensure that nothing falls through the cracks, and deliver exceptional service.

Three Ways to Leverage Intelligent Property Data We consistently hear complaints from rental managers about a lack of insight into their property care and maintenance programs. Even some sophisticated managers question whether their maintenance services are profitable. As managers look to grow their business, scale operations, and streamline processes, they are becoming more reliant than ever on data. Below are a few examples of how forward-thinking managers are using intelligent systems to leverage property data. With comprehensive, actionable property data, managers can implement valuable programs and initiatives to leverage this information. This informs the entire back-office operation and provides insight. B Improve Operational Quality Without a structured way to collect and manage data, it is difficult for managers to disperse information among the team, creating unnecessary back and forth between internal staff and vendors, resulting in confusion and extending the time necessary to complete a task. • Use data from previous clean times to smartly schedule staff and meet challenging turn days. • Leverage historic property data to predict rental readiness and manage early check-in more effectively. • Share the progress of a cleaning or maintenance issue in real-time across the entire team to avoid surprise delays and stay ahead of scheduling backups. • Associate marketing photos with housekeeping tasks so staff has reference photos to ensure the property meets standard property appearance. • Enable consistent communication among different departments, ensuring everyone is working from the same property data. C Upgrade Proactive Maintenance Property requires upkeep, plain and simple. Vacation rental properties have a constant flow of traffic, and maintenance issues need to be addressed quickly to keep the property guest-ready. It is difficult to provide great property care and do it efficiently when your team is constantly in a reactive mode and putting out fires. Even worse are the ancillary costs: guest frustration, potential negative reviews, and questions from owners about why surprise repairs were needed. By creating the foundation for proactive maintenance, managers can reduce many of these costs. • Share detailed property information and service history to improve response time, make sure people arrive with the right

parts the first time, and reduce duplicate work.

• Offer ancillary services like chimney cleaning, window washing, or tree trimming at the appropriate time of year, leading to better engagement and improved property maintenance.

• Easily generate customized preventative maintenance schedules and dynamic pricing of services based on the details of each home and actual scope of the work. D Share Details and Expertise One manager mentioned his owners only know 20 percent of the work the management company completes on their behalf. The hard truth is that reporting this to an owner today would, at a minimum, require devoting a team member to identify what was completed and translate this property data into an owner-friendly format…both of which require a commodity most managers cannot afford to lose: time. • Record the minor work and property care completed as a matter of routine maintenance—but which is rarely communicated to the owners. • Share real-time reports for owners, allowing managers to showcase professional knowledge and charge more for their management services. • Drive detailed property reports to demonstrate how familiar the manager is with the property, gaining more homeowner trust by providing full transparency into the upkeep of their property and allowing managers to make continued repairs to increase bookings. • Build a scalable solution to engage with second homeowners who are not renting, creating a feeder channel to rental programs.

Embracing Property Data Until recently, there were few options for rental managers if they wanted to build rich, detailed profiles of their properties. Some property management software systems are beginning to include deeper back-office functionality like digital inspections and automated cleaning workflows; however, just like website optimization, advanced guest management and email marketing campaigns require additional solutions beyond the basics. Managers can uncover more value by embracing software and technology to enhance their property care programs. With an inventory of unique properties, each with their own characteristics and owner idiosyncrasies, vacation rental managers have incredible operational challenges to meet. These challenges are even greater without an organized property data program to help deliver operational efficiency and, more importantly, capture the full value (and revenue) of the property care and asset preservation services that managers diligently provide. Property care, that ranges from familiarity with the home and history of maintenance to relationships with in-market services, is the special sauce of vacation rental “property management.” Managers that start leveraging property data and technology will elevate their back-office operations and be primed to grow their business in the competitive vacation rental market. Intelligent, organized property data that the whole team can act upon will help managers deliver the best service to their guests, impress their owners, and attract more second homeowners who are looking for solutions for quality property care. VRM Intel Magazine | Summer 2017

Stay Alfred Introduces Hotel-Like

Short-Term Rentals to Downtown Urban Markets

ounded in 2012, Spokane-based Stay Alfred manages four hundred short-term rentals in busy downtown areas in twelve major U.S. cities, with plans to grow its rental inventory tenfold and expand internationally over the next three years.

Stay Alfred founder Jordan Allen formed the company with partner Conrad Manfred, who eventually moved on to other ventures. “Alfred” is a combination of the cofounders’ names—though they went through multiple name iterations before settling on Stay Alfred. Those in the industry who have had the privilege of getting to know Jordan Allen know that he is an insightful, out-of-the-box thinker

average stay of 4.1 nights for 4.4 people, the company caters to families and corporate travelers looking for larger spaces, vacation rental amenities, and a more local experience—but with hotel-like standards. “The top markets we have entered are undersupported with this kind of new short-term rental concept, particularly in downtown areas,” Allen said. “At Stay Alfred we go in, test the market, see how it is working, and then expand within the city.”

Stay Alfred has a variety of economic models for securing inventory, but Allen doesn’t manage homes in the traditional sense. He primarily leases units under long-term contracts but has recently transitioned to leasing entire apartment buildings to control the entire guest experience.

who has taken the time to study the vacation rental and hotel industries and carve out a niche for his fast-growing company.

The Stay Alfred business model is laser focused on short-term rentals in downtown locations in major US city markets. With an 64

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Allen explained, “It is much more like a hotel operation, and now we are master leasing whole buildings. Instead of going out and renting two or three units in a building, this gives us flexibility on signage, corporate sales, and government contracts.” The challenge with Stay Alfred’s model is that it is responsible for the long-term lease payment of its units, regardless of whether it is able to maintain occupancy. “We carry the cost of the rent, which is why we are really hungry to make sure that we can make reservations,” Allen said. “There are certainly benefits and downsides of the model. The benefit is we don’t have to deal with owners and guests; we just have to deal with guests. But we have the rental amount of these properties that is due every month, and it can turn into a really scary number.

“This model pushed us to be at the forefront of revenue management and distribution, so we have turned into more of a differentiated hotel/hospitality company than we are a vacation rental company,” said Allen. “But we grew up as a vacation rental company, so we understand the industry and have merged the best of hotels and the best of vacation rentals into one hospitality model. For example, when we go into a city, we don’t go into the suburbs and into the residential neighborhoods. We only have properties in major downtown markets.” “This last year was a huge year for us,” said Allen. “We just completed a large capital raise and really narrowed our scope and articulated our identity and corporate strategy.”

Allen is referring to the company’s January 2017 raise of $15 million in a Series A investment round. Stay Alfred will use the funds to scale across more cities in the United States and launch inter-

nationally in about eighteen to twenty-four months. Stay Alfred’s goal is to grow to more than four thousand properties around the world.

“We’re building nationwide, and the reason for the capital is [we are] building an international brand that lies between your consistent hotel stay and this new vacation rental, short-term rental, Airbnb/HomeAway stay,” said Allen.

Regulations With city regulations in flux, we asked Allen how he maneuvers changes in legislation.

“We’ve been able to figure out the regulatory landscape in every city we are in,” Allen said. “Things do change, but while there is always legislation coming down the pipeline, more often than not, VRM Intel Magazine | Summer 2017

it doesn’t seem to actually go into action by the time the signing of it comes up. A lot of cities are smartening up and seeing what happened in San Francisco and Portland and realizing that trying to completely ban short-term rentals or not trying to come up with smart legislation around it just drives people to do it underground, which nobody wants.”

Opponents of short-term rentals are labeling operations like Allen’s “illegal hotels,” but Allen disagrees, primarily because his model is not illegal. “We have seen dominant cities, like New York and San Francisco, coin the term ‘illegal hotels,’ and it has become a national term. But each city has its own regulations down to zone or use or in a specific area. We are legal in every city we are in. When you get to a certain size of business, it just isn’t worth it to operate outside of the law. You can’t build a brand and be a fly-by-night, illegal company.”

OTA Strategy Even though Allen has a more hotel-like offering, he is continuing to operate distribution through major vacation rental channels, and the majority of his bookings are still coming from VRBO

a lot of bad actors into the space.

Technology In October 2016, Stay Alfred transitioned to Streamline’s property management software.

“One of the big reasons that we decided to go to Streamline is that its distribution is best in class in the vacation rental space,” Allen said. “With our old website, our direct online bookings were about 5 percent of the total, but with our new website—and Streamline and Bizcor helped—our direct reservations increased to 20 percent, which is huge when you are paying some of the commissions to OTAs.” Allen added, “Every system has its strengths and weaknesses. If you plan on growing and getting big, you have to go with a larger company like Streamline, and we have a lot of proprietary technology we are building.”

Allen has also developed an intricate revenue management system, and it now yields externally through the Streamline API. “I love revenue management. The hotel world has a completely different and opposite style of revenue management than vacation rentals have. Running a competitive set is very difficult. In fact, it is pretty darn close to being impossible to develop a stable comp set in our space. A hotel-style revenue management system is very complex and specific to a hotel, and on the vacation rental side, we have a different yielding methodology. I can’t imagine that the hotel style will ever work in the vacation rental industry and vice versa.”

Lessons Learned We discussed the lessons that Allen learned along the way. Allen said, “You do your best, and you have to care. In this business, you are passionate about everything. You may not be able to please every guest. But you have to continue to run your business, and you can’t let one guest experience get you down.”

and HomeAway, even though he believes that Airbnb has a better product. “Even though Airbnb has been a leader in the sharing economy with its public-facing image, I think many people don’t realize that commercial operators and owners who are renting out their entire homes represent the majority of their inventory. It seems to us that people don’t want to share accommodations when they are traveling, especially with families and business travelers. Maybe Airbnb started out that way, but it is now primarily entire homes and has really become more of a VRBO/HomeAway–type product. They just have a better product than HomeAway or VRBO.”

Allen continued, “But Airbnb is a blessing and a curse for us. They have brought a lot of bad attention to our market. Before Airbnb, we didn’t have any issues with buildings or regulatory issues. They have brought awareness to the industry, but they have also brought 66

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Allen continued, “This is a hard business. Our guests are spending a lot of money on their precious vacation, and if things don’t go perfectly right, it can get bad really quickly. We started putting performance metrics in place and processes to measure guest satisfaction so that we are not relying anecdotally on one-off guest experiences to make our decisions.” “I would love to tell you that we have a secret sauce, but we don’t. The number one thing we do is pick up the phone. The biggest strategic advantage we have over our competitors is that we answer all calls at all times of the day.” “In a hotel, you know what you’re going to get when you show up,” Allen added. “For us, we can manage guest expectations because we have Class A buildings with Class A amenities. Guests can cook, do their laundry, have a local experience, and have [the] best of both worlds. Control of the entire guest experience is a major advantage for us,” he said. “At the end of the day, most of our ‘competitors’ are marketplaces for someone else’s widget. We’re the marketplace and the widget.”

VRM Intel Magazine | Summer 2017

The Dangers

By Amber Mayer

of a “Good-Enough” Platform

How and Why to Rethink Technology Choices

f you’ve ever remodeled, replaced a roof, or landscaped a yard, you’ve probably had an experience with contractors and therefore understand the cliché about the lowest bidder providing proportionate work quality. As astronaut Alan Shepard said, “It’s a very sobering feeling to be up in space and realize that one’s safety was determined by the lowest bidder on a government contract.” A low bid doesn’t necessarily mean low quality, but it’s worth asking: “What am I not getting at this price point?” and “Is this decision too critical to make based on price alone?” Technology investments require these same questions.

Hospitality companies have complicated tech stacks. For the most part, due to data silos and integration issues, they’re pieced together like Frankenstein’s monster. This challenging environment makes every choice in technology that much more complicated but important, especially when it comes to essential guest and CRM software. The technology must not only increase efficiency and revenue, it also needs to play well with other applications. One hundred percent user adoption isn’t just the goal—it’s imperative. Therefore, a “good enough” solution won’t suffice for VRMs that require every edge in occupancy and revenue, especially with a booming new supply. Merely saying “You get what you pay for” is an oversimplification.

VRM Intel Magazine | Summer 2017

“Do your homework” is more like it, especially if you are accountable for the result. Choose poorly, and you might have to answer some tough questions. Choose wisely, and you might be a hero.

Hospitality technology platforms are business-critical. If you settle, you’re leaving much to chance. If it’s your reputation on the line, you’d better be sure it’s the right call.

The Keys to Choosing the Best Technology for Your Needs Even if you do your homework and still choose a less-than-ideal solution, the reality may not match what you heard and saw in the sales meeting. Then come the “gotcha conditions,” and you’re back on the phone with your account manager, trying to figure out if the provider can add on or customize to meet your requirements—and if so, at what additional cost?

Without a clear grasp of your priorities at the beginning of the decision process, it’s easy to get distracted by the bells and whistles and lose sight of your true needs. These are the big-picture goals you should have a firm grasp on before considering investing in a technology solution:  What are your annual goals for occupancy and RevPAR? Are you on track? If not, in what area(s) do you require the most support to get there?

 The direct voice channel brings in more revenue per reservation than any other channel. Voice channel room rates are typically 30% over national hotel ADR. What are your goals for the direct channel, and how do you plan to support them?  Review team performance. What percentage of reservations agents are low or middle performers? If these numbers are too high, where should they be instead?

The Problem with a “Good Enough” Platform What some tech companies actually offer is a DIY tool. They bill you monthly and provide little to no training or support. If you’re an expert who can master that tool and be the go-to person for questions, it might work out. But if a problem arises, whom will you go to for support? Do they have industry experience or expertise? The added expense of a premium provider almost always comes with added value, but that value might far exceed the investment.

For example, inquiry tracking and lead management aren’t the same thing. Formal lead management creates one lead that is traceable throughout the guest’s entire history. This may not seem like a big deal, but a significant percentage of guests call repeatedly, especially when they are booking high-consideration stays. They do this because consumers are often confused or overwhelmed by their options. Their travel plans may include more than one person and often more than one family. They may start their research online and then continue it with a phone call or an email. An inquiry-tracking platform can’t funnel all activity into one channel the way a lead-management platform can.

Similar examples abound for security issues, training, compliance reporting, and more. Filling in service gaps is costly to business, whether it’s the result of not closing the business or attaching more third-party solutions to the tool. Settling for “good enough” just doesn’t make sense.

Six Considerations for Getting Better Than “Good Enough” Technology (AKA the Best) So how do you get the best possible technology solution with so many companies knocking on your door? Start not by reviewing an A–Z list of product attributes but instead by looking behind the scenes to get a sense of the quality they are offering. B The Name of the Game: Adoption

Platform adoption is what it’s all about. If your staff isn’t on board, new technology can do more harm than good. Look at adoption rates and explore what the tech provider does to encourage adoption by your staff, such as compliance reporting and a rewards structure. Ultimately, simplicity isn't the solution. A complex interface is necessary for hotel sales technology; however, the user experience must be intuitive and approachable. The training/support must also be attuned to your staff ’s needs and be widely available. C Industry Experience and Tech History

There are many sales platforms in the marketplace, but few understand the specific needs of the hospitality industry. Therefore, explore the company’s knowledge of and experience with sales and marketing operations. Also, consider the history of the particular technology. As Forbes notes, “Think of technology the way you think of the iPhone. It took about three versions to really get it right. The earlier a technology is in its lifecycle, the less reliable it’s going to be.” 2

D Owned or Third-Party?

Many tech companies will use third parties for portions of their service. If this is the case, who is accountable when service goes down? Whom will you call, and how quickly will these people respond? Companies that don’t outsource pieces of their technology are fully accountable for outages and downtime—they are required to be dependable. E Who’s Behind the Tech?

Know if there’s another company backing the technology. (For example, Oracle backs Java.) What is that company’s track record? Does that company have any interests other than your wholesale success at reservation sales? F The People Behind the Code

A company that is invested in your success will take you further, period. Find out exactly what the account managers do for you once you’re on board. The ideal solution is to find a company that supports revenue management strategies (because this is what reservations sales is about at the end of the day) and will deliver consistent educational opportunities that evolve with the industry. G The Case for the Cloud

Cloud-based solutions are the baseline now. The cloud is more secure, and information is easier to retrieve, which speeds up every aspect of business and prevents losses. Cloud-based solutions also offer the most flexibility. The platform should be available on all devices at all times. H Data Security

Your guests’ personal information is sacrosanct, and you need to be confident that it is secure. Sensitive call-center data should be protected by the best privacy and encryption practices money can buy. Look for vendors that have or are working toward PCI compliance—a cross-industry security standard.

Passable. Adequate. Fair. Good enough.

In business, we often settle for passable options in ways we never would in other areas of our lives. If we aspire to have only adequate homes and acceptable relationships, our lives begin to look pretty uninspired. If we settle for the lowest bidder, we build a less sustainable structure. The same goes for business. Good enough isn’t enough. In fact, it usually comes at a price. Cindy Estis Green and Mark Lomanno, Distribution Channel Analysis: A Guide for Hotels (Place: Publisher, 2012). 1

Mike Hostetler, “Seven Questions to Ask before Choosing a Technology Stack,” Forbes, July 2016. 2

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 | Summer 2017

Creating Predictable

Direct Bookings at a Predictable GAC

(Guest Acquisition Cost)

By Matt Renner Partner, TRACK

reating and sustaining a direct booking channel is actually quite easy—and predictable. It really comes down to knowing a few simple math formulas and having a company and the technology to track and make adjustments for the optimal result.

Online Formula:

Users x Ecommerce Conversion Rate x Average Stay Value (ASV) = Online Revenue

Voice - Inbound Call Formula:

Reservation Calls x Inbound Conversion Rate x Average Stay Value = Inbound Call Revenue

Voice - Outbound Call Formula:

Res Calls x Outbound Conversion Rate x Average Stay Value = Outbound Call Revenue

Email Lead Formula:

Email Leads x Conversion Rate x Average Stay Value = Email Lead Revenue

Live Chat Formula:

Res Chats x Conversion Rate x Average Stay Value = Live Chat Revenue Once you know these formulas, you need only determine how much it costs to generate the following:  How many users do you get to your website? Analyze this data by month, year, and year-over-year to analyze trends.

 How many leads, forms, and inquiries do you get via email? Analyze this data by month, year, and year-over-year.  How many calls do you get into your contact center/reservations team? What percentage of your inbound calls are about

reservations (res calls), and what are your current single call conversion rates versus overall conversion rates (people booking via phone or online without needing follow-up). Again, analyze this data weekly, monthly, yearly, and year-over-year to see trends in your business.

(Note: Not knowing your call center/reservation call data can be one of the biggest hindrances to building predictable direct reservations at a predictable guest acquisition cost (GAC)).

 How many chats do you get from your website? What is your res chat rate compared to your general chat rate? What is your chat conversion rate?  What is your voice outbound conversion rate?

Let’s examine the cost analysis of this to predict our GAC by channel and what the best channels are by looking at the following:

Cost per click (user to your website) Cost per lead (email inquiry from channel/referral sites or your website) Cost per call (user calls to your contact center) Cost per chat To obtain a complete guest acquisition cost (GAC) analysis, you have to use call tracking/CRM software or your data will be incomplete. We obviously recommend our own TRACK Pulse, which is the only cloud CRM built for hospitality that seamlessly integrates voice inbound, voice outbound, live chat, and email into one system, tightly integrated with most property management software.

Let’s examine how predictable some of the channels can be. We’ll start with one of the most widely invested-in channels: pay-perclick (PPC).

PPC marketing for Google and Bing is actually quite predictable if you have the conversion data and a partner to help you manage it properly. See this formula, below:

Return On Advertising Spend Calculator Property Name

# Of Units

Annual Website Users

Annual Direct Bookings

Conversion Rate

Avg. Booking

Ancillary Rate

Total Avg. Stay Value

Bob's Resort

7,000

8,000

114.29%

$300

150

RAL Visits

Attributable Conversions

RAL Attributable Revenue

Annual Spend

ROAS

Repeat Guest Rate

Repeat ROAS

Total ROAS

7,000

8000

1200000

$15,000

8000.00%

10%

360000

1560000

Definitions: Total Conversion Rate = Annual Direct Bookings Divided Into Annual Website Users ROAS = Return on Ad Spend Repeat Guest Rate = Rate at which guests return directly over 3 years Total ROAS = Total Return on Ad Spend including repeat guest rate

VRM Intel Magazine | Summer 2017

Ancillary Rate = Spend on other products once on property - 1.25 = 25% spend for every dollar on lodging Annual Spend = Total Advertising spend on ResortsandLodges.com Conversion Rate = Total Direct Bookings / total Annual Users RAL Visits = Total Direct Website Users Sent by ResortsandLodges.com to the property website

In this formula, this property manager with 100 rentals and an average sale of $1,500 wants to generate $50,000 per month in net new direct booking revenue.

Based on their Google analytics, we plug in their actual online e-commerce conversion rate (0.26 percent). We then plug in their actual click-to-res lead call rate (5 percent of user clicks to their website turned into a res call).

Their voice conversion rate is 29 percent on all inbound res calls. With this formula in hand, we are able to see what type of budget it would take to generate the additional $50,000 in direct net new conversions they are seeking on a monthly basis. Once we plug in this data, we then analyze the average cost per click to compete in one of the top positions consistently (average position) within Google paid search results. We use $1.25 as the expected average cost per click. What resulted follows:

At a $2,500 monthly paid search budget, based on their actual conversion rates (online and offline) and their actual click-to-call rate,

agents and tracking, measuring, and coaching them toward improved performance. F Increase outbound revenue by saving non-booked calls and doing outbound follow-up.

G Increase outbound revenue by saving leads and using email drip nurturing technology to nurture leads automatically via email. H Increase online conversion rates by implementing shopping cart abandonment technology. I Decrease average cost per click by closely managing bid strategies in AdWords that optimize the highest conversions at the lowest CPC.

J Add “branding” to your overall PPC strategy to ensure that consumers do not go to third-party sites and advertise the best rate when travelers are searching for your brand. For example, here is the ROI if the average cost per click decreases by $0.10, and if the online conversion rates and voice conversion rates increase only slightly, with the same average stay value:

PPC ROI Calculator Property Name

# Of Units

Monthly Net New Revenue Target

Online Conversion Rate

Avg. Booking

Ancillary Rate

Monthly PPC Budget

Average Cost Per Click

User Sessions Generated

Bob's Resort

100

$50,000

0.45%

$1,500

NONE

$2,500

$1,15

2,174

Offline Revenue

Online Revenue

Total Revenue

ROI

$50,543.48

$14,673.91

$65,217.39

2608.70%

Click to Call Ratio

Res Calls Generated

Voice Conversion Rate

Voice Conversions

Online Conversions

109

31%

34%

Definitions: Monthly New Revenue Target = Revenue from New Bookings ROI = Return on Investment CPC = Cost Per Click Budget = Actual Spend in PPC Click to Call Ratio = Ratio of clicks resulting in a reservation call

Ancillary Rate = Spend on other products once on property - 1.25 = 25% spend for every dollar on lodging Annual Spend = Total Advertising spend on ResortsandLodges.com Online Conversion Rate = Conversions from Bookings / Users Avg. Booking = Average revenue from lodging only Voice Conversion Rate = Industry Average Conversion Rate of Reservation Calls

it is reasonable to expect (within a few percentage points) the gross ROI to be. In this case, a property manager can deduce their net ROI based on this. Add in a 20 percent (roughly) agency management fee for this type of budget (for a typical agency), and you have a total cost of $3,000 to acquire $51,000 in gross conversion. Total cost: $3,000 Total conversions: 34 Cost per conversion: $88 Revenue per conversion: $1,500 Property manager gross commission: $500 Less cost per acquisition: $88 Net = $412 x 34 = $14,008

So for every $3,000 in the paid search budget, it is reasonable to expect that this property manager will net $14,008 off of their gross $51,000 in conversion. Not bad, right?

What are ways to optimize this formula? B Increase online conversion rates by investing in better booking engine technology. C Increase online conversion rates by being aggressive with your pricing strategies.

D Increase online conversion rates by adding live chat to your website and engaging users when they are in your booking engine. E Increase voice conversions by incentivizing your reservation

In this scenario, a $0.10 decrease in cost per click, coupled with a 0.2 percent increase in online conversions and a 2 percent increase in phone conversions, leads to ten additional bookings and over $15,000 in increased revenue, with the exact same paid search budget. As you can see, by keeping a close eye on the metrics and taking steps to optimize your internal team as well as your technology, you can massively increase your ROI. This is just one way to analyze your data and create a predictable stream of direct bookings. You can run GAC (guest acquisition cost) analysis on any channel as long as you have conversion tracking in place. It is important when tracking conversions that you do not just track online because this will give you an incomplete picture of the overall return you are generating and might cause you to shut off channels that actually have a good GAC and a steady stream of travelers. Once you find a predictable channel, start optimizing the best possible results. You may eventually hit a diminishing return, but if it is predictable it may just be time to add more inventory, don’t you think? As the industry moves toward optimizing online conversions, a metrics-driven marketing approach is the only way you will be truly competitive in the direct booking guest acquisition game. Remember, top OTA companies and sites have been doing this already for many years. But the same technology used by these companies can be used to level the playing field at an affordable price for your company. VRM Intel Magazine | Summer 2017

Millennials in Vacation Rental Management By Alexa Nota

f there’s one thing I’ve noticed in industry conferences, courses, and LinkedIn posts over the past few years, it’s that there is a lot being said about millennials, but remarkably little of the chatter is from millennials. From how to get us to book your homes to why we’re inspiring the collective eye roll of earlier generations, it’s clear many non-millennials have plenty of opinions and survey results to share. But without an inside perspective, we’re only seeing this huge group of potential staff, guests, and owners in one dimension—and it’s usually not a positive one. 72

VRM Intel Magazine | Summer 2017

If we continue to approach our younger colleagues and guests with the typical stereotypes (“entitled and lazy” or “the Me Me Me Generation”), we will miss huge opportunities for growth and competitive advantages in the global travel marketplace. It’s true we are the newest and least experienced members of the vacation rental industry, but that’s not necessarily a bad thing—nor can we help it. To best harness our talents and give us the tools we need to take your company to the next level, you must first acknowledge where we came from, then get to the root of what we want you to know.

Not-So-New Kids on the Block

We seek flexibility.

Specific dates cited vary, but millennials were born generally between the early 1980s and around the year 2000. It’s fair for us to be known as tech savvy because we grew up as mobile phones and Wi-Fi became widely accessible, but don’t forget that many of us also vividly remember landline phones in the kitchen attached by a spiral cord that always knotted up in the middle. We used real printed phone books for more than a doorstop, and we went to the actual, physical library to look things up in encyclopedias. We fondly remember the days of 8-bit video games and recording songs from the radio onto tapes. Tapes! True, a lot of us do feel momentarily lost without Wi-Fi now, but we, too, spent hours suffering through the dial-up connection for AOL to say, “You’ve got mail!” We earned the right to love Wi-Fi and iPhones.

Along with our entrepreneurial spirit comes our desire for flexibility. We are adept at juggling projects and responsibilities, but with a system that works for us on our optimal schedule and in our best environment. Prime example: I’m at my most creative and productive between 10 p.m. and midnight, often writing articles in my head as I try to fall asleep or, like I am now, typing from the floor of my tiny house living room with Grace and Frankie on in the background. It’s not a coincidence that the millennial generation, the freelance economy, and the burgeoning shift toward distributed companies are taking over the workplace at the same time—they share many of the same values around flexibility and work–life balance.

Today, the youngest of us are still in high school, learning how to build our own robots and solve society’s toughest challenges with creative 3D-printed solutions that wouldn’t have been possible even a decade ago. The oldest among us are now in our thirties. We have kids on purpose. We talk and think critically about 401(k)s and lawn mower brands and all of that depressingly un-Instagrammable stuff. (Sound familiar?) We are as wrapped up in our careers as Gen Xers are, but in a less traditional way, seeking work–life balance and chasing our interests as our jobs serve as an extension of who we are.

While these characteristics may not seem so outlandish outside of the workplace, within it we are still an enigma that has inspired articles like “Effectively Managing ‘Typical’ Millennial Workplace Traits,” “You’ve Got Millennial Employees All Wrong,” and “How to Understand Millennials in the Workplace.” I’m sure every generation before us has had its own complaints and how-tos about those before and after them, but today’s Internet-driven world makes this content and all its associated griping about “kids these days” more prolific than ever. But what does it all boil down to, and what does it mean for you?

Who ARE WE Now? We’re entrepreneurial.

As a whole, millennials leap more fearlessly into entrepreneurship than generations past, and we often want and need second jobs. Many of us work side hustles (translation: gigs) and start new ventures alongside our full-time careers. Among my own four-person millennial team, all of us work two or three side jobs, including two who manage independent vacation rentals, one of whom owns two rental units himself. (Pay close attention here: millennials are quickly becoming your owner clientele, too.) As a generation, we may bristle at the typical 9-to-5 desk jockey workday, but we have no problem putting in long hours for the things we’re passionate about. We enjoy it! Sure, we have some lazy do-nothings in our ranks, but what generation doesn’t?

For property managers, this means being mindful of our off hours, because we’re probably working elsewhere or truly need a rest. It also means channeling this energy into new projects we can create and run with, then trusting us to execute them, such as handing the reigns on developing a new inventory management system to an assistant who’s expressed an interest in stock efficiency. Similarly, if you have a routine project that’s been done the same way for years, such as reservation data analysis, try giving the basics of the idea to the millennial and let him or her run with it. Let us tackle it with our own approach, and you may find we’ll discover new trends previously overlooked in old analysis habits.

While the vacation rental industry by nature could probably never be 100 percent distributed or contract based, it’s worth identifying the perks of those worlds that could be implemented with a fulltime, in-office staff. Consider flex days for your team members to work when and where they want on things that aren’t time or location dependent. Limit meetings and try to schedule them on one set day of the week to leave the other four more tailorable. Focus more on results generated than hours clocked in. I would bet this would appeal to many of our more seasoned professionals, too.

We are motivated by nontraditional benefits. If you haven’t noticed the trend yet, millennials aren’t as focused strictly on big paychecks and gold retirement watches as our predecessors. Don’t get us wrong: we do want traditional benefits— except maybe the watch—and we wouldn’t turn down a generous salary. And don’t be wooed by the ping-pong tables and nap cubes of Silicon Valley. We don’t actually care about those things. Rather, we simply place equal value on work–life balance, enthusiasm for our jobs, and the meaningfulness of our responsibilities. That’s no reason to discount us on the payroll, but it is an opportunity for property managers to find alternative ways to keep us around. Can’t offer an end-of-season bonus? How about some extra vacation days or an Airbnb gift card to help your teammates mark something off their travel bucket list? We are in the travel industry, of course!

We want our jobs to be meaningful. In stark contrast to the misconception about our lack of work ethic, we define ourselves by our jobs. This encompasses both our titles and the companies we work for. We see our careers as an extension of ourselves, so it’s important to us to find jobs and company missions that make us happy and proud to go to work. Are we booking reservations, or are we creating family memories? Are we making beds, or are we helping our guests find their first good night’s rest in a long time? We know we have to do the grunt work at the entry level and work for every promotion, and we’re happy to do so. We just want to know our work is providing value, so frame your assignments with this in mind.

We speak up, and we ask “Why?” Some of us are shyer than others, but millennials are generally more apt than other generations to voice our ideas and concerns—and to seek genuine feedback. We like to learn, contribute, and grow, so don’t take offense when we want to try a new solution to a long-standing problem or get annoyed when we ask what you think about a proposal. This is to our mutual benefit, so help us help you! We may not approach these discussions the same way as our predeVRM Intel Magazine | Summer 2017

cessors, but we know we have a lot to learn from you, and we’ll take every opportunity to do so.

Even more noticeably, we ask “Why?” A lot. I thought I was alone in bugging everyone with this question (sorry, not sorry), but a recent Inc. article, “The 1 Question That Gets Every Single Millennial in Trouble,” explained otherwise. Because I can’t say it any better myself, I want to share what author Nicholas Cole writes: “Millennials don’t ask this question out of impatience. We ask ‘Why?’ because we genuinely want to help. We want to provide value. We want to do things better.” My colleagues and clients have probably seen my brain temporarily short out when I ask this question and get the answer, “Because that’s how it’s always been done.” If that was an acceptable answer, we’d all still be cave people. And if that’s the answer you’re giving your teams, you should take a page out of the millennial playbook and start asking this question yourself.

We’re not a static, homogenous mass. I’m not saying we’re all special, wonderful little stars (except me— my mom says so). But we’re also not one hipster barista cliché or the fresh-out-of-college kids who “must be good with computers and social media” either. We each have myriad talents and interests we want you to capitalize on—just give us a chance to tell you what they are. Or don’t, and we’ll tell you anyway. Each millennial should be matched to assignments based on his or her skills, not tired, agebased assumptions. The latter can backfire quickly.

Similarly, don’t hesitate to mix up responsibilities over time as talents and interests shift. Don’t stifle new curiosities—ignite them! Remember: We like to bounce from interest to interest, so you’ll keep us around longer and uncover new ways for your company to flourish if you give us the room and tools to jump. You may discover that your outbound marketing specialist has a knack for writing, while your inbound specialist doesn’t like to write as much but is sharp with detail-oriented SEO and graphic design. Nix the inbound/outbound separation and pair them up to create a killer blog and social media calendar. We did, and it works! Have an inspector with a passion for photography? Hand over the camera and see what he or she produces. My employer did this a few years before I was hired, and now I am lucky enough to work with one of the most talented real estate photographers around. Above all, don’t perpetuate the stereotype minimizing us to lazy, entitled kids glued to our smartphones, compulsively Instagramming our food. Because we will totally Snapchat about how old and out of touch you are from our Uber ride to that craft beer bar.

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 co-founder and Editor of Travel Well Magazine and the founder of Canary Design, a boutique marketing and design studio.

BECAUSE YOUR GUEST’S INTERNET SHOULD NEVER TAKE A VACATION!

connect . brand . collect 74

VRM Intel Magazine | Summer 2017 SiliconTravel.com | 800.459.2256 | VacationAttendant.com

Page Tittle / INVESTMENT PLAN

BRINGING THE TRAVELER BACK TO YOUR BRAND Since 2002, Find Rentals has been helping professional property managers attract new customers and build their brands by delivering the traveler directly to you.

BRANDED COMPANY PROFILE PAGES PROFESSIONALLY MANAGED LISTINGS ONLY DESTINATION GUIDES AND EVENT MARKETING TRANSPARENT CUSTOMER INFORMATION DELIVERED TO YOU MARKETING OF YOUR BRAND DIRECTLY TO THE TRAVELER WITH LINKS TO YOUR WEBSITE FLEXIBLE, AFFORDABLE PAYMENT OPTIONS (SUBSCRIPTION, PAY-PER-LEAD, TRANSACTIONAL)

FINDRENTALS.COM

VRM Intel Magazine | Summer 2017

8 Tips to Turn One-Time Leads into Lifelong Guests I

n a time when travelers have innumerable travel planning choices, we often hear from professional property managers, “I can’t compete with budgets of the big OTAs.” Although vacation rental managers clearly can’t compete with their paid advertising spends, they can create an emotional connection with the incredible leads obtained from these channels. Distribution has provided vacation rental managers with fantastic opportunities to generate qualified leads and turn those leads into returning guests year after year. That said, it takes thoughtful execution to do so effectively. Recently, in a room filled with professional managers, a presenter asked the audience members if they felt it was critical to have a strategy that drives direct traffic and stays in front of past guests. Most attendees raised their hands enthusiastically. The speaker then asked the audience members if they were executing such a strategy well. The response was insightful—most did not respond with confidence. We all know we should develop a strong strategy, so why is there such a discrepancy between saying and doing? Professional vaca76

VRM Intel Magazine | Summer 2017

tion rental managers have an extraordinary advantage and opportunity to make an impression on travelers. They have the local presence and knowledge, unmatched experience, support staff on-site or nearby, related concierge services, and the innate ability to help vacationers create lasting authentic experiences. OTAs are not going anywhere, thank goodness! Our distribution partners have contributed to building our industry, extending awareness of vacation rentals, and providing professional managers with excellent leads. However, their responsibilities stop there; it’s our job to take these leads and develop lifelong loyalty. Here are eight tactics to drive your strategy, but keep in mind that this is just a start. There is always room to optimize, refine, and expand. B Develop Thoughtful, Nurturing Campaigns with Email One of the best opportunities to stay in front of your guests is through email. After a confirmed reservation, trigger automated messages to place your brand on the traveler’s radar. This campaign should include, at the very least, the following emails: confirmation, prearrival, concierge, travel insurance reminder, during-stay

your staff to inform those they come in contact with of the value propositions when booking directly with you. F Provide Smart In-Unit Messaging When guests arrive at one of your properties, you have a moment to imprint your brand on their minds. This in-unit initiative should include a captivating brochure or media piece of some sort that reiterates your value. G Create an Exceptional In-Property and On-Site Welcome Experience The in-unit arrival is also an opportune time to show that you care and are available for anything guests may need. Many professional managers take this time to provide a bottle of wine, a fruit basket, flowers, or snacks and ensure their brands are prominently displayed while doing so. H Implement Specials for Referrals and Past Guests Create a relevant promotion that will resonate with past guests. These specials may include one night free, a discount on the total price of a rental, or a vacation package that is relevant to that guest. For example, if the guests enjoyed golf on their last trip, you may want to include greens fees. Additionally, you should consider creating a special for referrals from past guests to their networks of families and friends. This unique opportunity will extend your brand to new leads while also providing added value for past guests. I Generate Social Campaigns That Emotionally Connect and Drive

Brand Awareness Social media has continued to reign as a driving factor for increased travel across the world, and more guests are looking for authentic experiences than ever before. Capitalize on these platforms to emotionally engage and keep your brand at the forefronts of their minds. Create custom hashtags, photo contests, or giveaways related to their mentions, shares, tweets, or posts about your company.

check-in, postdeparture with a survey, and a reminder to book the following year. C Create Paid Digital Advertising Messaging That Targets Past Guests Remind past guests of your brand and dreamy memories of their vacations with smart messaging. Use dynamic ads to display images and content relevant to their stay. D Build a Custom Landing Page on Your Website With a custom landing page, you have the chance to communicate your value proposition for booking direct. These value propositions may include lowest-rate guarantees, extensive experience, local knowledge of the area, low deposits, on-site management, or liberal cancellation policies. E Train Your Staff to Inform Incoming Phone Call Leads and Current

Guests and Their Networks Booking direct can be an educational hurdle. Leads and guests may simply not know that booking direct is the better option. Train

Creating an effective campaign to drive direct bookings may seem like a large undertaking, but trust us, the upside is well worth it! You will grow your bottom line, drive revenue, limit third-party commissions and fees, add value for your existing owners, and aid in the acquisition of new owners as well. So don’t wait—get started today. If you need a guide to assist you in developing this strategy, reach out to Bluetent’s team of consultants. We’re here to help your brand shine and to turn one-time stays into lifelong guests. If you would like to speak with our team about your strategy, please don’t hesitate to reach out: sales@bluetent.com | 970.704.3240

About Bluetent:

Bluetent is a digital agency providing strategic consulting; brand design; Web development; mobile solutions; and email, social media, and search services to the vacation rental, resort, and travel industries. Rezfusion, by Bluetent, is a powerful eCommerce platform that supports more than 170 vacation rental and hospitality sites and will process over $300 million in 2017 in direct online reservations. Bluetent is dedicated to creating sustainable growth and delivering measurable results to clients through innovation and quality in the digital space.

VRM Intel Magazine | Summer 2017

Are You a

Tech-Enabled

Vacation Rental Manager? T By Amy Hinote

his year, several vacation rental companies have begun to describe themselves as “technology-enabled” or “tech-enabled” in their press releases, marketing communications, and correspondence with media contacts. Here are a few examples:

TurnKey: “Tech-enabled TurnKey is setting a new hospitality benchmark for the vacation rental home industry.” Denise Clark, “TurnKey Vacation Rentals, Inc. Chosen as 2017 Red Herring Top 100 North America Winner,” June 22, 2017 Skift: “In this report, we analyze the role of Airbnb as a marketplace and distribution channel, but also look more broadly at the tech-enabled ecosystem that has developed around the professionally managed investment property—most often referred to as the vacation rental (VR).” Skift, The State of the Global Vacation Rental Market 2017

“Vacasa is the second-largest U.S. technology-enabled full-service vacation rental company. Leveraging proprietary technology, Vacasa drives revenue for homeowners and provides a seamless experience for guests.” Vacasa, "Vacasa Launches Yield Management 2.0 to Lead Vacation Rental Pricing" April 20, 2017 Evolve: “Evolve plans to use the funds to support the company's rapid expansion and continued development of its tech-enabled services platform.” Evolve Vacation Rental Network, “Evolve Vacation Rental Network Attracts $11 Million in New Funding to Fuel Growth,” June 1, 2017 78

VRM Intel Magazine | Summer 2017

BTVilla.com: “By leveraging tech-enabled services and local support teams, the company provides superior service and more income at lower cost for homeowners.” BTVILLA, “BTVILLA.com Raises $1 Million to Expand its Vacation Rentals Management Service,” July 7, 2017

What Differentiates a Tech-Enabled VRM?

We set out to discover what differentiates a tech-enabled vacation rental manager (VRM) from a VRM that simply utilizes technology. Andrew McConnell, CEO at Rented.com, offered some insight. “From my perspective it comes down to technology really being the competitive differentiator for the business and, in many ways, comes down to the ‘direction’ from which the company tackles problems,” said McConnell. “Many legacy businesses that use technology are just digitizing their old processes. This creates some efficiencies but is not really a game changer.” McConnell continued, “On the other hand, many of the ‘tech-enabled/forward’ or ‘tech first’ companies start from a business problem (e.g., spotless properties) and work back from there to figure out what technology can do to get the desired result as quickly and cheaply as possible while, ideally, ensuring even greater consistency. In using the technology, they are not led by or beholden to the old analog way of doing things.” McConnell provided an example of how a tech-enabled VRM

thinks differently. “So an illustration again with cleaning could be a VRM who still requires seven-night minimums, and all turnovers are the same day, but [it] uses technology to help schedule [the] cleaning crew and coordinate sending them to homes,” McConnell explained. “A tech-first company would have check-ins and checkouts automated, triggering the system for instant scheduling, and then use technologies and business processes to track and measure performance (e.g., quality of cleaning) and efficiency (e.g., speed of cleaning) rather than being dependent on spot checks and/or guest reviews and complaints.”

Accounting and Payments

Housekeeping and Maintenance

Reservations

Lead and Guest Marketing

Technology Currently Available for VRMs In the last three years, the industry has seen a significant expansion in the technology that is available to VRMs. There are guest-marketing and communications tools to reach out to travelers from before they first think about going on vacation to the time they choose never to vacation again. For operations, technology is being created to manage every aspect of property care, housekeeping, maintenance, human resource management, expense tracking, smart-home automation, energy management, and more.

WEBSITE

Online Marketing

Smart Home Integration

Safety/ Compliance

Property Display

Trust Accounting or Accounting Integration

Reservation Management

Performance TRACKING

Lead Management

Online Booking Engine

SEO

Keyless Locks

Background Checks

Onboarding Process Management

Commission Management

Calendar Management

Route Optimization

CRM

Website Front End

PPC/Retargeting

Energy Optimization

Noise Monitoring

Image Management

Tour Operator/ Agent Accounting

Digital Contract Management

Lost and Found Management

Marketing Automation

Content Management System

Online Reputation Management

Entry/Exit Monitoring

Description Management

Vendor Payables Management

Specials/Promo Management

Linen and/or Laundry Management

Loyalty Programs

Mobile/Responsive Design

Social Media Management

Occupancy and Parking Management

Floor Plans/Tours /3D/Drone

Reporting

Call Center Tracking

Supply/Inventory Management

Email Marketing Segmentation

Online Chat

Predictive Marketing

Multi-Currency Management

Rate, Fees and Booking Rules Management

Piece Rate/Contract Worker Management

Email Marketing Management

Urgency Marketing

Credit Card Gateway and Processing

Group, Tour, Wholesaler Management

Work Order Management

Content Management

Knowledge Base

ACH Deposit

PR Tracking

Property Display Management

Split Payments

Marketing Budgeting and Performance Tracking

A/B testing

Mapping

Add-on Management

Guest Service

Owner Relations

Owner Acquisition

Ancillary Revenue

Reporting and Revenue Management

Property Care

Distribution Management

Promotional Item Management

Owner Communications

Owner Acquisition CRM

System Integration

Travel Insurance Integration

Advanced Reporting

Home Inventory Management

Channel Integration

Payroll

Customer Support: SMS, Call Center, Email, Chat

Owner Statements

Owner Lead Generation

Internet Reliability

Activities Management

Comparative Reporting

In-Property Activity Management

Channel Management

HR Performance Tracking

Pre and Post Check-in Communications

Owner Tools

Prospective Owner Marketing Automation

Proactive Systems Management

Add-on Management

Revenue Management

Proactive Maintenance Alerts

Channel Performance Tracking

Post Stay Communications and Surveys

Churn Tracking

Systems Auditing

Event/Market Intel Tracking

Damage Management

Disaster Communications

Systems Documentation

Competitive Set Selection and Monitoring

Internet Management

Systems Reliability

Dynamic Pricing Automation Tool

VRM Intel Magazine | Summer 2017

As you can see in the chart, over seventy VRM functions currently have technology solutions available. Moreover, over a dozen new platforms in development have not yet reached the marketplace. As a result, at VRM Intel, we are beginning a series in the magazine called “The Tech-Enabled VRM” that will examine—by department—this rapid growth in the breadth of VR technology.

The Reality of an All-in-One Solution Is it reasonable to expect one technology provider to offer the bestin-class solution for all of these functions? Likely not. As more tech tools become available, it is improbable that any single soft-

ware company will have the resources to be the best supplier of every technology tool the industry needs. Consequently, increased levels of open integration will be necessary, but some software systems have been slow to provide integration. “Currently, reservations and accounting are at the core of the vacation rental technology model, and the other functions are secondary,” said Doug Macnaught, founder of The VRM Consultants and former president of Instant Software. “For each of these secondary functions, third-party technology companies have an opportunity to be best in class. If the secondary technology is valuable enough, the property manager will put in the extra effort to get around the integration.”

“Ultimately, though,” Macnaught continued, “the primary software providers who will win in this game are the ones who open up their system to allow interaction with the best-in-class systems and allow these systems to supersede the options available in the primary software. For example, if there is an outside company that has a better work order system, then the software company wins by allowing the VRM to use it. It doesn’t hurt the primary software company. The VRM will still use and pay for their core system.” As VRMs shop for new software systems, they will find it increasingly critical to choose software providers that provide the ability to integrate with the tools that they determine are best for their companies.

Finding Your Competitive Advantage As VRMs examine the contents of their technology toolboxes, they must begin asking the question “Are we a tech-enabled company?” An answer of “no” is perfectly acceptable, but the next question should be, “Which technology solutions will have the greatest impact on our bottom line?” For example, in some markets, investing in the best tech solutions for property care yields the biggest gains in revenue and market share. In other markets, investing in channel distribution management produces larger returns. In others, revenue-management technology has the maximum benefit.

It is also useful to compare one’s current technology utilization with that of competitors to identify core tech strengths and to communicate those strengths to prospective and current customers. In some cases, a lack of technology can provide a competitive advantage. For example, if a competitor is promoting automated inspections as one of their selling points, a response could be, “We don’t use automated inspections because we have live inspectors personally check before and after each stay to make sure that everything in the property is ready for the next guest.”

Not all technology solutions are right for all businesses. In many cases, the functionality that the primary software system provides addresses the need adequately. For example, the websites and online marketing tools that a software provider offers may work well in a market where the majority of bookings come from third-party channels. Although the technology solutions needed by each VRM vary greatly, knowing what tech tools are available and understanding how utilization of these tools potentially affects business are imperative in facing the future of property management. Look for part two of this series in the fall issue: “The TechEnabled VRM: Distribution Management.”

VRM Intel Magazine | Summer 2017

Changing your property management software? The consequences of a bad decision can last ten years. Let us help you make the right one.

Software Selection  Buy/Sell Transactions  Marketing Technology  Management Consulting 

VrmConsultants.com VRM Intel Magazine | Summer 2017

A Rising Tide By Matt Landau, Founder VRMB.com

have to be honest. Not long ago, I knew next to nothing about Marbella. I knew it was in southern Spain, and I knew that the Marbella soccer team loved to upset Real Madrid. That was about it. So when I arrived at the nearby Malaga Airport to meet Borja Rodriguez, a native of the area and one of the most forward-thinking property managers in Spain, I was pretty intent to let him tell me precisely what to do. In the end, he did much more than that.

We met at the gate of the rental where I’d be staying, which is one of about thirty properties Borja’s company, Vacation Marbella, manages with white gloves. The rental complex is located about one hundred meters from the lapping waves of the Mediterranean, and it is mostly what one would expect from a European beach complex: neatly manicured grounds, elevators with requests to dry off before entering, and a gate with a guard who is sometimes there and sometimes not. What was totally unexpected about my vacation rental for the next few days, however, was the high level of standards Borja implements in pretty much everything he does. In a lot of ways, Borja represents a growing trend of professionals who have left their well-paid jobs in one industry to get involved in the vacation rental movement full time. These people are finding the landscape of the profession they thought they would do forever—in Borja’s case, finance— changing in front of their very 82

VRM Intel Magazine | Summer 2017

eyes. Therefore, they were encouraged to venture out and explore new, often entrepreneurial, lines of work. In meeting the various friends, family, and colleagues who revolve around him, I sensed that Borja’s adventuresome instincts have rubbed off on them.

One such person who really impacted me was Borja’s family friend and go-to maintenance man at Vacation Marbella, Nandi. When I met Nandi, even if he came in to do something benign like fix a lock, I quickly discovered that he was a special guy. He was also a

MARBELLA big guy—with an equally large smile and desire to communicate with people. Nandi mentioned that he was working on a side business breeding Chihuahuas, so of course, I asked whether I could visit. Even during our short time together, Nandi made very clear to me—without ever actually saying it—how much of an influence Borja has been on his life. From helping him through financially hard times to arranging special exceptions so that Nandi’s kids could attend the right school, I concluded that Borja was like Nandi’s big brother. When I shared this observation with Borja, he clarified that he felt more like he was the father, not the brother . . . the father that Nandi never had. Exercise gets me started each morning. I love venturing out on a long run, swim, or bike ride to clear my head, let ideas I’d been sleeping on percolate, and most importantly while traveling abroad, to see the different sides of a community. I got a quick tip from a resident of Borja’s vacation rental complex about a scenic jog along the coast, followed by an ocean swim. My morning routines in Marbella became a chance for me to absorb everything amazing that Borja was doing, like cultivating a network of locals.

destinations, so when Borja mentioned that his best friend from childhood, Julian, was the manager of the nicest course in town, I couldn’t help but hit the links. Here is when I state clearly that I am not good at golf: my sole goal of a golf outing is to “not injure anyone.” Here is where I also mention that Julian was basically semipro. But as I have learned from the vacation rental industry, David actually can compete with Goliath . . . as long as David changes the terms of the playing field and refuses to match Goliath’s strengths one-on-one. As such, my strategy going in against Julian was not to try to hit any smashing drives or sexy chips; rather, it was to hit the ball low and straight, and to try to take Julian off his game by ask-

Marbella is one of Europe’s premier golf

VRM Intel Magazine | Summer 2017

some privately grilled lamb. As I listened to Borja suggest that the two vineyard owners could host his vacation rental guests for private events, it was clear that his connections were wired and firing.

ing intrusive questions about his childhood with Borja. Things like, “what’s the most embarrassing Borja story you can share?” and “how would your girlfriend describe Borja in one word?” I threw him off to the point that with one hole to go, we were tied. Despite my best efforts, in the end, Goliath did beat David by one stroke. But my time with Julian was worth the loss because it helped me understand the greater person that is Borja and the greater meaning that Marbella, as a home, has to them both. Another great experience that could never have been curated by a hotel concierge happened on our way home from a historic town called Ronda, when Borja and I wandered down a gravel path to one of the most stunning (albeit closed for the day) wineries I have visited. The owner popped out from what appeared to be his dayoff siesta, and then invited us to stay for a few glasses of wine and 84

VRM Intel Magazine | Summer 2017

Once a connection for Borja was wired and fired, it was typically handed over to Maria, Borja’s right-hand gal. Now, because meeting Maria was my first formal Spanish introduction in many years, I totally botched the “hello” kiss. So awkward! But that was OK because Maria was so elegantly chill. She lived in Malaga, the old city roughly forty minutes from Marbella, and I felt like she should have been its official tourism ambassador. As we zig-zagged through the streets, popping into storefronts for organic ice cream and life-changing almonds, Maria added yet another textured layer to help me understand what this region is all about. A young mother living in a town that is not her own, she mentioned that she loves bringing her son, Mateo, to this funky little beach promenade. So we wandered over for a sunset gin and tonic, where, of course, Maria knew everyone and spoke so admirably about Borja and his leadership style. Borja has taught Maria the straightforward vacation rental lesson that “honest work pays off.” While digging beneath the surface, I came to understand that Borja didn’t just do things right, he did the right thing. That is the difference between managers and leaders. Through Maria, I gleaned that Borja is both.

When I travel to a vacation rental, I always ask the hosts where to eat (and where not to eat), and if I am feeling annoyingly specific, I’ll ask exactly what dishes and drinks to order from the menu. This filter helps me avoid the tourist traps and fly-by-night shops, and I

For more stories about Landau's vacation rental experiences around the globe, check out A Sense of Place, his new digital show which launches in October 2017. often get to support the small businesses that my vacation rental host deems important. Borja recommended a long list of restaurants and selections in Marbella, including a few establishments where he has gone with his family for years. The food in Marbella was inimitable, and knowing that my selections were endorsed by locals meant I could avoid the restaurant roulette that most tourists have to play.

On my last night in Marbella, I wanted to make sure that my new friends had a chance to come and enjoy the connective properties of a vacation rental. I accepted a localâ&#x20AC;&#x2122;s challenge to make paella (it came out great, albeit slightly too crispy on the bottom) and was totally humbled to have Borjaâ&#x20AC;&#x2122;s mom, Marta, come and share some of her own recipes. After spending nearly one hour listening to the hilarious story of how she and her husband met, I also learned about her burgeoning flower business. Borja definitely gets his entrepreneurial drive from Marta. At dinner, we drank wine from the surprise vineyard, talked about Chihuahuas and financial independence, and I even met Santi, Borjaâ&#x20AC;&#x2122;s partner in the business. Santi reaffirmed my observation that Borja surrounds himself with amazing people. In only five days, Borja and his contacts helped me experience a version of Marbella that was previously reserved for those connected to special contacts but that is now increasingly accessible to travelers willing to opt for professionally managed vacation rentals. It was more than a VIP crash course on Marbella. It was a poignant reminder that a rising tide can lift all ships. As the vacation rental industry surges ahead with more and more successful professionals leaving behind their careers to do it full time, as families choose vacation rental options for the first time, and as legislators look to define exactly how things work, Borja is the reminder of how it all should trickle down. VRM Intel Magazine | Summer 2017

A Smart Day with a Smart Home VRM By Stan Earnshaw, Vice President Sales and Marketing, PointCentral

mart home technology provides great benefits for vacation rental managers, homeowners, and guests. As smart home adoption accelerates, these benefits are leading to best practices across the vacation rental industry.

A fictional“(turn) day in the life” illustrates the benefits across the entire vacation rental management operation:  Delighting guests  Delivering homeowner value  Improving turn-day operations

Funtastic Vacation Rentals has implemented the PointCentral smart home solution, and the busy turn-day is about to begin.

 6:45AM Bobbie, the operations manager, reviews the checkout notifications on her smartphone and opens her PointCentral dashboard to see where to send cleaners early. Twenty guests have already checked out, and Funtastic has picked up four hours of cleaning time!

 7:00AM Gone are the days of juggling keys and meeting at the laundry 86

VRM Intel Magazine | Summer 2017

room to dispatch cleaners. Bobbie texts the early cleaning teams to notify them of the early checkouts, and the “smart” turn-day is underway. Each cleaner will use their unique door code to track their entry and update the cleaning status.

 8:15 AM Eric and Evelyn Brainard and their three children have enjoyed their time at Funtastic, but they are anxious to hit the road. When they return home, they will miss the smart features at “Sea Breeze,” especially never having to worry about keys. Eric locks the door and enters the checkout code into the PointCentral smart lock. With checkout complete, Eric heads for the car.

 8:16 AM Bobbie notices the Brainards have checked out of Sea Breeze. The status of the property automatically switches to Unoccupied/Not Clean. She notes that the thermostat has been automatically set to energy-saving mode, which will reduce the homeowner’s utility bill. A happy homeowner and no more difficult energy bill discussions put a smile on Bobbie’s face.

 8:16 AM Edward in housekeeping receives an automated text message on his cell phone that the Sea Breeze guests have checked out and the unit is ready to be cleaned. He heads that way.

 8:30 AM Tim and Cathy Roberts and their two children can’t wait to start their vacation. They hit the road early and will arrive at their vacation rental house four hours early. Cathy remembers the check-in directions mentioned that an automated text message will be sent as soon as the house is ready—fingers crossed for an early check-in!

 8:32 AM Edward arrives to clean Sea Breeze and enters his unique code. The PointCentral dashboard is automatically updated to show the Sea Breeze’s status as “Cleaning in Progress.”

 10:10 AM Edward completes the clean ahead of schedule and enters the “Cleaning Complete” code into the lock as he exits the property.

 10:11 AM Sheila, one of the property inspectors, receives an automated text message on her cell phone that Sea Breeze has been cleaned and is ready for inspection. She is nearby and heads toward the house.

 10:17 AM Sheila uses her unique code and enters the home. The PointCentral dashboard automatically updates to “Inspection in Progress.”

 10:32 AM Sheila’s inspection doesn’t reveal any issues, so she exits the property after entering the Inspection Complete code; PointCentral updates the property to “Clean/Ready for Occupancy.”

The system also adjusts the Roberts’ arrival time from 4:00 p.m. to 10:33 a.m. before sending a text and e-mail “House Ready Early” notification to Cathy.

 10:33 AM Cathy receives the automated text on her cell phone that Sea Breeze is ready for early arrival. Their unique code is included in the text, and PointCentral automatically sets the thermostat to a comfortable arrival temperature.

 11:45 AM The Roberts pull off the highway and are happy that they no longer need to go out of their way to the check-in office to wait for the keys. High-fives all around.

Upon arrival, they enter their code and are greeted with a cool, comfortable environment, ready for their vacation.

 11:55 AM Vincent from guest services reviews the PointCentral dashboard and notices that the Roberts have arrived. He calls the new guests to make sure everything is to their liking. The Roberts are impressed that Funtastic knows they have arrived.

 1:30 PM After returning from lunch at a nearby seafood restaurant, Tim and Cathy can’t recall the code for the lock. In a bit of a panic, Cathy calls Vincent in guest services.

 1:31 PM Vincent is on a coffee run at Starbucks when his cell phone rings. Cathy is a little embarrassed that she can’t remember the code. Vince assures Cathy he can help, and after a couple of verification questions, Vince opens his PointCentral mobile app and remotely unlocks the front door to Sea Breeze. An exclamation of surprise is heard, and Cathy confirms the door just unlocked right before their eyes.

 1:34 PM While on the phone with Vince, Cathy reports that she had trouble shutting the sliding door and mentions that the HVAC shut off. Cathy asks if someone could come and fix it while they are out shopping. Vince assures her he will take care of it.Vince calls Stan in maintenance to have him check the sliding door at Sea Breeze.

 1:43 PM Upon returning to the office, Vince reviews the HVAC analytics for Sea Breeze to confirm the HVAC is functioning properly. All seems well, and Vince reminds Stan to confirm the contact sensor is connected once the sliding door closes—this will ensure that the HVAC will start to work again.

 1:50 PM Stan enters Sea Breeze using his unique code, which automatically tells the system Stan is on the property. When the problem is fixed, Stan’s code tells the system he has exited the property. Because all entries and exits are date and time stamped, history reports are available should any issues arise.

 1:55 PM Vince calls the Roberts to let them know their sliding door is fixed. Vince uses this opportunity to remind the Roberts that their home is equipped with a smart energy-saving device connected to their HVAC system that will shut off the HVAC if the door is left open for five minutes.

 5:35 PM Bobbie arrives home, tired but happy with the way the day went. The guests are happy, and the members of staff are able to operate more efficiently thanks in large part to the smart home technology. She sighs and says to herself, if only PointCentral could walk my dog. VRM Intel Magazine | Summer 2017

AN ENERGY APPROACH TO ATTRACTING AND RETAINING VR CLIENTS By Danny Bradford

et revenue. As business owners, managers, and entrepreneurs, we love to earn more of it each year, especially when it is backed by cold hard cash—not that fantasy money our accountants tell us we have to pay taxes on but have nothing to show for. It’s what keeps us carrying on each year. For many vacation rental owners, it’s also why they bought their properties. As rental managers, have we missed the mark on providing them this value?

The vacation rental industry has been getting an incredible amount of attention lately. Big money investors are entering the space, throwing money around to buy up the market. Additionally, smaller VR companies are popping up left and right. The industry is getting highly competitive, which means your clients are being hit with every gimmick and scheme under the sun by other property management companies, who are trying to entice them to join their programs, stealing away your clients and affecting your profitability. As businesses become more profitable, the competitive pressure 88

VRM Intel Magazine | Summer 2017

mounts and prices drop to attract more customers. This is how profits get squeezed. But there are ways to retain clients without sacrificing your profits. Dealing with guests alone keeps the life of a property manager ever busy. However, you also wear so many other hats: marketing expert, expense manager, customer service agent, maintenance manager, problem solver, and investment manager. Sometimes, the day-to-day tasks keep you so busy that you don’t have time to focus on that last job: investment manager. It’s true that many VR owners buy their properties for personal enjoyment; however, an overwhelming majority buy the properties as an investment, hoping for suitable annual returns. This means that your primary job, as investment manager, is to manage your clients’ top-line revenue while simultaneously driving bottom-line returns. The crowded nature of the business means that rental prices are getting highly competitive as well. Just the other day, I was searching online for a rental. I found seven distinct rentals within the

same city, offered by four different managers and across different buildings, all at the same price. Because the market is beginning to drive these prices, and the prices will only continue to stabilize as more competitors enter the industry, the days of aggressive top-line gross rental growth may be waning. What can be done, then, to drive the same level of value to your clients? I’m not a proponent of slashing your margins. Nor do I believe we should sacrifice quality for short-term profits. Instead, I believe we need to focus on the other portions of the equation, namely, the expense and profit sides.

I always saw myself as an investment manager for my clients. As such, my goal was to try to help them make as much money as possible. To do this, I saw each property as its own business. Just as you would do for your business, I tried to make sure I was maximizing the net revenue for that property. That meant not only driving the gross revenue of the property via targeted marketing campaigns, effective rate management, and increased occupancy, but also keeping an ever-watchful eye on the expenses. Along the Florida Gulf Coast, I’ve often heard realtors in the heat of a sale tell their prospective clients, “The summer months’ rental income pays for the entire year’s mortgage.” However, in my experience, the mortgage only accounts for roughly 40–50% of the total yearly expenses associated with owning the property (sometimes it’s more, and sometimes it’s less). In fact, expenses associated with owning vacation rentals tend to be so high that the average owner’s net revenue tends to fall to around 1–2% of the gross rentals. I’ve seen some owners obtain returns over 10%, and I’ve seen others go 10–15% negative per year, especially when owners bought at the height of the market.

I’ve evaluated hundreds of owners’ statements over the past several years. The numbers on the chart below indicate the trends I’ve noticed. There are some obvious variations across rental markets. Some markets demand higher management fees; some markets have higher/lower energy costs and/or HOA dues. Nevertheless, there are some key takeaways from evaluating the expense side of the owner’s portfolio:

B Owners rarely make any real money using vacation properties as investments.

C There are some tremendous opportunities for owners to decrease their expenses to improve their net revenue.

44%

10%

23%

 Mortgage  Management Fees  Utilities  Insurance  Taxes  HOA Dues  Upkeep

Looking at the expense percentages makes it hard to capture the relevance of the expenses with respect to the total revenue. Therefore, I created the example below to help bring the problem of owner expenses to life. The scenario may represent the standard in your community, or it could be totally different. Nevertheless, I want to focus on this example for a moment to drive a point home. This example was generated using historical figures based on my experience for a typical two-bedroom, two-bathroom unit along the Florida Gulf Coast.

Gross Revenue Mortgage Management Fees Utilities Insurance Taxes HOA Dues Upkeep

Percentage of Total Expenses N/A 44% 23% 10% 5% 5% 8% 5% Net Revenue

Yearly Expenses $30,500 $(13,200) $(6,900) $(3,000) $(1,500) $(1,500) $(2,400) $(1,500) $500

As you see here, after all expenses are paid throughout the year, the owner makes only $500. That’s right, $500—and that’s only 1.6% of the gross revenue. In my opinion, that does not represent a very sound investment. Some of you may be thinking, “Well, you haven’t considered deductions and adjustments for taxes.” True, I’m intentionally ignoring that because I want this example to be representative of the cash return.

If we look a little deeper, we will see that energy accounts for roughly 10% of the total spend. This may fluctuate depending on the market, but it will still be a sizable portion of the yearly expenses. In fact, in 2012, the hotel market released some information stating that, on average, they spent approximately $2,200/year on energy for the rooms1. Assuming an average daily rate of $120/ night with rooms occupied roughly 200 nights per year, we can estimate that a hotel room collects approximately $24,000 in gross rents and then pays 9.2% ($2,200/$24,000) of that for energy use, which is consistent with our estimates for vacation rentals. Out of the 10% of the gross expenses that are consumed through energy costs, 15% is consumed by lighting, 52% by conditioning of the rooms, and 33% by “other” (e.g., appliances, TVs, and other consumers in the rooms). Doing the math, we see that 1.5% of the gross expense is attributed to lighting and 5.2% to HVAC or conditioning. This tells me that there is a real opportunity to increase owner net revenues by reducing energy expenses. Based on our example, a two-thirds reduction in lighting consumption puts $300 per year back into the owner’s pocket, and a 25% reduction in HVAC consumption puts $390 back into their pocket. Those two strategies add 2.3% in the owner’s net revenue. We have more than doubled the typical return in one fell swoop. For example, NTE Assurance has put together two simple programs to help achieve the increase in owner returns that we just described, using a two-phased approach. The first phase is quite simple: it involves retrofitting all the lighting in the units with LED equivalents. The second phase piggybacks off the first and VRM Intel Magazine | Summer 2017

implements controls into the rooms to decrease wasted consumption whether or not the units are occupied.

LED lights are more efficient than traditional incandescent and fluorescent lights because 90% of the energy that passes through the units is emitted as light, whereas traditional lighting emits only

times their initial investment simply on an energy basis. When you add in the reduction in maintenance costs, that return increases.

We have put together some data for typical savings for three different unit sizes. Actual savings in your areas may vary because of electricity rates and occupancy, but the savings will be fairly consistent with what we have shown here. Within the cost to retrofit, we are including estimated time, labor, materials, and logistics. The other incredible benefit is that we GUARANTEE the annual savings for the first year. If there is a shortfall with the savings, we pay you the difference. This means that there is no risk to you or your client in moving forward!

L I GH T I N G A N N U A L RO I Unit type

Annual Savings

Cost to retrofit

ROI

One Bedroom

$176

$286

1.63 yrs

Two bedroom

$366

$452

1.23 yrs

three bedroom

$572

$626

1.09 yrs

Savings estimate based on blended rate of $0.10 kWh. When guests check into a unit, they want the room properly conditioned to their liking. When they leave, you want the thermostat to scale back so that you aren’t overconsuming energy. NTE has a solution that incorporates occupancy sensors and other simple technology to help you control the environments in your rentals all from a single integrated dashboard. Think home automation for rentals. This system has been implemented by our partners in several first-class hospitality spaces around the world. Integrating with your PMS, these systems can be set up to set the environmental settings to your specifications when guests arrive and when they leave. Furthermore, it can scale back the system when guests are out of the unit for an extended period. It can also incorporate lighting, lock, and shade controls to manage other critical features for you. There are excellent solutions available from PointCentral, Crestron, and several other reputable providers. The solutions may vary with respect to their offerings and savings, but all will provide some amount of expense savings to your clients.

20% of the energy as light and the rest as waste heat. This not only reduces the life of the bulbs but also causes HVAC units to work harder to counteract the heat output. The LED technology has advanced enough that highly presentable LED bulbs are now available at a fraction of their cost a couple of years ago. In addition to being aesthetically pleasing, the technology now lasts 10–20 years, based on typical usage in vacation settings. This means that over the life of the bulbs, the owners receive a return equal to eight to ten 90

VRM Intel Magazine | Summer 2017

The benefits of the two initiatives we are proposing provide improvements relative to an owner’s net return. When they are combined, the increase in net revenue is approximately 3%—nearly a $1,000 increase in revenue based on our example. Beautifully, the ROI for both systems is achieved in less than two years, allowing the owners to reap the benefits for years to come. Ultimately, the owners are not the only ones who benefit. Many of you have maintenance teams, cleaning crews, and/or property managers/inspection groups that are responsible for the general upkeep of the rooms. I will go out on a limb and estimate that they probably change at least one light bulb per month in each unit. Maybe

you bill the owner each time you change the lighting, or maybe you don’t. Either way, you have to pay for the employee’s time. Let’s assume that you manage 500 units and you pay your employee $25/ hour (fully burdened rate). If it takes the employee half an hour every time he or she has to change a bulb (maybe the employee had to go to the room and then go back to the supply room to get the right bulb), then you would be paying $75,000 a year just for changing light bulbs. Wouldn’t you rather have your team worrying about other, more critical items?

We also know the power of the mighty guest review. Better reviews mean more occupancy, which means more money collected. It’s well known that guests consult online reviews before booking rentals. In fact, a study released in 2010 found that customer experience now ranks as the most important factor—more important than location or price—when guests book hotels. Obviously, there are hurdles to implementing energy reduction initiatives. Some of the common questions are as follows:  Who pays for energy?

 Who pays for lighting hardware?

 Why can’t I go to my local store and source the product?

 My clients aren’t going to agree to this. Why should they do it? All of these are valid questions that usually have a very simple solution, depending on your situation. I’d be happy to answer these questions for you and help you tailor a solution for your clients.

Energy Star, “Hotels: An Overview of Energy Use and Energy Efficiency Opportunities,” accessed https://www.energystar.gov/sites/default/files/buildings/ tools/SPP%20Sales%20Flyer%20for%20Hospitality%20and%20Hotels.pdf. 1.

Barsky, J., and Nash, L., “What Is More Important than Location in Selecting a Hotel?,” Hospitality.net, last modified February 3, 2010, https://www.hospitalitynet. org/opinion/4045264.html. 2.

Danny Bradford recently moved from Destin, Florida to Nashville, Tennessee to join the team of energy experts at NTE Assurance. In college, Danny studied aerospace engineering in hopes of one day being the next rocket man. His rocket-fueled dreams quickly flamed out in college when he learned there was no way anyone his height would ever go to space. Nevertheless, he pressed on and got his degree. After college, Danny worked for a defense contractor in the Destin area, in which he led various programs including design projects for unmanned aircraft programs and for the cargo handling system of the KC-390 military transport aircraft. Danny decided to hang up his pocket protector and calculator and help his good friend build RealJoy Vacations, a small vacation rental company along Florida’s Emerald Coast. From April 2013 to January 2017, Danny was Chief Operating Officer at RealJoy, establishing all the basic day-to-day processes necessary for running the business. During that time, he gained invaluable insight into the goals and needs of the individual property owners. His net revenue focus for his clients helped to secure longstanding relationships between the company and the client, enabling them to grow from 80 properties to over 400 properties within just three years. Looking for a new challenge, Danny decided to leave the vacation rental industry and join the team at NTE Assurance, utilizing his engineering background and experience in the hospitality industry to help mold their operations. Passionate about the energy industry and grateful for an amazing team at NTE, Danny is excited about the future with such an incredible company.

VACATION

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VRM Intel Magazine | Summer 2017

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VRM Intel Magazine | Summer 2017

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VRM Intel Magazine | Summer 2017

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