The Insider Take: Why Growth at All Costs Is Failing in Short-Term Rentals

Welcome to the SDR Data Lab. Hello and welcome to the SDR Data Lab. I'm Jamie Lane, chief economist at AirDNA, and we've got two amazing guests on the podcast today. Uh we have Alex and Annie, Annie Hulcom and Alex Husner, uh here on the show. Ladies, welcome.

Thank you for having us. We're excited to be here. I I said before we got to record, I'm really excited to sit down with the Duke of data, but I feel like you said somebody called you the god of god of data. So, I don't know. [laughter] Duke just sounded more fun. So, thanks for having us.

We'll have t-shirts made for you and you can decide which one you like. [laughter]

Thank you for having us, Jamie. We're excited to be here.

Yeah. So, first I want to congratulations on the success of the Alex and Annie podcast. And I think what you guys are coming up are just past 300 episodes. So, having done a lot of these myself, I know that that takes time, effort, commitment, and want to say congratulations.

Thank you. And a little bit of insanity, too, right?

Yeah. [laughter] Yeah. Time flies. We It is uh depending on when this airs, we're about at 300 episodes. You're correct on that. And in five years, five years ago, we really had no idea where this was going to go, but for some reason, it's just kind of caught on and and here we are still still interviewing. We love talking about data and vacation rentals. So, it's it's a pretty fun gig. [laughter]

Yeah. So, I I've got a opening question for uh each of you guys to answer. And I do want to hear your answer and maybe I between both of you when you start just give a little bit about your background and sort of who you are. Uh how you got to this point I think would be helpful for listeners that maybe haven't heard you guys before or Yeah. hearing you for the first time. So, one of the things I'm I'm really interested is like maybe give me one of the things that maybe you believed about vacation rentals maybe and three, five years ago just when you guys were getting started in the podcast that you no longer believe in or no longer believe that has sort of changed as you guys have sort of gone down this journey and and you guys have so much experience. She talked to so many people and I'm sure you've you've learned much a lot uh about the industry. So uh just yeah what did you believe that maybe you've changed your mind on?

Alex, you go first. I have to think about

any [laughter] that's a tough one.

That's a hard one.

I got to think where I was three five years ago. Probably a lot I mean a lot is has changed. I think you know fundamentally I I feel the same way about the industry as I did. I think that there it's it's still in a lot of ways it's still a cottage industry and I think we've really u advanced things over the years and that technology and data have come played a very big role in that but I think probably the biggest thing that I would say for me personally that I feel differently about and I know Annie will like that I'm saying this but that it used to feel like you know five years ago when we were at VMA that if you were an individual host you were not professional and I don't think that that's necessarily the case anymore that you can be an individual host and you can be a a great hospitality um professional that provides incredible experiences for guests and and I think part of where I've seen that more in reality is just through my own travels and in a lot of cases it does end up being if I'm staying in a vacation rental if it's not in an area where I know a company in the area then I am booking directly through host and I've had some really incredible stays doing that and I think that the industry is now starting to kind of recognize okay well like what is the what is the issue that we're trying to solve here.

Like it doesn't just because you have a lot of properties doesn't mean that you're good and just because you have one doesn't mean that you're bad. But you know where can things kind of mesh in the middle there. And you know there's a spot for everybody at the table. And I don't think that it has to just be just one thing is good and one thing is bad.

Yeah. I don't you know I I can't think of anything that I thought then that I don't really think now maybe other than I really thought that coming out of co we had a really bright spotlight on us and that we were going to immediately take advantage of it. Um, so I think that that's where I might have missed the boat is I I thought that there were going to be more there was going to be more coalescing around the business in general. Like people were going to come together quicker and want to like formulate stronger groups and you know VRMA would boom and everybody would be on the same page and there wouldn't be this continued divide of STR and VR that that sort of happened. Um, so maybe that's where I think my differences were. I I really thought we would be catapulted a lot quicker to where we can be. Um, I think having been in the business for 30 plus years, I just you I know the struggles I was going you going through in the early 2000s, we're still going through them now.

So, I just felt like that was the optimum time and that we would have made more progress. Now, having said that, progress was made obviously in the technology space and we've kind of leapt past the hotel world, but I I think that we missed opportunity that I felt was there. We're still taking advantage of it, but I just I I really did think we would make a little more inroads with making people understand our business better. Yeah. And may maybe keeping on that topic of and it's been I feel like a theme that you guys have talked about a lot lot is the sort of growth at any uh cost has become costly. Uh and like coming out of COVID we saw so much industry growth we saw and massive increase in and people leveraging and using vacation rentals for the first time. We saw a lot of operators able to grow their inventory and massively. And we saw some of the big national operators and just take this acquisition strategy where it's like, all right, we think scale is the answer and we can spread our costs across more listings.

There was a lot of uh companies and funding companies that were willing to finance uh this growth. But ultimately like I think looking back I it wasn't necessarily the right direction that the industry was going. So I maybe a question for you first Annie is what do you think and the industry learned from this era and what do you think it's maybe forgetting as we sort of and evolve in this and sort of next phase of the journey? So I think relative to um kind of the growth at all cost is that I think you know I came from a market Alex and I come from similar markets. So Panama City Beach and Myrtle Beach and that there's a lot of condominium product. So there was an opportunity when you're in property management there to grow and to be able to like go take over a whole building.

And so some of the buildings in in my market, you know, we had managed one at one company, it was like 760 plus units. So there's an opportunity when you sign the the contract to pick up several hundred units at a time. So it it that was just sort of how the the business evolved for me. But I think that coming out of COVID and people doing that, we have started to see that it's really one, it's not sustainable for most people to do that from a technology, from a staffing, from operations. Um, but two, just be able to service the guest. I mean, you just can't do it. and the channels specifically with Airbnb, you know, ratings and and reviews are so important that when you get to a scale and you're not managing your reviews, it gets it gets it becomes out of control and you just can't manage it and then you're not able to get the accolades that you deserve, you're not able to, you know, highlight really how good you are because you're just beholden to that review number and it could be one that completely derailed everything that you were doing.

So, I don't know if that really answers your question. And I think that we just we lost sight of what we were in the business for hospitality to serve a guest and it just became about these you know what we've talked about Tim Rosolio said it's vanity metrics I mean it's like what what makes us feel good doesn't really necessarily translate to to success.

Yeah. Alex on your end I mean you've worked at some of these large companies. What what have you seen works in scale and what have you seen that sort of falls apart and and what do you think the industries aren't here?

Yeah and I want to add to that too. I think, you know, one thing that I've observed in my career, and it kind of loops back to the my first point, I guess, too, but it's like, you know, there's there's no wrong way to do this business. There's a lot of different ways to do it, but I know when I was at Condo World, we were when I first started probably around 250 properties and then through organic growth and then through one big acquisition, we were over 500. And that that acquisition and that growth was very very scalable because it was all condos that were in buildings where we already had a lot of inventory and we were already doing a lot of marketing specific for those condo resorts. And so the growth was it it was kind of like a made in the shade kind of an acquisition. That's not always the case. You know, I mean, if you're I think it's also, you know, wise to think about if it's a company that's been around for a long time, they can consume and handle acquisitions.

you know, of that size easier than a new company that's just trying to figure out who they are. But besides that, you know, a lot of companies here in our Myrtle Beach, Northport Beach market that have been around for a long time. I was just at dinner with one of the biggest ones last week and somebody asked them, you know, what's your growth strategy? Like, how much do you want to grow this year? And, you know, they're not trying to go grow by they have 1500 units. They're not they've always had about 1500 units. They're not trying to go get another 300 this year. That's just never been the plan. I mean, they've built over time and it's about, you know, sustaining the the contracts that you have and the owners and keeping them happy and and consistently getting better at delivering that experience.

Um, so I think it's, you know, you it's that's that and that's okay. That's a good way to do it, but like there are companies that they want to grow faster and they want to go out and they want to find portfolios to buy or they want to be very, you know, aggressive in their marketing and that's fine too. But it's just about like understanding what is the end goal of this growth plan and being you know structured enough to build something that will be sustainable once you achieve that growth. Because what I've also seen now in my consulting business is some companies that they had the money they had the means to grow and they grew but then they did not have everything figured out internally of how they were going to handle that and it's like you end up bleeding properties that you paid a lot of money to get in the first place. So, you know, growth looks different in in the lens of what you're trying to do and and we do talk about this a lot this year on the show of the growth at all cost mentality, which I think is is a scary mentality to have that it's really, you know, what does growth look like for you?

And for some companies, growth could just be really refining the processes and improving your margins and just making your business x amount better each year. And I don't think that's celebrated enough. It's like, how many more properties are you going to get? you know, it's almost like it's like a game. Like you're like pushing somebody like who are you going to get this year? And I don't think it has to be that way. Like growth can also just be becoming better at what you're currently doing. So it really varies across the board.

Yeah. And Annie, when it it feels like we've sort of moved from like who's going to be the national name in the industry and to who can do local best and like being local with scale is hard, right? And it's it t and and it feels like we're now trying to do different versions of that whether it's in franchise whether it's in peon that is keeping and the local name and maybe some parts of the lo local operations. So when you think about local winds, is that the permanent answer? Is that just the like flip from Vicasa to now we're going local and we're not going national? Like what do you how do you think this is going to shake out long term?

You know, I that's a good question. I I I don't know. But I it's interesting because I remember Alex and I had the opportunity to sit down with leadership from Vicassa a couple of years ago um actually at Verma and we both shared very specific situations from our markets and what they had when they would what would happen when they went into market bought a company and peeled away their identity and what that did not only for the marketing for the destination but just the overall kind of look and feel of how marketing was done for a destination and how people felt about the destination and that type of thing. And so I think that the focus on local is really important. I think that there's opportunities to help um by you know with the PE firms and the and the like to to economies of scale like being able to buy into larger things that you can't do on a local level. I think it's a hybrid of both.

I mean, I think that different markets need different things and that's what's really cool about our business, but it is also what's make makes it so challenging is every market is so different and the consumer that comes to the market, you know, like you know the panhandle well. The people that come to Panama City Beach are not the same people that are going to 3A and then you take 3A and then you dissect that into the 13 little destinations on 3A and those are all very different. It's just we trying to be oneizefits-all is is not possible. So you do need to have some local flavor and and color to it, but there is also opportunity to scale and go into to more markets. So I I feel like the answer is it depends, as I always say, but it's also I feel like it's a hybrid. Alex, you you have an opinion on that of like where where you see local going and do you think that that becomes the new norm that we're going to have all these local brands and and nothing and national brands aren't exist or and are we are we going to eventually sort of go back to because it's ultimately like it's a marketing question, right?

Like how are you going to attract the guests to the properties and that people and are going back to these markets over and over and over again? Yeah, it's it's tough. I mean, I think if any of us had a crystal ball and we could see what life's going to look like in five years from now, looking back on it, I think we would, you know, we we'd be very wealthy, I guess, but like we would probably be very surprised because or maybe not surprised of where things are going to go. I think you look at any other industry, whether it's, you know, restaurants or car dealerships or roofing companies, I mean, like PE has is not a new thing. It's just it's new in terms of vacation rentals. And I think, you know, as long as these groups really leave the local leaders and the local teams in place and they're allowing them to have the flexibility to still do what they say they're going to do, let them operate as they normally have, then I don't think that there's anything wrong with that.

And I think that there, you know, certainly are a lot of benefits when you do have another organization that is really good at one thing that maybe you're not great at. If you're not great at revenue management or the accounting side is just a nightmare for you, working with one of these groups makes a lot of sense. Um, but you know, there's been so many different conversations over the years of what local is. And when I was at Costco, we were when we were selling franchises at that point, the main push was for them to change the brand and that they had to change to being, you know, Casgo with the destination name within, you know, x amount of time or however that was negotiated. Um, and I think, you know, with the Vicasa uh deal and everything that happened there, some locations have taken on the Kasiggo brand. Some have they've come up with new brands powered by a kaso. So I mean there's a lot of different ways from the forwardfacing side of things that you know it's it's probably still confusing to the consumer but I don't think at the end of the day the consumer really cares about it nearly as much as we all think that they might as long as they're receiving you know good service at the other end of their stay and that their vacation that they've spent all year, you know, waiting for and saving for is is going to be a good thing.

But I I I think the definition of a local is just going to continue to evolve and as long as it doesn't get to the point where we saw what happened with Picassa that didn't work. If as long as it doesn't drive to a model again like that, then I think everybody should be in pretty good shape.

Alexa, I I do want to stay with you for a second because I feel like you've had a first row seat to what I think is one of the most interesting industry dynamics playing out and it's like the it's the PMS wars. like it's I the large property management systems they're all raising lots of money feels like there's still new ones being created in what was already a crowded space and they're all now launching different forms of AI and and automating different aspects of a property management business you've worked in a property management or you've worked in property management you see how AI is being deployed into these companies so question for you is How much do you see that property management is actually changing with AI and how much is it that this is just the new way to sort of market and the existing tools that people are are using today and sort of make it look like you're on the leading edge.

Yeah. And I think that's a tough one, too. And I think it really it varies by the company and and and by the market and whether, you know, all the competition is really leaning into AI versus if they're not. I know in the Myrtle Beach market, I would say we're more traditional here and most of the companies that I I talked to, you know, they're maybe dabbling in some things or adding a tool here and there, but most are not full full-on changing their operations, getting rid of their reservation team, you know, I mean, like they're they're not making massive changes into the business, but I think where, you know, it's it's going to evolve is they're going to start they're going to see where things can be that will at least streamline to have better access to data and to reporting and things that will make their lives easier as far as communicating with homeowners if things are, you know, set up on more of like a regular playbook, monthly, weekly basis, whatever it is that that the access to being able to see what's going on in the business is going to be the biggest change for them.

And I'll never forget, we were at uh the women's conference. I think this was like 2021 or 2022. And I was on a panel and I asked the audience to raise hands of like, do you know how what percentage of your bookings are direct versus OTAA? And some people raise their hands. And I said, okay, well, do you know how many people are repeats versus new? And very few raised their hands. So it's like that's not that long ago that like that information was there but it was you know you had to go through a lot of different reports and digging to be able to find that out and you know you're not able to make decisions on the fly if if everything takes a huge expedition to go and find the answer to the question. Um so I think that the ones that are leaning into data more I think that's where they're seeing more of like the immediate impact of AI. I think that it's going to help property managers, you know, be more competitive in the fact that they can be more profitable than their neighbor down the street if they're really utilizing it right.

But is that going to put the neighbor down the street out of business? I don't know. I mean, like I I think it that's right. It really depends on markettomarket um you know how it's utilized. I know personally, I was just telling the story on another call with Annie earlier today. When I am now conversing with a host of a pro of a vacation rental, I'm wanting an answer back very quickly. Like, you know, I can wait 5 10 minutes, but like I don't want to wait two hours for a response on something. And you know I think that's where AI has the most ability at this initial point of like how can easy answers be you know responded to very very quickly through the AI that's trained on your policies. Think that's like just right off the top is going to help the experience significantly and then look more you know deep into the business of where can this be applied from an operational standpoint so that when a worker work order comes in it's automatically assigned and that you know the tracking from the accounting side of it to the actual the field worker and then communicating to the guest all of that is just a lot more seamless than it is right now.

I think that's the next wave. And you know, these waves are probably going to come in and out at the same time, but it's like what what does a company want to focus on the most? Like is revenue more of the issue? Is marketing more of the issue? Is operations more of the issue? Owners? Like whatever's the bigger focus? It's like that's where you should really try and dig in and see where you can move the needle the most and have that proof of success with one thing and then then move on to the next thing. But I think all the PMS's are trying to come up with something at this point to stay relevant and some are able to do that better than others, you know, quite honestly.

Do do you think it's that the PMS's are doing it and and just to stay relevant or is it that the vacation rental managers are asking for it? Do you think like what is it going to take to get the average large Myrtle Beach property manager to start adopting these tools?

I don't think that I think it's almost working more in a in a silo that I think a lot of the functionality that's coming out of any of these tools is being developed by people that are really smart with AI and they're coming to the property managers and saying you need to use this because this is what it's going to do. But that also, you know, the property managers are relying on the suppliers in the space to bring them cutting edge information. That's always kind of been the case and that and that is a good thing. But the tools that I feel like are making the most uh inroads and having the most success are the ones that are really working closely with their clients to be able to say, okay, this is worth us developing now. This is, you know, nice to have, want to have, must have, whatever. like kind of prioritizing those things so that when it does roll out, the property manager is always like already ready and excited for it because they've known that's something that's going to really benefit the business versus having to explain to them, you know, why this is the new shiny thing that they have to implement.

But I I think it's going to be at least another one to two years before you really start seeing in this market and some of the more core traditional markets AI, you know, really impacting the business. And and you know, this is our industry. It's different than other industries. AI is taking over much quicker, but I think it's it's coming for sure, but it's just it's not going to be as rapid as some other industries.

Yeah. Annie, what about you? When you see all the and the tech stack that all these property managers have and whether it's five, 10 different tools they're using and then and trying to leverage AI on top of that, where are you seeing the adoption? Where where do you see things going in terms of I AI either making things easier, more efficient or is it I are we in the point right now where is this actually making things more complicated?

So I come at it from a little bit of a different angle because I intentionally when I started my consulting I intentionally wanted to work with smaller operators because I felt like they were the ones that could kind of needed the full support of the industry to like make sure that they got the right information. So, I think that the smaller operators are are adopting things quicker because they don't have a giant tech stack. They're not somebody who's been around for a while and have, you know, I just I I joke with my husband all the time like he was out of it long enough to have missed the proliferation of the technology. So, he got in his first week. He was like, "Did you know how many pieces of technology that these operators are using?" And I'm like, "Yeah, there's literally one for everything." He goes, "It's just mind-blowing." But I think a smaller operator hasn't had to do that yet.

So, they can start, they can see the benefit of AI. And I've seen several operators that are, you know, less than 25 30 units and they've started to build their own pieces of technology through a AI. So I think you're seeing some of those people maybe not adopt the PMS's that are adopting all of this. Um, but one thing I will say is from the PMS perspective is I've been doing work with Booking.com the last nine months and one of the things I've had the opportunity to do is talk with a lot of their connectivity providers and the ones that I think that are doing the best job are the ones that actually a lot of their team are also hosts and also operators. So they're getting real time kind of feedback on things that they're implementing and seeing like what's working, what's not working. So, I think the smaller guys are going to adopt it quicker because they can be more agile.

They don't have as much sitting on their technology stack to worry about. Um, I I actually, it's funny because at the beginning of the year, Alex will tell you I was a complete naysayer about about AI because it it just freaks me out. So, I was like, "Yeah, I don't know about this." But, I think that we're going to see really strong adoption in the next year. Like I really really think that it's going to be so mainstream that it's not hope, you know, by the time we get to VRMA in Denver. It's not going to be the hot topic that everybody wants to talk about. I think it's just going to be status quo. It's everybody's going to have it in some part of their business and then maybe that'll there'll be tweaks of it. But I, you know, it remains to be seen because Alex and I joke about on the show, we talk to somebody on Monday and then we'll talk to somebody by Friday and it's changed three times, you know, over that week.

So it remains to be seen but I I I do think that people are adopting it in the places that make sense for their business. So I always defer to this it depends response because it truly truly depends on the operation, the market and really the goals that somebody has for their business because some people want to build a business that they can turn around and sell and some people want to build a business that just gives them a little bit of money and they can have freedom to travel and and and be a host part-time and and do things. So at the end of the day, it's just what it's what suits their business.

Yeah. And something we talked about in the beginning was this notion of professionalization and that individual hosts are becoming more and more professional and it doesn't it's not necessarily I'm getting to a number a unit count, right? Like it's you it's not you get to 100 units and all of a sudden you're professional or you get to 20. Yeah,

I think we can point to a lot of hundred unit companies that we wouldn't um necessarily define as professional. So maybe a question for both of you guys of like how do you define professionalization?

I think that one is a is a is an ever evolving conversation as well. But I think it's you know somebody who's somebody who's got the right accounting in place. You know they're doing trust accounting even when they don't have to because it is shocking the amount of people that don't do it. I I just can't fathom especially after COVID. But I think it's just having those those pieces in place um for your accounting for you know so your owners are protected so you're protected so the guest is protected guest safety you know guest safety I think is I mean Justin Ford we know him I mean he's out there always joked out there doing his safety dance about stuff and it might sound a little you know obnoxious to people but I mean what he's talking about is really important and we need to pay attention to it. So I think that you're starting to see people adopting these pieces sooner instead of waiting till something happens to to to put things in place.

So to me it's just having the foundational pieces that you can provide good service protect your owners be profitable. I mean you know Simon used to say Simon Leman used to say all the time you know the profitability is oxygen and so many people just were barely scraping by and weren't profitable because they were worried about vanity metrics and not taking care of those foundational pieces that make a business successful. So for me, professionalism is just really um defining defining operations, safety, and guest services kind of all all intertwined as one.

Yeah, I'd say the same on that. I think it's it's professionalism is this isn't just like a side hustle hobby. I mean, you're really intentional about what you're doing and the experience that you're trying to create. Um you know, there's a lot of hosts that they own the properties themselves. I mean that that's a different landscape altogether than somebody if you're you know you're working for an owner and you do have to keep your money in trust accounting because it's it's not your money but like there's I think there's a lot of different sides of how all that works that makes it more professional. Um, but actually the the operator I was mentioning that I was meeting with last week in Myrtle Beach, they said that day that they had just had a surprise visit from uh I can't remember what it's called, but it's like it's basically it's it's the South Carolina Association that comes in to make sure that you're doing trust accounting.

And so like you don't you get a little bit of warning before they come, but like they want to see

now they want to look back retroactively and see what it was like in January. and you know they're they're trying to make sure it was like the licensing group or something I guess but this company's surely licensed and you know I thought to myself I'm like how are they getting in touch with to go meet because most of these companies the these newer ones they don't have an office or anything like that so like how are they how are they even you know getting in front of them but um you know I think there's the companies that are also equally invested in their DMO and in their community I think that leads to professionalism as well and and just just their focus on you know making a experience as consistent as possible even though we know consistency is also a very difficult thing within the industry but like what does consistent look like for them and if a guest stays with them again can they deliver on that or is every time a completely different [laughter] experience that doesn't feel professional to me if that's the case

yeah you you said you're working with a lot of smaller hosts now and I I'm interested from you on on what you think behind the sort of they need from the industry, what they need from and those out there trying to provide education. Like we did a survey at the beginning of the year where we like survey it was like a few ended up being almost thousand hosts and one of the questions we asked was like what type of education would you like more of and we put like 10 different topics.

Like people just selected all 10 topics. They're like, "Oh, yeah. We we need I need all of this." But and in the work that you've doing been doing like what do you see that is like really needed uh in terms of whether it's education, whether it's technology, whether it's and and distribution like what what do you see is missing for them?

Um all of the above. [laughter] Um, so I I think that I think that we saw again the the postcoid bump where people thought this was passive. It was very easy and then there was a lot of people with I think any business but our it feels like our industry was ripe with it where there was a lot of people that were like ah I could put it out on TikTok and give you all this advice and sell you sell it to you. And I've talked to more managers that bought into a mastermind or they bought into like a one-day course that was going to tell them how to run their whole business and they are out a lot of money and they didn't walk away with any tangible information to help them run their business. So I think they need all of it. What I you know what I tell people all the time if they if they don't engage with me is find a mentor. if you know if that's find somebody in a like market or even in their market.

Some people some of these people are operating in markets where they're kind of the only person doing what they're doing except for maybe one large one and they're just afraid. And so I think that from the professionalized if you will or the the legacy side of the business, what we can do a better job of is extending an olive branch olive branch over to these people to say we want to help you and there's not a divide. I think that for a while there was a big divide. I was like, "Oh, these little operators over here that only have two and they're only on one channel." Like, they're not our people. And I think that we need to do a better job of like, you know, I was somebody used to say like it's about opening the tent and letting everybody in. I we have a very big tent.

So, they want they're hungry. They want to know a lot of things, but it's it goes sometimes it just goes to the basics. Like I I'm working with a gentleman now out in California and just having conversations with him about how to find business like how does he find owners and he had no idea how basic you know other than like talking to a realtor he just didn't know all the different mechanisms that were out there to do that. So I think that it's just a matter of you know whether VRMA becomes the source of truth or you know the industry as a whole creates something these people want to know but they need to know everything from soup to nuts and they want to know it.

Yeah. And that that was going to be my next question of like do you think Verma can be that organization to provide it? And last year going to both Verma and like let's say the STR wealth conference like it was two entirely different audiences two almost entirely different messages but I this almost the exact same vendor hall in terms of the companies that were there and and a lot of the the solutions but and it was and the message that comes across sort of strong at Verma is probably not going to be the same message that resonates with the average individual host that maybe bought two, three, four properties. They're managing themselves. They're not hiring a third party manager. Like, and they're looking to build wealth and do that through short-term rentals. like it's just an entirely different thought process on why they're getting into the industry, how they might and be able to and what they can do with the properties.

I mean, it's talking with these groups, it's like they they do want to make investments. They want to get an ROI. They want to make things better, but the arguments that are going to work for them aren't going to work for the average manager that can't make these changes to the property themselves. So, how do you see having a big tent versus I and having two different types of people that are going to respond to different messages?

So, that's actually it's funny. I just got back from our board meeting and that that's a big topic. I mean, that's one of the things I've been on membership for the last couple years as well and now I'm on the board is, you know, how do we how do we get these people to the tent first of all? I mean, we can invite them in, but we got to get them they, you know, they they don't know we exist. That's that's been part of the challenge is they don't know the association exists. But the language in which we've been speaking is not the language that they speak in. I mean, if you've been to those conferences, you know that everything is very STR. It's very wealthoriented. It's very investmentoriented. It's very um you know, heavy in design. Like there's just a lot there's a lot of differences, but the there's a lot of crossovers. I think it's like a ven diagram. It's like where does that crossover happen?

So that's one thing that the the board and everybody all the different committees has been kind of charged with is like how do we make sure that we're using language that speaks to a broader audience. Do we need to have two messages? Do we need to have more tracks? I mean, they've been very mindful to add more education tracks in this. And we know that we're never going to appeal to the the entire segment of short-term rentals, but if we can provide access to information and connection, you know, to your point, the the technology partners, the suppliers, they need both sides of it. But for them, the growth is in that segment. And so we've got to all kind of work together to make sure that the suppliers can get in front of the people that we can help educate the people and then that way from the traditional side there's not this perception that these investment only types are the ones causing friction.

I mean it's it's it's um it's on all of us incumbent on all of us to kind of work together. And so I think VMA is very focused on being able to provide more information that speaks to that audience. Will it happen this year? No. But it's starting to slowly and it's on it's on the radar to be able to be incorporated in the association as we grow and you know who knows maybe Verma becomes you know VR VRM STR you know like there's there's there's something there's a mination in there somewhere that'll happen but we recognize that in order to invite people in we have to speak their language and provide the information that they're looking for.

Yeah. Alex, do do you have an opinion on the topic around and sort of how to open up the tent to more and how to make sure that really the knowledge that the industry is built is being disseminated to new joiners in because and it's one of my favorite things about Verma is a new property manager showing up and realizing the wealth of knowledge that's at this event and that they can go and learn and sort of take all these spec practices and bring them back into their business and it's Not that I mean everyone doesn't want it. They just maybe don't know that it exists, don't know how to access it. Like I it does feel like everything is sort of one chat away, but if you don't know the right thing to ask, then you don't know and what you're missing.

Right. Exactly. Yeah. I mean, it's like they don't know what they're missing or that they're even missing anything at all. But I, you know, there's there's no there's no wrong way to do this as I said earlier. But like with newer, you know, more investmentoriented hosts, if their purpose of doing this is for building personal wealth, that's that's okay. Like I mean, like that's very different than a property management company that we're managing on behalf of all these owners. But I remember when we first started the podcast, and we get this question sometimes, too, and we say what we do. People ask, "Well, how many short-term rentals do you have?" And my husband and I have some long-term, but I'm like, "I don't have any." you know, and they're just they can't believe that. They're like, "I thought that's what you did." And it's like, "Well, we do, but it's different." But, um, you know, I mean, I think if if somebody had told any of us back, you know, 15 years ago that this was coming, for sure, we would have all bought short-term rentals, too.

But most of the homeowners, you know, if you're on a a property management company in Myrtle Beach or PCB, a lot of those homeowners, they're owners that bought years and years ago. And of course, they want to do well each year financially with the property, but they're not looking looking at the NOI and like the, you know, the true return on everything in a way that somebody that's buying it as an investment is or somebody that, you know, that's that's their main goal. It's just it's a different type of an owner and I think you have to be able to cater to both. But for the people that they want to manage themselves like they just the type of content they're interested in is how do they find the best deals? How do they you know optimize those deals? How can they keep scaling that in a way? And I think they want to know the other things about best practices for how to actually run that as a business.

But the financial part is the most important to get started for them. So, a lot of the podcasts that are more in the smaller host space, I feel like they are a lot more about like howto, you know, type content, which our content is not as much howto. It's more editorial and story based and um, you know, we tell a lot of stories of the different technology providers and property managers in the space, but it's not as much of like you're coming to learn a specific course or anything like that. So understanding the needs of the people that they want to learn specific skills versus those that are just trying to have a better grasp of what's going on in the industry, not just within their own backyard. You know, I think that applies for for Verma or any of the other organizations that are out there.

But I think if you look back five years ago, the one thing that was not done well, but I don't know how I don't have any recommendations for how I would change it, but there was so much money that came into the industry. And there was not really a grand plan of like, okay, we're the property managers, they need this the most. Like there wasn't like a plan of like what was the most important, how all these tools were going to fit together. It was just there's let's just start building stuff because this industry is about to blow up. And what that resulted in is property managers are just very confused. Like I mean they tell us all the time we go to a conference and they're like I don't know what to choose. Like there's so many [laughter] different thing I can buy and I don't even know if I need to buy that thing in the first place if I need to be considering which ones I should look at.

So there's a lot of confusion around that and I think the content should be based around, you know, it needs to cater to the type of property management business that you're trying to run and it's, you know, one's not better than the other. They're just just different mentalities. And, you know, the more that we can help make everybody more professional at the end of the day, then that's that's good for all of us. And if we can as property management companies make our owners more profitable, too, like the STR side is doing much better, then great. you know, I mean that that's a win-win.

Yeah. And the the sort of choice on what to do, I think, is an interesting one. And there's the PMS, there's the RMS, there's the what point solution do I need? What channel should I be distributing on? Like all these different questions. Annie, I know you you said you've been working with booking, and booking has been famously trying to crack the US market for a long time. And you talked about on the show um and and we talked about how and you were at the Booking.com conference. You brought a lot of people uh to that conference to and sort of have this sort of listening tour and have them hear and what people need from their sort of OTAA from the different channels. And I'm interested just some of your takeaways from that of one like what what do you feel like maybe booking is missing in terms of understanding the US market and then what did you hear from sort of post operators on terms of what they want from an OTAA?

So I think a lot of a lot of times and I haven't had experience working at OTAAS the the amount of data and I always said it this way like the amount of data that you can vomit on somebody is just ridiculous. And so that was where you always got them. They're like oh my gosh you know people would be oh all this data. Well hosts don't necessarily want all this data. So I think sometimes like focusing on the technology aspect the amount of data just doesn't really that just doesn't excite people. They're like, I want something that's going to be easy for my operations. And you know, it could be very simple like they just want a couple more reservations or they just want to plate an owner that wants to see them in more marketing places. So, I think that there was some misconceptions about what the technology was doing. Not that it's not great technology because it is, but just how much they focused on delivering that as a message.

Um, but from the host perspective, I think what was really interesting and you know this person very well um but we were talking um about kind of the relationship between OTAAS in general and you go to a show and this also is for any supplier. You go to a show and as an operator you walk through the vendor hall and everybody wants to marry you but nobody's asking you out on a date. And so what we walked away from is like people want a relationship. They want to feel supported. And so the question was, well, you know, why are you using this channel and not using our channel? Like the devil you know is better than the devil you don't. And so that very much was made very clear in that like we need let's get to know you better. Let's understand what you do better. And so that's what I've been working with them on is kind of dispelling the myths of what OTAAS do for for operators. You know what booking has created to make operations more simpler.

They're you know working with their connectivity providers to make that you know they call it seamless in Europe. It's not seamless in the US, but it's it, you know, it definitely is an easier connection. But they're also listening and saying, okay, like, okay, what's really causing friction is when channels try to dictate what cancellation policies can be. That's just, you know, that obviously we see that on LinkedIn and Facebook groups all the time. So, they're trying to really make sure that they're listening and op and offering things that make sense for the business. They're they're doing things that the operators need and they're listening. And so I think that for them to have that one-on-one conversation, they really really understood that we're in a relationship business with whether somebody has one property, they or they have 10,000, we they want to trust the partner that they have and they want the channel to be a partner.

So I feel like they're in the right path, but um that is that is where I I see the opportunity is we're a relationship business regardless of what side of the business you're on. On the topic of OTAAS, Alex, like putting my marketing hat on, like this whole debate around direct bookings, OTAAS, uh, AEO, SEO, showing up in AI in terms of search. If you were sort of giving advice to someone running marketing at a vacation rental company today, like where would you be putting your effort towards? Is it in multi- channelannel distribution where you're not like and have too much exposure on any one OTAA? Is it developing your direct booking and and getting those funnels and sort of targeting repeat booking? Is it that I I've got to be visible on chat GBT and claude and every single LLM and that's going to be I what drives the future of sort of demand and where would you sort of put your focus towards or is I am I

this way this way this way this way this way. [laughter] I mean honestly it it goes a lot has changed but at the same time I mean I think the strategy that we used to run at condo world was very unique because we were also an OTAA and we were trying to make our a name for ourselves as that brand to grow into other regions and so that was a unique strategy of we were 95% direct very you know intentionally more direct than we were on the OTAAS um and invested heavily you know in that too but I don't know that I would recommend some of those things, but the principles of how we were doing it are still applicable. And even in today's day and age, it's just another leg that you add. But in marketing is I've got a great graphic that it shows. I mean, it's a flywheel. And you can't just focus on one area and expect the rest of them to get better. They all have to be working in sync. So, it's like, you know, the fundamentals of making sure your website is optimized, that it's very easy to use, that it's userfriendly, you know, that it's showing up in, you know, for SEO, that you're writing great content, that it's it's original, that's always going to be, you know, kind of like the the backbone of things.

But now, how things have changed as far as the LLMs, you know, it's from what I'm seeing, a lot of the companies that are showing up more, they're looking at your review scores. I mean, that's a big part. So, it's like if you are only focusing on your individual OTAA listing reviews, that's not enough. Like you need to be pushing guests to your Google business page and to be evaluating you as a company in order for your company to be able to show up in the LLMs. And I think the brands that are doing really well right now, they are doubling down on social and really, you know, showing the impact that they're having on guests. They're not just showing property after property after property. They're showing what it actually looks like through user generated content of their guests actually, you know, on vacation and and providing a way for somebody to kind of see that and be like, "Wow, that looks, you know, I I can see myself there.

That that looks like, you know, I I would fit in." And I think it's about creating an environment where guests feel like they're going to be welcome, where you're going to come. And so, how do you portray that in your marketing? and and what are some of the more sophisticated things you can be doing to retarget and make sure if you are spending, you know, time and resources on PPC or email or SEO or any of the things that you you're getting those guests back in and that you're create creating a really sticky mousetrap so that you're you know you're just leveraging as much as you can from the things that you're putting efforts into. Uh but I also think you know listing optimization is huge too that you even if you want to be primarily a direct company you need to be looking at your OTAA listings because in most cases people are going to find you there and then come and book direct. So, you know, putting the name of the property in the title, just basic stuff that I see a lot not doing that that you know, those things need to be looked at.

And if you end up getting the business from the OTAA instead of your own direct site, as long as you're, you know, ch optimizing your rates so that you're covered, in a lot of cases, you're going to be making more on the OTAA booking. And then if you convert them to book with you direct the next time, that's a home run. So, you know, utilize the OTAAS for what they can do, which is massive marketing. And then make sure you have the most sticky environment so when they're in in the property when they leave they know to come back and book with you next year or if they don't want to do it right away they they remember who they stayed with. They didn't just stay in an Airbnb they stayed with XYZ company.

If you had to make a prediction like over the next three to five years do you think the industry is going to be getting more direct bookings or less terms of share? I I think less, but I think it's, you know, we don't none of us know where brands are even going to go. I mean, like, if there's definitely talk of people saying that it's just you're just going to use your AI agent or your your preferred LLM of choice and that you're basically bypassing the brand, that you're not going to brand first. I I don't know when that comes into play and how much that, you know, directly affects like is that still going to be the case for Airbnb, Expedia, Verbbo, these big brands? I'm not sure, but I mean if if they start hurting from their own direct efforts, you know, that's coming downstream to all of us, too. So, it's kind of like a a wait and see of like, you know, we're really beholden to what the LLM are going to be serving up, whether it is the OTAA or it's the local company.

And if it ends up that the LLMs are serving up the local company listings over the OTAAS, then that's a home run, too. And u Annie and I have mentioned this on a couple podcasts that we did an exercise live with some people on the phone one time that I used um we both used Claude, I think, and we both asked for like the best vacation rental company in in her town and in my town and she got the you got the local property management companies. I got OTAA listings of those same local property management companies. So, I don't know what it was that we searched that decided that was how it was going to show up for us. that, you know, in today's modern age of marketing that the results are supposed to be tailored to you. So, if you're showing the LLM's what you want, then that's what they're going to give you.

So,

any your opinion there?

I, you know, I really think it'll be interesting to see if one of these LLM doesn't become an OTAA because they're going to own it. Like, they're going to own all of this information. I mean, it it to me that would that's the that makes the most sense. I don't you know I don't know what the inner workings of all that have to be behind the scenes

like a Google vacation rentals.

Yeah. I mean I think I think you know as long as we've been talking about Google vacation rentals this is when they finally figure it out

vacation rental.

Yeah. I I don't I don't know. I mean I I just think it's it's so it's too soon to tell and about the time we feel like we've seen the writing on the wall somebody's going to come through and paint it and you know remove the wall. I don't know. It'll be interesting to see. So, and we're we're about up on time, so I I don't I don't want to hold you guys up too long. Uh, but I did want to end with maybe some predictions um of what you guys sort of and expect to see over the next maybe year or two. And if we were going to come back in a year or two, what do you think we'd be talking about? What do you think are going to be driving sort of uh industry headlines over the over the next 12 to 24 months?

I think we're going to be talking about all these things we talked about today. We'll just have a little bit more visibility into where they're going to go. I I think I do believe that the the content that comes out from these associations and even the technology that's coming out now is going to be more intentional and probably better for the audience that's trying to receive them than just, you know, both sides kind of pushing what they think is going to be best. Um, so I think that's going to be a good thing for it. I think you know just what we talked about on the brand side that's going to be fascinating to see and you know at the end of the day we Simon Leman says like you know we don't want to just be all glorified cleaners but if brands go away I mean that kind of swings back to swings back to that so like how do we prevent that and I think you know you you always have to have a good pulse on your direct bookings and you do have to have efforts there at the very least so that when people want to come back they know how to find you But where this is going to go in the future as far as how can you can really procure new guests through your own direct marketing, I think it's going to become more and more challenging and you've got to be really savvy and and really look at how you're getting to that end result.

Yeah, I I agree with that. And I think the only thing that I think is going to be I'm watching because I'm seeing it is I think going back to what AI tools can do for people. I think we're going to start to see a shift from large providers in the PMS space being dominant. I think we're going to see people having their own independent sort of systems built around what they need. Because again, I think that's that's always a challenge for a PMS company is that they can try to build what they think is the right answer, but depending where they go, it's the wrong answer for somebody or it might not be exactly right. So, I think that as people figure out how they can build something that fits their style of operation, we're going to see more of that and maybe some of these PMS's that are trying to be all things to everybody will start to peel back and say, "Okay, I'm I'm all things to this segment and not to everybody else." So, that's my that's my big one.

I love it. Well, this has been a lot of fun. Uh if you guys want to point someone uh somewhere to find more about and the Alex and Annie podcast or what you guys are doing individually, uh where would that be?

So they can go to our website, Alexandroodcast.com. I know Alex and I are both very active on LinkedIn. Um so I def I definitely would say connect to us that way and um you can see us on socials as well.

Yep. That's uh that's it. [laughter] I would say too. Yeah. LinkedIn and the and the podcast is on every media platform, YouTube, Spotify, Apple. We talk to guests every week. We haven't missed a Wednesday in five years and in some cases we have six or seven episodes a month. Uh but we're there and we'd love to connect with people and and thank you Jamie for having us today. I knew this would be a fun conversation. We we had you on our show last year and it was one of our highest performing episodes. So

people like Jamie [laughter]

you guys are one of the few podcasts that I like watch on YouTube as opposed to on Spotify. You guys do a great job there.

Interesting. Thank you. Appreciate it.

Awesome. Well, thanks everyone for listening and Alex and thanks for joining.

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