1969: Short Term Rental Growth, Hospitality Brand Mindset, AirBnB Bust, Jasper Ribbers of GetPaidForYourPad

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Welcome to episode 1969. 1969. And I am coming to you from a bar. Just kidding. Actually, I just got a cup of coffee outside the poison coffee from Starbucks. But what's interesting about this episode and the intro for it, it's a little different, is I'm on a cruise ship on the symphony of the seas and this ship is absolutely insane. I mean, 6,500 or so passengers at the time it was built. The biggest cruise ship in the world. I think it's the second largest now. It's absolutely unbelievable. So today we're going to have a talk with Jasper Rivers. He's been on the show before and I've been on his show too. We're going to talk about the market. We're going to talk about specifically the short term rental market. If you do Airbnb or VRBO and you're interested in that topic, you've got to listen to this, this episode. It's going to be super helpful for you. We're also going to talk about the market in general, not just as it applies to short term rentals. So we will get to that in just a moment. But I'm here this week, gave a speech for this mastermind group here on the ship. And so they said, you know, we'll have you on the cruise and invite you to hang out with us the whole week and present for us. I talked yesterday about the impact something totally new. Depending on how the recording is, maybe I'll play it on the here. But a totally new topic, you know, that we haven't discussed too much on the show before, which is AI and population collapse, the two things that Elon Musk thinks are the biggest threat to humanity. So that was an interesting chat yesterday, that presentation I gave. Depending on how the recording comes out of that, we may just share that with you on the show. So it'll depend on that. But before we get to our main core episode today, I just wanted to show you a little bit of this amazing ship from Deck 55 here, which is quite literally like a shopping mall on deck five. And I just ducked into this bar area so I could record this intro for you. But let me just give you a little bit of a tour. But first say hi to you know who. Yeah, Coco's here. It is her fifth cruise. Say hello. Say hello there. Yeah. All right, let me just show you outside here and then we'll get to the main episode. This is the fifth deck and up above it is Central park, which is like a park area. It's absolutely incredible. The scale and the cost of what they have built is mind boggling. 17 decks. I just wish I could really tour you around the whole ship. It's beyond belief. I mean, I've been on many, many Cruises. Yeah, almost 20 cruises, but no ship like this. The scale is absolutely amazing here. There's, there's a few Starbucks on the ship. So yeah, it's truly incredible. Anyway, let's go to our main episode. Let's go to our discussion with Jasper and I think you'll enjoy this. So here we go.

It is my pleasure to welcome Jasper Rivers back to the show. He is the founder of get paid for your pad and overnight success. He does a lot of education in the short term rental market and is going to offer some great insights to us today. Jasper, welcome back. How are you?

I'm doing great. Thanks for having me.

It's good to have you. Things are certainly changing in the short term rental world. Give us an update just as an overview as to what has been happening.

Yeah, last few years have been very interesting in our space. You know, March 14, 2020, I think it was. Airbnb canceled or allowed guests to cancel all their bookings penalty free. And the whole industry went into shock. And kind of surprisingly, there was a very strong rebound, especially outside of the urban Markets like the traditional vacation rental markets, the secondary towns, and 2020, especially 2021, 2022, ended up being some of the best years for a lot of people in those markets.

We are experiencing somewhat of a plateau or even a slowdown in some markets as well. So, yeah, it's been very interesting. A lot has changed. The customer, the guest has changed. The way that hosts create experiences has changed. So it's been a very interesting time.

So Airbnb allowed everybody to cancel reservations. And what really annoys me about the way they do business is they sort of get all this pr, this sort of virtue signaling pr. But it's the Airbnb hosts that are taking the brunt of the damage. Like, they didn't pay any hosts, did they? They just allowed the guests to get out. But did they. Did they compensate the host, the owners of these properties, or host of these properties for their losses?

No. I mean, they did come out with some sort of compensation package after getting a lot of pushback from the community. But it was, you know, how do you say, water drop on the hot plate? You know, it wasn't. It didn't cover very much on the.

Biggest scale, it was basically nothing. Yeah. Right. Okay. So I think there's an important lesson here, and it's a general life lesson. It's not about short term rentals only. It's about investing, it's about rental property, it's about life in general. And that lesson is that just when you think things are really bad, it can just turn around so quickly. So they had all those cancellations and all the hosts were just really disappointed, I'm sure. And then was it about three months later that everything just turned around and bookings went through the roof and prices went up and everything. What's the timeline on that?

That? Yeah, you know, it depends a bit on. On the area because. Because remember, like, 2020, it was such a. It's such a weird year in the sense that some areas opened up very quickly. Some areas stayed in lockdown for, you know, for like a year. Right. So it was very area dependent. But, you know, I would say what happened was international travel just completely came to a halt. Right. And so people want. Who wanted to get out of the town. They started looking, you know, driving distance. Right. Where can I go? One hour, two hours from here? So those areas rebounded very, very quickly. Especially, especially, like, the, you know, the more unique experiences. And the reason for that is that, like, if you, I mean, you just went to Japan, you told me, right. If you go to Japan, that's an experience in itself, right? It's a new culture, it's a different country, different language. Everything is different. So there's a.

Unless you're Japanese, of course, but.

Yes, but, you know, there's a, there's a unique to the destination, right? But if you're traveling, if you're going like one hour, two hours from home, you don't want to be staying at a cookie cutter type of place, right? Like you, you want something, something special, right? So I think that's, that's what happened is especially like the unique, the unique properties right nearby the large cities. Like, you know, those, those properties were doing massively well, like probably better than ever.

Okay, so it was offering a different type of experience. Now, was this mostly driven by vacation or was it driven by the great migration of 2020? That, by the way, I think I was the first one to predict in February of 2020, because I just knew there would be a mass migration out of cities into suburban and rural areas and exurban areas. A lot of the short term rental rentals I know were simply for people to sort of stage their move and they went and rented a place to look for a permanent place. How much of it was that market versus just vacation? People had been cooped up and they just had to, you know, get the family into somewhere else to break the monotony.

Yeah, I mean, that's a good question. I don't know the exact numbers on that, but it's, it's definitely a combination of a number of different things. Right? There's people who just wanted to get out of the city for a weekend or for a couple of days during the week. Right. There's people, like you said, who, who, you know, move to either a different state or more smaller town suburbs, you know, the, a lot of like, secondary cities, like cities in, you know, states like Kansas, Montana, like, you know, those type of states, like the cities there have done very, very well. And I think it's also, there was also. It also caused an accelerated trend where people started looking at their home differently in the sense that instead of living in one home and going on holiday, they started thinking about, hey, what if we, what if we just cancel our rent and we just stayed in Airbnb for a month and then we, we go somewhere else and we stay at another Airbnb and we kind of live that digital nomad lifestyle. Right, everybody?

Yeah, some, some good stuff came out of the plandemic and one of them was adoption of remote working technologies, which really should have been adopted 15 years earlier, but it took that to make it actually happen. So a lot more people really became digital nomads in a sense. Right. Or I mean, I, I don't know if I'd call them digital nomads in the sense of that phrase. You know, we usually figure that as kind of like young people, backpackers. These were remote workers, you know, people with corporate jobs that were working remote. Right?

Yeah, yeah, 100%. And you know, like you said, like it was a trend that was already there. Right. I actually was a digital nomad for eight years. And I remember when I started 2010, it was very, very unknown. Like, people didn't really. That lifestyle, there was not a lot of people that were doing it. That trend's been. Been growing steadily. But yeah, the, the pandemic, or plandemic as you call it. Like, it really like put that in, in, in acceleration mode. Right. But I think in general, like, people just became more flexible in terms of location. Right. Like they could. Obviously there was the remote working thing. You know, there's. And I think there's still. There's still a lot of people who are working remotely and haven't gone back to the office, like a lot of people have, but it's still, you know, I think that trend's still. Still in place. So. Yeah, I think it was a combination of things. But in general, I would say people are. People have just gained more flexibility in terms of where they would be. Right. Other than just being at home and going on holiday once a year. Sure.

Okay, so bring us up. I mean, we're talking about something that happened three years ago now. So bring us up to date. Are there any more sort of seminal times that you want to talk about in that three years? And then bring us to present day and what the outlook is?

Yeah, for sure. So 2020, there was a pretty strong rebound in the areas that we just talked about. 2021 was a very good year. We saw a lot of growth in the industry in terms of nightly rates, occupancy. Airbnb also had a record breaking year, 2022, same thing, a record breaking year. Obviously, this is somewhat dependent on the markets. The urban markets have just recently starting to recover. It took a lot more time before the urban markets recovered than the other markets. But if you look at just overall numbers, 2022, very strong year for certain rentals. But towards the end of the year, we started seeing a slowdown happening and.

There became this popular kind of term called Airbnb bust that went around the Internet. It started somewhere around November because some hosts were started seeing slowdown. And then suddenly everyone started talking about this Airbnb bus thing, which in my opinion was extremely exaggerated because.

There'S not really a bust. Right? I mean, nothing goes up in a straight line is something that I learned when I was in finance. There's always going to be slowdowns. But, yeah, we are seeing a slowdown. I think the higher rates that we've seen over the last couple of years have attracted a lot of supply onto the market. So a lot of people have noticed that they could be making good money on Airbnb. And so a lot of supply hit the market. I think that supply is probably.

When you say higher rates, you mean higher rental rates Higher.

Yeah. In the short term rental space, we talk about adr, like average daily rate. Right. So, yeah, if you're a host in one of those popular markets where suddenly like you could charge 300 or $400 for a night versus like 250 a couple of years ago, that's going to attract a lot of supply. Right. That's going to encourage a lot of people to list their homes in Airbnb. And that's in the short term rental space. It's pretty easy to list your home on Airbnb. Right. It doesn't take that much to get your home listed and start receiving bookings. So, yeah, that's what we've seen. And supply has grown a lot. Demand has grown a lot as well. But it seems like the balance between demand and supply is now. It has shifted a little bit. And because of that, the rates are starting to come down a little bit. We're seeing occupancy and rates coming down.

Can you give us some numbers in terms of the amount of supply or supply growth of. And I guess we should count this in number of beds rather than properties over the years. Do you have any numbers to share with us on that?

I haven't really prepared any numbers, but what I can tell you is when you look at the more popular markets, like our market, for example, is a traditional vacation rental market. It's Idaho.

What is your market? What does that mean?

It's a small. So.

One of the locations where we are, our company Freewild, will take, which we're building right now. We have properties in Idle, California. Right. Small market town. Right. Mountain. Mountain town, not market. Mountain town. So very popular. I mean, I just looked at the listings. I think there's like 650ish listings now. And a couple of years ago there was like 450. So.

In Idlewild, California.

Yes, exactly. Yeah.

I'm amazed that there were even 450 in a market like that. That's not. That's a small town, right?

Yeah, yeah, yeah. It's. It is, it is. Right. But the growth, you know, the growth in terms of supply is pretty, you know, it's pretty. Pretty aggressive. Right. And we've seen that in a lot of markets, like it's. And to the point where some, some operators. If there's no restrictions in your market, if anybody can just come in and put their home on Airbnb, if there's no. If you don't need a certain rental license, right. If. Then, if there's no restrictions in place, then, you know, the. The supply can grow very, very quickly because there's no real barriers to entry. So, you know, definitely in those markets, the supply has grown very, very quickly. You know, if you look at the global look globally or look at the total Liu assets, you know, it's probably, you know, I'm not 100, sure, but I'm probably going to say, like, it's probably grown around 10, you know, 10% per year. 10, 15% per year, maybe. Yeah, but that's.

That's unsustainable growth. So I think what we have here is we have obviously a market shakeout. And this will be an opportunity for the professionals, the people who are the real operators, the people that work with you and your students and so forth, who will really consolidate their foothold in the market and they will go through some pain time, and they have been going through some pain of the shakeout. But again, all of the also rans and the people who just got in this for a quick buck, they shake out. And this happens in any market. It doesn't just happen in the short term rental market. It happens in traditional real estate. It happens in stocks. It happens in crypto. It happens in everything. Okay, how do you see that playing out?

Yeah, I mean, look, my perspective is the people that are focused on building a hospitality brand. What I mean by that is there's a different mindset. Like some people, they see their business as an Airbnb business versus a hospitality business. Airbnb is a marketing channel. It's a place where we can find potential customers. But if you're in the mindset of, hey, I'm building a hospitality brand that I want to continue to build for the next 5, 10, 15 years, then these slowdowns are kind of. It doesn't really change your overall plan. Right. Your long term vision for what you're building? I think yes, there's an opportunity for the professional operators who are really focused on building a sustainable brand because in a slowdown it's easier to acquire clients. For example, a lot of homeowners will be unhappy with their property manager because they're not making as much during a slowdown. So that's a time when, when you can acquire more clients or if you want to buy existing short term rental properties like the, you know, the, the prices will come down, the owners will be more motivated to sell during a slowdown. So yeah, I think there's definitely opportunities. But you know, I think my personal opinion is like, like there's always going to be ups and downs and I prefer to just have a very clear goal in mind with, with our business. And regardless of like what's happening in the market, like, we gotta be just focused on like, well, what's the, how do we create world class experience for a guest, you know, who has our guest avatar? What's their needs?

How do we create something unique. Right. That people are going to want to experience for, you know, years to come? Right. If we're just focused on that, then I think that's the most important thing to focus on. And then, you know, yeah, there'll be slow, there'll be ups and downs, but in the long term that's, in my opinion, that's, that's the way to success in the, in this space.

You know what's interesting too is the knock on effects of, you know, for example, the furniture business. I mean, as Airbnb has grown, I've noticed all these new mattress companies popping up out of the woodwork because all these new beds have been created around the world. You know, I would imagine that furniture resellers and consignment stores are going to do very well and probably have been doing very well. Well, at least in terms of lots of inventory. I don't know if they have lots of buyers for their furniture because as these Airbnbs go on the market, as long term rentals or the properties are sold, I mean they've got a whole house full of furniture over and over and over again and you know, thousands of times over and over around the country and more so around the world. Any thoughts on kind of the related industries and the way this plays out?

Well, first of all, there's a whole ecosystem that has been built around the short term rental space. Right. And yeah, furniture is definitely interesting. There's some really interesting companies out there. I'll name a Couple number one is a company called Host gpo. And what they do is they essentially allow host to buy furniture in built. They do group discounts. So like, if you're, if you're a small house of a couple of units and you know you want new furniture, you go to the store and you just buy retail price, right? But if you unite with 500 hosts who all have free units, and then you go to certain shops and say, like, hey, we're all, we're all want to buy furniture here, but we want a discount, then you have, you know, you have the power to negotiate this discount. So there's companies that play into that. Another really interesting development is that there are now companies that help hosts actually market their products in their Airbnbs, right? Because like, if you, if you stay in Airbnb, for example, and you, you lie in the bed and it's like, wow, this is such a comfortable mattress. Like, I might want to buy this for my own home, right? There's no companies that will allow you to literally just scan a QR code. And then if you want to buy that mattress, you can buy it, you can buy it at a discount and then the host a small commission. So, you know, there's, there's really interesting developments going on in, in that space, for sure.

Yeah. Yeah, that's, that's great. What else do you want people to know? Anything more in terms of predictions, what we can expect?

Yeah, I mean, I'd say, you know, for the people that are listening and are interested in, you know, starting out in the short term rental space, I think it's really important to understand that, number one is the industry is maturing. It's, it's no longer a case that, where you can just list, list your home and Airbnb and expect the bookings to just come rolling in. Right? That's been the case for a long time. That's, that's no longer the case. There's exceptions, but, you know, overall that's not the case anymore. So that's one thing to keep in mind is like, if you want to enter the space now, you got to consider, you got to look at it as a real business, right? You got to, have you got to really think about, like, who am I serving? Who's my guest avatar? You know, what's the experience that's needed in my markets? How do I stand out from the competition? Like, all the questions that you have to ask yourself when you start any business, really, that's really relevant now and that's, that's changed a lot. Number two is the guest expectations has changed a lot as well. I remember when I stayed in my first Airbnb in 2011, you know, I wasn't even sure if the host existed. Number one, I thought, I didn't even know if it was a scam or not. Number two is like, well, if the host opens the door and actually lets me in and there's a bed where I can sleep in, like that's pretty much what I'm, you know, my expectations right now. That's completely changed. Right. People have much higher expectations of, of Airbnbs now, right. They've, they've stayed at different Airbnbs. They've seen the difference between like a really good experience and a bad experience. So they're, you know, their expectations have raised. So I think that's something that we have to really keep in mind as well.

It's not, you know, it's not as, it's not as easy anymore to make, to just go on the platform and make a bunch of money. Right. You really have to have a plan. And yeah, like I said, like, you have to consider yourself in the business of hospitality, not in the business, not the business of real estate. It's the business of hospitality and you're dealing with people, with guests. Right. And you have to keep that in mind because, you know, it's a 24 hour thing, right. If the guests lock themselves out at 3am in the morning, like someone's gonna have to, you know, solve that challenge. Right? So just a couple things to keep in mind.

Yeah. What segment of the short term rental market is the best segment? Is it the low end segment where, you know, you're maybe renting out little condos or studios on a nightly basis? Is it the high, high end or, you know, just everywhere in between? Where do you see opportunity?

Yeah, I mean, it's hard to say overall, right? Because like, you know, one thing that's, that's really important in the short term rental market, when you're renting out a home on, on for the short term, it's all about the experience, right? So when you compare it to long term rentals, like if I, if I tell you like, hey, I'm in this neighborhood in Scottsdale, I have a, I have a 1,000 square feet, you know, two bedroom, one bath, you can pretty much estimate what it's going to do as a long term rental, right? But with a short term rental, it's very, very different. There's, there's so much variety, right. Because you're not renting out a space. You're creating an experience. So you can have two apartments in the same building with the same same size, same layout, everything. But one host creates like a unique and cool experience. And another host doesn't create a cool experience. That one unit could be doing, you know, $5000 a month and the other one could be doing $1500 a month. So the reason that I'm saying this is, is that it's because of this, like, it's very hard to say in general, like, oh, this type of property is the biggest opportunity. Right. It just varies from market to market. But even, even within neighborhoods, it could vary, you know, depending on what's available and what people are looking for. But I will say a couple things. Number one is a lot of people like to focus on the higher end. Because if you have like, let's say you have five properties and they're doing $200,000 in top line revenue a year. Right? Five properties, you're doing a million dollars in revenue a year. You could also have 20 properties that do 50,000 in top line revenue. And you're also, your top line revenue is a million a year. But there's a lot, it's a lot more work to manage 20 units than to manage five units. Right. So, you know, that's just one thing that a lot of people focus on is like, they, they feel like, okay, well, you know, it's better to get high end properties versus versus lower end properties because you make the same with less, less work. Right. But yeah, and I mean, in the end of the day, it's like every market has opportunity. You have to study the market and you have to see like what's available. Who are the people traveling to the market? What, you know, are they traveling here as a tourist? Do we get transaction workers? Do we get travel nurses? Do we get business travelers? Like you really have to study the market to figure out where the opportunity is.

Yeah, well, that's really. Actually you kind of alluded to the last thing I want to just ask you before you go, and that is this potential shift in the market from short term rentals to midterm rentals. And you know, first of all, define what midterm rentals is and tell listeners and viewers how they can play that game.

Yeah. So short term rental is really considered like anything below 30 days or less, essentially. Right. So a midterm rental would be anywhere between like one to six months would be considered a midterm rental. And I think the reason that those rentals have become popular is what we talked about before. You know, a lot of people can work remotely now. A lot of people are looking for that lifestyle where they stay in one city for like one or two months and then they move on to a different city, stay there for a couple of months. You know, outside of that, there's also a lot of other reasons why people might need a midterm rental. For example, you know, there's insurance companies that look for midterm rentals, right? If somebody, if your house burns down and you're insured, like the insurance company is going to rent a space for you for a certain amount of time, right? And it's the same for, you know, I mentioned travel nurses, I mentioned construction workers often stay for a couple months in an area to work on projects, right? So there's, there's quite a bit of demand. And you know, I think, I think one thing that we've seen is that, you know, traditionally a lot of people might stay in a hotel for a couple months, right? For example, the, you know, corporate, corporate travelers or construction workers, they might stay at a hotel. But I think because a lot of people, a lot more people are aware of the existence of certain rentals. And when you're staying somewhere for two months, it's nice to have a kitchen, it's nice to have a living room and a little bit more space than a hotel room, right? So, so yeah, the midterm rentals is, is definitely something that is, it's a trend and there's opportunity there. The challenge with midterm rentals is there's you, you can definitely list on Airbnb, rent and rent out your space for 30, 60 days or even like 3, 4, 5, 6 months. But to really maximize your occupancy, you're going to have to develop your own marketing channel. You're going to have to really find your custom.

Outside of Airbnb.

Are you going to do that on Furnished Finder or are you going to do it directly to the, the consumer? Or how are you going to do that? What are those channels?

Yeah, I mean, Furnace Finders is a platform that focuses on travel nurses, right? So if that's what you want to focus on, if you're nearby a hospital, for example, you know, a specific experience that travel nurses look for. They often travel with their pets, right? They, they, they like to cook, so they're looking for a good kitchen. There are some other platforms where you might be able to find, you know, some, some longer term stays. But, but I think if you want to be successful in that space, you really have to develop your own marketing channel. Right. I know somebody, for example, who really focuses on the corporate traveler and they have connections with a lot of big companies. Right. So they've this, this established relationships with big corporate companies and said like, hey, when your people are in this area, these places that they can stay at versus a hotel. Right. So it's, you know, it requires more, more work to develop that.

Yeah. Right. Okay. Okay. Good stuff. Give out your website, Jasper yeah.

If you, if you want to get started on Airbnb, say get paid for your Pad.com is where you can find blog posts, my podcast. If you're interested in scaling your short term rental business, then check out our educational company, Overnight Success IO Jasper, thanks for joining us.

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