Sustainable Strategies for Scaling your Hospitality Business

One of the biggest problems in a business journey is scaling and growing. And today's boastly podcast episode is all about scaling sustainably. That's hard for me to say. I've been practicing that five times. Scaling sustainably. We have got probably, I think our very first ever New Zealand host. I may have got that wrong. We may have had somebody on before, but this one is going to live out in in time. So this is such a good episode. John Laurie is the founder of Urban Butler. He's also part of the directors of the Astra which is based in Australasia. He is in New Zealand. He was in Auckland. We did some time travel magic here. I spoke late on a Wednesday evening, which was very early, his Thursday, really interesting podcast. And I feel like anybody who scaled their business, whether it's scaling from like 1 to 10 or gone from 10 to 21 or from him where he went from 30 to 80, you'll be able to sort of relate to the struggles that he had. And this is obviously before we put in Covid and all of that. He talks about what is coming up in New Zealand, he talks about how he got started with Astra and it just breaks down the story as well. It is super interesting. Go and check him out on LinkedIn, John Larry. And also as well, go check out urbanbutler.com it's a really well put together website. Bearing in mind that what he talks about in this is what it was beforehand and what it is. And I mean I wish it was a boostly website, but it isn't. But it is a very well put together website, one to go and check out. So without further being said, I hope you're enjoying the new office lights. And let's hand over to the podcast interview with Mr. John Larry of Urban Butler. First and foremost, thank you very much for being part of the podcast. Can you just please give a little bit of background about yourself, how you came to creating and founding Urban Butler and then just. Yeah, let us know a little bit more about yourself and where you are in the world, please.

Yeah, fantastic. Thanks, Mark. Yes. So the Urban Butler was born, so to speak, in 2016. I was living in Australia, moving to New Zealand and took a few months off to travel in Europe. And the thing that stood out to us, you know, we were probably staying 80% Airbnb type properties and 20% hotels. And the thing that really stuck out was the additional level of guest experience that we were receiving, you know, at those Airbnbs in, in Europe. And one night in particular really stands out. We were checking in around 10pm place in Barcelona and the, the host came to meet us there, showed us through the apartment and, you know, lovely apartment right in the middle of town. And on his way out he just sort of said, look, here's Lonely Planet's list of recommendations and here's ours. This is where you get the best aperitivo, this is where you get the best tapas, this is where you get the best coffee. Make sure you go here, here, et cetera, et cetera. You know, please contact us if you've got any, any questions or anything. And you know, at 10pm in Spain, that's dinner time. So my partner and I at the time, she said, where should we go for dinner? And I said, well, clearly we're going to go to that tapas place downstairs that he's just recommended, you know, and that was really the sort of start of that, I guess live like a local or whatever you want to call it. That sort of personal touch that I think is really, it really resonates in what we do and is a really a great add on for guest experience.

So what point in time from doing the trip in Europe to then coming back and creating the urban butler, what was the sort of like time zones? Like the timeframes of that?

Yeah, okay, so that, that was around mid 2016, and we landed in New Zealand around September 2016. The Urban Butler was up and running by the end of 2017. So in that, in that year or so in between, we had moved to Waikiki island, which is just off of Auckland, and purchased a, an investment apartment in Auckland City, which we were putting on Airbnb, you know, whilst we were living on the island and using it as a crash pad when we were coming into the city. And it just went off the chart in terms of bookings and reviews and everything else. And that was really the sort of catalyst where I'd had enough of corporate life, was looking for something else to do. And this was really that, yeah, like I said, the catalyst for, for me to start it up.

Nice. And then so from 2017, end of 2017, moving into 2018, 2019, what was the growth and the trajectory like?

Yeah, so we started off with just a couple of apartments, my own one and, and a friend's. And just from there we started doing some advertising and, you know, beating the streets in terms of meeting as many real estate agents and, and referral type partners that we could. And by the end of 2019, we had around 65 properties. Wow.

And then from 2019, moving now into 2023, how does the business look? Obviously we've gone through so many things, lockdown, shutdowns, Covid, et cetera, from those 2019 to 2023. First question is, how many properties are you on now? And second question, which you can elaborate on as much as you like, how have you sort of changed and pivoted the business through what has been like the biggest sort of lockdown shutdown that Australasia has probably ever seen?

Yeah, yeah, that's right. Look, we are currently, we currently have 50 properties, but it's a very different looking portfolio. So beginning of 2020, when, when everything started to shut down, we did lose a lot of properties. A lot of sort of mum and dad investors that couldn't afford, you know, the cash flow fluctuations and the uncertainty. So a lot of those ended up getting, you know, long term tenants in or selling their properties. The reality of it is I think that at the end of 2019, early 2020, we had scaled far too quickly and in a hindsight, you know, weird kind of way, Covid was a really good reset for us. During the early part of COVID something that we hadn't had to do before was, you know, market the properties per se, you know, putting them on Airbnb and the other channels did all that for us. And all we needed to do was, you know, advertise to new owners and bring the properties in. And that was a real sort of wake up call for us. Our previous website was a very simple, you know, off the shelf type website that was targeting owners basically and it talked about all the services that we provided for as a short term rental professional management host. And that was. Yes, so like I said, that was the sort of trigger point where we decided, well, we really need to have a booking site as well and we need to be advertising, we need to be, we need to be advertising to new and existing guests and that's kind of where we got to. So we, we invested heavily during that first part of COVID We didn't quite realize how long it was going to go up for, as nobody did at the time. But yeah, that, that was, that was an absolute game changer for us. And you know, the, the website is predominantly now a booking channel. There is a page for home posts or owners which describes all of our, you know, all of our services, etc. But the, the idea being that if you're an owner and you look at the Urban Butler website, you can see how well presented the properties are and what that sort of looks like from the front end and that's kind of, it sort of sells itself.

And so what powers the business? Like what, what's the tech stack that you, you have property management software like dynamic pricing. What are you using behind the scenes that help powers the Urban Butler?

Yeah, so we have Guesty which is the engine room of the, of the business. So as you know property management and channel management software we use beyond pricing for our dynamic pricing tool. We use Aperto for our guest experience app. And so all of that obviously links together with, with Guesty. So it's quite, quite a seamless operation. We use noise monitors in the apartment. What else do we use? Yeah, obviously you know all the different OTAs and a few boutique ones as well that we've built APIs to, to connect to all that sort of stuff. So yeah, that's the, that's the main tech stack. Yeah.

And, and what does the team look like? Like the team makeup obviously. Visit yourself like how many members of staff are running like the, the operations and the day to day in the marketing now with Urban Butler and how has that changed from 2019? It sounds like a lot has happened within the business structurally since. Since then.

Yeah, that's right. I mean casting back to 2019 when we scaled too quickly, you know, we only had three staff members then 65 properties and then we lost a staff member just before Christmas going into the summer busy period. So that was a testing time and you know we learned a lot around that. So there are five full time staff members now including myself. So myself we have an operations manager who is very experienced. She, she's come from another large short term rental company here in New Zealand and underneath her are three other staff members. One is guest experience manager, one is an owner experience manager and the other one is a marketing specialist. So that's kind of, we, we've kind of siloed the business into those main areas that we want to concentrate on.

Fantastic. And what would you say over the last sort of three years has been your biggest like sort of learning lesson, so to speak. Like what's that one thing that you wish you had known like beforehand and what have you gathered from that and taken on the other side?

Yeah, I really think it is that sort of growing, sustainably, scaling sustainably. It's, you know, you've got 10 or 20 properties is a very different prospect to when you've got 50 plus properties. And in order to manage that expectation of the owners, manage the guest experience, keep the reviews up, all that stuff, you really need to be. What do we say? We're sort of planning to grow so we're, you know, growing, growing before we get to that. To that stage. So making sure that we've got the staff in place and all of the requirements before we get to that point.

Scaling sustainably. I like that. That's a nice thing, scaling sustainably. It's so easy when you're growing as well, when you feel like you're on that roller coaster and when you're growing, it's so easy just to keep saying yes to every opportunity that comes your way. And I feel like over time, the trick is to say no. Say no is better than a yes because it can open up a really good yes sometimes. And, you know, it's these lessons you have to learn. You know, choices is all about, you know, finding those things you're going to regret. You know what I mean? You got to make that choice. You got to be able to go. And that's what life is all about. So really interesting to see, like, where it is now in terms of marketing, obviously, bringing in a marketing specialist. When it comes to the marketing of the business, what do you notice that Urban Butler is doing differently now than what maybe it was before? And let's go down that route with direct. Obviously, Boost is all about direct bookings. What. What have you noticed at the team? Whether you've got much input yourself or just handing off to the marketing specialist, what do you notice that the team is. Is doing now?

Yeah, look, we. We've certainly grown the awareness of Urban Butler organically. We don't spend a lot on marketing. We use Google and Facebook advertising and we do a few events and things like that. But in general terms, we don't spend a huge amount on marketing. We are looking at potentially engaging with an agency or consultants this year to really boost the portfolio once. Once we get all of our ducks in a row, as we were talking about earlier. But the direct booking side of things is extremely important to us. Coming out of COVID and some of the upsets there with some of the OTAs, et cetera. So last month I think we were at 37% direct bookings, which is the highest we've ever had. It's typically around 20 to 25%. And ideally, you know, we want to get that up to sort of at least 50% on an average month. But that following has been driven out of the small amount of marketing. We do some of the LinkedIn stuff, a few events and the like. And like I said, it really has Been quite organic journey.

Yeah. Nice. That's fantastic. And obviously building a list, building a database. So emails and things like that is obviously going to play a big part obviously in the future as well. Let's shift gears and talk about something else that I wanted to mention to you, which is Astra. Obviously you're part of astra. How did you get involved with the organization? How many years ago was that? And what's the role that you play within Astra? And if you could just please break down what ASTRA is, please, for the people that are listening.

Yeah, sure. So ASTRA is the Australian Short Term Rental association, soon to be Australasian with the inclusion of New Zealand, without changing any logos or too much marketing. So the local council here in Auckland, when we first started out, I want to say sort of mid to late 2018, brought in a flawed scheme, which it was touted as a bed tax, but really a wasn't a bid tax as such. It was more for the property owners. And it was, it was called the aprt, which is the Accommodation providers Rate tax. And what that did, it was a sliding scale based on the number of nights that you rented the property out over the year, depended on how much your council rates increased up to, I think if it was over 180 days, then you paid 100% business rates rather than residential. And this scheme was highly discouraged by pretty much everyone. Airbnb lobbied pretty hard against Auckland Council to have a sort of a more traditional bed tax scheme in place and that was ignored. That started around end of 2018, something like that. It was incredibly hard for them to place, you know, in apartment buildings in Auckland. It's very hard to tell who's renting their, their apartment out by the night, whatever it is. And so they spent a lot of money trying to try to chase people down that hadn't paid it. That scheme got thrown out last year. It went to court and was actually deemed unlawful. That was challenged for a while. I don't know if it's still going through the appeal process, but it's very unlikely that that will come back. But during this whole process and dealing with guesty and going overseas and meeting other people, you know, realize how, how important it is to be on top of that regulation stuff. And really in New Zealand at the moment there are a few sort of licensing and consent type arrangements in Queenstown, in Christchurch and places like that. But in Auckland, they're reviewing what they want to do. So when I was talking to you have at guesty and he was already on the, on the board of Astra and talked about, you know, well, we need something in New Zealand because I can see that something's coming, you know, around the corner. And, and, and so he approached the board and asked them if they would be interested in starting a New Zealand chapter and if I would be interested in becoming a member of the board to look after the New Zealand chapter. So that was probably 10 or 11 months ago now. The Astra conference was an incredible boost for the industry here in Australia and New Zealand. And you know, all of the industries that I've worked in in the past, you have industry bodies, you have, you know, continued professional development points and all those sorts of things that you know, help to bring the industry together and progress it. And that's something that I don't see here in New Zealand. For the short term rental industry, it's very much in its infancy. There's a lot of different players of different sizes, but everyone kind of keeps their cards very close to their chest. And that's something that is also very appealing to me out of having this organization here in New Zealand is that is bringing everyone together. We had a meet up last Friday when you have was here in Auckland and it was just great to see people turn up and be, you know, wanting to be part of it I guess progress the industry and you know, there's no harm in getting together. You're not sharing IP as such. You just, you're just, just talking about the issues that everyone, everyone experiences individually.

Collaboration definitely over competition all day, it always wins. You can, you can do it yourself. You'll only go so far. But if you go, come together, you, you go a lot farther. It is great to see and I've said this to you, I've said this to a few people in Australia. You got to cling on to this organization and the help and support because it is not as prevalent around the rest of the world. I started boost Lee in 2016 because the lack of local support when it comes to tourism here because of funding and whatnot. And I think Australia and Australasia is one of the last places where you really do have this. So from like from an outsider looking in, it's, it's, it's great to see and you know, the meetups and the events, the conferences like long may it continue. I do recommend everybody like reach out, look out to see where your local help and support is because there's a lot out there and you just gotta just you know, open the doors and go and join. So when it comes to New Zealand and this is something I want to chat about next is obviously over the last few years there's been lockdowns and everything. How is the current market looking? How is the current scenario looking in New Zealand in terms of any regulations that are left in terms of travel and whatnot? Is it, is it easy? Is like the, the airways opened as much as it has around the rest of the world and how are bookings looking? That's basically the next question. How is like the forecast for the sort of the next three, six, nine months? Obviously you're going to be coming out of your summer going into your technically slower periods, but how has everything been and how is everything looking?

Yeah, look there is still a shortage of short term rentals and there is definitely high demand. All of the borders are open. Our biggest three visitor economies are Australia, US and China. Obviously China has only just opened up so we hoping that that's going to, you know, add to the demand. Yeah, we, we are super busy. I mean we're, we're at sort of over 70, 75% in February and the same in January. So it's certainly a busy period going out of summer. We also have the FIFA Women's World cup here in Australia and New Zealand which is July and August this year We've got over 20% occupancy in July and August already, which is amazing. You know, six months out at good rates and you know we see this year as an, an absolute belter. It's, it's gonna, yeah, it's, it's, it's back hard.

Fantastic. Fantastic. Well that, that's, that's amazing to see. And you know the one thing about New Zealand is it does cater for all. You know you've got a very strong tourist but you've obviously got a very strong business like medium term rental. As, as we sort of talk about those 30 day stay. So yeah, it's, it's unbelievable to see. So well done. When it comes to your plans for 2023, are you looking to grow more properties now that you've got the solid bedrock in place? Are you looking to keep as it is? Are you looking to do other things? Like what's the, if you could put like that, that, that goal for 2023, what would you want that to be?

Yes, during. Oh, sorry. Towards the end of middle of last year. Sorry. And coming out of COVID we got a couple of investors in. So that money was used to one sort of get us out of the, the whole of COVID And secondly for growth. So we've got an ambitious but achievable growth plan for the next couple of years and that is seeing us, you know, with over 200 properties by the end of next year, hopefully a lot more. We're looking at different geographical areas within New Zealand for the next 12 months and then potentially overseas in 2024. That's all in place. And you know, we've got, we've got funds in the bank now to be able to do those projects that, that we've been talking about for three years and haven't been able to do.

Ah, well, that's, that's amazing. So. Urbanbutler.com so u r b A M B U t l e r.com go check it out. Go check out the properties, the location, and if someone wants to get in contact with yourself about Astra or, or anything, where's the best place? What's your favorite social channel to hang.

Out on, look for, for business? I think it would be LinkedIn.

And how are they spelling your name?

J, O, N, L A W R Y.

Fantastic. Go check it out on LinkedIn. Go check out Urban Butler and go check out Astra as well. If you're based in, in, in Australia or New Zealand because we do get a lot of listeners over there and you, and you've not yet heard of Astra, you want to find out more, please do go check it out. Send John a message if you, if you want any links. But yeah, thanks for doing this today. It's really good. This is one thing I love about creating the podcast is that we get to, we do behind the host from, from all over the world and doesn't matter whether it was on the west or the east, the north or the south or wherever, we get to chat to host and find out the not only the current situation, but also the tech stack as well. So it's interesting to see what hosts are using all over the world, which is amazing. So thank you for doing this. Fast approaching 600 episodes now of the podcast. So thank you being part of that and yeah, fantastic. And thank you everybody for tuning in. As always, if this is the first time that you are listening or watching this podcast, please make sure you stick around. Hit the subscribe button, hit the like button, share it with a host that you know that would maybe enjoy this interview. And with that being said, we'll be back in a couple of days time with our next podcast. So thank you very much everybody.

Mark, thank you for having me.

Take care everybody.