STOP Letting Bad Guests Ruin Your Airbnb

Well, welcome back everyone to the Short term Rental Riches podcast. I've got another fabulous guest today, Leo Walton from Super Hog. We're going to be chatting about risk management. We're going to be chatting about those sometimes unwanted guests and how we can prevent them before they actually check into our properties. And I'm sure the conversation is going to go in several different ways. So welcome to the show, Leo. Happy to have you here.

Thanks buddy. Nice to see you. Honored to be here as a guest.

Yeah, I'm excited to have you. It's always great to talk to industry experts. We were chatting just for a second before the call and talking about how quickly this industry is changing and it's really like we got to look at it like doggy years. And you've been with Super Hog for a long time, which in real years is like decades. So can you tell us you are that you're the co founder of Super Hog, right?

Correct. Yeah, I'm one of the co founders. So I met my now co founder Humphrey all the way back in 2011 when we were both part of the team that helped build, grow and sell One Fine Stay to the Accor Hotel group. One Fine Stay being one of the early tech enabled property managers working to grow at record speed within new within this new vertical met him he went off to start the the forerunner of Super Hog which was Guardhog insurance selling lines of home cover to short term rental operators and hosts. And I jumped on in 2019 when super hog was ready to be born as a piece of software to help screen guests alongside still providing financial protection. And since that time we've really tried to dominate the screening space by adding as many checks as possible that are our our operators want. Things like sex offender checks, ID verification software, background checks, but at the same time also providing extra tools as well. So things like deposit capture and damage waiver collection, we can do all of that stuff and that's really just evolved out of the journey we've been on since since 2019. As I think you know from talking to me before we started, I'm an industry junkie, I love it and I put really simply, I think what Superhog is here to do do is to help enable trust in the short term rental industry. So help guests, hosts and operators all transact more, do more business and do it safely.

Awesome. Yeah, I'm looking forward to digging in deeper here. There's a lot of little pieces in there that go into this risk management piece. And before we jump in I think this is sadly this is One of the reasons why a lot of people probably don't, don't get into short term rentals, you know, they think, oh, I got this. Especially if it's a property that they have a personal connection with, maybe one they've been staying at. They're like, I don't, I don't want people having parties in my properties. I don't want them destroying it. Luckily there's a lot of ways to manage that risk.

So what, why don't we do this before we get started in some of those ways. Most of which super hogs doing like deposits and the screening and all that good stuff. Do you have any kind of like stat or background info on like, you know, how much fraud there's out there these days and you know the, any, any sort of stats around it?

Yeah, there's some interesting ones for sure. So I guess the first thing to say is that you're exactly right when you say, think of all the people that are put off by coming into the industry. So that's your first blocker to growth, right? Who are they? If you're, if you, if you're using the management model to grow, who are the hosts? You can't even find, right? Because they would, they're just, they only want to use it themselves because they don't trust anyone else not to trash it. And there's 50 weeks a year where it's sat there idle. There is still so much of that supply out there, right in Holiday Town, you know, where people don't really, they feel like they don't financially need to, to, to give their home to a manager. So they won't, or you know, how many people who want to, who could be hosting themselves and getting that extra revenue themselves because it would be useful, are not doing it. Our data suggests that if you screen a guest before they arrive, you reduce incidence of damage tenfold. So that's the first thing, like you significantly reduce these problems even coming to your door. I suspect in the most part that's because people are deterred from going through a screening process if they know that they're coming with the intention to host a party, sell tickets and have 2,000 people turn up to a rave. They're also very unlikely to book it if they're going on a bachelor party with their friends that they know are terrible and likely to drink a lot of booze and more importantly, much less likely to do a fraudulent transaction. And there are obviously tools within what we do to help reduce that and we can send the evidence of the screening process to a credit card company to help fight a chargeback. But in terms of stats on fraud, unfortunately, I can only tell you it's going one way, it's going up, it's a moving target. People find different ways to beat the system and apply for a charge back. There's friendly fraud where you come and pretend that you were just unhappy with the service and that's why you're refusing to pay. And then there's actual credit card fraud where it wasn't you and somebody used your details. It's on the rise, it's on the rise around the world. And unfortunately, unless you have a really, really robust website and even then you're not immune to it, you're, you are very, you are very vulnerable. So we found that often a jumping, a jumping off point and where people realize they need to start looking at tools, additional tools is when they start to look at direct bookings. That's one of the points people start to look at. But yeah, so like I say, 10, 10 fold reduction in damage is probably the headline one. And that in a nutshell is, is why we only provide protection. We only provide our protection products. If we're screening a guest can be actively, it can be passively, it can be a background check without the guests knowing they're going through it. But we have to do some level of screening if we're going to provide protection.

Good stuff there. Well, the protection that kind of comes afterwards. So let's dive into the screening part first because this is what we all want and need really is to prevent these bad guests from checking in or people that don't have the property's best interests in mind. And I think because this industry is, I don't want to say maturing because I feel like it's still just really young still and changing a lot, but it has evolved a lot more than 10 years ago. And with any evolving industry, people come along and they figure out little, little ways to sort of take advantage. Right. And so we want to prevent all that. And so the first step is screening guests. So can you tell us a little bit more about.

Ways you'd recommend screening guests and then also how Super Hog can help us do that?

Yeah, And I think we'll probably start with the, the premise, and I think you're exactly right to, to mention it, is that.

The growth of the industry means that you're now able to take bookings 24 hours a day. And most hosts, the vast majority, use instant book. That's been a really slow process of Moving to instant book, often it was inquire and that creates a blocker because then you have to ask that person why they're coming. So in the desire for greater conversion and more bookings, people have relaxed their stance on that. And so as a consequence, if you've got 100 properties, they can be being booked 24, 7. So you could wake up to 10 bookings. Right, that's brilliant. You know your properties are working for you while you're asleep. But new types of risks evolve right out of that way of doing business. I always go back to this idea that when we were kids and I'm not going to age, reveal my age too much. But my, my dad would book the holidays and we would find it and he'd find it in a magazine or a brochure and we'd probably go back to the same property four or five years in a row because you'd build a relationship with that owner and they'd be there to give you the keys when you arrived. So face to face check ins, when I started in one fine stay, every check in was face to face. There's no way we could have convinced a host to give us their property without saying we were going to meet that person. Look in the whites of their ey rise. That has now taken a big most people what may. Most people use remote access, keyless entry systems. Brilliant means again, you can do it at scale, you're keeping more revenue per booking, but new types of risk involve evolve because of that. So that's the premise. The second thing is, if you're meeting people in the flesh as well, you're not doing a biometric check on their passport in person. That's not happening. That's something that happens before they arrive. So even if you are doing face to face check in, you still probably want tools at your disposal that can make sure that you're protected when it comes to damage and fraud and things of that nature. So I would say without having a risk management strategy, you are being very fatalistic about damage and you will get caught out at some point. It's the Warren Buff Buffett quote. Apologies if anyone's heard me say it before because I always seem to come back to this. But where this idea is born for me is it's only when the tide goes out that you can tell who's been swimming naked. And so without a risk management strategy, you're going to get caught out. Right.

To put a super hog hat on for a second, we can provide a range of services that can Help de risk from a screening perspective. One is we can do checks on the validity of people's emails, their mobile phones, their names against our database, all of those details against fraud. Databases around where people have used false information and then done a charge back or used it to launder money. All of these, all these APIs are built and done. We can do a sex offender check. We can then also do ID verification. So there's a whole range of things you can do. Be specific. It goes back to that point about having a risk management strategy. Your market. If you're in a party, urban market, you probably want to do everything. If you're in a holiday market where it's families and it's one week, one week bookings all summer, you can maybe be a bit more relaxed and a bit more tailored. We can do all our checks as well without the guests needing to be bothered. So we can just do checks on their data. If you're worried about guest friction, you can, you can, you can remove the need to do checks in general. But what I like about doing an interactive check with a guest is you can then take a credit card deposit, which is another check you're doing on their credit card as well as getting the money you need, or you get their credit card details and you charge them a deposit waiver, which is a good revenue driver for you as a host, but also another way of checking that they're serious about the booking. So you know, there's the, there's lots to unpack there. Taking my super hog hat off. I'd say the most important thing about, about the process is that you are learning a bit more about who your guest is. So, you know, if you use any sort of screening tool, you're getting a real phone number, you're getting a real email address as a marketing opportunity. So you know, we talk about, and you, you introduce this as a, as a topic about how we keep bad guests away. Yeah, that's part of it. But also how do we enrich your relationship with your good guests? Well, it's being able to find out, you know, give them a phone call, send them a WhatsApp message, send them an imessage, why are you coming? Why are you here? And then leave some champagne in the fridge if it's an anniversary, leave some kids toys, they're coming with their young children. You know, there's a, there's an opportunity there to kind of hack that, getting to know them, process and do things for them at lower effort than you would if you didn't if you weren't collecting that information. So there's, there's a marketing opportunity for sure in that screening process. And one thing that's super important is making that screening process as nice as possible and as quick and as intuitive and streamlined as possible so that people don't get irritated by it. Because what we're not trying to do is create friction with your good guests. We're trying to weed out your bad guests.

Right. I like what you said too. A lot of times just having these processes in place weeds out the guests before they even try to book or depending on. There's a lot of things that we can do, aside from just screening that.

Are going to help.

It's the combination of all the things. Another thing you mentioned is just finding out why they're coming to stay at your property. That's a good one. So if you're out there and you don't have a way of asking your guests, obviously there's multiple ways to ask that. You want to do it with a hospitality approach, right. Not why are you staying at my property? So that's a great question to ask.

Another point there too, right. It's good data. So you can take that handheld directional. You can just think about that as a good data to have for your. When you're sending out text messages to say, hey, have you booked anything there for Thanksgiving yet? We're running a 10% promotional discount. Like, do you want to come back? A host I know that works with us, collects the address during that check in process and the day that guest arrives at one of their apartments, one of their cabins, they have sort of cabins in the woods and things like that. They send them a postcard, say thanks for. Thanks for visiting. So that when they arrive back home, the first thing they see is a postcard from the host. Like just little cool touches like that that just help elevate the experience. That's where STR beats hotels every single time. Right. And we got to lean into that stuff because that's what being a wonderful host is.

Yeah, that's an awesome, awesome touch there. You mentioned briefly about, you know, direct bookings and this is really where we open ourselves up to even more risk. Obviously we can have unwanted guests, I guess you could say, come through any channel, but some channels are a little difficult and we need to be on other channels and we need to have our direct booking website and everything set up. We talk about that a lot on this channel. But, but what's your take on, you know, the, like, we've had a Lot of trouble with booking.com, for example, things that we figured out, but more credit card declines and stuff like that. How would you sort of rank OTAs, I guess, if you were into, in terms of potential risk?

I think there is, I think there's a lot of, there's a lot of value to be had from working with an OTA that is the merchant record, because then, you know, if something happens and there's a fraud, a credit card fraud, it's, it goes through their system, it doesn't go through your system. So that's really important, I think, is making sure that you don't, if there's any way to try and reduce that chargeback risk. I think where you work with an OTA and that, and that gets passed through to you is slightly more challenging. So that's the first thing I'd be assessing with OTAs. The OTAs generally feel like their job is to get you the guest, not to screen the guest for you. And that is generally true. But if you look at, are they getting me the right guest? Sorry, sorry. Are they getting me enough guests? And that probably is the most important metric with an ota. How you then choose to make sure the booking is secure and I think squarely falls on you as a, as a, as an operator and you should see it that way. You should go, you know, I'm going to build a direct booking website, but I have to be really hot on the safety of it and I definitely have to be using screening tools on top of it. And I'm going to play with all these OTAs that are useful and get me the guests. But again, I'm not going to assume that they're going to get me anything else apart from the guests. They might bring me a bachelor party, they might bring me a fraudulent guest. I have to weed that out for myself. But I'm just trying to put them all into my funnel and, and aggregate them down. If you, if you take that approach that you know, you, you, you trust, you trust every guest that comes, but you need to verify that. So trust but verify. I think, I think you're on the right lines. But again, sort of as a, I guess the first incident, like who's taking the risk there when it comes to the credit card, because that is the most common thing, unfortunately at the moment is it's just credit card fraud where you're in a market where credit card fraud is specifically an issue. I would 100% be.