VRMA 2024 Highlights: Top STR Trends, Revenue Strategies, and AI Tools for Airbnb Success

Welcome back to the show. I'm glad you're here again. I'm going to give you just the latest pulse of the market, you could say. And I really feel like the VRMA is that pulse. People fly in from all around the world that specialize that focus in short term rentals. We're talking about tech providers, property managers, and thousands of people at this conference. And so there's lots of good information there. Unfortunately, there's so much information there that I couldn't possibly sit in on all of the sessions. So I'll cover a couple quick things that I learned from my takeaways, but I've also got another 20 or so breakout sessions coming to me in the form of a recording, which I will run through and I will report back to you in a few weeks when I have access to those. So even though the VRMA stands for vacation Rental, it really encompasses the whole industry of short term rentals. So Whether you're operating one property or whether you have a portfolio of 2,000, there's lots of good information there. And as the pulse of the market or as of the industry, I really gotta say that it's just still really inefficient. The industry that we're operating in is really inefficient. We have some people that are way outperforming others, some people that have their operations fully dialed in, some people that are pulling their hair out. It's really all across the board. There's a lot of old school, you could say, vacation rental property managers that go to this conference and they still do a lot of operations the old school way, using not a lot of technology and doing a lot of things manually and not even taking advantage of all of the OTAs, for example, really relying on direct bookings and trying to shift all of their guests there, which we know of course isn't necessarily the best thing for your revenue at the end of the day. So I think that's just the big highlight that there's a lot of inefficiency here in the market, in the industry. We're. Which means there's still a lot of opportunity for us. All the biggest players were here, right? So we have Airbnb, we have booking.com, we have Expedia, which owns Vrbo. And they were all on a panel together. And one of the really interesting questions that they got asked is, what would you fix if you were superhuman? So this is the person representing each of those online travel agencies at a very, very high level. So they're asked what would you fix if you were superhuman? And the answers were pretty in line with what we probably all would want to fix. But by hearing their responses, it also allows us to really get a good understanding of what they want us to do. Right. And so the first one we don't have that much control about, that's regulation. So one of them said we would help with regulations. And we know Airbnb was banned in New York. Right. All of the Airbnbs were taken off the market. And this is a really good market study. What they found is that the hotel prices went up like 7% year over year. That makes sense. Right. We take away supply from the market and what's left is going to have increased rates. So a lot of the push behind the regulations is that it's bad for housing, that there's. We do have a housing shortage in the US really across the nation, but some places are a lot worse than others. And what they found is that housing still went up after this year of not having Airbnbs. In fact, it went up almost 5%, which inflation certainly takes a toll on all the markets. Costs are just going up on everything and they continue to go up. Right. But by adding thousands of units back into the housing supply that once were short term rental or nightly rentals, I should say, because this isn't affecting those monthly rentals. Right. Didn't have the impact they thought it would. So that was one of Airbnb's responses. If they were superhuman, they would help out with regulations. Of course, we've got booking.com sitting right next to them that also works with hotels. And so I'm sure they sort of have mixed feelings about that one. But one they all shared were host cancellations. So us, as the host of the property, canceling a reservation, I think that one's pretty obvious that they don't want us doing that. Right. But we know that we will lose our superhost status if we do this more than just a couple times in a whole year. So we definitely get penalized in a really big way if we're canceling reservations. So a couple quick things there. We've talked about this before on the channel, but we always want to reach out to the guest first and ask them to cancel if there's some sort of issue. Most of the time, the guests will be open to doing this. Of course, if we're canceling a reservation because we don't want that guest showing up at our property, maybe because we're. We think there's some sort of fraud or something involved, then those are legitimate reasons for us to cancel the reservation. I've got another quick note on fraud here just in a second. So they all agree less host cancellations would be better. They also all agree that having party guests and bad guests is something that no one wants. It gives the platforms a bad name. You know, all the parties we've heard about and Airbnb, but also gives us as hosts a bad name. And it goes against the regular regulations. So these things are really sort of integrated. One other one that got brought up was staffing and housekeeping. So we know that in order for our guests to have a good experience, all of the operations have to be handled in a really good way. In fact, Airbnb has placed so much importance on this that they just launched their co host platform. So over 10,000 hosts have joined this platform and it's only eligible for you out there. And if you're a property manager, there's certain requirements you have to meet. And also if you have an average score of 4.8 or higher, which based off air DNA's data, I've got some stats for you here just in a little bit. 7.4% of all property managers have average scores of 4.8 or higher. That means over 90% of all your larger property managers don't have good reviews. We talked about the impact of not having good reviews just recently. We had a partner join us recently that used to be with a larger company, and his revenue really got cut in half. So those bad review scores come back to operations. And that's one thing that all the OTAs agree on. If there was some way to help those operations on the back end, that it would help the guest experience. It would also help cut down on bad guests. And so our interests are really aligned for the most part with the OTAs. We know sometimes it doesn't feel that way if they're refunding guests that we don't think was fair or something like that. If you've been in the industry for a while, I'm sure you've come across some challenges with the OTAs. My team and I have managed over 40,000 guests now in several countries and nearly 20 cities. And so we've come across a lot. But the reality is we rely on these large OTAs for their marketing, right? They spend hundreds of millions of dollars on marketing, and that helps us boost our revenue with our properties. So I attended a session on fraud and really, when we talk about fraud, it usually comes back in the form of a chargeback and so if you're accepting direct bookings, or if you're taking payments on behalf of one of the OTAs, like you take payments directly from a VRBO reservation, you're probably using a company called Stripe, a credit card merchant. And so what happens is sometimes someone makes a reservation, it's fraudulent, they file a chargeback claim, or they file a claim with Stripe. Stripe refunds them for all of their reservation, whether they stayed at your property or not. And this is across the board, all the hosts out there, almost 100% of the time, lose these cases against the credit card company. So there's a number of things that we want to do up front just to avoid these guests in the first place. So we've talked in the past about getting a rental agreement signed by getting a copy of their id, by getting a copy of their credit card, making sure that those names match up, getting a copy or a selfie from them, so you can make sure that the person checking in is the person on the id. These are all really important things. And the reality is, is that this will nearly eliminate all of your fraud. Most of these things we can cancel up front. And. And the reality is that if we're doing all of these things, the amount of fraud that we actually have is very, very small. But there is a little different type of fraud that they refer to as friendly fraud. This is someone that booked your property with the best intentions, but maybe they had to cancel last minute and your cancellation policy prevented them from getting a refund. Well, sometimes they go back to the credit card company and they say this was unfair, whatever reason they give, and that company ends up refunding them. Hopefully you were able to get that property booked if you're coming across situations like that. But this actually accounts for about 70% of the fraud, according to some of these companies that we were talking with at the conference. So make sure that you have some of those preliminary steps in place. And if you have the option to use Booking.com's payments, for example, that'll cut back on a lot of this because they will take the fault for any chargebacks. You basically don't have chargebacks if you use booking.com there are several solutions that have come up to help us automate all this. We had the CEO of Super Aug on recently. You can go to striches.com check all of our past episodes, and get some good tips from him. Okay. On to new tech. So there's a lot of vendors here. There's a lot of new tech. Yes, there's a lot of talk and there's a lot of people using AI now in some pretty cool ways, including those large OTAs where they're trying to really facilitate the whole booking process. So booking.com for example, they want their customers to do the whole process through booking.com they want booking.com to be the travel agent, they want to book their flight, they want to book their accommodation, whether it's a hotel or short term rental. They want to be their concierge, you could say, for this whole travel experience. And they're using a lot of AI to do that. But on our end, as the host, as the operators of these short term rentals, we also have access to a lot of really cool AI as well. I've talked briefly about some of these in the past, like, you know, autoresponders and automatically upselling gap nights or unbookable days in your calendar. But there's some new tools coming out that just take it five, ten steps further that are really dynamic, that can send videos back, that can respond to voice messages, that can send custom tailored review responses automatically, that can evaluate your listing online and compare it to others, really just at a click of a button. So there's a lot of great tools out there, especially in regards to AI, but the reality is none of these tools are one stop shop. If you've listened to the show for a while, you know our team uses a whole bunch of tools, I would say over 10, that all work concurrently together. And I worked in the software industry for a long time, eight years. And the reality is, from what I saw in the past and what I see today is that there is no one program to handle it all. So you have all these add in programs that you can have. Of course, this starts with having a property management software platform. So we use Hostaway, but but Guesty's a popular one, or you have owner res. There's a whole bunch of them out there. And then you're gonna be connecting to all these different softwares. So just keep an eye out most of the time on your property management software platform. There'll be a link there that either says Marketplace or integrations. You can click on that. You can see all of these other software tools that are popping up that integrate with your current system, making the whole process a lot easier. So onto revenue management. One of my favorite topics and one that I've talked about a lot recently, and there was quite a few breakouts on this as well. It's becoming increasingly more important. The breakout session that I had With AIR DNA. For those of you that don't know, AIR DNA is a data scraping tool that helps you analyze different properties, different markets really underwrite properties. And they had data showing that professionally managed properties, they're up year over year about 6% versus an individual operator that's down about 4% year over year. And I would venture to guess that a lot of the reason why is because the individual operator does not have a revenue manager looking at their prices day in and day out, analyzing it against the market. And so this is really, really important piece of your operation, your overall revenue. Unfortunately, as an individual operator, it usually doesn't make sense to hire a revenue manager. Right. It's a costly position in the hotel industry. Of course, you know, they pay easily six figures for this position. We know that we can hire people virtually and we talk about that a lot and we do that ourselves. But there's a lot of training that goes into that position. So just to break down the whole revenue management process real quickly, they broke it down into several levels, different levels of skill, I guess you could say. And the first level is really just taking advantage of a dynamic pricing tool like Price Labs or like Wheelhouse and understanding how that tool works so that you can at least go in and set up those initial settings and understand the data that you're seeing. We know of course, if you're using one of these tools but you're not using it properly, well then you could be lagging behind, you could be leaving a lot of revenue on the table. The second level or a step up from there, where you're really taking your revenue management game to the next level is managing distribution, managing your performance reports. So at this stage you're going to be comparing your property against another comp set regularly. You're going to be comparing your property against the market. You're going to be looking at the different channels where your property is advertised and seeing how well it's performing on these different channels and including your direct booking channel and then one other step up from there, we're really going to go further into our advanced reporting. We're probably going to be doing some sort of AB testing here. If we have that luxury or if we're a property manager, then we probably have multiple properties in the same market and we can weigh those against each other to see what's working and see what's not. The advanced reporting at this stage is really, really going to be fine tuned when it comes to, to analyzing our properties against the market. So looking at the overall revenues and all the little metrics. There's so many. I, I did, I've done a quite a few podcasts on this before. So you can go back to 239. It's a quick one to let you know if your property's priced too cheaply. You can go to episode 255. It's the flip side of that to find out if you're charging too much. Episode 234, I talked about 46 different factors that affect your performance. So depending on where you are at with your experience as a revenue manager, you're going to fit into one of those categories. And we know, we know that the higher you move up, the more advanced you are with those strategies, the better your property will do. We do, of course, help you out there if this is something you don't want to do. So if you're new to the channel, as I said, we've got properties and lots of different markets. We have our own in house revenue managers. These are things that we look at with a fine tooth comb and we'd love to help you with your property. If that sounds interesting, you can head over to str riches.com you'll see a property management button there. Set up a quick call, we'll chat, we'll see if it's a good fit for you. We'll see if we can make you more revenue with less headache. Okay, let's talk about some stats real quick. These are always interesting to me, and this was again from a breakout with airdna, but which is arguably the industry's leader when it comes to statistics around the short term rental industry. They are scraping 45 million points of data every single day. That is a lot of data. And just to give you an idea, there's about 8 million Airbnb listings right now in the world. That means they're looking at all kinds of things with each of those listings. They're looking at reviews, they're looking at occupancy, they're looking at prices charged that they can see on the calendar. And this provides them and us, if we use their tools, some really good data. When it comes to supply, the market's up about 4% year over year. So there's 4% more available listings this year than there was last year. If you Compare that to 2022, just a couple years ago, our supply was growing at 20%. Imagine that. So way, way faster than it is now. Of course, that's for a lot of reasons. So inflation has had a huge impact on the economy and interest Rates are much higher. So less people are buying properties to start their short term rental. And as a existing operator, that's good for us. Right, because the overall demand, their stats on the overall demand are up year over year, but not up that much. They're basically breaking even. So the projection for next year is that occupancies are pretty much going to stay flat or maybe a slight decrease. Of course this depends on your market ADRs. So your average daily rate that's being charged is expected to go up just a few percent. And all of this equating to a negative revpar of just 0.4%. So we know revpar is the total occupancy multiplied by the total average daily rate. That's how much revenue per day a property is generating. It's basically flat. So they're not, we're not expecting a whole lot of change this year. One of the really cool things with Air DNA's tool and a new feature that they have is that you can sort properties by review score. So I did this just for fun on one of my properties in Sacramento, a small little two bedroom. And I ran the comparable properties in the whole market at a 4.6 average review score. Air DNA estimated that that property would make about $20,000 in the year versus a 4.9 score would make double $40,000. So that is the impact that bad reviews can have on your property. Okay, so some really interesting insights from Air DNA if you haven't checked them out. I'm not sponsored by any of these people. My job is just to report back to you. And that's what this episode was really. Just an industry pulse. You know what's going on out there. Lots of new technology coming out. A company called Boom that I think was really interesting. Another one called autorank. You might want to check those out. Those are AI related. But remember, those in order to work well, really need to integrate with your property management software. So check out that marketplace link, check out the integration link on your property management software to see what new tools are available to integrate with your existing platform. So some interesting stats on the market. I gotta say I'm really excited because with without really hardly any new supply coming on the market, but demand staying about equal, we have a lot of opportunity to outperform our market. If we're doing a good job, if we've got our revenue management in place, if we have our listings set up properly, if we're providing a really good guest experience and making sure that our reviews are high, we can really, really outperform the averages. As I mentioned, there's another 20 or so classes that were recorded that, that I'll have access to in the next few weeks. I'll break those down. I'll come back with my biggest takeaways. Hopefully this gave you a little glimpse into the industry. It's constantly changing. I think it's really inefficient still. And because it's inefficient, there's just a lot of opportunity. And so until next time, I hope you have a fabulous week and I'll see you soon.

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