Mike Bayer

You're listening to the Vacation Rental Success Podcast, and we are proud to welcome back returning sponsor, OwnerRez. Providing a powerful and flexible system for managing vacation rental properties, OwnerRez provides booking and maintenance management, payment scheduling and collection, as well as insightful reporting. OwnerRez will provide you with a long-term booking foundation that is scalable for your vacation rental business while fully managing your channel listings, but still focusing on your brand, your website, and your way of doing things. If you sign up now using the promotional code VRF30, that's VRF 3 0, you can get 30% off your first three months. Make sure you listen in to the mid-episode break where you'll hear some great testimonials about OwnerRez and more about this incredible company. For more information about OwnerRez, click in the link in the description of this episode on your smart device. Let's get started. Here's your host, Heather Bayer.

Heather Bayer

So who can you believe these days? The data companies assuring us all is okay, because demand is increasing and there's a surprising surge in bookings. Or the Airbnb decriers who claim bookings are 45% down in certain areas and everyone else in-between. In today's show, I'm joined by Andrew McConnell, the GM of Revenue Management at TravelNet Solutions, to talk about where we are really at, and how we can decode all this conflicting information.

Heather Bayer

This is the Vacation Rental Success Podcast, keeping you up-to-date with news, views, information, and resources on this rapidly changing short-term rental business. I'm your host, Heather Bayer, and with 25-years of experience in this industry, I'm making sure you know what's hot, what's not, what's new, and what will help make your business a success.

Heather Bayer

Well, hello and welcome to another episode of the Vacation Rental Success Podcast. This is your host, Heather Bayer. And as ever, I'm super delighted to be back with you once again. Super hot here in Ontario. It's scorching. I think it's pretty hot everywhere. Having said that, I say it's scorching. It's nowhere near as scorching as it's been in Texas and the other Southern US states.  So I take that back, it's really quite hot and I do have the benefit of a river at the end of my yard. So at the end of the day, I can go and dunk myself in some very cool water, which is absolutely stupendous. Love it. So yeah, no complaints about the weather. Right now, it is really lovely.

Heather Bayer

Anyhow, enough of that. Let's look at some messaging that we've been seeing recently. And there's a lot of messaging around all sorts of things, whether it's international events or national events or things coming up over the next year or two. We are bombarded by messages. And it's troubling to figure out what you can actually believe. And it's just the same in our industry. So towards the end of June, a real estate consultant called Nick Gerli posted a tweet with a chart showing some really massive drops in revenue in major cities across the US. So, Sevierville... do you know, I practiced pronouncing that before I started recording, and the first time I've said it now, I got it wrong. Sevierville in Tennessee, which is in Smoky Mountains, that tops the list at 47.5 % and closely followed by Phoenix and Austin and some other major cities.  And the chart quoted the percentage change in revenue per available listing, otherwise known as RevPAL - you know how many acronyms there are in this industry. But these are statistics quoted between May '22 and May '23. And the text of the tweet read - a lot of click bait here - The Airbnb collapse is real. Revenues are down nearly 50% in cities like Phoenix and Austin. Watch out for a wave of forced selling from Airbnb owners later this year in the areas hit hardest by the revenue collapse.

Heather Bayer

Now, the source of this data is cited as short-term rental analytics company AllTheRooms, so it comes from a trusted company. That's where the data comes from, so why would you not believe it? Anyhow, a few hours later, a rebuttal came from Jamie Lane, the chief economist at AirDNA, another short-term rental analytics company. And he said, Let's get some facts straight. There is not a collapse in RevPAL happening. Is it down in 2023? Yes. Is it down 40%? No. I've pulled the numbers from AirDNA's data set, mirroring the analysis done by Nick Gerli. What do we find? The average market listed is seeing RevPAL decrease of 3.6%, not 40.3%.

Heather Bayer

Wow. Who are we to believe? Are they both right in their own way? Are they just, in words used by Mark Twain...and I say used by Mark Twain because it's not totally assured that Mark Twain came up with "Lies, damn lies and statistics"?  But this is why we've put this as the title of this episode, because we're going to be looking at statistics and whether they're telling us the truth and how we interpret them. So to address these questions and bring some balance to this issue, and some other confusion that is out there right now, I'm joined by Andrew McConnell, the former CEO of Rented.com, and now the GM of Revenue Management for TravelNet Solutions.  If you listen to the podcast a lot, you'll know that Andrew joins us twice a year to give us his educated and very, very experienced view on the industry. So let's go on right over to the interview and see if we can get some clarity here.

Heather Bayer

So I have with me, once again, Andrew McConnell. Andrew is probably now the one person who's been on the podcast more than anybody else. Even Matt Landau, he's been on more than that.  Now we do this twice a year, which I absolutely love. We're a little bit late in this year. That's because our 500th episode crept in and we wanted to mark that. But really glad to have you back, Andrew. So I've introduced you now as the GM of Revenue Management at TravelNet Solutions.

Andrew McConnell

It's a dynamic role. We do that appraising. I have a dynamic role, so who knows?

Heather Bayer

But formerly of Rented.com and also the author of...

Andrew McConnell

Get Out of My Head, Creating Modern Clarity with Stoic Wisdom.

Heather Bayer

Which has been a best-seller. Is it still a best seller? Does the book remain a best-seller, even if you drop off the top of the list.

Andrew McConnell

Yeah, it made the best-seller list. And then I guess you could have consecutive weeks. It's like the same with a song. It was the number one hit. That doesn't mean it's the number one hit every single week

Heather Bayer

Well, I don't know if you get our newsletters, if not... you do. So we've just created a new format for our newsletters and we're also starting a book of the Month Club. So this month of July, it's They Ask You Answer by Marcus Sheridan, which is a book I really, really love. It's just about every question that you get from your customer is an opportunity to create content, basically, and it taught me an awful lot. But your book is Book of the Month next month. You are Book of the Month for August.

Andrew McConnell

That's very exciting. My TED Talk just went live the last couple of days, too.

Heather Bayer

Okay, well, send me a link to that.

Andrew McConnell

Yeah, absolutely.

Heather Bayer

That'd be very cool. Okay, we are here today talking about this confusion. I am down here with everybody else in the mire of messaging, of things that come at us through the media. We're hearing messaging about everything in our lives, and we have this task of trying to get through it and figure out what it means, what's true, what's not true, whether it's just statistics that have been manipulated to say one thing. And in the introduction, I'd mentioned that tweet by Nick Gerli, who nobody had heard of at that time. He's a real estate consultant, but he posted that tweet with a... and I'm sure you've seen it... with the chart that showed massive drops in revenue in cities like Austin and Phoenix. And the clickbait title, The Airbnb Collapse is Real. And then a few hours later, Jamie Lane from AirDNA comes back with the rebuttal of it, saying, No, no, no, no, no, is there is not a collapse in RevPAL happening? It is down, yes. Is it down 40%? No. And he used the same statistics and came up with a different result.  He said, What do we find? The average market listed is seeing RevPal decrease of 3.6%, not 40.3%.  I want to talk about this, Andrew. I want to know that those of us who are down in the trenches here and see this stuff, what are we to believe? Can you shed some light on these conflicting statistics and tell us what we should be looking for?

Andrew McConnell

Yeah. So as Mark Twain said/Disraeli said....

Heather Bayer

.... I've been down that rabbit hole looking to see who said that.

Andrew McConnell

There's lies, damn lies, and then there's statistics. So you can spin it to say whatever you want.  There's the adage of - Jeff Bezos walks into a bar and the average income in the bar, the average person is a billionaire. And then Jeff Bezos walks out and the average person is making $60K a year. Averages don't actually tell you anything. There's huge variability. For example, in Phoenix, very tough year overall at the market. We have a client on Rented.com, that we do full service for, that's up 80% in revenue this year. Averages aren't telling you anything. It's specific to you. And I think this is where there are a bunch of different things going on here. So one, depending on what statistics you're looking at, AirDNA is going to look at different data than key data. AirDNA very much focus on mostly Airbnb. They're looking at other listing sites, but it's weighted to Airbnb, much more urban and that kind of property versus traditional vacation rentals and how it's going to be weighted in traditional markets. And they were impacted differently.  Right?

Andrew McConnell

In 2020, 2021, those urban markets, AirDNA was like, Oh, the markets are performing much, much worse than historical. Whereas if you were in Gatlinburg, in the Panhandle, you were doubling the money, tripling the money you had made the year before. It was an entirely different world. And then it flipped a little bit. Now that people felt more comfortable in cities, people started going more to these other properties, more to urban destinations, more international travel. And what that did, and this is probably the biggest problem, well, there are a lot of problems, is that it encouraged more and more supply. If you want to go build a hotel, it's a several year process. You need the licensing, you have to get the permitting, you have to go build it. Whereas anybody, legally or not, can just say, Hey, this is now a vacation rental. I'm just going to turn it on, put it on a website, and people can start renting. And when you had the Airbnb boom, which was not an Airbnb boom, it was an alternative accommodation boom that people said, I can't really travel internationally. I can drive to these places. I want more space. I don't want to stay in a hotel.

Andrew McConnell

Everybody was going after the same properties. And we got that in 2020, people missed out on 2020. And so it pushed it up even more in '21. So people book way ahead because they didn't want to miss out. They were over paying. And what that led to was a lot of people felt kind of scammed. Just because you were able to get three times the price did not mean it was really worth it. We've gone through this inflection point a few times as an industry with early 2000s when things went on the internet with Vrbo, etc. A bunch of new people came to vacation rentals, and alternative accommodations. '08, '09 through 2012, Airbnb comes online. Another big explosion. 2020, another big explosion. The difference was in 2012 and post financial crisis, people were overdelivering. It was a relatively cheap option for a family versus a hotel. And so people stayed. They're like, Wait a minute, I'm paying less than I would for two or three hotel rooms. It's a much better experience. I have everybody under the roof. This time around, there were a lot of people that were like, Wait, I don't even have to try.  I can just jack up the price. People have no other choice. I'm going to make a ton of money. And they could in the short-run. But this is where Goldman Sachs says, No, be long-term greedy. Don't sacrifice your long-term profits by just extracting value in the near-term. And so I think a lot of people got turned off because they were overpaying.

Andrew McConnell

So that's a very rambling answer to say we're left where there are people that are very, very down. When everybody could just jack up rates and you could put anything online that was not a hotel and people were desperate to get out the house and go book, anybody could make money. You show up, you make money. That's why all these Twitter influencers or TikTok influencers are saying, Hey, just go buy a cheap property. You put it online, you're going to make tons of money. This was also why in 2020, in 2021, I fielded a whole bunch of calls where people said, Hey, would you please advise... We're starting a REIT. Could you be an advisor to us as we go buy properties to go into this? And every single time, I could have made a bunch of money, but every single time I said, This is the worst time to do it because you're buying when it's peak rental income and also peak prices.

Andrew McConnell

And so you're running the numbers on that. As soon as you buy it, the only thing guaranteed is that you paid a peak price. I can't guarantee you're going to have pink rental income anymore. In fact, I'm guessing it's going to start coming back. People didn't want to hear that because they wanted to go right then, right then. And needless to say, they do it. And now you're these people are stuck with properties they overpaid for, in markets that are not making the money that they made in prior years. So when it's going up 20% a year, anybody can make money. In a tougher market, no, you have to be a better manager. And so this is where you're going to get a real shake out. This is why yet Phoenix is having a really tough time. But we have clients that are making literally 80% more money than they've ever made, because the ones that are doing it the best, your pricing right, your marketing right, you're providing an amazing guest experience, you're still going to outperform.

Heather Bayer

There was another article in Business Insider this week about the high-end of the market and the low-end of the market. I think I referenced it in my newsletter a couple of weeks ago, and it had that picture of a really old style...

Andrew McConnell

The old browns.

Heather Bayer

The old Browns. We were still seeing them in Ontario cottages before we left. But basically they're saying if you're at the top end of the market, you're going to be doing pretty well. If you're at the bottom end of the market, you'll probably be doing okay. But the middle ones, you really have to increase your attention to the guest experience. But it seemed a little bit... a bit of a fluff article... because it really wasn't addressing what the issues are for those people who are in that mid-range.

Andrew McConnell

Yeah. This is where with the internet in general, the fat middle gets killed. So it happened with music. They say, Oh, everybody can succeed now because it's all online. You can buy anything, books, anything. Actually, the fat middle dies. It's the long tail of both ends. So no one sold albums at the level that Taylor Swift and Justin Bieber and Bad Bunny, etc. do, in terms of making money on the far, far end. Also, the random artist who would never have anybody buy at all, now they might get a couple of hundred. You have that long, long tail. But the middle, you just get totally lost. And this is where Shaun Stewart - the guy who used to run the vacation rental side for AirBnB - he came to DARM in 2020. He told everybody this.  For years, people in the industry have been telling everybody exactly this, saying, if you're stuck in the middle, you're just a commodity that can be replicated. Anybody can go buy a bunch of IKEA furniture and put it in a mediocre home in a mediocre location. If you have unique inventory, the properties that kill it on Airbnb, regardless, are the unique... treehouse, the house shaped like a dog in Idaho.

Heather Bayer

That's a potato, I think.

Andrew McConnell

But there are multiple. There's the dog ones, there's the potato one, there's the Grinch one. Those are those unique things are always going to make money because there's more demand than their supply. There's only one of those. If you're the fat middle, you did great in 2020 because there was more demand than supply, but no longer, anybody can put that on. And especially if you overpaid for it, you're just not going to be able to make money there. So I think that was their point on the two ends of that curve. If you're super cheap and your whole shtick is we're not a hotel. You know what you're getting into. This is a $75 a night. You're saving money. You're not going to a hotel? Sure. You can always get the budget traveler there. If you're at the high, high-end, those people don't feel recessions anyway. They're still buying yachts or doing whatever they do. But if you're in that middle tier, I'm a three or four bedroom, I have dated furniture, IKEA furniture, there are plenty of those. You're not unique, you're not special. Anybody can undercut you on price and they're going to beat you.

Heather Bayer

Yeah. I think they mentioned that travelers these days have the champagne expectations on a beer budget.

Andrew McConnell

Yeah, I wouldn't blame the traveler. I think that's what a lot of people say. But the flip side of it is, there were so many properties in '20 and '21 and into '22 that were beer properties charging a champagne rate. And Skift had the same article when even at the luxury end, in those same times, the luxury hotels were charging astronomical rates. And they said, Look, this is really dangerous because when you start charging this, people's expectations fundamentally change. And you were charging this at a time where service levels were going down. Staffing was really difficult. It wasn't the best showing for a lot of people. And so you burn. You had this opportunity to really win customer loyalty. And I think that's why you're seeing some managers do better than ever.

Andrew McConnell

They had this customer loyalty. People showed up and they said, Maybe this was expensive, but it was worth it. This is a place and this is a property I want to come back to. This is a company I want to stay with again. And so they're not shopping for the budget on Vrbo or Airbnb or a listing site. They're going directly back to that manager saying, Hey, I loved staying with you last time. I'd like to come back this year with my family, with my friends, with whatever it is. And that is the name of the game. You have to over deliver. And just very, very few people did it, because they were trying to make a quick buck.

Heather Bayer

We're going to take a short break just now to hear about our sponsor, OwnerRez, directly from one of their clients. We'll be back to our interview in just a few moments.

Adria Hahn

Hi, my name is Adria, and I own and manage three homes, plus a suite in Page, Arizona, a few hours from the Grand Canyon, and have been actively short-term running for nearly 10 years. One way I stand out from the crowd is by offering three houses in combinations, plus my neighbor's suite. The larger guest count multi-house listings are surprisingly successful. Some months we have more multi-house bookings than single house stays. Offering all three houses individually, plus various permutations of two or three houses, plus allowing the suite to be added to any of those, provides tremendous versatility. OwnerRez has been instrumental in the success of my vacation rental business. The expansion from one house to multiple properties introduced particular complexities. OwnerRez's mutual blocking feature has been a perfect solution. Instantly blocking the calendars and related listings to prevent scheduling conflicts. I cannot even imagine creating these complex permutations of multi-house listings without having the benefit of OwnerRez. The thought of relying on iCal Channel syncing? No way. OwnerRez's capabilities have been crucial in managing the intricacies of my short-term rental business. The thought of double bookings can be stressful, but with OwnerRez, I can trust that such issues are mitigated, allowing me to focus on providing a top notch guest experience.

Adria Hahn

Exceptional hospitality for my guests means providing all the information they need to craft their once in a lifetime experience. OwnerRez's automation features have proven invaluable in streamlining communication. Utilizing messaging templates and automated triggers, I can ensure that guests receive the necessary information at optimal times without me manually tracking each individual message. This saves time and allows me to maintain a high-level of guest satisfaction by providing timely, relevant info. OwnerRez has transformed our property management workflow. The platform's advanced features and automation capabilities have significantly reduced the time and effort required for various manual tasks. As a matter of fact, I liked OwnerRez so much that when they were hiring last fall, I took a job and now work on the support team. I like and respect OwnerRez even more now that I can see behind the scenes.

Heather Bayer

Well, that was a great testimonial. And now back to our interview.

Heather Bayer

Let's just talk a bit about... I want to go back to statistics in a minute, but let's just talk about niche marketing. Is it worthwhile for hosts and managers to look at different niches? I'm talking to the American audience, niches and niches that they can enter. I did a presentation in Barcelona at the Short Stay Week back in May about niches. I mentioned a company in the UK in the little county of Norfolk, and their particular niche is dogs, multiple dogs. So if you've got six dogs, you will find a property that you can go and stay at. And this came from the owner - before she started her business, she wanted to go on vacation with friends. She had three dogs, her friend had three dogs. They couldn't find anywhere to stay. So this became her niche. And now she is... I tried to find a property to stay at in her portfolio in April, and there was nothing. Everything was booked out because she has this niche that nobody else is covering. Is this worthwhile exploring?

Andrew McConnell

It is, depending on your size, depending on the number of properties. If you have 10 properties and there's always more than 10 families booking or 10 bookings worth of demand, that's great. If you have a 1,000 properties in the same location, but the niche is only 10 big or 12 big, that's not going to work for you. It's very difficult, I think, for someone at a scale of thousands of properties to say, Hey, we're going after the niche market. You can totally do it if the niche matches what you're doing and you can deliver very, very well there. That's where individual properties can still do really well. Star Wars themed property around Disney. If you really kill it on that, then that's a bigger market than your one property or even if you had 10 properties like that. That's a big market because there are a lot of people coming down to Disney for doing that. If you had 25,000 properties across the US and you said, our niche is Star Wars, there's not big enough demand for that. And that's where the potato property in Idaho, those can all stand out because the niche is bigger than their supply.

Andrew McConnell

Separate from your niche, too, I think this gets back to building demand that matches the supply you have. And it's like the planting a tree. When's the best time to plant a tree? 20 years ago. When's the second best time? Today. And when's the best time to build really robust CRM out and customer data and collect all of that so you can do marketing? Five years ago. When's the second best time? Right now. Start collecting all that data so that you're not dependent on the bargain hunter, the random person that's just shopping you on price versus everybody else out there on a listing site.

Andrew McConnell

But people that you know have stayed with you, that you know what they liked about it, what they didn't, where they live, how to market to them. And you can go do targeted campaigns to them. Hey, I know you are only a two and a half hour drive away. Did you know you could stay this Fall weekend for one third the price of what you paid over the summer when you came? Would you like to have this beautiful weekend and stay in the same home? Just targeted to that one family.

Andrew McConnell

That's not the last thing. You can do very specific things. And so I think that is something everybody should be building out. If all you are dependent on, and I really was hoping with the pandemic, people had learned this lesson of we can't just depend on channels, because then you're dependent on search. And when they stop having the search there, you don't have anything. You have to be able to generate your own demand. And whatever that looks like, going after those niches, targeted marketing, whatever it is, you need to find what fits you in your business and your target guest to make sure you're getting that messaging out to the right people at the right time.

Heather Bayer

Okay, so that moves on to what I wanted to talk about, about data, how important data analysis and market research is for smaller operators in understanding the health of the short-term rental industry in general as it impacts them. Where should they look to find data? I mean, you said from previous guests, but what happens if you're starting out, you don't have that many previous guests?

Andrew McConnell

Yeah. This is where data on the health of the overall market is irrelevant. The true need is data on your market and how you're doing. Because back to that lies, damn lies, statistics point. Depending where your market is, there are going to be different, better sources. We've already talked some on AirDNA. If you are starting in an urban market, they're going to be one of the best. They've been scraping it. They have the historical trends. They have how many properties are coming on and offline on any given month. That's going to have a ton of data there for you. If you're a traditional vacationer or manager, they're really, I don't think there is a better source than Key Data Dashboard. They're pulling in, with their partners, actual data going back years and years. And you can see for that market what actual bookings look like. It's not just scraped data from a site. You see what was the booking versus the owner hold. And they do this thing, adjusted occupancy, adjusted paid occupancy. Because if an owner is taking 10 of the weeks, then it may look like it's booked, but it's not really booked during those times.  You should only be looking at the other 42 that they didn't take.

Andrew McConnell

But you don't want to look overall at a market. Even in your specific market, if all you have are two and three bedroom condos, you want to look at what are two and three bedroom condos in this area? How are they performing? How do I position? Now, the one caveat to that is as you build out your marketing, your competitive set can be broader than your specific geography if you're good at it, you say, okay, people are looking for a beach vacation. Who would come down to this area? Where else might they look to go if they're looking for a beach vacation? I'm actually competing against all of those. I need to not just convince people who are already coming here to stay with me, but I have an opportunity to convince people that this is where they should be instead of somewhere else, because this is great for whatever that niche is, whatever that target is. Is it cost? Is it luxury? Is it the prettiest beaches or the best restaurants or the best shopping?

Andrew McConnell

Whatever it is, make sure that you aren't just positioning within your local set. But you're doing broader marketing, positioning on, hey, maybe come to Rosemary Beach instead of somewhere else. You can sell your specific niche a little better.

Heather Bayer

This is all interesting stuff. And I think, going back to that original, I'm guilty, I think, as many people are, of looking at these messages that come to us and going, Oh, my gosh, this is it. The Airbnb bust, the Airbnb boom. But I think you've made such a great case for, and I think you've just said that about the health of the short-term rental industry overall, looking at that is not really helpful in assessing what your local situation is. We see a lot of comments on Facebook groups and forums where people are saying, It's rubbish this year. When do we start getting the bookings? What can we do? We've touched on some practical ideas, but can you think of some more things that they can do to meet these challenges?

Andrew McConnell

Yeah, absolutely. As you might gather from me, this is where looking at bigger data sets and limiting what's going on is not really my shtick. I'm very much on setting your boundaries. What can I control and influence and focusing the mind on what's there? So looking at these meta statistics and, Oh, woe is me? I wrote a book on not living like that.

Andrew McConnell

And so what do you do in the end? What do you do to focus on how and where you can influence things? And this is where I think it was the same of people just waiting and thinking, By showing up, we can make money, which was true for years and years. But running a business when it's competitive is actually much more difficult. But the thing is, that's also where the best businesses are built. Amazon was so successful because they navigated the dot-com boom and bust, whereas so many others fell out. They could take all that market because they were a well-run business and made it through. Airbnb started in the financial crisis. Uber started in the financial crisis. Time the world is falling apart, these companies are doing incredibly well, started in the toughest times.

Andrew McConnell

So it was easy for a bunch of people to pour in past five or eight years. The ones that can navigate through this now are the ones that can make it through the long haul. And some of those didn't start five or eight years ago. Some of those started 15, 20, 30 years ago. And they're like, Mike Harrington, I think even when COVID hit, he was like, We've been through hurricanes. We've been through oil spills. This is not our first difficult situation. We can navigate this. And you see the difference. I mean, with our partner with Key Data, we look at TravelNet clients, the biggest enterprise, most established businesses and how they perform versus market. And historically, we see TravelNet clients on RevPAR make 20%, 25% more RevPAR than in the average market, not on TravelNet. And it's part of that, hey, it's great software, etc. But it's just better managers using TravelNet. This year, that number's jumped to almost 35%.

Andrew McConnell

So the spread when things get tough, the best managers do even better, whereas the others slip behind. And so what are they doing differently? Well.  One, they're marketing.  They're not just dependent on third-party channels; we talked about that. Two, they are building guest loyalty. And that, I mean, you talked about They Ask, You Answer. There are books and books written about how do you build customer loyalty? How do you overdeliver? One of the best who talks about this, David Angotti. I'm sure he's been on and he talks about the Ritz. He has a story, some kid left a stuffed animal. So the parents call him like, look, he can't sleep without this, etc. Can you help? And so the good would have been, Hey, yeah, we'll mail it and just pay us back. Right? No. The Ritz did this whole photo montage of, Oh, the rabbit was having this great vacation, went to the beach and put this all together, paid and sent that back with some other stuff that just totally overdelivered. They're going to talk about that. They're going to come back.

Andrew McConnell

Chewy, the dog food, like pet food. They had this tweet that went viral because they had an annual subscription and someone's dog passed away and they said, Hey, I need to cancel because my dog passed away. And they sent flowers and all this stuff to the person and it went viral.  But that wasn't a one-off. They do hundreds of those every month because that's just the company they are. Everybody has the opportunity to do that. It doesn't have to be super costly. You just find, how do you stand out to your guests? Again, what is the niche? What are you going to overdeliver on? It doesn't have to be everything. You have to understand where your cost and price point is and what you can, relatively cheaply, given that price point in your skill set, deliver on. And then you need to be able to run the business efficiently. You need to understand, okay, yeah, we can all make money when we have 89% paid occupancy. But what if I need to design a business that can survive, that can break even at 54% occupancy? None of the businesses were going to survive at zero when it all went to zero. Other than I know Ryan Damon talked about, they started playing with a subscription fee for their owners. So, hey, we can cut back on our % of bookings that we take, the revenue, but we're going to have a monthly maintenance fee because we still have to take care of your property.

Andrew McConnell

Even if no one's staying in there, you need someone in there to make sure the toilets are flushing, to keep the dust bunnies away, the spider webs. So having models like that, think about, okay, if there was a storm, how do I prepare ahead of time? How could I shift my business model that's not entirely dependent on booking revenue going up, up, up, up, up, but that's about building a long-term sustainable business? And that could be part technology, that could be part the people you hire being more efficient, what's contractor versus what's employee, part how you market, part how big you grow. Part of it may be, Hey, I need to be bigger than this size, once I get to that size, it's actually problematic. I need to stay in this sweep spot. So much of what people do is focus on growth. I have eight properties now, but I'm going to have 40 at the end of the year. Okay, but is that a good business? You could actually make less money at 40 than eight, depending on how you set up the business. If you have a good business, just make sure you keep and maintain and run a good business, not just a big business.

Heather Bayer

Okay, that's really, really good advice there. Talking about advice, I want to move to your expertise or your core passion of Stoicism. How can hosts and managers who are concerned... You have actually touched on this already, but I want you to expand on it a little bit. Because, once again, going back to those anguished messages of, I can't cope with this, revenue is down, I'm not sure how we're going to survive, It's awful, I have to get out of this. How can they stay optimistic and proactive at times like these? Because however much you cut it, it's challenging.

Andrew McConnell

It is. And this is where we always have this line, hope is not a strategy. So optimism is good. Blind optimism is not. And the right answer may be to get out of it. If you were finding yourself, you got in it because you loved it and you were making money, etc, etc, and you're hating what it looks like now, then why continue banging your head against the wall? I always tell them, you have a choice. When you're in it, you may not feel you have a choice, but you always have a choice. People say, No, I don't, I have this car payment. I have this mortgage. And blah, blah, blah. It's like, No, you actually have a choice. You could choose not to make the car payment. You could choose not to pay the mortgage. Now, there are costs associated with that. You're going to get your car repossessed. You may get your house foreclosed on. But that's a choice. You're choosing that you're prioritizing that versus something else. The first thing I would say, don't put yourself in the victim's seat. Just know what your choices are and that you get to decide which path you're going to choose.

Andrew McConnell

You may not like the options there, but you get to choose which of the options currently available are and then start creating a life and world where you have more choices in there. So, just blindly banging your head and saying, Hey, it's going to get better. Let me stick it out. I'm not sure that's the right answer. The right answer may be to get out. If you are committed, you really want to be in here and work through it. There's a good business here. Now, if it's you own your own properties and you have it at a high interest rate and you overpaid and now you're managing income, the math may not work. I would not necessarily be optimistic there. I would be realistic, run the numbers. Hey, what do I need to break even? Just like oil nations do, what price per barrel of oil do we need to balance our budget? You need the same. What occupancy and ADR, what level of RevPAR, what number of properties do I need? Is that a realistic assumption? Let's go back. Let's look at '15, '16, '17, '18, '19. Before the last three years, what is realistic?

Andrew McConnell

I ran some data with Key Data, because we saw we were climbing, climbing, climbing, fell off a cliff, and then this huge spike, '21, '22, and then '23 looks very different. And I had this question, are we back on the trend of where we would have been? We went backwards on '22, but are we back on the trend line? The answer is not great. So the answer is we're 36% up on where we started in 2019. So RevPAR in 2019 versus RevPAR in '23, 36% up. But if the trend had stayed from 2015 to 2019, we're 25% down. So we were used to this 14% every year, up, up, up. But it took such a hit in early 2020, the average year, we're actually down where we would have been had that trend continued through '19, '20, '21, '22, '23. And so that's tough. If you built a business that only made money when interest rates were near zero, not 5-6%, and revenue was only going up 15% every year, that's not going to be a good business. You might need to reassess the situation and change the business.  What it looks like entirely, or change the industry you're in.

Andrew McConnell

There's going to be a shake out. Not every tech company in the space is going to survive. Not every manager is going to survive. And failure is not saying, Okay, I've had my time. I'm now moving on. Failure is wasting your life doing something you don't love and enjoy long after it makes sense to do so. So I wouldn't necessarily stay optimistic. I'd stay realistic and then decide, Okay, yeah, actually, there's a good path here. I can get the business at this level of occupancy, this level of RevPAR, this number of properties, I can do that and I want to do it. That's a great path. If you don't want to do it and/or there's not a good business story there, don't stick around. The world's a very big place. This is not the only industry there is. It's a great industry, but there are plenty of others out there.

Heather Bayer

That is great. Thank you. We're coming up to the end here and I just want to look forward now. We've been looking back a little bit here. Just look at what's upcoming. Are there any emerging trends or new developments that people should be aware of? And if so, how are they going to leverage those to their advantage?

Andrew McConnell

I think looking forward, the only certainty is uncertainty. And that for the right person is the best case scenario. Because if you can learn to be comfortable and thrive in that and learn and grow, then you are going to beat out the competition.  That somebody else... Hey, I need it to look like it did the last five years. Well, they're not going to do as well as the person saying, Hey, I want to stay on top of the trends. I want to see what's happening in my market. I want to talk to my guests and understand why are you coming back? Why are you not coming back? What else would you look for? That person is always going to do better in an upmarket or downmarket. It's just an upmarket can hide a lot of ills. This is where with pricing and revenue management, people say, Oh, no, I don't need it. I don't need dynamic pricing. We're making more every single year. Well, how much did you leave on the table? That was hiding that you were actually doing terribly. You thought you were doing well because you did so bad the year before that you could make a little bit more the next year.

Andrew McConnell

But when the market goes down, you start to realize, Oh, wait, I don't actually know what I'm doing. Whereas the people who are, they're still making more money. They can continue to make more money because if you do things well, you beat out everybody that's just showing up. This is not an industry that you can just show up. Honestly, this is not a world that you can just show up anymore. I talked about my dad when he was growing up and in sports, he competed with his city and state. And then by the time my wife and I are going, it's more national competition. We go to national competition. Honestly, now our daughter, whether it's going to school, sports competition, whatever it is, it's a global stage. You're competing globally. You can't just show up and expect an easy ride. You're competing against the world. When it comes to time and attention vacation, you're not just competing against a few houses or condominiums in your little area. You have to contract people to come there in the first place. You have to get them to choose to travel instead of spending their money somewhere else. And if you don't love it, you're never going to beat the person who loves it.

Andrew McConnell

The people who got in, not because they read a tweet of, Hey, this is an easy way to make money. The person who got in because they love it,  Lauren Madewells of the world. They're always going to do well. They're going to make it through. They're going to do well every single time because they love what they do. They're going to listen to the guest. They're going to innovate. They're going to evolve. They're going to do a great job. The person that saw a TikTok influencer, it's like, Oh, here's how you go make a million dollars on Airbnb. As soon as you can't do that anymore, you're not going to do it so well.

Heather Bayer

Yeah. Couple of things you said there. One, you said it as you always do, leaving money on the table, because that's something you told me over and over and over again. You're leaving money on the table. And I know we did. Secondly, just to let everybody know that Andrew just mentioned Lauren Madewell, she will be on the podcast in September. She's booked and now I've announced it, she can't back out of this one. And I'm sure she will not. That's going to be a great conversation from a great property management company.

Heather Bayer

This has been such a super conversation. Just in those first five minutes, actually, when you talked about those statistics, you opened my eyes as to how I look at them. And I did, along with many others, looked at them and thought, This is it. Airbnb is all collapsing. But what you said made so much sense. And now I'm going to look at a lot of other statistics in a different way. Then you just said, said something that made me think about my experience as a podcaster. I think maybe that's an analogy that works here. When I started out, there was me and there was Jasper Ribbers with Get Paid For Your Pad.

Heather Bayer

That was back in 2014. And we did tremendously well because there was nobody else out there. I have lost count at how many podcasts there are out there in this space. I can't just show up every week and just do this thing. There's some reputation there, but there's a constant working at it to look for the new audience, to find new people that are going to find it interesting, to change the way we do things so that it's not same old, same old all the time. And I thinkthe more I talk through that, it seems like a pretty good analogy.

Andrew McConnell

It's 100%. So what you're doing, you're asking people to give their time, this portion of their life, every single week of their time and attention to what you're doing. So you have to deliver. It has to be worth it. In vacation rentals, we're asking so much more that you get two weeks a year, if you're in the US and lucky, to go travel. And I want you to spend that very, very tiny amount of this incredibly valuable time with me as a manager, as a host. What is my case for that? Can't just show up. You have to do something special.

Heather Bayer

On that note, Andrew, we'll wrap it up. Just want to thank you so much for joining us. Just before you go, just give us a little bit of background on what you're doing now for TravelNet.

Andrew McConnell

That's a good question. It's a few different things. I was running marketing for a while in addition to Rented [.com]. I'm helping on corporate development, so looking at the M&A strategy, helping launch into new clients, do enterprise sales. So just helping across the business, but still running, Rented in addition to all the other jobs.

Heather Bayer

Sounds like fun. And of course, still living down there in the Caribbean.

Andrew McConnell

In Bermuda, it's a beautiful day. We got a 4½km swim in this morning. So no complaints here.

Heather Bayer

Well, I hope you have a wonderful rest of the summer and thank you so much for joining me on the podcast once again.

Andrew McConnell

Yeah, it was my pleasure. Thank you, Heather. Have a good one.

Heather Bayer

Well, that was a great conversation with Andrew. As ever, he always enlightens me and I come away feeling just that little bit more educated. And certainly, I'm not the only one that knee jerks when I see statistics. You see something that's in your face with a clickbait headline and you jump at it and think that this is it. Airbnb bust. Airbnb is going down the tubes. If you've bought a property in 2021 or 2020, you're toast, basically. Well, I  guess there is something to that one. But I like Andrew's approach where it's a very Stoic approach that you just look at it realistically and not optimistically. Or rather there is a place for realism in place of optimism at times. So I really hope you found that a useful conversation because I sure did.

Heather Bayer

So as I mentioned, Andrew's book, Get Out of My Head, will be featured on the newsletter and on the Facebook group over the month of August. So best you get out and buy it. And it really is a tremendously good read. As you can tell from the way Andrew speaks, he's a storyteller, loves telling stories, and this book is absolutely jam-packed full of stories, all relevant to what he's talking about is about taking a Stoic approach to everything in your life, not just the industry that we're in.  I love this book. I pick it up and just pick a page sometimes, and it gives me some really great insights. So we will be discussing that over the course of August.

Heather Bayer

So that's it for me for another week. Always a great pleasure to be with you. I've got a ton of great interviews coming up, some really good stuff so I hope you can continue to listen and you let me know if there is anybody you'd like to hear on the podcast or any topic that you would like me to cover and I'd be more than happy to oblige. So with that in mind, I hope you go on and have a great day.

Mike Bayer

This episode was brought to you by the kind returning sponsorship of OwnerRez. Don't forget, if you sign up, use the promotional code VRF30, that's VRF 3 0 to get 30% off your first three months of usage of OwnerRez, which is an internationally recognized leader in vacation rental software. You can click the link in the description of this episode in your smart device or head over to vacationrentalformula.com/OwnerRez to find out more.

Heather Bayer

It's been a pleasure as ever being with you. If there's anything you'd like to comment on, then join the conversation on the show notes for the episode at vacationrentalformula. Com. We'd love to hear from you. I look forward to being with you again next week.

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