Mike Bayer
Hello and welcome to another episode of the Vacation Rental Success Podcasts. It's Mike Bayer here, CEO and co-founder of the Vacation Rental Formula Business School. And if you're tuning in today, chances are you're a property manager looking to streamline your operations. Well, one of the biggest challenges you have is the time consuming process of onboarding new staff, be it in-person or virtually. And we can help you solve a big part of this problem.

Mike Bayer
We all understand how important it is to train new hires quickly and effectively so they can step into the roles you hired them for. However, in a rush to fill positions, we often overlook the need to build a strong foundation, ensuring that new team members understand why they are doing what they do.

Mike Bayer
But here's the thing, training can be time consuming, and without the right system in place, it can feel like an uphill battle. That's why we're excited to announce the upcoming launch of thrive essentials. This program is packed with everything your new team member needs to hit the ground running. Now, before we officially open the doors, we're offering an exclusive deal. Register today for early access and you'll receive 50% off the course price at launch.

Mike Bayer
This is the ideal chance to invest in your business and save big, before the course is even available. Go to vacationrentalformula.com or click the link in the description of this episode on your smart device and sign up now. Transform your onboarding process; this is a no brainer. Grab your early access discount before time runs out.

Mike Bayer
Now let's get you back to your favorite podcast with your favorite host, Heather Bayer.

Heather Bayer
Ever since Airbnb announced the wider rollout of its Experienced Co-Hosting Program, there's been discussion about its impact on property managers, and I quote, "A shift in power dynamics." In this episode, I talk about what's at stake for property managers with industry expert and founder and CEO of consulting firm AJL Atelier, Simon Lehmann.

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 Rentals Success Podcast. This is your host, Heather Bayer, and as ever, super delighted to be back with you once again.

Heather Bayer
As you can tell from Mike's introduction there, we've been super, super busy over the past several months, in fact, creating the THRIVE Essentials Course, and I'm so excited about it. You know, Mike and I will be talking about this in the podcast episode next week, but I remember taking on board a new employee many years ago and the time spent teaching her about the industry. And that was way back when the industry was nowhere near as complicated as it is now. And I remember searching everywhere for some sort of a course that she could sit down and do in her first week, which would give her all the background to the industry, give her some idea of what it meant to be involved in the short-term rental or vacation rental in a management company. Of course, there was absolutely nothing. We ended up with a tourism travel course, which was incredibly expensive and taught her all about how to book cruises, very little about short-term rental accommodation.

Heather Bayer
So that's one of the reasons why we wanted to do this, why we wanted to create this starter course for anyone that has never been in the industry before, but would like a little bit of a jump start into it. And we see it as having two real benefits. One is for the people who are thinking about starting a career in short-term rental and vacation rental management. And the other, of course, is for property managers to help them with that onboarding, so that when they start a new hire, they either come in with this information, or they get the course to work through in their first few days, which will give them all that background information, saving so much time on behalf of other people within the company. So you will be hearing much more about this over the next few weeks, but that's what's been keeping me busy.

Heather Bayer
So today we're talking about the Experienced Co-Hosting Program, Airbnb's Experienced Co-Hosting Program. An article in July in Rental Scale-Up highlighted the wider rollout of its [Airbnb's] Experienced Co-Hosting Program. While the co-host platform has been in place a couple of years, this expanded version aims to provide a more streamlined and efficient way for hosts and professional property managers to connect, and I quote, "By explicitly welcoming professional short-term rental managers, Airbnb is signaling its recognition of the vital role professional managers play in the short-term rental ecosystem."

Heather Bayer
Sounds good, right? Then, Thibault Masson followed this up with another piece in Rental Scale-Up in late August, where he says, "Airbnb is positioning itself as more than just a booking platform, it's becoming a comprehensive ecosystem for property management. By connecting small property managers and co-hosts with homeowners, Airbnb is facilitating business growth entirely within its ecosystem. However, this also creates a stickiness factor, making it harder for small property managers to leave or diversify to other platforms. The competition for basic property management services is about to heat up, and those who adapt quickly will thrive."

Heather Bayer
Then, following Thibault's article, Simon Lehmann, who is an industry expert and founder of the consultancy firm AJL Atelier, wrote on a post in LinkedIn. And he said, "Airbnb's co-hosting model is a sleeping giant, poised to radically alter the professional property management landscape. The lack of discourse in the short-term rental industry is surprising given the potential for co-hosts to capture a growing slice of the market. Property managers who don't recognize the potential of this model risk being left behind in a rapidly changing industry." Simon's joining me today to talk about what's at stake for property managers as this platform is formally launched. You don't want to miss this conversation.

Heather Bayer
So I'm so happy to have with me once again, although it's been quite a while, Simon Lehmann from AJL Atelier, thank you so much for joining me. Simon, such a pleasure to have you back on the show.

Simon Lehmann
Thank you, Heather, and the pleasure is all mine.

Heather Bayer
Yeah, we haven't seen each other for quite some time. We were just chatting before we started recording to say there are so many conferences now and it's really tough to decide which you're going to go to. And you've just been telling me that you're going to some different ones, because there's new markets emerging. Tell us a little bit about those.

Simon Lehmann
Yeah, absolutely. So this year doing VRMA International, since I didn't go last year as well. So I feel that's important as the conference is growing. But we're looking more at new regional events. So this year I'm actually going to Colombia, Medellin, to ExpoHost, which is a very large conference without having a lot of international attention. So it's a regional event for Colombia and Latin America, which I'm really looking forward to, because, the market is quite sizable and they have similar challenges in these markets. And another one is Australia, Brisbane, second time to the ASTRA [Here to Stay] Conference, which is a significantly emerging market, over 600,000 units for rent in Australia. So that's a sizable market that has a lot of challenges and also opportunities at the same time. So I like these new events, because first of all, we're getting new relationships, new contacts on one side. On the other, at the end of the day, the challenges we're facing within the industry are very universal, no matter where you operate in, and building a bigger perspective on international challenges will help us as an advising and consulting firm to help people maneuver through their challenges. And we also learn something every time as well.

Heather Bayer
Yeah, that sounds so interesting, and I look forward to seeing the posts that you do following those attendances. But in this session, I wanted to talk about something that sort of came on my radar back in July when Rental Scale-Up did a post about the Experienced Co-Hosting Platform on Airbnb. And then that was followed up by a lengthier and very interesting post from Thibault Masson towards the end of August. Then you took that up in early September with a post on LinkedIn. Now, for listeners, all of those links are going to be on the Show Notes. So it'd be useful for you to go back and see the origins to this discussion, because we've got a lot to unpack here. And I wanted to kick off Simon with just a short discussion about what this rollout of the new Experienced Co-Hosting Platform actually is, because there's been co-hosting going on Airbnb for a long time. So what makes it different? What's different now?

Simon Lehmann
Different packaging, I guess, as well. I mean Airbnb, one thing they're very good at is obviously marketing and how they position their product and create a conversation around it. But I think before I can go a little bit deeper, I want to start...., once again, also for the audience, to sort of think about where we're coming from between rent by owner, operating rent by owner (RBO), more individuals versus professional managed inventory. Right? And I think one thing we have to also be clear about is that over time, when we look at our entire inventory that has been listed out there in the marketplace has not had significant shifts from individual managers to professional managers. And obviously, it's interesting to see that any initiative that tries to disintermediate the professional property management industry, which we are focusing on as AJL Atelier, is something that triggers our interests quite significantly. I mean, what we are all about at AJL, and we're telling that wherever we have the opportunity, is that one of our key objectives is to help professionalize the STR and property management industry on a global basis. That's what gets us excited and that's what gets us up every morning to help professional managers to run a better operation.

Simon Lehmann
Whereas individual homeowners and RBOs have always been around and they're getting different opportunities to manage their inventories and everything else. Now, let's face it, Airbnb has launched several different other products in the past, such as activities and things like that, and anything besides their core, which is still the marketplace, has not had significant success. Let's put it this way, right? You can do a lot with Airbnb as a platform. OTA has been a conversation, flights, tours and activities, you name it, you can do a lot of things. And Brian Chesky always alludes to that in some of the interviews. He's still thinking about it. Right?

Simon Lehmann
But the co-hosting product for me is once again an additional product that they felt we can leverage with the community that we have built to help others to manage properties. And of course, that raises the immediate question, how can that disintermediate the professional property management business at a far lower commission level and do it equally as good as a professional property manager? Is that a particular threat to our industry and if so, what do we do about it, or is it just a hoax and it's not going to work?

Simon Lehmann
Tourism activities, anything that relies on the service of an individual is a challenge, because you can't manage that person apart from incentivizing that person. Right? So if you offer a sushi cooking class on your listing, well great. If you don't rock up, it's a bad experience. Right? So it's individually managed, it's individually taken care of, and the co-hosting platform is the same? Yes, you have ratings and everything else, so you're motivated to do a better job. But at the end of the day, it still relies on an individual that delivers a better service or a service for somebody else. And if that is not delivered in a professional manner, then it doesn't have scale.

Heather Bayer
So you mentioned that this isn't being talked about enough and it's a sleeping giant. And this new model is shifting the power dynamics. Can you give a bit of background to those statements?

Simon Lehmann
Yeah. We can differentiate between practical and theoretical if you think about the community that Airbnb has built, and theoretically, the power this co-hosting offer has is actually quite significant at a far lower cost than a professional property manager can take in terms of commission today. What is your gross margin? What is the take rate of a professional property manager? Anything between 20-30%, depending on leisure and urban markets etcetera, and destinations. And co-hosting can potentially be done  significantly cheaper for property managers and for property owners, therefore, it can potentially have an impact to the professional property managers to lose inventory to Airbnb co-hosts.

Simon Lehmann
And that's where the threat is. And what we have connected with that is, one thing that we still haven't done well in our industry is communicating value proposition to homeowners in general. People just don't know what's behind to run a property professionally. And you're the last person I need to tell you that, what professional property manager is all about and how much is behind the scenes that homeowners normally don't see. So it's easy to offer a product that from an outside seems to be capable to disintermediate the professional property management industry. But is it actually going to work at scale, at a far lower commission rate to really be a threat to the professional property management industry? I would question that.

Simon Lehmann
What we're saying as consultants is we are here to bring these topics up to the conversation and start having a look at it and build plans and strategies around. What would that mean for me as a property manager, if that potentially becomes a threat? And what can I do about, for that not to become a threat? Is it going to become a threat for the time being, while the industry is still hyper-fragmented and continues to be so? I don't think it's becoming a significant threat to the professional property management industry, to be perfectly honest.

Heather Bayer
Okay, you mentioned that word fragmented. I remember when I first went to my very first VRMA conference back in 2011 or 2012, that was one of the first terms I learned, fragmented. And here we are. Where are we, 12 years later, 13 years later, still talking about fragmented, and we still talk about disruption never ending. Right? But doesn't this inflow of co-hosts just, you know, it is fragmenting the market even more? I'm just thinking about a property management company in a smaller area, not necessarily a destination area, but they're really working on building their inventory and they are losing those homeowners to the co-hosts. What do these small property managers have to do to create the value proposition for the homeowners that stands them out? What differentiators should they focus on?

Simon Lehmann
Let me first pick up the word fragmentation. So one thing that we're very clear about having been around for 20 years in this industry, is that fragmentation is not going to go away. We call it the mushroom business, one leaves, five come up. So, you know, this is a hyper-local industry and it's still based on relationship and trust. So as long as you can't scale trust, the fragmentation is not going to go away. So the fragmentation of our industry at large will always stay. We have seen big companies like Vacasa, Interhome, awaze, and others who have grown 30,000 units plus. But there's a ceiling to it, because it's still a hyper-local and personalized business that is built on trust.

Simon Lehmann
So fragmentation, unfortunately, or fortunately, for many reasons, is not going to go away. Second, I think Airbnb hosts, for me or for us as professional industry consultants, is a particular persona that does not ultimately fit where owners are in the professional property management industry. Number one, we see a lot more investors. We see people have taken a lot of opportunity. Airbnb has created massive opportunities for investors and homeowners, which Uber has done for car owners, for example.

Simon Lehmann
So we created a marketplace which has become ideal. But this doesn't mean it will continue the same way all the time. Right? And it's very opportunistically driven. Hey, I buy a unit, I flip it, I do Airbnb and it grows really well. I take the second, the third, or I manage some others. Interest rates come up, these units disappear. Regulation comes up, these units disappear, and then business will come back again. So for me, the professional co-hosting program is far more volatile, because it's opportunistically driven for homeowners and real estate investors than somebody who needs a property manager to run the property that is owned by the family, has been within the family, is not an investment property, has totally different values to the people who own it, etc.

Simon Lehmann
So that's one thing we need to be very mindful about when we compare that. And then the last bit to your question is, it's the value proposition for me that is still not highlighted and communicated in the way it should be towards homeowners. Do you have an investor homeowner, they take the commission of Airbnb. This is how much commission I pay. And then, so this is all of an excel spreadsheet calculation. On that basis, we make decisions.

Simon Lehmann
One thing we should also not forget, and I think that's a key element we have not talked about/quickly touch on. If you are a co-host or if you run a co-host program on Airbnb, this implies immediately you have a single channel distribution strategy. So this for me is limiting significantly this conversation, because ultimately, I personally would never invest into any property manager that only uses one channel for distribution. So if you use a co-host service of an Airbnb, this implies that you will only use Airbnb as your distribution strategy, as your distribution channel, which means you potentially miss out on other bookings.

Simon Lehmann
Booking.com is growing market share in the United States. There's Expedia, Vrbo, there is Meta-Search platforms, especially in Europe, you cannot go with a single distribution strategy, especially with companies like Holidu and HomeToGo, and Booking.com. You'll miss out too many opportunities, so that alone will have a decisive factor should you go with the co hosting program of Airbnb, because you then are basically bound to have a single channel distribution.

Simon Lehmann
So coming back to the value proposition, one thing that general homeowners who are not familiar with the property management industry are not really aware what kind of services a property manager and what kind of chores that they're taking care of on behalf of their owners and properties. And I think that's something I have criticized a long time, for six years while running AJL, that we're still not good enough to communicate our value proposition to homeowners and really get them to understand how do we justify a gross margin of 20-30% of taking care of their property? Because at the end of the day, we're asset managers and that's something that we still need to get better at.

Simon Lehmann
We have data at large. We have so many sources to tell a homeowner, hey, this is what we're doing. We've just consulted a property manager just recently and we created a newsletter for them so they can communicate all the things that they have basically done on behalf of their homeowners and their properties. And some of the owners were overwhelmed. They didn't know they had an office, they didn't know what they paid for running their websites and marketing. And hey, we're invested another significant amount in better bed linen and things like that. And that's all things that we need to be proud about as professional property managers on one side, but on the other, we need to make sure that message arrives with the homeowner and he doesn't compare us with the commission of an OTA, versus the services we provide.

Heather Bayer
Yeah, that's such an important point about conveying what you actually do. And I think you can get so insular in the business that you're just out there collecting new property owners. And I'm just going to go put the listing up, do the photos and away we go, and I'm very glad to have you. But when that starts dropping off, when those new owners start dropping off from coming into the inventory, that was always to me the first thing that I thought of when that flow began to dry up, was what are we telling our owners? Or what are we not telling our owners about what we do? And changing that had quite a dramatic effect. It also created a better relationship, because it was more transparent, it was more honest, and it wasn't...... We weren't a Vacasa, we weren't an Interhome.

Heather Bayer
But that brings me to another question. You talked about Vacasa and Interhome being these massive, massive companies, and then you've got the very small co-host as property management. At what point does a property manager come to that point where they lose that personal connection, that relationship with their owners? And can they do something about that as they scale?

Simon Lehmann
I think they can. I mean, there's some great examples out there, and if I can do a shout out, I can probably do it for somebody like Tom Goodwin, who has understood how to create incredible relationships that go over generations of owners with their family, who are still working with them and, you know, and taking care of them. I think there is plenty.

Simon Lehmann
But coming back to the first question, for me, the question lies down into fact or the reality of how many relationships or how many friends can you manage as an individual? Right? And then I say managing 100 relationships is pretty challenging, and I think that's where I would sort of draw the line into the sand. Right? So I said an individual. And, you know, we've seen different metrics for large companies. They have, you know, 100 units per account manager for example, who creates a relationship with owners. Sometimes we see 150 as well. So let's say 150 owners. That means you would basically contact one of them each single day of your work, except with the exception of holidays and everything else. So that means you can contact one homeowner once per day of 150 owners.

Simon Lehmann
And I think that's where I would draw the line. It sounds very scientific, but actually, how many relationships can you manage at once? I say 100 to 150 as an account manager. And then it's becoming challenging. And from then on, it's really the property manager who needs to think about how do you create relationships with newsletters, with events for homeowners, where you gather them, where they can share experiences, you can put communities up. You know, we don't. We need to make sure we're not hiding anything from homeowners. Homeowners have been spoiled the last few years, and it's becoming even more challenging now as the market softens and we see lower ADRs and we see lower occupancies. Homeowners get very spoiled, they get very nervous now. So the churn potentially goes up, and the homeowner says, I'm going to move because I'm not happy with it anymore. We're all in a very tough spot right now.

Simon Lehmann
So building these relationships is even more crucial right now. And I think there is definitely different ways in how you can build that and be transparent. If you look at, you know, one thing I also want to mention, if you look at the technology stack within the vacation rental industry, we have any type of technology we can think about, from noise sensors to door locks, to PMS to channel manager, revenue manager, you name it. How many of the tools out there that we're providing currently or we're actually using to run our business, our own refacing tools? None. You know, we have built a vacation rental technology landscape at AJL called the tech landscape of STR. And if you look at 22 subverticals of technology, not a single one is geared only for homeowner purposes. So that means we need to include our homeowner more often to our tech stack to be transparent. And that can include anything. Services, real estate prices, interest rates, financial services, any data related to the property and the competition. So creating more transparency, transparency builds trust. And I think we will want to see more owner facing technology platforms that builds on that relationship as well.

Heather Bayer
Yeah, you mentioned trust a couple of times, and then you'd mentioned Tom Goodwin in Mountain Laurel Chalets. I was just on his website the other day. I'm doing a presentation about trust values, and it seems that Tom and his team, well Tom, and from the family history of the business, they've built up the values that they operate by and having those, and they walk the talk, as you mentioned, having these amazing gatherings where they invite not only their own homeowners, and this is where I think Tom gets really clever. It's not only their own homeowners, they invite everybody. Other homeowners come along and have dinner and have a party and network with everybody. Just such a terrific way of running a business. But to me, what comes out of that, that creates trust. And trust is the cornerstone of everything we do. And my question is that, how do property managers go about building more trust with their owners? Because I think they've got this huge potential to create the trust that has them saying, okay, this company's been around for a while, they've got a number of properties. I'm trusting them to look after my property, perhaps over the person who's just managing one or two or three of their friends properties and is expecting to take theirs on as well. How can they develop this trust with the owners?

Simon Lehmann
Yeah, you know, I think the way to answer that question is, what makes me trust someone? That's the way I would approach that and say, okay, what takes me to trust this person and I want to do the same to these owners, right? So if I consider myself a property owner, which I am but I'm doing self management, is I want to get as much transparency as possible. A lot of homeowners don't think they get a fair share. They get a fair deal in relation to pricing, in relation to commission, in relation to occupancy, ADRs, etc. So the homeowner always thinks something is missing. You're deducting too much for maintenance. You're doing this, you're doing that, you're doing the other. And I think what helps me is it's like you're bringing your car to the service and you pick it up again, nothing has changed on the car, it just has potentially new fluids inside and new oil and everything else. And you trust that garage actually changed that oil. Have you ever made sure that they actually changed it or not? Probably you haven't. Right? So I think that's how I would approach and that's how we advise our customers to build relationships; build on transparency and transparency creates trust.

Simon Lehmann
I think data in general, market data is underutilized in building this trust process, where we're actually sitting down with homeowners and building that relationship and build that trust. Now with artificial intelligence and other tools, we have incredible opportunities to build even more trust, because we can support that with data that is available out there. For example, how can you analyze photographs and give a feedback to a homeowner about the quality of the furnishing and things like that? Another one that is still underutilized in general in the industry, there are still property managers who don't share reviews with their homeowners, because they're scared of them leaving. Right?

Simon Lehmann
And that, for me, these are all trust elements. So there's many different trust elements that help to build this relationship to the homeowner. Transparency is all about, there's no lie' it's straightforward. And I believe homeowners overall react better and that they find out that they've been wrong, done by, because of commission, higher maintenance costs or whatever it is. I think transparency is key. And then, of course, results are the ultimate goal, to deliver results, but they need to be managed in the right way. And expectation management is extremely important.

Simon Lehmann
You know, especially when people are out there acquiring properties, they always promise everything and then they come on board and then their bookings don't come in. I think you need to have people who they can contact, they can ask questions, they give feedback, and then I think we can do a lot to improve that trust level. And once again, especially now, after we have seen incredible years, it's going to be more important than ever. And I remember the closing remark, and it's been a while ago, I think last year at DARM Conference, Jason Sprenkle from Key Data [Dashboard] closed the conference and said, if you don't have a relationship with your homeowners now, you never will. So I found that an incredible comment to tell the guys, hey, it's about time for you to take care of these owners because they're going to get nervous.

Heather Bayer
Yeah, I think that's where things maybe changed. I remember in the early days of my company, back in 2003/2004, the only way to bring owners on was to create a relationship and to find out what we had in common and have conversations about children and pets and just create that rapport. And it seems like, you know, what I'm seeing on Facebook groups and LinkedIn, when people are out there and maybe those much newer to the market, they're talking about doors and keys, and that just blows me away, because that's not the way to start a relationship. It's just another door, it's just another key. Are you seeing more of that, or is that a phase that is perhaps reducing now with a new wave of more guest-centric co-hosts who are perhaps becoming more owner-centric as well?

Simon Lehmann
Yeah, I would wish so, Heather. To be perfectly honest, I think, you know, the term of keys and doors, I don't think that's sustainable in our industry in any shape or form. And, you know, we still talk about, should we call it an object or a property? You know, that's a language issue. In German, we say object. An object is an object that's not a property. But for somebody who owns a castle and has worked all his life for it to have an apartment somewhere in the Swiss Alps, it's his castle. Right? So I think that's not sustainable. And we need to think about where is that term coming from. Look, we have clearly seen very disruptive models from new companies coming in, especially in the urban markets. Let's face it, they've done an incredible job in doing a lot of optimization and process automation and getting things more efficient. Revenue management, the way they use tech, especially urban operators. And I think that's where the term came from rather than from the leisure industry to talk about doors and keys in addition to that, I think the homeowner structures is slightly different, where in certain urban markets you have more institutional owners.

Simon Lehmann
So they don't care about properties, they care about doors and keys. And if they take an apartment over with 50 doors, it's 50 doors. Right? Because it's one institutional investor that owns that place and rents that out. So I think that term would come more from these urban markets where you deal more with institutional owners and therefore doors and keys. In the leisure and vacation rental industry in general, I don't think that term is not sustainable in any shape or form. We still talk about properties and that's what we manage. And I think doors and keys are definitely more for the urban markets and more institutional investor side as well.

Heather Bayer
Yes. I heard it quite recently and it was in the Orlando market, and that just struck a chord with me that this was still out there and it seemed a little bit outdated. But I understand about that urban environment.

Heather Bayer
You mentioned, and this is a quote from you about property management, "Companies need to leverage tech to deliver value and efficiency, which helps them to stay competitive without sacrificing quality." Just expand on that. About the leveraging of tech. You've mentioned how much tech there is out there. From one who started with tape charts, fax machines and checks coming in the mail, it's all a bit overwhelming now, but what is the best way for property managers to leverage tech if they've got wider distribution? Maybe they are working within the experienced co-hosting platform, but they are distributing out onto many other channels. They need that tech. What is the leanest way? Is there a lean way of leveraging tech?

Simon Lehmann
Yeah, that's a fantastic question, Heather, and technology has been definitely overwhelming. We have created a very complex ecosystem, very heavily verticalized; over 25 subverticlas in tech. The average PMC is using six platforms throughout its business, excluding general IT infrastructure as well. So yes, it has become overwhelming. And my statement more comes towards the fact that put the smile where it creates a smile and put tech where you can optimize, and that we're also putting out there in relation to AI, machine learning and artificial intelligence at large, is to think about where do I put my tech and where do I need tech. I think it really depends, you can overdo it. For me, it's always a balancing act in terms of size. What is your goal? What is your strategic ambition in general? Where you want to be with your business? What is your growth strategies at 100 units? Is it enough? Is it 500 units? You want to continue to grow? I think all that has a direct impact in how you build your tech stack and what kind of technology do you source and how efficient you want to be.

Simon Lehmann
In addition to that, I think that the first question we ask when we come through the door of a property manager is, are you guest centric? Are you host centric? And what would you really like to do with your business? What is your business stand about? If somebody tells me I'm a low touch business, I don't want to see any guests and I don't want to have anything to do with them, well, then it's clear what you need in terms of technology. If somebody says, hey, I want them to have the best experience, I want to be there for them 24/7, I want to sell them stuff, I want to take care of them and have the most unforgettable experience. Well, you need maybe more resources than technology versus technology and resources.

Simon Lehmann
I think it really depends what your overall strategy is, where you want to be with your business, what is your growth strategy, and then you can define what your technologies. At the end of the day, I think your base requirement that you have, instead of the fax machine and the pin board is that you have a PMS which runs through your bookings and you have a multi channel distribution opportunity and you have a revenue management capability. And then you really have covered literally most of what you require and then the rest is really up to where do you put the smile and where do you put tech and what is your overall objective as a business from a strategic standpoint will define what your technology is going to look like at the end of the day.

Heather Bayer
Yeah, that tech stack, I remember when it came around to selling our company and that was the point where we had to look at the tech that we had and it was quite amazing the amount of platforms that we bought into and never utilized. And that made quite the hefty tech stack and a very expensive one.

Simon Lehmann
Yeah, this is an interesting one. This is the Microsoft effect. Everybody has Excel, but the average user is using 5% of it. Right? So you need to think about what is really what you need. I mean, I am still flabbergasted and I'm amazed how many PMSs are out there for a business that is actually universal. From Australia to Southeast Asia to Europe to America to Latin America. Right? So I can't believe that there's hundreds of PMSs and I can't believe there's thousands of property managers who can...., who manage to do the business different from each other. And it just boggles me. Right? At the end of the day, we're connecting guests with owners. We need payments, we have cleaning, we have maintenance, and that's it. So it can't be that hard. And definitely technology companies have made a lot of money with making it very complex for ourselves to run our businesses. To say the least.

Heather Bayer
I think that's a great way of putting it. You know, I remember going through that process of looking for a new PMS and coming to that realization, hey, they're all the same. They really are. And it just comes down again to the relationship. Who do you feel happier with, because they're all offering the same. I want to know what the relationship's like, what the support's like, and that's about it. The rest is going to come.

Heather Bayer
As we think about wrapping up this, I want to talk about what advice you could give to property managers who are looking to scale at the moment. I think we've covered a few things, but before I do that, coming back to a quote from Matt Landau. He said, "The challenge with co-hosting, especially in certain markets, is the lack of professionalization. In competitive environments, co-hosts may struggle to deliver the same results as professional property managers. While the co-host model may be a cheaper solution, the service quality often requires a level of professionalism that many co-hosts may not be able to provide." Again, it comes back to fragmentation. What do you see in what Matt said? Do you agree with that?

Simon Lehmann
It's an interesting one, but on that one, there's no question. I wholeheartedly agree with Matt. There's no question. I mean, this is exactly what I meant earlier in our conversation. This is opportunistically driven. Okay, I can host one property. I can host somebody else's as well. No, that's not the fact. Right? And it's driven by opportunities to say, okay, I can make another buck out of this. So instead of just running mine, I run somebody else's, and then somebody else's, complexity rises. Are you able to manage this additional complexity when you have all of a sudden ten units to manage with cleaners and maintenance and everything else? This is an interesting fact, and we know that for a long time.

Simon Lehmann
While we're looking at data, it is clear that single hosts have higher review scores than property managers. This is not a secret, it's a fact. Running 100 units in the same quality and running one unit is obviously not possible. So it's no big surprise that property managers have, on average, lower review scores in a single property owner or running five units. And that goes exactly into the same conversation that Matt is raising here. Can we do that at scale? It becomes more challenging, and I think that's exactly what is happening. And it doesn't mean that you can run it equally better or even better than a property manager as well.

Heather Bayer
As we've gone through this discussion, it's coming clear, and I don't know who mentioned this, but said, at what point is a co-host just another property manager? Are we just talking semantics here, or is there something else there? Because as I through all those comments and your article and Thibault's, it just felt that once you get beyond five or ten properties, we're all property managers.

Simon Lehmann
Yes, I guess we are. But I think there is more to it. Like coming in as a co-host probably shows you a different way in how we look at the professional property management industry as a whole. That's my view very clearly. So, you know, running one unit doesn't mean you can run like a property manager has a lot of additional challenges to think about and gets engaged with, the community regulations, a lot of other bits and pieces that an individual co-host might not even think about, or having to worry about at all.

Simon Lehmann
So I think as you grow your supply and inventory, your complexity increases quite substantially. So I think there is a clear differentiation. This is not semantics. I think a smaller host who runs a few unit can stop tomorrow as well. Let's not forget that. How big is that dependency as well, because the money is in the assets and not in the actual making money from the service business. Right? For a professional property management company, he makes a living, he pays a number of staff and his family and his upkeep and everything else.

Simon Lehmann
A co-host potentially makes money more with real estate and maybe even at a job. So his commitment, or his or her commitment to the business is definitely different and has different complexities. So I would clearly separate that.

Heather Bayer
That was interesting because there's a couple of commenters on your article, who are clearly in the property management area with 30, 40, 50 properties still calling themselves co-hosts. So I'm coming back to my last question, because I got squirreled out on asking that, what advice would you give to property managers who are looking to scale in this current landscape? Is there still room for growth, or are we headed towards some sort of consolidation? But I think we've dealt with that question.

Simon Lehmann
Yeah, I wouldn't use the word consolidation anymore. I used to in the past quite actively. I think that has left my vocabulary for many different reasons, because it's the mushroom business, even on existing......

Heather Bayer
Okay, thank you, and thank you for clarifying the mushroom thing. I saw the exchange that was going backwards and forwards with Richard Vaughton [from Key Data] and yourself talking about mushrooms, and somebody came in and said, what's this mushroom thing about? And now I understand.

Simon Lehmann
It's about cutting one off and five grow, and that's the same here. So I think regardless of if supply grows or shrinks, and overall, I think the fragmentation will remain in and consolidation is very difficult, for all the reasons we discussed today. Scaling a local organization is very difficult. Scaling trust is difficult. We're still in a low asset class business, which means we manage somebody else's property, not our own. So we have plenty of reasons why it is the way it is. I think the first question is, can you scale? Yes, of course you can. I think the first question any property manager out there needs to ask himself, what am I in it for and what is my goal? And I think that's the first question that a lot of people out there don't even have answers for right now. Why am I in this game? Is it lifestyle? What is my ultimate goal? Why do I do what I do? And once you have an answer on that, then you can start defining your strategy on, Okay, I want to grow.

Simon Lehmann
A lot of businesses, while ADRs are compressing, while margins are compressing, you're economically forced to grow your business to scale. Right? Because you need to have more units to make the same amount of money, and therefore you get more pressure to grow, so it will become more competitive. But I think you need to answer yourself what you're in it for. And what is my end game, ultimately, to do that? I think there's too many companies with no strategy, no plan, were just in it on a day-to-day basis, in the hamster wheel, and saying, this is what I've been doing, it's been running quite well.

Simon Lehmann
When things are not running well anymore, then you start asking yourself a lot of questions and you get really nervous and you get worried. And then, because you don't have a strategy, you start to struggle. So I think to build a scaling strategy, you need to think about, what I'm in it for and what is my plan to do and what is my ultimate goal? And then you can start scaling and you can differentiate. And I think that's another piece which I find, in a way, quite logical, but even underestimated.

Simon Lehmann
When we talk to a lot of property management companies in a specific market, they know very little about their own competition and talk about how do you differentiate your services, what sets you apart from the local competitor, what makes you better? And this is not the answer of I have a better team. It's a lot of other things that you can potentially differentiate yourself. And so there's a lot of things you can do, but scale is definitely an option, but you need to have a clear plan to do so. And then make sure you focus on these execution as well.

Heather Bayer
So that segues quite nicely into just asking you what AJL does and how you can help companies that are maybe struggling or having these challenges at the moment.

Simon Lehmann
Yeah, absolutely. That's what we love about AJL. None of our customers are the same. So any challenge we're facing with any property manager that we're dealing with is different. So our customer base is very diverse. Our largest customer is one of the top companies in the world. My smallest customer has 40 units under management. So this is not about size. This is about how eager and interested are people to professionalize their business and move forward and seek professional help and support, such as AJL Atelier. So we'll help, whatever your challenge is.

Simon Lehmann
Do you want to think about outsourcing or insourcing your laundry? We can help you calculate that and make a decision. Are you looking at growing? Are you looking at expanding into new destinations? Are you looking at increasing your financial hygiene? Are you planning to sell your business in a couple of years? We tell you which strings you need to pull and optimize your business and get it ready for an exit. We can help to sell your business. So on a property management level, there is literally nothing that we can't support you with. We can help select your text, make decisions on the right technology to serve your needs.

Speaker 3
We can help building management teams. We can help finding resources for you as well. So we're very diverse because we live and breathe this industry 24/7. And we understand what the pain points of our customers are. And with the experience of our team, we can help mitigate these challenges and risks, and that's what we do.

Heather Bayer
Well, I will make sure that Simon's information, plus the information on AJL are on the the Show Notes, so you can go and check that out.

Heather Bayer
Simon, it's been an absolute pleasure talking with you. You are such a fount of knowledge and expertise, and it's always a pleasure to hear you. I always learn a lot, so thank you so much for joining me.

Simon Lehmann
Thank you so much, Heather, to have me as well. I thoroughly enjoy our conversations every time. It has been a while, but that doesn't mean anything and hopefully I was able to give some good input and everything else and more than happy to help anybody out there to take the next steps in this incredible industry.

Heather Bayer
Thank you so much, Simon Lehmann, for joining me. That was such an interesting discussion and it's not going to end there, I'm quite sure. I'll be very interested to hear from those of you who are listening who are perhaps co-hosts or who are property managers and are feeling the challenge of the Airbnb Experienced Co-Hosting Platform coming at them. Let me know, are you experiencing issues with acquiring new owners or retaining them, or delivering that value proposition to them? You know, anything, I'd love to hear from you.

Heather Bayer
You can email me at heather@vacationrentalformula.com, I will respond, or go to the Facebook group, The Business of Short-term Rental and Property Management. That group has grown so nicely and organically over the last four years. We've got coming up on five and a half thousand members, and I happily say, hand on heart, that I have never had to ban anybody or admonish anybody for poor behavior in that group. And I see so many other groups where conversations disintegrate into, well, they go places where online conversations shouldn't really go and certainly professional online conversations shouldn't go. I am so happy that my group is not like that and everybody is so incredibly supportive of each other. So if you haven't found the Facebook group The Business of Short-term Rental and Property Management, please go over there and join. I will be there to welcome you.

Heather Bayer
So that's it for another week. As I mentioned at the outset, we are getting ready to launch our THRIVE Essentials Program. And gosh, we've worked hard at it. It will be a work in progress. It's going to go out and be piloted by some companies and some individuals, and then we will tweak it and we will change it. So if you actually go in and register and buy the course, it is for life, and you will get all the changes and any adjustments that we do to it over time. So don't forget that. How would I put it? It's not set in concrete, if you like. It is a course that will be evolving over time as we get feedback and a bit like a piece of software that gets updates, we will be doing updates. We will add in new features to it, new lessons, new resources and if you buy into it then you just become part of our community of professional property managers and co-hosts.

Heather Bayer
Alright, that's it for this week. I've thoroughly enjoyed this episode and look forward to bringing in the next one which is a conversation between me and my business partner, and that's my son, Mike Bayer, where we'll be talking about the challenges of bringing new people into an organization. So I look forward to being with you then. For now, enjoy the rest of your day and I'll see you next week.

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@vacationrentalformula.com. we'd love to hear from you and I look forward to being with you again next week.

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