Our Thought Leader Spotlight series is a monthly profile of interesting and notable ‘game changers’ in the international vacation rental industry.
We ask these industry experts, all with different backgrounds in the industry, questions that aim to get to the core of what they view as both the challenges and opportunities facing the vacation rental industry. We also delve into how our Thought Leaders personally relate to the industry, and what they, and their businesses, bring to the collective table.
What businesses, organisations and enterprises are you currently involved with within the industry?
I am a co-founder of Rentivo.com, a VR tech-centric business. Through Rentivo and my experience of being a property portfolio owner and latterly owning two contracting agency businesses (last one sold earlier this year), I have been able to network extensively across the industry and understand the challenges from inventory control to OTA integration and owner-manager relationships. The eco-system is changing and I feel it is important to ensure that keeping up to date on all fronts will ensure we don’t miss a trick. To support this we also run a news feed, SmartHosts.com where industry news and ideas and commentary are regularly posted by the industry.
This reach has allowed me to become involved in a variety of projects for Rentivo, predominantly focused on creating marketing platforms, financial management and increasingly data exchange. I have also been involved in newer tech enterprises of late such as a remodelled AVROA, Blockchain technology and real estate investment enterprises.
Earlier this year we joined forces with Klik.Villas and acquired their business and their team joined Rentivo. We have been busy integrating and planning for 2018 with a new marketing approach which extends the offering from simple data management and websites to brand and marketing tools and services initially in Asia but growing west.
I have also enjoyed and been fortunate to be asked to present at various small conferences over the last few years.
What do you consider to be/have been the key (s) to your success?
Most people succeed through hard work, luck, perhaps being in the right place at the right time and one other vital ingredient. This business, my previous management businesses, also in a former life as MD of a Scientific supply and service company, success was always about the people around you.
I am extremely fortunate to have been involved with smart, hardworking, enterprising and talented people for many years. This isn’t to say that it’s been easy, as despite the work ethic and talent, there are always challenges to be faced at a personal level and with the fast changing world of commerce.
My family has an unbelievable range of skills and I’m pretty sure most didn’t arise from my genes! But when you have business minds, designer’s, developers, photographers and more on tap at home, it’s certainly a benefit!
One of my favourite quotes is: “Luck is a matter of preparation meeting opportunity”. You need to be out there to succeed.
In your view, what are the biggest challenges / threats to the vacation industry and what counter measures would you suggest minimising these risks?
A really interesting and commonplace question these days, with many different views! The answers we generally see in the press are modestly biased; shareholder pitches mostly being self-directional PR exercises picked up by a press who often have not looked below the surface at the whole iceberg.
We are still in the middle of a civil war and growing market that crosses continents, which is spawning new micro-tech and management businesses daily. Many owners and managers have been subjected to an onslaught of marketing power through a small number of behemoth businesses in the last few years. The rapid rate of change and the growth of Airbnb as both a VR business and hotel disruptor is also seeing a battle for Mount Olympus amongst OTA’s. Much of this is taking place in the cities of the world and has resulted in local challenges from governments and lobby groups.
Sharing properties, serviced apartments, leasing buildings for short term leisure and business travellers in cities were never true “Vacation Rentals” (holiday rentals or self-catering) as we knew it. The VRBO/OwnersDirect markets were the core sector. This element is now being heavily targeted by OTA’s and will continue for a few years.
This challenge to millions of owners and thousands of managers is substantial and has seen many small businesses consider their future as profits dwindle. So the challenges are several:
- Small players without smart tech will struggle.
- Guest expectations are being raised faster than owners can accommodate and owners will need to invest.
- Management issues will arise as flexible shorter stays are expected.
- OTA’s for 2-3 years will see more growth and their spending power will form a greater wedge between inventory and guest.
- We will see the rise of super managers who may challenge the OTA’s regionally and also owners.
- Regional destinations will also see “over accommodation” challenges as interest rates remain low and ease of OTA marketing is perceived as easy routes to healthy returns and more properties are purchased for short term rentals.
- The businesses with all eggs in one basket, e.g. Airbnb managers, will need to be careful.
How to minimise these risks?
Accept that OTA’s are here to stay, but even they face disruption. The world has changed and despite substantial vocal antipathy no-one was listening. Use these sites wisely and work toward an independent opportunity as soon as possible. This means reviewing all parts of a business and addressing the changing needs of guests. Technology, investment and smart use of pricing, going the extra mile on communication and customer service will pay dividends. The next 2-3 years will be the most difficult but I am sure there is light at the end of the tunnel for those who are prepared.
What do you view as the greatest opportunities for both individual businesses, and the industry as a whole, both now and in the short to medium term future?
Without blowing our own trumpets, over the last 5 years we have predicted every move by OTA’s, meta-search, big managers and Google. Admittedly it was not difficult to see and was a standard e-commerce play in a fragmented market. It is so fragmented however that it still poses massive booking logic problems to the large corporations which opens opportunities.
This fragmentation elicits guest opportunities to serve and divide and conquer. Poor communication and extra fees is a target for messaging on owners and managers websites and marketing campaigns. Trust, reviews and photographs are the most powerful elements in marketing VR. Address these and conversions will increase. Hotels are seeing success here.
It is important to reflect on what others including the local competition and OTA’s do not do well. OTA’s cannot be a specialist in any quarter. A pet friendly tick box or one for local fishing for example does not hack it. Detail is needed and presentation of detail needs to be more visual. Everybody needs to think in images.
I suspect we will see a raft of specialist and local marketing web outlets with greater communication options as OTA’s outspend each other and now appear to be seeking less digital and more TV advertising.
These platforms need seeking out and owners and managers need to focus less on the property (that has to excel regardless) and more on the reasons for visits, the experiences etc. We may see more meta-search engines reaching south to inventory direct as OTA margin envy develops and their margins decrease.
These are all minutiae and there is no doubt those who want more control will have to work harder and be educated. Anybody who wants to use OTA’s and has sufficient margins and can work these processes will be offered the opportunity, adopting the rules to be ranked highest. The danger is that the demands on free cancellation, shorter stays and higher commissions will apply in time. “Dependency is dangerous”.
Managers are now talking behind closed doors without the ears of big commerce listening in. Collaboration (or sharing as the new world understands it) is coming. Rentivo runs 14,000 properties from 50 managers with direct bookings and communication as an example on lovecottages.co.uk.
All the majors are looking at AI, Chatbots and BlockChain. Google is circling the accommodation sector from which it mints money on advertising. Why, when it makes so much money from them? The big OTA’s have paid Google for years to build these brands. Google becomes less important once critical mass is achieved. Even Google may assist monetised direct business eventually in preference to large corporations.
More and more people are moving to mobile and this is very important depending on your business model. These tools and tech will be decentralised and opportunistic. It may well disrupt the disruptors.
The opportunity is not immediate but the ability to take the tech and push direct, increasing controls and improving margins will happen. It does rely on the inventory controller being ready with small tech and presentation/conversion however. This means acceptance of change and to learn and work at it.
The “money” is in the booking, so the property owner or managers and the marketplaces are the two poles of the income chain. The connections and processing are the links that tie the chain and disburse data, which we see as being a race to the bottom with lean mean tech surviving.
This means large investors in property with a view to capital income gains and amortisation of management costs and leverage over OTA’s will be a growing industry.
Imagine: A wet cold January, you ask Alexa or Google Home
“Please find me a 4 bed villa overlooking the coast in Sardinia, with a private pool, with 5 stars, 20+ great reviews and a short walk to the beach?”
“I have found 21 within your normal budget and your dates. Would you like to see them?
You ask to project the images. You ask a few more questions and narrow it down to a lovely villa, then the killer question.
“What’s the best deal I can get?”
“There are 9 offers which are roughly the same price from various XXXX or one supplier which offers free pool heating and a welcome case of local wine. It is also cheaper by $100.
This is direct from the owner and they have VR certification. Would you like me to provisionally book it for you and send them a message?”
If you were to start over again in the vacation rental industry, what would you do differently?
Personally I would focus on the high end, “experience”, property ownership part of the business and put as much automation into the property, but also ensure high levels of personal service and interaction.
Technology wise, I would focus on voice search and data management to leverage direct booking of inventory for those who are prepared.
And finally….. what and where would your dream vacation rental be, and who would you invite to share it with you?
A large comfortable space in the middle of nowhere with great vistas, water, mountains!
I’d go with the family of course!