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[00:00:00] Sarah: Hello, welcome back for another great week. My name is Sarah Karakaian.
[00:00:03] Annette: I am Annette Grant, and together we are–
[00:00:05] Both Sarah & Annette: Thanks for Visiting.
[00:00:06] Sarah: We’re going to kick off this episode like we do every week, and that’s sharing one of you our amazing listeners, our Instagram followers who’s using our hashtag #STRShare Sunday. We’ll share you here on the pod, to our entire email list, we’ll shout you out on YouTube, anywhere we can, and of course on Instagram on Sunday. Annette, who are we sharing this week?
[00:00:24] Annette: This week we are sharing at _homesuitedome_. Again, that’s _homesuitedome_. And this is a dome home on 40 acres in Kenny Bunk, port Maine. And it is, to say the least, unique. Would you not agree?
[00:00:41] Sarah: It is a very unique, and I’m very impressed you knew how to say that town.
[00:00:44] Annette: I’ve been to Kenny Bunk port.
[00:00:46] Sarah: Oh.
[00:00:46] Annette: And I can tell you this because I was looking through their, feed, it is difficult to get a short-term rental license there, so kudos to them. They have it. the town is, I want to say persnickety, but they have their rules and regulations and you need to abide by them.
Couple of things we want to talk about this space. It is truly unique and they’ve done a wonderful job with their drone footage. Giving you a feel of what this dome home is and what the 40 acres looks like and what that feels like because it is remote. It’s off the grid, and I think it’s a great way to let the potential guest see what they’re getting into.
A lot of times we go heavy on the interior photos, and this is a special place. So people need to know what they’re getting themselves into, and so they’ve really done a great job of letting us see what the exterior looks like because it is unique.
But then on the inside, Sarah, let’s talk about some things that they’ve done a great job of too. Also, they have a piano and that is something on the amenities list that you do not see all the time. So, this might be one of only two places I’ve ever seen with a piano inside.
[00:01:49] Sarah: I love these hardwood floors. I think they’re pine, hardwood floors and they’re beautiful.
But the one thing I really enjoy too is they mention how it’s essentially an open space. There are no doors other than to the bathroom. And so there are more than one bed. You have visual privacy because there’s walls, but there are no doors. You can hear the guest you’re with if you’re chatting or snoring or whatever. So–
[00:02:08] Annette: Or whatever you do in bed.
[00:02:09] Sarah: But they’re very clear–
[00:02:10] Annette: Clear noise you make in bed.
[00:02:11] Sarah: They’re very clear about that in their listing. And it’s not hidden. It’s like at the top, which just setting the right expectations for your guests, it’s going to help you get a good match when it comes to guests who actually book your place. They’re going to know exactly what they’re getting. They’re going to love their stay. It’s going to be great for you. So well done there as well.
[00:02:27] Annette: well. Awesome. Well, thanks again for using our hashtag and we will be combing through the interwebs, our Instagram, finding the next one for next week. But Sarah, let’s get on to our episode.
Okay. We have a short-term rental celebrity on the podcast today.
[00:02:42] Annette: International celebrity,
[00:02:45] Sarah: International celebrity. And listeners, get ready to have– it’s going to be a really special episode.
Let’s just say we did our pre-interview for like two minutes and Sarah and I were already taking notes, so get out your pen and paper. He’s coming to us live from Barcelona, so we’re not lying when we say international. We feel very lucky for him to share his time with us and expertise. Sarah, who do we have today?
[00:03:08] Sarah: Yeah, so today we have Simon Lehmann, who is one of the world’s foremost experts on short-term rentals and vacation rentals, and we mean that. He leads– okay, I’m going to brush up my French here– AJL Atelier.
[00:03:18] Annette: Yes, you got it. You got it.
[00:03:19] Sarah: Thank you. Thank you. A specialized vacation rental and business consultancy, while also advising multiple companies as board member and executive chairman. He’s hosted some very notable people in our industry. I want him to chat about that a little bit. He’s a sought-after speaker, panelist, and moderator. Simon loves to broach high level and technical topics alike from the future trends of short-term rental to the specifics of online distribution in the top five OTAs.
Previously, Simon was the co-founder and chairman of Vacasa Europe, former president of PhocusWright and ex board member of HomeAway, to name a few. But he’s also an accomplished operator having led Interhome as a CEO, Hotelplan Group, deputy CEO, and Swissport as EVP. Simon, welcome to the show.
[00:04:04] Annette: Sarah’s tired saying that.
[00:04:07] Sarah: the list goes on and on.
[00:04:08] Annette: Yeah. I’m like, how is he having– like I don’t even know how Sarah said all those things, so I don’t know how you–
[00:04:12] Sarah: But I wanted to make sure the listeners really understood who they’re in presence of today because, Simon, the industry is, I mean, it’s been on a rollercoaster ride since– you were involved before Airbnb was even a household name. And we’re going to talk about that, through Covid and all what that did to the industry and where we are today. So welcome to the show and yeah, we’re just really excited to have you.
[00:04:35] Simon: Thank you Sarah and Annette. This is long in doing and actually, I was so looking forward to speaking to you guys. I mean, I love your energy and, we never really had the chance to meet in person, but our first conversation was already very important to me and I said like, one day we’re going to do something together and I’m super happy to be here.
My introduction sounds somewhat boring, right? Because at the end of the day, vacation rental is all about the human beings that are behind it. So it’s all about human capital. It’s more important than any titles or any other achievement. That’s what we love about industry.
[00:05:07] Sarah: And that’s what we love about you, the fact that you’re bringing the guest to the forefront. So when we first met you, we were on a Zoom call several months back, and we didn’t know what to expect. We knew that you were a prominent figure in our industry. But right off the bat, we understood your deep passion for quality.
And I want to kick off this conversation with that topic of quality. Annette and I preach it all the time here on the podcast, but I know that you’ve done some deep work. You’ve talked with a lot of prominent people in this industry. Where we are today after the pandemic, drivable destinations were really hot, and now here we are going to be normalizing, especially here in the States.
But let’s talk about quality. How important is quality to you? What are you seeing? Because I know you also oversee a lot of businesses, in your consultancy, and I know that it’s an important topic for you. Let’s start there.
[00:05:55] Simon: Yeah, absolutely. It’s a big term, and I don’t want to demoralize anybody, but I think we still have a lot of– I actually don’t want to talk about quality just an independent or single word. I want to talk about product consistency. It could be extremely high quality, and for other people, absolutely no quality at all because you have to go downstairs to go to the bathroom or whatever it might be.
So the question is, what is quality? Quality can be different to many different people, right? And depends on what you need, what you’re looking for, what’s your definition of quality. A treehouse, could be extremely high quality and for other people, absolutely no quality at all, because you have to go downstairs to go to the bathroom or whatever it might be.
So, definition of quality is an issue here that I would rather name consistency of product, and I think one thing that we have to do a lot more work in vacation rental, it’s getting better over time, is providing a better consistency of product. And consistency of product has many different facets. Guest experience, guest communication, the interiors, the houses, the quality of services we deliver, the quality of bed linen, anything that has got to do with the stay has to have better consistency so the guest has similar experiences all the time.
Because one thing we need to remember is we’re not differentiating ourselves by the brands. We’re actually differentiating ourselves by the product consistency that we deliver to the customer that goes to the short-term rental.
And that’s one thing that I always talk about in especially at conference, is to say, we can’t afford not to deliver a consistent experience or product because everybody else suffers from it. So if somebody had a bad experience in short-term rental, everybody else suffers from it.
It’s not about a bad experience with brand XYZ, it’s a bad day. I did a rental and it was horrible. Does that mean that everybody else is horrible too? And I think that’s something we need to be mindful. And this is the hardest thing to do in our industry, deliver consistent product. Why? Because at large we still depend on individual homeowners to deliver us good properties with good interiors, good furniture, good decorations.
If you don’t obviously owner manage, then you know as large, let’s remember 95% of supply is individually owned, which means we need to deal with what we get. And to deliver a consistent product to our guests is a massive challenge, but absolutely paramount if we want to compete with other hospitality vertical.
[00:08:33] Annette: So we have thousands of people listening to this show. That could be potentially tens of thousands of homes, but will definitely be tens of thousands of stays. What can you offer our audience of how our audience, we can be consistent? What are some tangible things that they could do today to make sure that all of us that are a part of our Thanks for Visiting community are giving that consistency? What are some marks that you think that we could do immediately?
[00:08:58] Simon: Well, if you’re a rental manager with multiple properties, the first thing I would recommend to deliver consistency is go and sleep in your own properties. And this sounds so simple, and I say that all the time. When you run a property management company, make sure that all your staff are spending at least one holiday a year in one of the properties.
And negotiate terms with your homeowners that you’re allowed to use it for company use so you can actually start experiencing the product because then you know when you get out of the shower with red hair that the hair dryer is crap, right? Because you can’t dry yourself because the cord is not long enough or the mirror is at the wrong place. And then you need to iron something because you need to go to work and there’s no iron board.
And believe it or not it’s going to rain outside. Well, good luck in finding that umbrella. This already helps to deliver a consistent product. I’m amazed that products are so inconsistent when it comes to the basic needs of a stay. And we don’t have about fancy stuff, amenities and branded soaps and all this stuff that’s already sort of champion league in vacation rental.
Let’s get the basics right and I think the consistency will be driven if you experience your own product and make sure like a catalog of what is a basic requirement for a vacation rental company property like number of glasses, forks, and knives and things like that. And I’m still amazed that even these basics are not met, and that’s when we talk about product consistency.
Sometimes you have a kitchen that allows you to do, um, a 10 meal course and you have everything that you need and other times you have kitchen with a knife that wouldn’t even kill a dead dog, right? So that’s something that we’re aiming very high, but we still need to work on the basics. Use your properties and see what’s missing.
[00:10:45] Annette: Okay. That is a challenge I want to put out to all of our listeners. It’s the beginning of the year and guarantee– Um, and Sarah and I will take ourselves up on this challenge. Go stay on your property and if not you, someone on your team.
I think that every single one of us would find a handful of things that need to be either improved or repaired, and that will impact every future stay at your home. So, listeners, please take that. If you stop listening to the episode right now, but you shouldn’t, that’s the one thing I want you to take away is please spend at least one evening, shower, cook, all the things in your home, and that will offer consistency across the board for all of us.
Because if we’re all doing, the compound effect of all of us staying in our property will be invaluable. So Simon, we’re going to put that challenge out. So, listeners, if you do that and you notice some things, email us and let us know and make sure that we get that back to Simon. All right, so what’s next?
In regards to consistency and quality, or how do we get better? One thing that is interesting, I’ve had a lot of debates just recently actually to think about when we look at the tech landscape and see where a lot of investments are now happening, it’s all about guest experience, so being capable of delivering a solid, consistent, seamless guest experience. And we all believe that technology will take care of that.
[00:11:59] Simon: This is total nonsense because one thing, when you look at the hospitality industry, the hotel industry, I love the hotel industry. I love it. And they need to get better at it. The dinosaurs, [inaudible]. I’m currently reading an excellent book, which I would absolutely recommend to you all your listeners. It’s called Excellence Wins from Horst Schulze, chairman and CEO of Ritz Carlton.
Interesting enough, a very dear friend of mine, Andrea Stingio Jiomani, he’s the CEO from [inaudible]. He actually sent that book to me by, by Amazon as a present, which I love, and I’ve read it within like three days. So, and this brings it to the point, the human capital to deliver solid experience is far more important than technology. Technology will help us to enable to create standards with door locks, with check in, checkout processes, etc.
But the smile on the face will not be replaced by tech. And while we’re trying to make these business as less interactive as possible, we should think about what does our guests want. Is that the right way to go about it? And in the hotels, the human capital of the service is paramount because you have far more interactions obviously in a hotel than you have in a rental.
But we, in vacation rental, we sort of get that human capital piece. Yes, we need cleaners, we need, uh, maintenance, we need salespeople, but customer service, resolving challenges, problems, defects, etc., etc., even though that they’re happening in remote, they’re so important.
We should do more in training our staff, setting brand standards. Hotels are all about brand standards. What is this brand standing for? What for you is a good complaint handling? Within an hour? Within a two hour? Does that end up in a good review afterwards? Do we take the review seriously enough? Do we have the processes for them to come back down again?
How do we train staff? Who is out there? In vacation rental, who offers customer service training at a level of a five-star hotel? We all talk about tech, but the human capital gets forgotten. I think that’s where we have a lot of opportunities to increase that consistency and that product quality by having everybody understand what a good delivery is. And a smile is the cheapest thing you can provide.
[00:14:20] Sarah: It’s so simple and it’s so basic, but it– like, you’re right, it is paramount, Simon. And I know we’re going to get on our soapbox a little bit here. But Annette and I, we continue to be frustrated by some of the content that’s shared out there. It’s all about the acquisition for some people. It’s all about how to get the home, how to get the owner, how to get the contract, and then it stops.
It’s like, it’s not sexy to talk about that next step. It’s not fun to talk about how to create brand standards. What brand standards are important to nail down? What do you think is at stake if we don’t, as an industry, come together and dial this in so that we can continue to have the trust of the traveler?
[00:15:04] Sarah: I mean, how do we get our listeners fired up enough to know that we need everyone to be on the same page when it comes to demanding our fellow short-term rental owners and operators and partners, that we all are in this together. What do you think’s at stake right now?
[00:15:19] Simon: Well, commoditization is the biggest risk, commoditization and standardization. But we’re far away from that, so I don’t think we have to worry about it. Is this short-term rental, vacational rental industry ever going to be commoditized like a married or a Hilton brand maiden is?
Probably not, because we still have individual properties that we manage. They’re all different. They look different, architects, different interior designs, house apartments, all shapes and sizes and forms. Why do people like vacation rental? Because of the convenience of many different things.
Traveling with family, traveling with friends and location is very important, all the amenities around, the swimming pool, lots of space, privacy, safety, security. I mean, there’s so many things that I can think about that still makes us unique and we need to cherish those. And I think that’s one thing that is very important.
On the other side– you’ve mentioned it before, we need to also think about the properties. And I see property owners and guests, by the way, equal of importance. And that’s one thing we have all the time when we go and consult property management companies we’re working with and we have all size and shapes of property managers that we’re working with as well.
And one thing that I always ask and one of my first question is, would you consider your company to be customer– a guest focused or owner focused? And in 99% it’s either or. Nobody tells me, we’re 100% balanced. We treat the guests and the owners in equal important. That needs to change. That is exactly what is needed.
In good times, properties are very important because you can’t get enough because demand is up too. But when all of a sudden the guests are not coming, well, you need to come back to you. And we always tend to forget that. So we need to be in the balance of how we’re structuring focusing our business.
The homeowner is equally important then to the guests. Obviously, with the exception, if you’re owner operator and you own all your assets, then of course it’s the different aspects. But the large majority of vacation rental globally, 95% plus is guests and homeowners. And one thing that we are not doing well, and you just said that before, which I found very interesting, we sort of get that owner to the signature and then we need to think about what is next and how do you stay, a unique and commoditized and standard.
But that’s not done there. The homeowner also wants to be part of that journey. He wants to be part of what’s going on as well. And when we ask property managers, what is your biggest challenge out there? They’ll say, well, dealing with homeowners. Well, we need to think about that. Yeah. It’s all their own costs. If you give your own cost to somebody to manage, of course, it’s challenging. But one thing we need to get better at towards the homeowner is our value proposition.
And that’s something I criticize in the industry for years. We’re not doing a good job in communicating our value proposition to a homeowner. The average homeowner has no idea how much hard work, dedication, sweat, blood, and tears go into running a property management company. They just see, well, you take X amount of commission. That’s too expensive. I can do it with an OTA a lot cheaper.
Well, excuse me, sir, who cleans the toilet? Who receives the guests at 3:00 in the morning? Who deal with broken pipes and damages and all that? There’s so much work. We should be proud of what we’re doing. Being proud of managing properties. And if you think about it, and we talked about this already two years ago, we’re actually not property managers. We are asset managers. That’s what we’re because we’re managing assets.
So think about if you manage an asset, what other things are already becoming extremely important? Because then you can say to your homeowner, hey, by the way, if we throw in a jacuzzi into the backyard, we make another200 ADRs or whatever. So we start engaging the homeowner into the conversation. So it’s not all about guests, it’s very much about the homeowner as well.
[00:19:18] Sarah: I am obsessed with that viewpoint.
[00:19:20] Annette: The asset management.
The asset management, yes. That’s a mind blown statement too. And we’re going to share that with other people and give you all the credit, Simon. But you’re right, it’s involving the owner too and not getting defensive.
[00:19:30] Sarah: And Simon, I want to bring this up too. So a lot of our listeners, they’re owner operators too. And then they often get into property management because they’re so good at what they do and they really fall in love with what they do and then they start doing it for others. But one thing I see too is these owner operators don’t treat themselves like if they were their own client in terms of really dialing in how the month went, what was our ADR, what was our occupancy, what are our goals this year? And really treating their home like the business it is.
Do you work with a lot of owner operators maybe who own more than one property and are really wanting to take the next level in their own asset management? And how can they do a better job of helping themselves and their own assets? Is it as simple as maybe just treating themselves as if they were a client or a third party, or what do you see there in your consultancy?
[00:20:18] Simon: Yeah, absolutely. I mean, owner operating is becoming more and more popular. But before I go deeper into that answer, I would also remark here as inflation is rising and as interest rates are rising, owner operating models are also under massive risk and can change again very, very rapidly. I’m a dinosaur. I’ve been in vacation rentals since 2005. I’ve seen a few crisis over the past.
And one thing that I remember extremely well was 2008financial crisis. I can assure you, owner operators disappeared, all of them. So we need to be extremely mindful of that business model, going forward as well. In good times, great gold mining time. In bad times, down very fast. So if it’s not managing somebody else’s assets, and so that already has a certain risk to it.
So you need to be a risk averse and you need to also understand your risk profile and therefore all the questions you need to ask yourself as an owner operator will also help you how do you run this business, in terms of an asset. And I think one thing I would see more dangers in the owner operating model is that we are commoditizing what we’re offering to our guests in terms of types, how do we furnish standard quick, and easy? Are there differentiators in terms of how you do interior designs, etc., etc. And what drives ADR?
What are, like if you do revenue management, obviously, you need to do a lot of revenue management. You need to consume a lot of data. You need to consume hotel data. You need to understand which amenity can potentially drive better returns on your asset. And this is not just a comp set from your revenue management tool that shows to you vacation rental XYZ is this much. And I think that there’s a lot more to it if you’re an owner operator, to actually go deep into data, understand the value drivers that you have, where you can make impact.
But then you also need to understand your cost drivers and everything else in order to optimize your margin. And yeah, you probably run your business a little bit different if you’re an owner operator versus a, a classical property manager, and I think you would have lot more data driven. Doesn’t mean the others don’t have to be, and very much you need to have models in place that you know what are levers that will have an impact on ADR occupancy because– and RevPAR, because that’s something that might have a different correlation. Because all of a sudden you might be better off just renting for a certain period of time instead of the full year because the others are less profitable, doesn’t make profit at all.
So I think there’s a lot we have to look into. And while you drive the cost of your own assets, you can also be more aware of what can you do, what you do to reduce fuel and electricity consumption? You can introduce sensors for your air conditioning so it turns off automatically when people leave.
I mean, energy is becoming a massive cost to our industry, and if I would be an owner operator, especially in Europe and energy costs, energy consumption, that will have a definite impact on my P&L. So I’ll make sure I want to save electricity. Labor is another one. What is best? To have an external laundry? Internal laundry?
Is it better to have internal cleaning people? Is it external? Is it a mixture of both? All these aspects in relation to the operation will become important to think about as an owner operator while you’re managing your own asset. Needless to say, it also applies to property manager, obviously, but there’s a few different levels of what you can influence also towards homeowners in terms of type of rent and how much rent you have, and when you have availability as well, which you cannot always control by if the asset is owned by somebody else.
AD MARKER If you don’t mind sharing with us, I want to go back to 2008 for a second.
[00:24:08] Sarah: Yes, me too.
[00:24:09] Annette: And you said that a lot of the owner operators disappeared. Were they selling their assets off? Were they too risky? Can you talk about what you saw there? Was it like just these vacation rentals one after one after one, like the inventory completely reduced? I feel like we’re starting to–Sarah and I, we get a lot of emails, DMs from people that are like, oh my gosh, like is the market turning? I’m not getting the reservations that I used to get. I don’t know if this is making sense anymore. So what happened in 2008? Can you take us back there and what you saw with the owner operator?
[00:24:42] Simon: I mean, maybe I need to specify a little bit. So first of all, I can talk about Europe and talk about US.
[00:24:48] Annette: That’s okay.
[00:24:48] Simon: At the time, I was running Intrahomes as the CEO. And I was more like– actually it was interesting. So owner operator as a business as such didn’t exist at that time. The only thing I make in comparison, if we would’ve had owner operators in 2008, they would’ve all disappeared because they wouldn’t have been able to sell their assets because they wouldn’t have been even able to serve their debt. So the banks would’ve sold them on their behalf. So it would’ve been going a lot faster than that.
So what happened was the real estate market devalued massive. So you had a ton of– especially Spain was one of the most affected. Many second homes by people who live in Germany, Switzerland, England would have houses in Spain, and real estate prices have gone through the roof, and we’ve seen the same in the United States. We see how challenging it for large real estate investment firms to find good properties that provide you with good return of investment, very, very difficult.
So while the market is inflated, when a crisis like that happens, interest rates goes through the roof, valuations will drop, the buyer market is over. So you sit on these assets that you still need to rent at a higher rate, but the market is flooded with supply. So one thing that happened when we were running into home at a time, we had Spanish banks who set on thousands of villas that people couldn’t pay anymore their mortgages and they had to sell them.
So the banks came to us the entire holiday apartment blocks and said, please take it off our hands and at least create some rent while we’re trying to find a buyer at the time. So the market just turned totally upside down. So while real estate prices are overheated and now, interest rates are going to go up and what you do if you can’t serve your debt anymore, well, the bank will liquidate your property.
So, I mean, this is the devil on the wall, of course, but we need to be mindful of that. And one thing I would highly suggest to owner operators is to think, okay, how far can I go? That I can still run a profitable business. Labor costs becoming more expensive. We see inflations. Interest rates go up, so all that goes actually against my operating expense.
Now, at the moment, we can say, well, demand is still super high. Do we remember what happened in March, 2020 when the big OTAs decided to turn the tab off and refund all the guests instead of the owners? I mean, all the master lease arbitrage companies went out of business with exception of Saunder because they raise capital at the right moment.
So we’ve seen it before what can happen. If it’s master lease arbitrage or owner operator, same thing. Huge risks. And I would think about, am I capable with my business model to afford to charge eight, nine, 10% interest rates and still have a profit rate? So you need to stress test on your business what is doable and what is not doable to define your strategy.
[00:27:45] Annette: Ooh, I love that, stress test. We might steal that from–
[00:27:49] Sarah: Stealing it–
[00:27:49] Annette: We’re going to steal some–
[00:27:50] Sarah: We’ll steal–
[00:27:51] Annette: from our mentor. That’s what we’re going to say.
[00:27:53] Sarah: No, but you’re not wrong. And again, as I go back to this– being a conversation that I want to see more that, you’re right. Whether it’s an arbitrage or owner operator is yes, you’ve got the property. That’s wonderful. Have you done any forecasting? Do you know what’s ahead? What can you withstand? We are seeing different occupancies than we were last year. When did you buy the property and on what numbers did you run? Where did you need to hit? Yeah, sitting down and running those numbers and really looking at your operations and I just don’t– people aren’t doing that.
And then they just get kind of like the world is falling syndrome. You know what I mean? Like everything’s, I don’t know what to do. There’s no guests here. But then you ask them about what they’re doing to get guests, which leads me to the next thing I want to talk about with you, because I know you’re very passionate about it and it is, reducing our industry to the Kleenex or to the Hoover vacuum. What do you mean when you say that?
[00:28:49] Simon: I love it. Before I go there, I want to say one additional thing. It still puzzles me. So we talked about interest rates, the risk in businesses, etc., on the supply side. But let’s one second think about demand side. It’s still puzzles me in a great deal people are building their sole business on a company based out of San Francisco.
This for me is absolutely crazy. Okay. I would never invest into a property management company that has one demand generation channel. And in the best case is two. The other one is based somewhere in Seattle. So having these two companies as your demand generation channel, that is not, excuse my word, sexy at all because that– what happens if one of them will, whatever happens, regulatory impact. Something that I urge when people do about stress test, you need to have from a demand generation standpoint, you need to have as many eggs and different baskets as you possibly can and do multichannel distribution because one channel to create all your demand and your success, that’s not a sustainable business model.
So this leads exactly to the question about the Kleenex, because that company that we’re talking about, and I’ll not say the brand, has made it happen, that we have been reduced to glorified cleaning people. And don’t get me wrong, cleaners do an incredible job. We can’t do without them. And we need to be very, very, very mindful of them.
So this is why this company has now made it possible for people to say, hey, where did you go on vacation? And then they will say that word and it’s say, well, like how often did Brancheski clean toilets? I don’t know exactly how many. It probably wouldn’t be too many. So for me, we can’t accept that.
Property managers are the ones who are doing the hard yards. They’re the ones who make sure the property’s there, the product is consistent, guest experience is amazing, everybody’s happy. People come home with [inaudible], holiday and then you asked them, hey, what did you do for vacation? Well, we did– what did you do? Who was actually your property manager? Uh, I don’t know. I I know where I booked it, but I don’t know actually, who made sure my bed was nice and it was smell beautiful. The linen was great. It was clean. I had great sharp kitchens knifes. I had a wonderful pool. The family had a great time.
So this company made it happen, and I have a lot of respect for that company, don’t get me wrong. Massive brand marketing, absolutely amazing. Unfortunately, we have become too lazy to– because somebody else is doing the demand work that we just say, okay, well it’s coming, so why should I worry about it?
And that has now taken over and now being reduced of just cleaning properties. But actually we should be proud of what we do as an industry and not being dependent on a company that brings all the demand that now we’re being reduced to that brand.
What if one of our listeners though today is only on one of the OTAs? I will say it. What if they are just on Airbnb or Vrbo? What would you suggest? Today they’re listening to this. They’re like, that was a gut check, what you just said to them. Oh my gosh, all of my reservations are coming from one place. How can they start? What would you advise them to do today to start to get those direct bookings? To not have all their eggs in one basket? What could be your advice, their takeaway, that they could doing today?
[00:32:30] Simon: Absolutely. That’s the whole idea. We need to create value. And one thing you guys and us have in common, we want to professionalize vacation rental. That’s what we’re passionate about 24/7. We want vacation rental to be the most respected travel vertical in the world. That’s our ambition.
I met Brian Sharples, the founder of HomeAway in 2005. I asked him, what’s your mission when nobody knew what HomeAway was? And he says, I want to build a respectable travel vertical. And since then, we were friends. 2005, vacation rental was on the level of a type ware party. So we’ve come a long way in professionalizing this industry, and we still have a long way to come.
And one is the distribution strategy. Yes. That question is asked. So for me, it’s part of the risk profile. Where is my supply coming from? Where is my demand coming from? If the demand patterns all of a sudden change, when all of a sudden the Asians coming back, well, who is going to get you those?
Now who can help you to balance your demand generation, if it’s not just one channel? So what I’m telling to these people is to think about, first of all– that’s one of my first questions when we consult people, how does your distribution make look like? How many bookings are coming from which channel? How many do you do direct? How many do you do from Airbnb, Booking, Vrbo, you name them, and others. Method search. How many reservations are coming from Google? Who out there works with Google Homes?
They’re going to come and they’re doing a lot of work right now, Google. And actually we’re working very closely with the team to– and I see they have massive opportunities to come into this market as well.
Google Flights is well established. Google Hotel ads well established. Google Homes will be there too. So I’m not saying it is wrong. What I’m saying is it is super risky. So think about it and say, okay, what alternatives do I have? What other channels are out there? In how many different baskets can I put my demand strategy?
There are unique channels out there, niche channels, we call them. If you are in a leisure destination in Florida, for example, close to golf course, we’ll make sure your properties are listed on some of these niche sites that are made for golfers or on niche sites that are made for pet owners or, I mean, there’s even niche sites for people who like to smoke dope, like Airbnb.
[00:34:56] Sarah: There are, yes.
[00:34:58] Simon: So you can lease properties on Airbnb if you welcome mag, cannabis consumers. I mean, that’s incredible. There’s a lot of different alternatives out there. Do you work with college game organizers who bring demand as well? There’s so many different– it’s not just direct bookings because that’s the hardest part.
Let us remember in 2019, Booking.com and Expedia, both together spent 12 billion on Google. So building a direct brand is a bit of a challenge. But for me, building a direct brand is a commitment in your strategy and takes years. But it’s definitely worth doing. But it’s not a work in the park.
[00:35:33] Sarah: I don’t know if you know this, Simon. You probably do, but your company just sent out a wonderful email that actually shows all the really wonderful different channel distributions and technology that’s out there. And it is a colorful document. And I mean that, and there’s all these different logos and brands.
Annette and I pride ourselves on keeping up with the industry and there were so many on there that I had never heard of. And so I don’t know, Simon, if we can work a way for us to like link to it or something in the show notes, but it was one of those valuable emails I’ve gotten in a long time. And obviously your company sees the value in exposing our industry to all the new technology companies and channel distributions and just different ways to diversify ourselves as an industry. Do you want to talk about that email a little bit because it, blew me away?
[00:36:19] Simon: Oh yeah. I mean, you made my day. I love you forever. Right. I said we have a team meeting today in Barcelona. So we’re all here in Barcelona right now where our office is. And I said literally an hour ago, this technology landscape was the biggest event that AJL has ever done.
So we had 23,000 views on LinkedIn. It went totally haywire, and I knew it’s going to go that way because we’ve been asked about this for years. And I’ve had roles in my previous life at PhocusWright where we looked at many different landscape slides. In every tech vertical you see these slides, but in our industry, the tech landscape never ever anybody did something in the same breadth and depth that we did it.
And I wanted to do it for a time, for a long time. It’s a lot of work. It’s 410 tech companies on there categorized in 22 subcategories on technology. So navigating technology in our industry is brutal for a PM, like how much technology do I need? What is an over kill? Guest experience is the most crowded space. We see consolidation in the PMS front. We see hospitality companies from the PMS coming in, so I could talk for hours on this slide.
The idea that we have behind it was manyfold. First, we wanted to have every company in the vacation rental industry to use that slide in their pitch deck, to their investors, etc. We want all the investors to look at it. We want all the tech companies to look at it because then they now know who else is out there, who they can partner with. And we will see M&A opportunities coming out of that.
So this slide has changed AJL literally in terms of reach and the way we can position ourselves as a thought leader in creating business intelligence on vacation rental overnight. So we have a lot of passion about this, and we’re actually in the process of thinking to do the same about the property management side as well.
No, It was– it was good.
[00:38:07] Annette: We’ll make sure to link that there. As we wrap up this episode, Simon, I want to kind of go back to our pre-conversation before we hit record and let’s just talk about the toaster. I want to go through a couple of spots for our listeners too, that they can take a look at their property when they’re doing their overnight stay
[00:38:24] Simon: Yeah, I thought our conversation was quite engaged, but it sort of became very technical. So to close it a little bit more on a human front is definitely not something wrong. And as I said at the beginning, human capital remains the most important capital in our industry. And we talked about standards and product standards as well.
And when we talk about basic standards as well– in 2005, just a little anecdote, when I got contacted by Head Hunter saying, are you interested to become the CEO of the one of the largest property management companies in the world? I said, you must be out of your mind because the perception at the time was sticky, bad, smelling apartments in the ski fields, carpet that haven’t been cleaned for 30 years, the couch is gray. Like really bad guessing, like big bad spirit that was rental at the time.
Vacation rental is very old in Europe and very well established. And now fast forward, we still work on some of the basics. So one thing that I’ve sort of became, whenever I stay in customer properties of our, I would only rent anyway with my family, I sort of have a Simon Lehmann checklist of stuff, and I always say I find at least five to 10 things that I believe are not in order.
And one is the toaster. So I always go and turn a toaster upside down and trust me in 99% cases, the crumbs from the previous guests fall out the toaster. Then I go and check out the dishwashing filter. You can see the breakfast that the customers have reported and checked out. And then you go and not try to commit suicide, but go to the knives and see what you can do with these knives.
Apart from maybe hurting your finger, you can’t do anything with these knives. They won’t even chop a tomato. So that’s another issue. And then there’s many more. Fluff in the drier. And I always make fun of that. So I had, once I was visiting a luxury rental company in Colorado, who has ultra properties and, they already knew– and I was staying in this massive mansions, like a six bedroom with a Jacuzzi. The master bedroom was as big as my own house. It was crazy, huge. And I was in this house on my own. I arrived someday, so I had enough time to take this place to find something.
And I was literally taking this place apart. And the next morning I came to the boardroom, everybody waiting, smiling, did you find something? And uh, they looked at me, as in, no, he didn’t. And then I put my hand in the pocket and I reached out and I got a capsule from the espresso machine out of the coffee machine. It’s the only thing I found.
So basically the espresso capsule was still in there from the previous guest because it was not open where the capsule falls out, because obviously you get the coffee when it’s closed. So I find an espresso capsule. So between finding only an espresso capsule and not a single hair in a six bedroom home all the way to really disastrous properties is, we have a long way to go.
[00:41:19] Sarah: Wow. All right, listeners, the challenge has been set and we expect all of you to meet Simon where he’s at.
[00:41:26] Annette: I mean, the toaster check. I’m going to have to do some– we’re going to do some content on that too.
[00:41:30] Sarah: I also want to– that makes me think of my cleaner, who deserves all the shoutouts as that’s the first thing she does is turn that toaster upside down and it’s when you’ve got a good cleaning team who really cares about those details.
[00:41:41] Annette: Or if you’re like, I like bedroom.
[00:41:42] Simon: I mean, if you dare make a fried egg with one of the pans that you find, good luck to get it out.
[00:41:47] Annette: Oh my goodness. Simon, where can our listeners learn more from you, learn more about you and your organization? What’s the best place for them to follow along on all the amazing work that you’re doing?
[00:41:59] Simon: Absolutely. Thank you so much for asking. So obviously my name Simon Lehmann on LinkedIn is one and then AJL Atelier. We have our own website. It’s very simple. It’s ajlatelier.com. I’m sure we can make that visible somewhere. Nobody knows about French spelling as well. Be complicated. And, uh, obviously simon.lemman@ajlatelier you’ll find team on LinkedIn and on our own website and come to conferences. We’re literally at every single conference with one of our team members, either speaking, moderating, or being part of the crowd. So, uh, yeah, we’re all over there.
[00:42:35] Sarah: Thank you for all the work you do for showing up all the places and not being afraid to say the things that we’re all thinking. We really appreciate all the work that you’re doing, Simon. With that, my name is Sarah Karakaian.
[00:42:47] Annette: I’m Annette Grant, and together we are–
[00:42:48] Both Sarah & Annette: Thanks Visiting.
[00:42:49] Annette: We’ll talk to you next time.
