Welcome to Short-Term Rental Riches.

We’ll discuss investing in real estate, but with a specific focus on short-term rentals.

Quick, actionable items to acquire, manage and scale your portfolio.

I’m your host, Tim Hubbard.

Welcome back, everyone, to the Short-Term Rental Riches podcast.

I’m really happy you’re here again, and I’m really happy to be seated virtually with our guest today, Marcus Rader.

He is the CEO and co-founder of HostAway, a program I’m sure you’ve heard us mention on the channel before if you’ve been tuning in over the years, because we do use it ourselves, and we’ve been very happy with it.

And they’re doing some really big things.

So, HostAway is a all-in-one vacation rental management software.

I often refer to those types of programs as PMS software.

They have preferred relationships with Airbnb, VRBO, and booking.com, which I know is not easy to do.

They have an integrated marketplace of over 200 different applications to integrate with HostAway.

And they just raised $365 million if I got it right.

So, really excited to have you on the show today.

Welcome, Marcus.

Well, thank you very much for having me.

A great sales pitch there.

I don’t need to do any introductions, it seems.

Yeah, for anyone in our audience that’s been in for a while, they know that I love software.

I used to work for a software company, and it’s something that we use, we take advantage of, and we always want to be using the leading software.

So, we’ve been using HostAway for several years now, and the growth has been awesome.

The changes have been awesome.

Why don’t we start off with, how do you define a PMS software, or how do you define HostAway?

Really good question.

So, I mentor a lot of startups and software as well, but it’s the same in pretty much every business.

Either you do something that hundreds or thousands have done before you.

Like, if you open up a bakery or a nail salon, you don’t need to reinvent the wheel.

You can just look at what others have done.

But if you want to start software, copying what others are doing means that you’re going to be behind.

So it’s going to be really hard to get ahead.

You need to do something differently.

And often there’s a problem and a solution of it.

And I spent six years of my life trying to be fine for myself, for our staff, for our customers, and for potential investors.

What is the real problem that we’re solving?

What is the real problem that people are having that they need to pay money to solve?

And it was a tricky question, because our solution or any software in the vacation rental space actually solves a ton of different problems, whether it’s synchronizing calendars or automating tasks and messages, connecting to IoT or doing your accounting or managing your staff or providing a better guest experience, driving direct bookings.

There’s a ton of problems and there’s all of these solutions.

It was after six years I finally figured out what the real problem of a lot of people is, that they just want a really good vacation rental software.

They want a software to run their business on.

And when I figured that out, that the problem is that simple, that they’re actually looking for a software, our solution became a lot simpler.

Because we didn’t have to say, we’re the best task automizer and channel synchronizer and time saver and money increase.

Instead, we just said, well, we’re the best vacation rental software.

And suddenly, we started growing like crazy.

So that’s what we are.

We’re a vacation rental software.

And if you’re running a vacation rental business, you’re going to need a software.

Hopefully, it’s us.

But you’re going to need a software for a lot of different things.

And that’s what a good vacation rental software can do for you.

Yeah, that’s exactly right.

There’s all of these challenges running a short-term rental or vacation rental, literally dozens and dozens of them.

And so, you guys have done an excellent job.

And what would you say to someone out there today?

I started personally a little over a decade ago with short-term rentals, and the technology we have today was not available back then.

Automated locks were just becoming more common.

What would you say today to someone that is starting a short-term rental, or maybe they have a few but hasn’t adopted technology, or a PMS system, a vacation rental software system, like HostAway?

I would say that it’s very important.

I just checked with a friend.

I got 176 reviews now as a guest on Airbnb, and most of those have come in the last couple of years.

But it’s very important to stay up to date with the consumer trends, because when tech changes happen, quite often, they’re in the background.

It’s something that big businesses do, because they are the first ones who can afford it, and then later smaller businesses can afford it.

And only at the last stage does it actually reach the consumer.

A good example here is supermarkets that have been using computers to manage their inventory and decide which products to put on shelves for decades.

But it’s only now that we’re starting to see the actual price tag becoming a computer that can change depending on supply and demand.

And the same thing goes for vacation rentals.

So even though technology has been around for a while, the actual guests or visitors haven’t seen that much technology yet.

But now it’s starting to come out.

Now there are expectations by the guests that things work a certain way, that you know where to find the Wi-Fi, that you know how to open the door using a smart lock, the last-for-digit cell phone number, in case you need to put down a security deposit or in case you’re in a location that requires that you gather the ID of the guest, you need to make sure that process is as smooth as it is with your competitors.

And I would say that the technology doesn’t even matter to the guest.

What matters is that first impression.

So, if it’s someone who is used to doing things in a certain way, let’s compare this to hotels, where if you go on 10 plane trips and you check in to 10 hotels, pretty quickly learn that although they have their small differences, it’s pretty much the same routine.

But when you go check in to a vacation rental, you’ll find out that at least three out of those times, suddenly it’s all different.

Like you need to go, for one of them, and you need to go somewhere else to pick up the key.

And then for one of them, when you enter, the air conditioning is turned off and all the lights are off.

And you need to struggle to find the light switches and the air conditioning and wait five hours for it to work.

That’s not a uniform experience.

And this is where technology comes into play.

And you didn’t see it before if you didn’t use technology, because it was all in the back end.

It was the fact that they could answer messages faster than you could, maybe because you were asleep.

And now AI can answer messages for you.

But you didn’t notice that.

But now your guests are going to have a bad first impression when they enter the property, which means that any issues that you have in your property, and let’s face it, all properties have issues, at least for some guests.

They’re going to tell you about that.

They’re going to be more vocal.

Because if you give someone a good first impression, they’re going to be very forgiving about any issues.

But a bad first impression, then you’re going to have problems.

And this is where you need to make sure that the consumer-facing side of technology is there.

Otherwise, you will, quite frankly, get worse reviews.

It’s that simple.

Yeah, excellent points.

And that first impression is so important.

Often what we find in our own business is that if some step gets missed in that first impression, then that guest is often more likely to find the other faults with the property.

It’s almost like they’re looking for it if you missed a step there.

A super simple trick is just leave a bottle of champagne, even someone who doesn’t care for that.

When something unexpected happens, let’s say the washer breaks down, that’s not supposed to happen.

You had a thousand guests, the washer work just fine.

Now there’s this one guest who has just been on a long road trip and all their clothes are dirty.

At least they can enjoy that bottle.

And that will make sure that they still have a good experience and they still get that good review.

Yeah.

Great, Tim.

Well, awesome.

Yeah, there’s so much to jump into.

Why don’t we start with your recent fundraising?

And correct me if I’m wrong, but I believe you guys just raised $175 million not too long ago.

And so now with what you’ve just raised, you’ve raised over half a billion dollars.

Have I gotten that right?

Yeah, that’s correct.

Half a billion is a lot of money and also the valuation we got here is $925 million, which is not quite unicorn.

We’re 92.5% unicorn now.

Just wait a few months, we’ll be a unicorn.

And one of the questions that I often get from pretty much everyone is, what does it mean for our customers?

And I just wanted to share that these numbers don’t really mean anything.

They don’t mean much to me and they don’t mean much to an individual customer.

They don’t mean much to an individual employee.

But it does mean a couple of things that is good news for every property manager out there, whether they are a HostAway customer or not.

First of all, it’s one thing to go out and say, here’s a company that’s worth a billion dollars, but a completely different thing to put money behind that statement.

It’s whenever you have a business idea and you ask your friends, hey, would you buy this thing?

Everyone says yes, but then when you ask them for the money, suddenly there’s an excuse and they won’t give it.

Now, anyone can say this company is worth a billion dollar and then they put 10 million to prove it.

But to put down 365 million, that’s a massive amount of money and that’s testament to the fact that there were so many interested investors.

And as we know in the stock market and on the real estate market, opinions don’t matter.

Someone likes a house or they don’t like a house, that doesn’t matter.

The only thing that matters is what is the price of the house.

And not the asking price, the actual selling price.

Or when you rent out a house, how much do people actually pay to stay here per night?

That is the only thing that really matters in the end.

Same thing here.

Now, in order for us to have that kind of valuation, it essentially tells the entire business world and the entire world that this is a legitimate industry.

This is an industry that’s not a niche, it’s not something new or potentially up and coming.

No, this is an established industry with a growth forward, with a strong forward-looking growth trajectory.

What that means, in other words, is that if you are working in this industry, it is the right place at the right time.

Now is not the time to start thinking about whether we should replace horses with cars.

That was a hundred years ago.

But if you are working in anything related to short-term rentals, now is the right time.

And this is not the opinion of someone.

No, this is $365 million that proved that this is the right time.

So it’s really good news for the entire industry.

I agree.

It’s really exciting.

And I agree.

It’s really good timing to be in the industry.

Just a ton of opportunities still.

Well, maybe let’s dig into this a little bit further.

We know there’s a lot of money coming into the industry.

We know people are becoming more professional.

We know we have lots of great tools on the horizon, like AI, which I want to come back to AI.

But before we do, like where do you see us maybe not in three or five years, but where do you see the industry in like, and years from now?

This industry is just getting started.

There’s two sides of vacation rentals.

One of them is old and the other one is well, also old.

But I have two different angles that I’m looking at it.

One of them is tourism and travel.

And as we saw during COVID, suddenly that can change overnight and that can be very quick.

Or as you see, I think an easy metric is plane ticket prices.

Sometimes they’re super cheap, sometimes they’re ridiculously expensive.

And that’s something that comes in trends.

But overall, there are no clouds on the horizon.

There’s no reason why to believe that in the future, people will travel less.

So travel restrictions, maybe World War III, those would be legitimate reasons why people would choose to travel less.

Another reason could be consumer behavior.

There’s two things we know for sure in the world.

One is that old people are going to die and the children of today are going to grow up and become adults.

But for both of those things, there’s nothing implying that people would travel less in the future.

Now, the other aspect of it is the assets that most of our customers are managing, or even owning the real estate.

We are in a world where the real estate globally has increased in value faster than the income has gone up in the same amount of time.

As a result of that, there’s fewer people who have more properties, so to speak.

That’s simply not effective use of these assets.

Capitalism has a way of finding the most effective use for any asset.

I’ll give you a very real example.

I run a workshop with all of our new employees, and we have quite a few, so some of the new employees have been with us even a year before they get on the workshop.

And I asked, does anyone know anyone who has an Airbnb or a vacation rental?

And one of the new employees we have is in Rome, and she said, actually, my uncle rents out a place for students, but we were thinking about turning it into an Airbnb.

And the main reason for that is that in the summer, which is the top tourist season in Rome, it’s empty, because the students, they come in fall, and then they leave in spring, and then it’s empty for three months of the year.

And that’s a very good example of where these assets are not well allocated to be fully utilized.

And this is why the other side of the thing, the supply, I believe that there will be a lot more supply in the future of short-term rentals and vacation rentals, but also a lot more demand at the same time.

And this is why, and by the way, these, my statements now are backed up by $365 million.

That’s how other people believe in the same thing.

And they don’t believe it because I said it.

They did research before they even got to talk to me.

So yeah, that’s just how I see it.

That there’s really strong trends both on the supply and the demand side.

And if you’re anywhere in the middle, let’s say your property manager, you’re essentially getting a piece of that action.

And that’s really good news for you over the next 10 years.

Yeah, yeah, great points.

People will always be traveling, and the way society is living now has changed, right?

People are more mobile than ever, and I don’t see that slowing down either.

Like the ease with which we could work remotely or travel.

Yeah, that’s actually your…

You mentioned here earlier that you’re commuting between Brazil and Colombia, but you’re from the US.

I’m spending this winter in Miami, but I actually, I changed my home base from Toronto in Canada to Warsaw in Poland just last year.

But I’m still going to be here three months of the year.

I’ll probably be in France a couple of months of the year.

And that’s not because I’m a digital nomad.

I have a daughter and she goes to school, but we can arrange schools in different locations.

And there’s a growing number of people who are exactly like that.

We just hired, we have our Chief Operating Officer.

He’s an American who lives in Portugal.

We just hired our Sales Director.

He’s a British guy who works, who has lived over 10 years in Barcelona.

And that’s just a new norm.

We’re fully remote, so we meet a certain type of people.

But yeah, I agree that the way people see life has absolutely changed in the last 10 years.

Totally.

Yeah, we just brought someone on yesterday from Calgary originally, and now she’s living in Montenegro.

And it’s, yeah, it’s just, it’s like every day, it just becomes more and more the norm.

And it’s exciting.

I don’t want to go off on a tangent too far.

I’m guilty of doing that quite often.

But part of this living remotely and being able to travel easier than ever and staying in short-term rentals has created this little bit of a gap between what traditionally was a long-term rental and what now is a short-term rental, a medium-term rentals or however you want to describe them.

I know that we use most all the same software programs to manage those types of reservations as well.

It’s still really important to get all those pieces in place.

But what’s your thought or outlook on that space of the that segment of the market?

There’s really a lot of room for growth.

First of all, there’s no successful market places for mid-term stays so far.

I mean, yes, you can go on Airbnb, but the fact is that if you go there, you’ll often find that people haven’t enabled any monthly discounts.

So you have to manually ask.

And if you ask someone who’s, let’s say they’re asking 20,000 a month for a property, if you say, I want to rent it for three months, they’ll be more than happy to rent it for usually less than half of that, because that’s how much they would make.

It’s actually, you can do the math yourself.

Take the average occupancy times the average daily rate.

Let’s say they’re charging 300 a night.

That would be 9,000 a month, but they only rent out 50%.

So 4,500.

That’s how much you could expect if you want to rent 30 days.

Because that’s how much they can expect making on it by charging 300 a night.

But there’s no marketplaces.

And also it seems that there’s only one segment of the market that truly has figured out the needs of these travelers.

And those are the RBOs, rental by owners.

Actually, the house where I’m staying right now, the owners live three houses down the street, and they used to live in this house.

And that’s why I’ll give a very practical example.

One of my pet peeves is the kitchen knives.

I like cooking, and for that, you need proper knives.

But of course, in an Airbnb, there’s a lot of people who come who don’t know how to use knives, so they end up very dull.

And you can have a honing blade, actually a honing blade was missing from here, but that doesn’t really help if the knife is damaged.

What you need for that is a whetstone.

And one day my wife said to me, hey, did you notice here’s a whetstone?

So I spent 15 minutes on a Saturday morning just sharpening every single knife to perfection.

And that’s what you need for a long-term stay.

And many short-term places are simply not equipped for the needs of a long-term stay.

Another example is the mattresses.

There are mattresses where you can sleep for three nights or a week without developing health issues or without figuratively dying.

But you can’t spend a month in that mattress.

It’s that simple.

You can’t.

And I think the market and the industry is just in the early days of these mid-term stays.

Of course, from a property manager and owner point of view, they’re the dream case where you get higher revenue than long-term.

You don’t get the obligations of the long-term, but you don’t get the hassle of the short-term either.

So it’s supposed to be a win-win for everyone.

But the fact is that it’s just not common enough that the standards aren’t there.

It’s very much like renting on Airbnb 10 years ago or 15 years ago, when you never knew what to do.

That’s a great way to put it.

Yeah.

So we’re just waiting for the days to come.

Yeah, it’s a great way to put it.

And yeah, if you’re staying for over a month, those little things that might not be a big deal for two days become a bigger deal when you’re there for 30 plus.

For my own ease of mind, what I started doing, I just put in the budget a certain amount that I need to buy stuff.

Like, for example, if you’re near a beach, it would be nice to have a beach umbrella and beach chairs for the amount of guests that you have.

If you have two beach chairs, but there’s three of you, that doesn’t make sense.

But instead of being upset and complaining and bothering the host about it, I just put aside a budget and I order that stuff, and I leave it at the house and tell them, this is my gift, thanks for staying.

Because it’s a lot easier.

If you’re in a location where Amazon works like Miami, I was in Costa Rica two months last year, and there you couldn’t order anything, that was more difficult.

Yeah, that’s a great point.

We get free furniture a lot of times in our medium-term rentals as well.

Things that probably they should have been there in the first place, but it goes back to your point.

That’s a great way to put it.

It is kind of like Airbnb 10 years ago or something.

It’s not really that established and a lot of improvement in that area for sure to come.

Yeah, actually, the furniture is a great example where you got to really utilize the space.

I stayed a month on South Beach, Miami last year.

We had a beautiful two-bedroom loft in one of the boutique condos.

I don’t know why they call them boutique condos.

They should be called mid-rises.

And it had these balconies.

One of them was right next to the bedroom, and I love having my coffee outside if it’s a sunny day.

No chairs on the balcony, so I had to put a beach chair there, and it was pretty uncomfortable.

And if it was my place, I would furnish every area of the space the way I would like to live there for the rest of my life.

But this was clearly put together as someone who did, who probably lived there themselves, but just didn’t enjoy having coffee and watching the sunrise.

And that’s okay, but if you’re gonna be hosting a lot of people, then just imagine what do other people do, and how do they do it?

They probably do it differently than you.

Right.

I’ve dedicated years and hundreds of thousands of dollars through trial and error to figuring out how to manage my personal portfolio remotely.

And it wasn’t always easy, and it took a long time, but now my amazing team can professionally manage my properties without me.

And good news, our team can also manage yours.

Let us save you the stress and headaches and some money by offering you an industry low fee.

To find out more about partnering with us, head to strriches.com, hit the property management button, answer a couple quick questions, and meet with me personally.

That’s strriches.com.

Rest easy knowing that with my team, your properties will be in excellent hands.

We’ll see how things shape up.

I know you guys will be.

Obviously, this is on your drawing board as well.

And the OTAs and where we rent our properties is really, really important.

There’s been a lot of push or trends lately, going direct booking and a lot of good reason for that.

We have Google Vacation Rentals now, which I think is probably what should be in everyone’s list of channels that they’re marketing on.

How do you see?

And you guys are a Premiere host?

Or what’s it called when you guys have an excellent relationship basically with some of the bigger OTAs like Airbnb and VRBO?

Yeah, it’s called different things.

So, Verbo calls it Elite Plus, Airbnb calls it Premiere and booking.com.

No, booking.com calls it Premiere and and Verbo calls it something.

I forgot the name.

So, these OTAs, when they started out, well, Verbo started out a bit differently.

They essentially bought 50 different websites.

They bought Arbitel in France, they bought HomeAway in the US, and they started consolidating them into one platform.

And eventually that merged with Expedia, which was selling hotels and plane tickets and car rentals.

But Airbnb and booking.com, they both started with the same idea.

They’re going to monopolize an industry.

And eventually, because there were three big players, you can monopolize an industry for two players.

You can just divide the market.

You can say, hey, one takes North America, the other one Europe, and then we just split somewhere in Asia and call it day.

That’s cheaper for both parties involved, which is why maybe oligopolies aren’t great.

But when you’ve got three strong players, suddenly nobody has the power.

And what it means is that you have to compete in an open market, which is beneficial for us all.

What that means is that they can’t charge extraordinarily high prices from property managers.

And what it also means is that they have to actually compete on the service level as well and on the inventory.

And as a result of that, they need to make sure that they have access to inventory.

We happen to be a HostAway in a space where we have a lot of really good inventory.

And that’s essentially what these OTAs care about, that they can have a consumer go in on their site, and they get to book a place that is available, that has the correct price, and then provides a good service because they also want that review.

Airbnb wants every property on the platform to have a 5.0 review.

Because they would make more money that way.

So they really want hosts to have these 5.0 reviews.

And they measure the connection quality, availability of functionality.

I mentioned their discounts for monthly stays.

That would be one thing that they measure.

And then it’s our job to go out and educate the property managers.

That’s why I talk so much about what I think property managers should do.

There’s also a real incentive behind there.

I want them to be successful.

And I also want Airbnb, booking.com and Verba to be successful.

Because they are the ones who invest in this market in the first place.

If Airbnb didn’t exist, if booking.com didn’t spend, I think, 15% of their marketing budget on short-term rentals, our industry may not exist as we know it today.

We might not have a job.

So it’s very important to recognize that these companies should exist.

And yeah, we’re strong partners with them.

And we plan to keep it that way.

And especially the education piece is very important, where in order to provide a good guest experience, there’s only so much they can do.

I mean, Airbnb can go out and say, hey, make sure you clean the property.

Once you say that 10,000 times, the people that didn’t listen the first 10,000 times, they’re not going to listen later either.

And that’s why it’s, let’s say, easier to work with partners like us, because we can share the message from a different point of view.

We can, for example, share data that’s across all the platforms that show, hey, here are the amenities, here are the best practices, here are the tools you need to provide a better guest experience.

Yeah, a lot of good points there.

And I agree, really important to be on all the different channels for diversification.

The different channels also bring in different types of guests, so depending on what type of property you have, a lot of little intricacies there.

I could maybe add one comment on that.

The common misperception of property managers is that they tried a channel in one area and it didn’t work.

I think they don’t truly understand the business model of a two-sided marketplace.

So all these OTAs are a two-sided marketplace, and this is something that you can Google.

You know, you can read endless books and articles about two-sided marketplaces, but it’s really simple.

They need to get in the supply.

Those are the travelers, and they need to match it with the supply of the properties.

Now, the way they measure the success there is not actually with how many guests are staying or are they having a good time, because to bring in those travelers, they spend money advertising.

So they measure success where they get the best, the highest return on investment.

And that’s not necessarily the best location or the best rated property.

It might be that it’s actually fully dependent on the competition.

Because if you want to buy a Super Bowl ad, the price of that ad space doesn’t matter.

It doesn’t matter what you’re willing to pay.

You’re going to pay one dollar more than what anyone else is willing to pay.

That’s the price.

And it’s the same thing online.

If you want to pay Google AdWords, you’re going to pay one cent more than whatever the second best was willing to pay.

And that’s the way an auction works.

And what it means for a property manager is that if one OTA is great for you today, they bring in all the guests, and you’re in a certain area, could be that six months from now, yes, it brought in a lot of traffic, but it wasn’t as profitable as another region because of competition.

And suddenly, another OTA has swooped in and taken all the guests.

And that’s why you need to be on all the channels.

Because this will change over a period of time.

It’s a free market.

Yeah, excellent point.

We’re just another drop in the giant bucket and good to be diversified.

Let’s continue a little bit on just the property manager topic, because you guys list really well.

You talk with property managers all the time.

Your software is essential or software like yours is essential for property managers.

Is there something maybe that you’ve learned that you feel really strongly about in the property management world, but maybe most people haven’t really discovered it yet, or it’s like a contrarian belief right now?

Does anything come to mind?

So, one thing that was a bit frustrating for me, and that I think has really changed in the last couple of years, is the humbleness of the average property manager.

In order to build a good business, one key aspect is to recognize that you are no different than anyone else.

You are following the same…

Unless you invent a new game, you are going to be following the same rules as the other players in the same game.

As a result of that, you can either pretend that you are in your own league, and then you will eventually lose, or you accept that there are others out there who are better than you, and then you look at them and you follow their example.

What I’ve seen, I’ve seen a massive shift over the last, let’s say, five years where a lot of those people who used to think that they are unique, and they don’t need to learn from anyone, whatever other people did wrong, they don’t need to learn from their mistakes because they’re different somehow.

Those people are no longer in business, and the people who stayed, they are the people who are humble enough to admit that not only are they not unique, but there’s other people that do every single thing they can do, but better.

And the reason why they’re successful is not that they’re the best at everything in the world.

It’s just a combination, that they’re in the top 10% in this category, and maybe the top 1% in that category, and maybe they’re average in a third category.

But that’s good enough to win the market, because that’s all it takes.

And that’s what I’m very happy to see with property managers.

And I think a lot of property managers are quite exhausted because there’s been so many changes over the last decade in this space.

First, they come in different sequences, depending on the location, but regulation, rising interest rates, there was the COVID, which was either good or bad for business.

But if it was really good initially for business, suddenly turned against it when, for example, American tourists started going to Europe again, then suddenly there was a lot of empty places, competition on how that has changed.

A lot of property managers who have been in this business for more than five years, they really deserve a tap on their back.

They really need to open up a bottle of champagne and just relax a bit because they survived.

There’s so many that didn’t survive, and I’m just so happy every time I talk to our customers because they are the ones who made it.

It may not seem like a big victory, but keep in mind for every survivor, there’s hundreds that tried and failed.

Yeah.

It’s not an easy business.

It just isn’t.

There’s a lot of moving pieces, and we got to make sure we’re checking all the boxes.

On the hospitality front, on the property front, on the listing optimization front, on the revenue optimization, revenue management.

There’s a lot to learn and a lot to stay on top of.

And it’s changing so quickly, which can make it both challenging and good.

What would you say to someone out there that’s starting their first short-term rental?

Like, what do you think are their chances of success or competing or performing better than their immediate market versus that of like a professional property manager?

I think right now is actually a great time to enter this market because we saw for many years, we saw consolidation take place, meaning that if you grow your property management business to a certain size, let’s say 100 units and you become profitable, then you can sell your business to a bigger company that has 10,000 units.

But it turns out that business model wasn’t scalable after all.

And just to give an example, Vakasa, they had a valuation of 1.8 billion and they lost 90% of the value in a year on the stock market and then got acquired and now are being shut down.

And if a business is able to scale up from 1 unit to 10,000 to 100,000, that’s really bad for small businesses.

That’s like trying to be a book shop, bookstore in a small town and compete with Amazon, or trying to sell groceries in a small town and compete with Walmart.

It’s just, it’s going to be really hard.

But now what we’re seeing is that those big consolidation plays didn’t work out.

And the reason why they didn’t work is very simple.

To be successful in managing all the moving parts as property manager, you need local connections.

You need to be able…

There’s one test that I always mention that it’s funny how sometimes it turns out true, because just this Saturday, our washer broke here at the Airbnb.

If you can find a plumber who works Sundays, and he can actually come out to your place on a Sunday, yeah, then you can be a property manager in that area.

If you’re a company that has 37 offices, operates in several countries, has 10,000 homes, there is no plumber that will work for you.

But if you happen to call your brother-in-law, and his son is available, and he’s a good plumber, he’ll come over.

And that’s why the smaller property managers are mid-size, are currently winning the market, because they have what it takes.

The other interesting part is what I mentioned earlier.

It seems the only mid-term stays that are good are the ones where people actually have lived in themselves, or live in themselves.

The RBOs, people who own one or two properties, not the ones who own 40 properties, but the ones who own one or two, maybe maximum of five.

And that’s a substantial part of the market.

Now, at least we see among our customer base, a lot of the property managers that are growing and are profitable, they are exactly people who used to own one or two, and they still own them.

But in addition to that, they start managing other properties.

So if you’re entering this space right now, it’s the right time.

And I’m not saying that just because I benefit from it.

This is just my observation that if you would have asked me the same question three years ago, my honest answer would have been that you’re probably too late because the consolidation is already in progress.

If you didn’t start five years ago, you’re too late to the game.

But now the game is reset.

Consolidation didn’t work.

So it’s an excellent future ahead for everyone here.

So yeah, Marcus, well, that brings up another question.

Could there be some ideal situation where there is a mix between traditional property managers and centralized backend operations?

But we’re going to save that for another episode.

I can’t believe our time’s up already, but it’s been a pleasure having you on.

I got to ask you one last question.

We didn’t even get into AI, but I know that’s big on HostAway’s front, and there’s just a lot of really good things coming.

One last question actually not related to short-term rentals, and that is that the name of this podcast is Short-Term Rental Riches, but we know that life is not just about financial riches.

And so I’m curious if there’s something in your life that’s enriched your life in a non-financial way that you’ve changed lately.

Yeah, good question.

So about 18 months ago, I decided, I looked back at my life.

I had just turned 41, and I realized that there’s really a couple of defining characteristics of who I am.

They are inactiveness, beer, pizza, hamburgers and hot dogs watching TV.

That’s really what I’ve been doing for 41 years.

And I thought, that’s been a great life, but let’s try something different.

What if I get in shape?

What if I get up at 6 a.m.

every morning and go out for a one-hour run before the family wakes up?

And I try eating some healthy foods, and I try going to the gym.

And I’ll do that for another 41 years.

And if I’m lucky enough to live to 82, then I have an objective way of seeing where I spent half my life and the other half.

And then I can choose.

If I want to lie on a sofa watching movies and eating potato chips for the rest of my life, I’m going to do exactly that.

But at least I have this ability to do that.

I’m very happy I made that change.

It’s been really great.

My energy levels are through the roof, and it’s really life-changing.

And also the amount of sacrifice to spend 30 minutes or an hour exercising every day or eating healthy is nothing compared to what I thought it would be.

Because people always complain.

But yeah, that’s a change I did, and I’m really happy I did that.

Now I’ve been on it one year, so I have only 40 years left.

And hopefully when I’m 82, you’ll be able to ask which one I prefer.

That’s awesome.

That’s awesome.

I’m sure you’ll find at the end of this 41-year experiment that you made the right decisions.

That’s good, Marcus.

Hey, it’s been a really big pleasure having you on the show.

I definitely would love to have you back on in the future.

For anyone out there, if you want to find out more about HostAway, hostaway.com, is that the best place to find you guys, Marcus?

Absolutely.

And if anyone wants to reach out directly, if you’re a customer of ours and have any feedback at all, then reach out to me on LinkedIn.

I check my messages there on a semi-regular basis.

Awesome.

It’s been a pleasure.

And until next time, I hope you have a fabulous day.

Likewise.

Thank you very much for having me.

See you next time.

Take care.

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