VRMA 2024 Highlights: Top STR Trends, Revenue Strategies, and AI Tools for Airbnb Success

welcome back to the show I'm glad you're here again I'm going to give you just the latest pulse of the market you could say and I really feel like the vrma is that pulse people fly in from all around the world that's specialize that focus in short-term rentals we're talking about tech providers property managers and thousands of people at this conference and so there's lots of good information there unfortunately there's so much information that I couldn't possibly sit in on all of the sessions so I'll

cover a couple quick things that I learned from my takeaways but I've also got another 20 or so breakout sessions coming to me in the form of a recording which I will run through and I will report back to you in a few weeks when I have access to those so even though the vrma stands for vacation rental it really encompasses the whole industry of short-term rental so whether you're operating one property or whether you have a portfolio of 2000 there's lots of good information there

and as the pulse of the market or as of the industry I really got to say that it's just still really inefficient the industry that we're operating in is really inefficient we have some people that are way outperforming others some people that have their operations fully dialed in some people that are pulling their hair out it's really all across the board there's a lot of old school you could say vacation rental property manager that go this conference and they still do a lot of operations the

old school way using not a lot of technology and doing a lot of things manually and and not even taking advantage of all of the OTAs for example really relying on Direct bookings and trying to shift all of their guests there which we know of course isn't necessarily the best thing for Revenue at the end of the day so I think that's just the big highlight that there is a lot of inefficiency here in the market in the industry which means there's still a lot of

opportunity for us all the biggest players were here right so we have Airbnb we have booking.com we have Expedia which owns VRBO and they were all on a panel together and one of the really interesting questions that they got asked is what would you fix if you were superhuman so this is the person representing each of those online travel agencies at a very very high level so they're asked what would you fix if you were superhuman and the answers were pretty in line with what we

probably all would want to fix but by hearing their responses it also allows us to really get a good understanding of what they want us to do right and so the first one we don't have that much control about that's regulations so one of them said we would help with regulations and we know Airbnb was banned in New York right uh all of the airbnbs were taken off the market and this is a really good Market study what they found is that the hotel prices went

up like 7% year-over-year that makes sense right we take away Supply from the market and what's left is going to have increased rates so a lot of the push behind the regulations is that it's bad for housing that there's we do have a housing shortage in the US really Across the Nation but some places a lot worse than others and what they found is that housing still went up after this year of not having airb in fact it went up almost 5% which inflation certainly takes

a toll on all the markets costs are just going up on everything and they continue to go up right but by adding thousands of units back into the housing Supply that once were short- teral or nightly rentals I should say because this isn't affecting those monthly rentals right didn't have the impact they thought it would so that was one of airbnb's responses if they were superhuman they would help out with regulations of course we've got booking.com sitting right next next to them that also works with

hotels and so I'm sure they sort of have mixed feelings about that one but one they all shared were host cancellations so us as the host of the property cancelling a reservation I think that one's pretty obvious that they don't want us doing that right we know that we will lose our superhost status if we do this more than just a couple times in a whole year so we definitely get penalized in a really big way if we're canceling reservations so a couple quick things there

we've talked about this before on the channel but we always want to reach out to the guest first and ask them to cancel if there's some sort of issue most of the time that the guests will be open to doing this of course if we're canceling a reservation because we don't want that guest showing up at our property maybe because we're we think there's some sort of fraud or something involved then those are legitimate reasons for us to cancel the reservation I've got another quick note

on fraud here just in a second so they all agree less host cancellations would be better they also all agree that having party guests and bad guests is something that no one wants it gives the platforms a bad name you know all the parties we've heard about and Airbnb but also gives us as host a bad name and it goes against the regulations so these things are really sort of integrated one other one that got brought up was Staffing and housekeeping so we know that in

order for our guest to have a good experience all of the operations have to be handled in a really good way in fact Airbnb has placed so much importance on this that they just launched their co-host platform so over 10,000 hosts have joined this platform and it's only eligible for you out there if you're a property manager there's certain requirements you have to meet and also if you have an average score of 4.8 or higher which based off air DNA's data I've got some stats for

you here just in a little bit 7.4% of all property managers have average scores of 4.8 or higher that means over 90% of all your larger property managers don't have good reviews we talked about the impact of not having good reviews just recently we had a a partner join us recently that used to be with a larger company and his Revenue really got cut in half so those bad review scores come back to operations and that's one thing that all the otaa agree on if there

were some way to help those operations on the back end that it would help the guest experience it would also help cut down on bad guest and so our interests are really aligned for the most part with the OTAs we know sometimes it doesn't feel that way if they're refunding guest that we don't think was fair or something like that if if you've been in the industry for a while I'm sure you've come across some challenges with the OTAs my team and I have managed over

40,000 guests now in several countries and nearly 20 cities and so we've come across a lot but the reality is we rely on these large OTAs for their marketing right they spend hundreds of millions of dollars on marketing and that helps us boost our Revenue with our properties so I attended a session on fraud and really when we talk about fraud it usually comes back in the form of a chargeback and so if you're accepting direct bookings or if you're taking payments on behalf of one

of the OTAs like you take payments directly from a vbo reservation you're probably using a company called stripe a credit card merchant and so what happens is sometimes someone makes a reservation it's fraudulent they file a chargeback claim or they file a claim with stripe stripe refunds them for all of their reservation whether they stayed at your property or not and this is across the board all the hosts out there almost 100% of the time lose these cases against the credit card company so there's a

number of things that we want to do up front just to avoid these guests in the first place so we've talked in the past about getting a rental agreement signed by getting a copy of their ID by getting a copy of their credit card making sure that those names match up getting a copy or a selfie from them so you can make sure that the person checking in is the person on the ID these are all really important things and the reality is is that this

will nearly eliminate all of your fraud most these things we can cancel up front and the reality is that if we're doing all these things the amount of fraud that we actually have is very very small but there is a little different type of fraud that they refer to as friendly fraud this is someone that booked your property with the best intentions but maybe they had to cancel last minute and your cancellation policy prevented them from getting a refund well sometimes they go back to the

credit card company and they say this was unfair whatever reason they give and that company ends up refunding them hopefully you able to get that property booked if you're coming across situations like that but this actually accounts for about 70% of the fraud According to some of these companies that we were talking with at the conference so make sure that you have some of those preliminary steps in place and if you have the option to use booking.com payments for example that'll cut back on a lot

of this because they will take the fault for any charge back you basically don't have charge backs if use booking.com there are several solutions that have come up to help us automate all this we had uh the CEO of super OG on recently you can go to Str strr riches.com check all of our past episodes and get some good tips from him okay on to new tech so there's a lot of vendors here there's a lot of new tech yes there's a lot of talk and

there's a lot of people using AI now in some pretty cool ways including those large OTAs where they're trying to really facilitate the whole booking process so booking.com for example they want their customer to do the whole process through booking.com they want booking.com to be the travel agent they want to book their flight they want to book their accommodation whether it's a hotel or short-term rental they want to be their coner you could say for this whole travel experience and they're using a lot of AI

to do that but on our end as the hosts as The Operators of these short-term rals we also have access to a lot of really cool AI as well I've talked briefly about some of these in the past like you know autor respond spers and and automatically upselling Gap nights or un bookable days in your calendar but there's some new tools coming out that just take it five 10 steps further that are really Dynamic that can send videos back that can respond to voice messages they

can send custom tailored review responses automatically that can evaluate your listing online and compare it to others really just at a click of a button so there's a lot of great tools out there especially in regards to AI but the reality is none of these tools are One-Stop shop if you've listened to the show for a while you know our team uses a whole bunch of tools I would say over 10 that all work concurrently together and I worked in the software industry for a long

time8 years and the reality is from what I saw in the past and what I see today is that there is no one program to handle it all so you have all the addin programs that you can have of course this starts with having a property management software platform so we use hostway but guesty is a popular one or you have owner reses there's a whole bunch of them out there and then you're going to be connecting to all these different softwares so just keep an

eye out uh most of the time on your property management software platform there'll be a link there that either says Marketplace or Integrations you can click on that you can see all of these other software tools that are popping up that integrate with your your current system making the whole process a lot easier so on to revenue management one of my favorite topics and one that I've talked about a lot recently uh and there was quite a few breakouts on this as well it's becoming increasingly

more important uh the breakout session that I had with air DNA uh for those of you that don't know air DNA is a data scraping tool that helps you analyze different properties different markets really underwrite properties and they had data showing that professionally managed properties they're up year-over-year about 6% versus an individual operator that's down about 4% year-over-year and I would venture to Guess that a lot of the reason why is because the individual operator does not have a revenue manager looking at their prices day

in and day out analyzing it against the market and so this is really really uh important piece of your operation your overall Revenue unfortunately as an individual operator it usually doesn't make sense to hire a revenue manager right it's a costly position in the hotel industry of course you know they pay easily six figures for this position we know that we can hire people virtually and we talk about that a lot and we do that ourselves but there's a lot of training that goes into that

position so just to break down the whole Revenue management process real quickly they broke it down into several levels different levels of skill I guess you could say and the first level is really just taking advantage of a dynamic pricing tool like price Labs or like wheelhouse and understanding how that tool works so that you can at least go in and set up those initial settings and understand the data that you're seeing we know of course if you're using one of these tools but you're not

using it properly well then you could be lagging behind you could be leaving a lot of Revenue on the table the second level or a step up from there where you're really taking your Revenue management game to the next level is managing distribution managing your performance reports so at this stage you're going to be comparing your property against another Comet regularly you're going to be comparing your property against the market you're going to be looking at the different channels where your property is advertised and seeing

how well it's performing on these different channels including your direct booking Channel and then one other step up from there we're really going to go further into our Advanced reporting we're probably going to be doing some sort of AB testing here if we have that luxury or if we're a property manager then we probably have multiple properties in the same market and we can weigh those against each other to see what's working and see what's not the advance reporting at this stage is really really going

to be fine-tuned when it comes to analyzing our properties against the market so looking at the overall revenues and all the little metrics there's so many I I did I've done a quite a few podcast on this before so uh you can go back to $239 it's a quick one to let you know if your property's priced too cheaply you can go to episode 255 it's the flip side of that to find out if you're charging too much uh episode 234 I talked about 46 different

factors that affect your performance so depending on where you are at with your experience as a revenue manager you're going to fit into one of those categories and we know we know that the higher you move move up the more advanced you are with those strategies the better your property will do we do of course help you out there if this is something you don't want to do so if you're new to the channel as I said we've got properties and lots of different markets we

have our own in-house Revenue managers these are things that we look at with a fine tooth comb and we'd love to help you with your property if that sounds interesting you can head over to strr riches.com you'll see a property management button there set up a quick call we'll chat we'll see if it's a good fit for you we'll see if we can make you more Revenue with less headache okay let's talk about some stats real quick these are always interesting to me and this was

again from a breakout with airdna which is arguably the industry's leader when it comes to statistics around the short-term metal industry they are scraping 45 million points of data every single day that is a lot of data and just to give you an idea there's about 8 million Airbnb listed listings right now in the world that means they're looking at all kinds of things with each of those listings they're looking at reviews they're looking at occupancy they're looking at prices charged that they can see on

the calendar and this provides them and us if we use their tools some really good data when it comes to supply the Market's up about 4% year-over-year so there's 4% more available listings this year than there was last year if you compare that to 2022 just a couple years ago our Supply was growing at 20% imagine that so way way faster than it is now of course that's for a lot of reasons so inflation has had a huge impact on the economy interest rates are much

higher so less people are buying properties to start their short-term rental and as a existing operator that's good for us right because the overall demand their stats on the overall demand are up year-over-year but not up that much they're basically breaking even so the projection for next year is that occupancies are pretty much going to stay flat or maybe a slight decrease of course this depends on your market adrs so your average daily rate that's being charged is expected to go up just a few perc

and all of this equating to a negative revar of just 4% so we know revar is the total occupancy multiplied by the total average daily rate that's how much revenue per per day a property is generating it's basically flat so they're not we're not expecting a whole lot of change this year one of the really cool things with air DNA's uh tool and a new feature that they have is that you can sort Properties by review score so I did this just for fun on one

of my properties in Sacramento a small little two-bedroom and I ran the comparable properties in the whole Market at a 4.6 average review score airdna estimated that that property would make about $2,000 in the year versus a 4.9 score would make double $440,000 so that is the impact that bad reviews can have on your property okay so some really interesting insights from airdna uh if you haven't checked them out I'm not sponsored by any of these people my job is just to report back to you

uh and that's what this episode was really just an industry pulse you know what's going on out there lots of new technology coming out a company called boom that I think was really interesting another one called Auto rank you might want to check those out those are AI related but remember those in order to work well really need to integrate with your property management software so check out that Marketplace link check out the integration link on your property management software to see what new tools are

available to integrate with your existing platform so some interesting stats on the market I got to say I'm I'm really excited because with Without Really hardly any new Supply coming on the the market but demand staying about equal we have a lot of opportunity to outperform our Market uh if we're doing a good job if we've got our Revenue Management in place if we have our listings set up properly if we're providing a really good guest experience and making sure that our reviews are high we

can really really outperform the averages as I mentioned there's another 20 or so classes that were recorded that I'll have access to in the next few weeks I'll break those down I'll come back with my biggest takeaways hopefully this gave you a little glimpse into the industry it's constantly changing I think it's really inefficient still and because it's inefficient there's just a lot of opportunity and so until next time I hope you have a fabulous week and I'll see you soon want to get on the

fast track to Financial Freedom through short-term rentals well it all starts with the properties you acquire but you want to make sure that you acquire the right properties I want to give you my ebook that will show you how to do just that there is no charge it's my gift to you for being one of our subscribers