Where to Invest, What to Charge: STR Strategy from AirDNA

I started as a customer back in 2015 subscribing to the data and the industry looked a whole lot different. If someone asks you, Jamie, what do you do at AirDNA? What do you say to them? I don't think we're going to go through a recession the next year. I get excited every time I sort of see the numbers coming out of India, China, Brazil. There's so many new travelers being created every day as sort of these rise of the sort of global middle class. is something

that AI can't replicate. AirDNA is tracking data for over 13 million properties worldwide and they've been doing that since 2012. So that is a lot of data, a lot of data in regards to what amenities you should have with your property, how your supply is doing, how your average booking window is trending, how are different channels performing in your specific market. I sat down with Jamie Lane, the chief economist for AirDNA recently and we dove into a lot of these topics, topics that you won't want

to miss. Welcome back everyone to the Short-Term Rental Riches podcast. I'm excited to have another fantastic guest on the show today. He is the chief economist for one of the companies that we've talked quite a lot about in the in the past. I I've mentioned this company AirDNA a lot because we use it personally. I've used it with my personal investments. We use it with our management portfolio. We see them at the conferences and so excited to sit down with one of their top members of

the team, Jamie Lane. Welcome to the show. Yeah, thanks for having me. Yeah, awesome. There's a lot of ways we could take this conversation today because AirDn has a lot of just a lot of data. I mean, you guys, that's that's what you guys do. But I'm curious like if someone asks you, Jamie, what do you do at AirDNA? Like, what do you say to them? I It probably depends on the day on in terms of what we're working on, but uh I lead a couple

teams at AirDNA. One being the research team. Um so we're just trying to understand what are the trends that are happening in the sector. Uh so uh what's happening with supply? How's it growing? What type of supply? What markets are people sort of growing inventory in? Uh what's happening in terms of occupancy levels? Are they going up? Are they going down? Is it because more people are traveling? More people adopting short-term rentals relative to hotels? Uh how are people pricing those units? Are hosts able to

get higher prices or lower prices? um what makes most sense for investment today. Uh what are the sort of attributes of I and top hosts, top property managers, things like that. And then I also manage the data science engineering team at AirDNA. So, we're very focused on sort of bringing the data in, uh, sort of how we model demand, how we're sort of scraping and collecting the rates, and we're processing almost a terabyte of data a day, uh, across the global short-term rental industry. So, 12

million properties around the world that we're collecting data on. So, it's a it's a massive data operation. There's changes being made across Airbnb, Verbbo, booking every day uh that we got to stay on top of and making sure we really understand every data point that we're collecting off the major OTAAS and then how to interpret that and how to bring it into our platform to make sure that we're describing and representing it correctly for people that use AirDNA's platform. So, that's a lot of fun. And

then more recently, I've gotten really involved with the product team and making sure that the products that everyone uses and loves within AirDNA are sort of evolving and they sort of answer the right questions for what people come to AirDNA for. Wow. Okay. So, there's quite a bit there. Um, why don't we start off maybe on kind of the high level? You mentioned you guys have data from 12 million properties and I know that you've been getting this data for a really long time which means

you have a lot of history as well and you're able to uncover trends and see a lot of the things that I think maybe the average Joe investors maybe not looking at um would you mind highlevel trends maybe some things that you guys have been seeing with the data and then I'd love to jump in later howda can help the investor make smarter decisions. Yeah. One thing that's really interesting for me to sort of analyze uh in terms of looking at a long time series of

data is just how short-term rentals in general have evolved in terms of I and seeing adoption in sort of the general public. So if we go back to when we started collecting data on US short-term rentals, it was at the end of 2014. So we now have more than 10 years of data uh which is pretty crazy to think about now. One of the first customers of AirDNA. I started as a customer back in 2015 subscribing to the data and the industry looked a whole lot

different. It was primarily urban. Um it was primarily sort of people doing private rooms. Uh a bit of rental arbitrage. Uh but if you looked at the in inventory back then it was almost I mean half of US inventories was in sort of the large sort of major urban centers across the US and now you fast forward to today like a lot of that urban inventory sort of disappeared during the pandemic. There was not people sort of traveling to uh major urban areas. uh a lot

of the sort of apartments that people were renting out sort of transitioned back to uh long-term rentals, a lot of the rental arbitrage companies went out of business. So, you think back to sort of big companies in 2019 like Stay Alfred, Lyric, do uh all sort of went under. And then we've really seen subsequently the rise of sort of travel outside of sort of uh urban core really even outside of traditional vacation rental markets um and people just looking to explore the country uh traveling to

small and midsize cities really around the world and it's really opened up investment opportunities into areas that people would have and never really thought of using Airbnb for back in 2015 or 2016 that's been driving a lot of growth uh and over the past few years. So now there's and we classify things like midsize cities, small city rural areas and now there's more listings now in small city rural areas than there are in the sort of urban core of major cities when like six or seven

years ago like urban had like 8x the number of listings in sort of these small and mid-size city areas. So, it's areas where hotel investors aren't going into. A lot of times there's not other lodging options and now people sort of think, oh, if I'm going to this area, like, let me check Airbnb, uh, let me check Verbbo. It's really opened up areas to travel and really created new investment opportunities. Uh, today, yeah, our team, I mean, we're we're in a couple dozen markets and they're

just spread out all over the place. And I started way back in the day as well. 2015 was my my short-term rental. And pretty sure I was I was diving into AirDNA back then. Um, but of course your your guys' platform was way less developed than it is now. I mean, there so many ways that someone can go in there and really dissect a market. Uh, you know, look for what might make the best performing property segment in that market. I mean all these features that

you guys have added, but there are a lot of features there. So, what what would you say maybe to someone out there that's either planning on expanding in their local market uh or maybe they're looking for a new investment market? What are maybe, you know, two or three of those top uh data pieces want to pull out of AirDNA? One is, and we've created this new section. I like to think about it as like market explore. Like AirDNA back in the day was all about like

know your city, go search that city, get the data on that city and you can sort of understand the investment opportunity. It was built around this notion that most people were investing in markets that that they know maybe that they used to travel to or the city that they're in. There wasn't a lot of I demand for like I'm open to any market in the country just show me where to invest. uh and now we see that so much more today that people don't know where

they want to invest but they want a platform to help them sort of uncover uh those areas. Uh so now that we have this whole section of the site that sort of breaks the entire c country up into markets or submarkets uh and there's roughly there's about 317 markets that we divide the country up into. So the traditional markets like let's say in Atlanta where I am today or Denver uh but also sort of defining out like what is Breen Ridge and the market what is

the andorax what is the lower Hudson Valley Coachella Valley sort of these traditional vacation rental areas uh but then taking all these and sort of subdividing them into the subm markets. So in cities it's neighborhoods more destination areas it's sort of the beach verse outer areas. Uh, and what you can do is sort of hone in on the types of locations you're looking to invest in and then start maybe filtering down to the type of properties that are maybe sort of good investment comps. So, I

want to look at just the performance of properties that have that are maybe operating full-time more than 270 days throughout the year and have good reviews. And then you can start ranking markets. Like I want to see like the top submarkets in rural Georgia by occupancy and maybe look at that for just threebedroom or fourbedroom or fivebedroom uh type properties. So I can start to see like where are pockets of demand where properties are just really crushing it. then dive deeper and figure out like okay

like Mon or Columbus and Georgia is doing really well and what are the property types that are generating the highest returns and maybe those are areas that I want to go and start replicating what I'm seeing top investors doing in that market and it really lets me sort of uncover sort of hotspots where before it would just be impossible to click into every city around the country and try to see where there's sort of outperformance happening. Yeah, that's awesome. It's it's I mean, it's amazing what

you guys have set up and and the data that we have. Quite a few of our listeners on for this show are, you know, we're kind of in both worlds. We've been in the traditional long-term real estate world and we're also in the short-term rental world. And sometimes I feel like the data we have now for short-term rentals is so much more comprehensive than it is sometimes for long-term rentals even. I mean, of course, there's a lot more pieces of data, uh, the reviews and amenities

and all these different things that really segment properties out, which is also one of the things that helps some properties earn a lot more money than others. And I think that's one of the things that I've liked most about AirDNA recently is really market and seeing the difference between what a top performing property can do versus one that's not performing well, you know, and of course, management play there. reviews have a massive impact on on the revenue. What what would you what would you say to

that? You know, let's say you decide on these markets and you've ranked them out. Maybe you have like three markets, but then you know within each of these markets that there's just a big gap between the top performers and the and the low performer. Yeah. It's it's a way I actually think about investing in markets of if there is that disparity between top performers and and sort of low performers that really gives me the opportunity to go in and like actually differentiate my property and where

doing things well can generate outsiz returns. And then it's also really important when sort of analyzing a potential investment. Like let's say you're going in and using our rentalizer tool. you sort of putting an address in a property you're interested in investing in. And that tool goes out and selects comps. And as we all know, like every comp or comparable property out there has a different owner, has a different operator, has different reviews, different amenities, and it's really incumbent upon the investor on the analyst sort

of digging into the deal. And what are all the comps sort of being used to generate that estimate? And then that's a lot of the sort of changes we've made to Rentalizer recently are letting you see all those comps, letting you evaluate each of those comps individually and see, okay, is this actually comparable to the investment that I'm going to be making into the market? What are the amenities associated with each of these properties? Where is it located? Is it on the beach versus off the

beach? Uh, does it have a pool or not have a pool? and then the ability to remove comps, resave the report, and then if you want to go out and find your own comps that are sort of more representative of the property you're going to be investing in, there's this whole new tool to actually like and filter by amenities, filter by sort of core property attributes and then add those new comps into your report and then be able to save it and access it down the

line and then generate a PDF of that report. So, we're really trying to change the way sort of people think about sort of using airdna to find their investments as our number is sort of a starting point and then you really need to do the work evaluate the comps edit those comps and then once you get done with that and depending on the complexity of the market depending on the complexity of the property it could take an additional 10 minutes it could take an event a

couple hours to really go through each of those properties but when you get to the end of that process now you're going to feel really confident one with like what are sort of the attributes of high performing versus low performing properties and then of like what your investment is, what are the things that it's going to cause it to sort of earn the additional revenue that you think it will earn. Uh and then go into that investment with much more confidence than just saying, "Hey, this

is the number that AirDNA spit out verse like I actually analyzed. Here's all these properties. Here's what they're earning. I think we're going to be competitive with them and that as long as I perform well as a manager like then we're going to be able to hit those numbers. If we're comparing apples to oranges instead of apples to apples, then uh we're not really starting from a good place, are we? Curious, uh, you know, a lot of people maybe they haven't used AirDNA for the at

all or they're new to AirDNA and they're in this process. They're in there, they're looking at some markets or maybe they're in a market where they're already at, but they're like, I know supply is increased here. I'm not sure if it really makes sense for me to add a new property. What are the things that maybe you guys see people doing incorrectly when they're comparing other comps? And I'll just give like one example possibility. I I see quite a few people sometimes filtering out like negatively

reviewed properties and maybe just segmenting like the highest reviewed properties uh which doesn't really show there. Any thoughts on maybe what people are doing incorrectly or want to keep an extra eye out for? Yeah, I mean there is and a lot of ways that you can filter down the data in AirDNA and that's one of the superpowers that we're trying to give you is the ability to slice and dice the data to generate alpha or beta or like way ways that you can really dig in

and find outperforming underperforming like ways that you can generate outsized returns. Let's say you're analyzing supply and you want to limit it to just properties that have 20 plus reviews and then let's say you've applied that filter and now you're looking at supply and supply is coming down and you're like oh this is great like I'm going to be able to get into this market where supply is coming down there's not as much competition but the sort of notion of looking at reviews like it takes

a long time for a property to get 20 reviews there's generally in a significant ificant amount of churn that happens in the market. So, if you're using a review filter and then going and looking at supply, like you're going to be artificially bringing down recent supply growth because all those new properties aren't going to have 20 plus reviews. So, I always like to start like with my supply analysis of getting a sense of how supply is going. And yes, like you can use bedroom count filters,

you can use property manager versus non-propy manager. Uh there's sort of these notions of like property attributes that like absolutely you can use those and still analyze supply. But once you start getting into sort of performance metrics or listing things like days available, like price tier, like things that where we have to actually look at the performance to categorize the property, I wouldn't use those when sort of analyzing supply. And then there's other sort of great ways that I don't see people doing enough of segmenting.

Like let's say you want to look at occupancy and look at how occupancy is trending in your market. Like absolutely start segmenting that by like price tier because how occupancy might be trending in your market for lower priced or budget properties versus upper tier luxury properties like can be wildly different. And that's actually one of the things we see is very differential today in terms of industry performance is budget properties are just getting crushed with sort of expectations of higher inflation and people on the lower

income spectrums have sort of blown through their COVID savings and they really are pulling back on discretionary spend of which travel is usually one of those discretionary spending items where on the luxury end and people's got have savings things. They're doing well in their jobs. They're seeing income in continuing to increase and they're uh absolutely continuing to travel. So, you might go in and look at a market and like, oh, occupies down like I don't want to be investing in a market where uh people are

pulling back. And then you sort of segment that to maybe larger homes on the luxury end. Like, oh, like these properties are like at six or sevenyear highs in terms of occupancy. Like they're doing really well. like maybe this is a segment I can invest into and uh continue to see outsized growth. Great insights there. Great insights. Um and it's interesting to see these things just changing all you know they just change with time. Great point with the reviews there. That that's a great point. You

know, 20 reviews uh can take a long time, especially let's say you're in a market where the season's only half the year. You know, maybe an average length of stays a week or something like that. You know, that could take that could take a lot of time. So great great point there. Great point with segmenting just how this data is changing. Are there other industry changes that you've seen? I know after co you guys had some really interesting data as well. You know we see in

our portfolio is shortening booking windows. Um do you have anything to to add to to that? Yeah and I I think that's one of the sort of most important sort of things to understand in your property today is how booking windows are changing. There's a chart within AirDNA. It's sort of the bottom of the market overview. It actually shows within the market and you can like segment it to one bedrooms or five bedrooms or filter it down to see sort of how it differs across different

property types. Is the share of bookings coming in by booking window? So like what percent is coming in within the week, within two weeks, how what percent is getting booked uh more than 90 days in advance and sort of how that's changing and how it's sort of changed through the seasons. Because if you look at summer pacing today and we're sitting here in sort of early June, demand looks pretty bleak for July and August. And for a lot of properties, July and August, that's peak season.

That's when you're making your money. And you look at sort of pacing, you're like, "Oh no, like we're down 2, three, four, 5%." And then we sort of look at some of the near term historical data and it's like, ah, well, demand's coming in. Like it's we're still growing. occupancy sort of flat uh slightly positive. So you look at pacing and so there's a disconnect there and what is the disconnect? It's and extreme shortening of lead times. So guests are just waiting uh to book and

it sort of makes sense with the sort of uncertain times we're in and we don't know what tariff rates are going to be. We don't know the impact that tariffs are going to have on inflation. Uh there's a lot of people worried about economic prospects for the market, whether the stock market's up on any given day or down 10%. And it's it's really volatile. So what do people do if there's uncertainty in the market? They wait and they're waiting to book their summer travel. Uh but

so far what we've seen is they're eventually booking. They're just waiting sort of waiting a week, waiting two weeks uh longer than they normally would to book a trip for that same time period. as an operator like that's worrying right because you're sort of used to a certain amount of bookings as of a certain amount of time and if you don't get that then you start to worry like do I need a discount and what are my competitors doing are they starting to discount if they're

starting to discount now we can sort of get into this downward price spiral but then if you're able to have some confidence of knowing okay people are booking they're just waiting longer and I sort of need to hold the line and sort of know that those bookings are coming and that and we're going to get the demand that my market's used to. Like that all takes data. That all takes sort of conviction and and sort of knowing that people are booking, they're just waiting. um and

sort of bringing those sort of data pieces into your strategy and can really separate and sort of operators that are going to get to the end of the year and like all right overall market demand was sort of on par and I was actually able to grow my revenue versus oh man overall market demand was on par but I shrunk revenue because I sort of panicked and started discounting and you can really get to entirely different outcomes based on sort of how you're reacting to what's

happening in the market. Yeah, great great point. And that's just it speaks to the importance of data. I mean, you basically can't do revenue management unless you have data, right? So, I'm curious, uh, correct me if I'm wrong, Jamie, but you guys, you have lots of data. You've had it for lots of years. It's primarily from Airbnb, but you get VBO data as well. Yeah. So, when we scrape data and we're we're collecting data sort of off of the major OTAAS. So, we're looking at the

calendars on Airbnb, Verbbo, Booking.com. Um, and when we see sort of calendars change, we're sort of modeling those calendar movements into a guest's booking or an owner is sort of blocking that calendar. Uh, and and there's sort of really important blocks to get like if I'm an operator in Cape Cod and we're getting into October and I'm going to block my calendar for the winter like because I'm sort of shutting the property down like we got to make absolutely sure we're not modeling that sort of

block as a booking. And then there's sort of and we're modeling sort of lead times, length of stay, all these things that sort of and cause us to like okay this looks like a booking. Uh, but what's really important to understand is because we're looking at the calendar, if someone's booking sort of direct, that booking is going to cause the calendar on Airbnb to go unavailable. And so, we're going to see that sort of movement in the calendar and model that as a booking. So, it

doesn't matter what the books, what channel it's coming through, whether it's Airbnb, Verbbo, Booking.com, as long as you have your calendar synced, um, and we're able to see that calendar on one of the OTAAS, we're going to model that data and sort of capture all the bookings that are coming through those properties. Yes, we're sort of limited to properties on Airbnb Verbbo booking, but we're capturing all the bookings that are happening for listings that are on those platforms. One of the things I find interesting about

the different platforms, you know, like Booking.com and and VBO is that they have slightly guest profiles, you know, they have slightly different booking windows. There's these, you know, differences between the channels. Um, and I think it's left a lot of opportunity, you know, for for someone with a typical vacation rental, for example, that's been on VBO and they've been on Airbnb and maybe hasn't been on Booking.com, they've seen a lot of supply where a lot of other Airbnbs have have come on in that market. I

think it leaves more opportunity for some of the other channels uh sometimes. So, I'm curious, do you have any into some of the differences that you guys see with the channels? Yeah, absolutely. And it it's part of our bet uh around channel management that and channel management listing on multiple channels is is the future of the industry. We just don't think that people should only be sort of single channel listed. It opens you up to a lot of risk. And in addition and the ability to

sort of drive direct bookings, drive repeat bookers direct to your platform and saving on platform fees is a real big opportunity for your property. So, we bought a property management system about a year and a half ago called uplisting. Uh, and we've now have that sort of under the AirDNA umbrella and are making a lot of improvements to there. But it it is crazy how different the sort of guests are that book through the different platforms like Booking.com can actually be a great way to get

exposure to international guests is if you go and look at the data and uplisting is very big in both the UK and the US in terms of hosts that use it. In the UK, almost 50% of bookings are coming through Booking.com for hosts that use uplisting where in the US it's like four or five% of overall demand, but it's growing. And guests just like if they're in Europe, they think of Booking.com like we think of Airbnb. It's just the spot that you go to book your

vacation rental. Uh so when those guests are now traveling to the US, they're using Booking.com and just like they would in Europe. So, it can be a great way to attract more international guests uh to your property. Verbbo guests do tend to be more older generation sort of booking in traditional vacational markets like you're going to the beach, you're going to the mountains, you're traveling with your family, uh you book a Verbbo. They're typically longer stays, so five plus stays. You see a lot more week-long

bookings on Verbbo than you see through Airbnb. uh you see longer lead times and you typically see much higher sort of uh total checkout value and a lot of that has to do with the larger homes and sort of beach mountain markets. Airbnb still trends uh shorter booking windows, shorter sort of average length of stays, still trends more urban, but has absolutely dominated the small and midtown midsize rental market. Like Verbbo almost has no exposure to those areas. Verbos also had almost no inventory in the

urban areas. Uh so Airbnb still dominates that and depending on the type of guest you're looking to add to your property. I launched a property in North Georgia last year listed on Airbnb verbooking.com. Expected that most of my bookings would come through Airbnb. Uh given that it was sort of I near Atlanta and you'd see a lot of sort of domestic guests sort of booking through there. I've been astonished by the amount of bookings I've gotten through Booking.com and then the long sort of week or

two long weekl long bookings I've gotten through Verbbo have been massive and also coming out of off- peak time sort of layering all those channels in together could really make like if I looked at my performance and what I'd be doing if I was only on Airbnb it would not nearly be as successful as if um now that I'm on multiple channels. Great insights and yeah, again, you wouldn't know these things with all the um and so really important to be looking at all this. You've

you've brought up some really interesting things, Jamie. Some some big industry changes, you know, like economic segment of short-term rentals kind of really getting crushed, shorter booking lead times, you know, the differences in some of these channels. I know you don't have a crystal ball, but if anyone did have a crystal ball, can you give us any sort of predict prediction the the coming one two years? I like to look at a lens of overall travel. I think travel as a sector is going to continue

to sort of outperform other sectors on the economy. We're seeing really strong sort of domestic travel right now. Uh I think that's going to continue. Uh we're seeing really strong sort of outbound US international travel. That's something that is really uh exploded post pandemic and we did a lot of travel around and domestically. Now people are wanting to explore the world and they're using short-term rentals for it. Uh so if there's ever a time that you've thought about sort of investing outside the US, there are

ways to do that and ways to sort of capture that demand and and sort of do interesting investments outside the US. I think that is going to be a trend that continues and I get excited every time I sort of see the numbers coming out of India, China, Brazil. There's so many new travelers being created every day as sort of these rise of the sort of global middle class that I think is going to continue to sort of feed this sector. It's something that AI can't

replicate and technology I think is only going to enhance people's desire to sort of get out explore. People want to sort of spend on services. I think they're tired of spending money on goods even sort of longer term than one or two years. like the travel sector is going to be one that really continues to outperform in the economy. And yes, there's going to be sort of hiccups here and there and whether or not we go through a recession and over the next year is still

probably 50/50. I'm still on the lower end of 50%. I I don't think we're going to go through a recession the next year, but I think even that we come out of it probably as an industry stronger. So, I'm continuing to invest in the travel sector. I think it's one that I and is a long-term good bet. There's not new investments being happening in hotels right now. Uh with the sort of commercial sort of debt crisis that was happening post pandemic, banks just don't want to

finance construction for new hotels. Uh so if we think sort of long-term travel is going to continue to grow two or 3% like it has over the past 20 30 40 years and hotel developments only happening at sort of half a percent growth per year that sort of growth of inventory's got to happen somewhere and if not it means higher occupancy and ADRs for those existing operators. So I think we've got a lot of great sort of tailwinds in this sector. There might be some sort

of near-term headwinds but looking out longer term I'm feeling pretty great. Yeah, great points. And you know, the the supply, it's such an important thing, right? And these things take time to sort of slow down or speed up. Uh and because interest rates are really high and aren't lending, like you said, uh to hotels or really, you know, to apartment buildings, any of the commercial sector, that that whole supply and demand equation is really getting it's going to have some big changes coming. So, exciting stuff.

I I also agree. Um and a lot of international opportunity. A lot of listeners know from the show I I spend most of my time and uh uh we're we're doing some fun stuff down here, but of course we wouldn't be doing it without good data and that's where you guys come in. And so for anyone out there uh what's what's the easiest way to get started with AirDNA and get good access to data? Yeah, and you can go to airdna.co. Uh we've got data uh

covering every country around the world. So you can leverage it. One subscription gets you access to every country. Uh so you can start with a free account suggest upgrading to Pro. We've got great annual subscription options which relatively low cost gives you access to all the data you need to really get going in short-term rental investment. Uh and then once you buy that property, we've got a great property management system for you uplisting that can get you listed on all the channels, automate your messaging, uh

and get you operating efficiently. So really trying to make this sort of one-stop shop for uh helping you find an investment and then uh operating long-term in the in the sector. Thanks Jamie. There's definitely a lot more questions that I would love to dive into. Uh so we'll have to we'd love to have you back on the show uh in the future and hopefully catch you at a a future conference. And until then uh thanks a bunch for coming on.