Heads In Beds Show - Things We Love From The Biggest Brands In Vacation Rentals

Episode Date: June 19, 2024

In this episode Conrad and Paul turn the tables on the large brands that they often love to take shots at. What are the BEST parts of Airbnb, Vrbo and Vacasa? Enjoy!⭐️ Links & Show NotesPaul Manzey Conrad O'ConnellConrad's Book: Mastering Vacation Rental MarketingConrad's Course: Mastering Vacation Rental Marketing 101Vacasa PM landing page🔗 Connect With BuildUp BookingsWebsiteFacebook PageInstagramTwitter🚀 About BuildUp BookingsBuildUp Bookings is a team of creative, problem solvers made to drive you more traffic, direct bookings and results for your accommodations brand. Reach out to us for help on search, social and email marketing for your vacation rental brand.

Welcome to the Heads and Beds show where we teach you how to get more properties, earn more revenue per property, and increase your occupancy. I'm your co-host Conrad. And I'm your co-host Paul. All right, Paul, how's it going today another lovely spring day here you're getting closer to that summer break school's almost getting close to being done we've got a works in in minnesota we extend i mean the june a little ways but uh yeah it feels like it's a little longer than most most states but how are you doing, sir? What's happening with you?

Yep, pretty good. As people know, we record in advance, so maybe by the time this one comes out, it might school like, yeah, you might have little ones running around the house nonstop, which is, my wife loves it. No, she does not love it. Well, it's good. It's kind of a pretty sunny day here. Not perfectly sunny, but pretty sunny. And we're in a sunny mood, I think, because we're trying to do something a little bit

different. We have been critical in the past of many brands in our space, including two large ones. One, I'll sometimes jokingly, excuse me, say something like the V brand, meaning Vekasa. And then maybe I should say 800 pound gorilla if we say Airbnb. But these are companies, Vekasa and Airbnb, that we have been, you know, take our little shots at or be critical of in the past as we record this today. For example, Vekasa did another huge layoff and they're laying off one, I would assume hundreds of people, which is a bummer for those people, obviously. And not a great time for the business, but we're trying to be positive. So we've got a fun topic

that we came up with. We always look for like new topic ideas we can do here on the show. Things we love from the biggest brands in vacation rentals, two in particular that we might kind of headline the most today that we put together at our outline are Vacasa and Airbnb. And these companies are impressive. And I think particularly with Vacasa, it's easy, I think, for people in our space to take shots, to say negative things. There's a lot of bad things and there's different shows and there's people in our space that will love to tell you all the bad things they're doing. That's fine. Maybe we'll do that down the road. But today we'll take a different tact, which is that Vacasa became a public company. Vacasa does almost a billion dollars a year in bookings,

right? Vacasa does a lot of things right. Vacasa signs thousands a billion dollars a year in bookings, right? Vacasa does a lot of things right. Vacasa signs thousands of homeowners every month. We have this whole list of things. And I think it'd be foolish just to ignore and to brush aside some of these accomplishments for a large property management company like Vacasa. And with Airbnb, again, a lot of our people in our space have this sort of love-hate relationship with Airbnb, but they've built a business that is bigger than any other OTA in our space by a wide margin. There's not a client we work with that gets more bookings from Vrbo than Airbnb who actually lists all their listings on Airbnb, not people who give them a fraction. But if you give

your listings to both platforms, there's not a client we work with that ever sees more from Vrbo than Airbnb. The brand awareness, et cetera, there's so many things to touch on. They've made things mainstream, and I think it's foolish to ignore that and try to push against it maybe we don't like the elbows they've thrown along the way to getting to the front of the line but i think we can we can sit back maybe for a second admire what they've done and learn something from it and maybe we can learn some of these techniques tactics marketing kind of angles to then apply to our small businesses that we work with on the vacation rental side uh the managers that we work with and maybe they can learn something from them as well so yeah we're uh flipping the cap around going happy all, and maybe they can learn something from them as well. So yeah, we're flipping the cap around, going happy, all smiles and sunshine. So what do you want to start

with on the Vakasa side with respect to some things you like that they're doing? Here's the thing. I mean, the reality from all of the Venturi partners is, or most Venturi partners is, Vakasa is a competitor. Like that's it. Like it's a one-to-one competitor and then sometimes it's the biggest player in the market sometimes it's the middle-sized player but there's a presence almost always the case we could throw an evolve in there too but i think lacoste is the one that that they did they did a lot of work and i mean for a couple years they're adding on a lot of these properties buying acquiring a lot of these homes and numbers. This is something that you can't deny. I mean, just look at the total number of properties that they bring on in a

given period, whether that's a month or over a year, they have an engine that works. Like I will never deny that. And it starts with the lead gen tool. We've got the link in our show notes, just vicasa.com forward slash property management. Don't go there. Go to these other partner landing pages that I'm saying. But here is the reality is that they have a lead magnet. They have a easy fill form that really works. Kind of, you know, the blurred calculator idea, like kind of obscuring your potential rental projection that you're going to get. That's something that, guess what? I mean, everybody's looking for that number. How

can you present it in the most compelling way possible? Is it the number one factor for everybody? No. So how do you, how do you gamify it a little bit for people? And I think it is, Vacasa does it in a really good way. It's something that we've tried to mirror as much as we can, But it is. Vacasa does it in a really good way. It's something that we've tried to mirror as much as we can, ensuring that we get the same conversion rates that they do. Because to get to as many sales as they do, to get to as many properties added into their inventory as they have per month, you have to have a lot of leads coming in. So it is.

We're trying to match the same type of conversion rate that they have over all of their system there. So especially on the property management side, I think they do. They have an amazing system. And they have a lot of great salespeople that I think are maybe in some different locations there, but they are very good at what they do. The team that they have has proven success in the industry at doing something that's very difficult as well. I mean, that's something that there's something to be said for getting that homeowner across the finish line. It is really a struggle to get those leads in and to get them over the finish line. We know it's just very difficult.

So the Vacasa team being able to bring in thousands, hundreds and thousands of listings every year, that's a testament to probably a good sales process, a good sales training behind the scenes and, and making sure people understand the value of what Vacasa can provide. And I would guess probably overselling in a few cases as well there. So yeah, it's, it's, it's, it is. We're trying to be positive, but we got to take a little shot. I had to, I couldn't, I couldn't take a pot shot. Let's go.

But yes, no. Generally speaking, as is always, they do. They do a really good job of selling that service. So in addition to that, providing examples of people who have done a really good job, their case studies are really well done and they put those out in marketing. And I think it helps that lead engine and that sales engine as well. So we'll keep it on a positive.

Yeah, well, to your point, it's funny, right? We have this negative perception, but obviously the marketplace doesn't necessarily agree from a homeowner perspective, because just for reference, now I know many of these units were sort of acquired through like Wyndham. Many of these units were acquired through these individual property management companies that they were buying for several years. But the last ID number that I can see in the Vacasa website is in the 120,000 range on properties, and they number everything sequentially. So that means over the lifetime of Vacasa, they've signed roughly 120,000. They brought 120,000 properties in the fold. Now there is 41,000 or so active at the moment,

and they do unfortunately lose listings every month. That's just, that's not taking a shot. That's just a statement of fact. But in order to get the numbers they get, right? Like for example, month over month, you can see there's months where they sign their gross signings as far as new units added to the website is still in the thousand or 1200 range across 30 markets. So they're adding, if you look at it that way, but just do some quick math. And I realized this would not be the case where, you know, the number works out to be 40. It's not like they add 40 units per market per month. There might be one market where they add a hundred and then one market where they add 10. But regardless, there's many companies that don't sign 40 units in

a year in a single market that are quite large, nevermind in a single month, which is what Bacasa does if you average it over all their markets, as far as just gross ads of, you know, on the, on the homeowner side of things. So, and we've looked at it before. So on the Victoria side of things, some of the marketing that we looked at before was all their direct mail that they do. And if you have a vacation rental, you are probably in a multitude of a cost of direct mail tests, which might include letter campaigns, might include postcard campaigns, might include different types of offers that they might send out there. They, I know in the past I'd seen them testing, for example, like sign on bonuses, they've tested guaranteed revenue type stuff in the past I've seen on those types of mailers. And you can't dispute that, like the results of those efforts

are very clear to your point, and they close a lot of those leads coming in. So I've been you guys are often trying to mimic and get more leads in the door. And people will sometimes, you know, shrug their shoulders, but just be like, man, we're fighting a heck of a gorilla with costs on the homeowner side, because they are pretty relentless when it comes to homeowner marketing. And they do a good job. And they tracked 1000s of units, typically many months, they tracked 1000 1200 new people to sign up every single month, which is very impressive, extremely impressive. It is I mean, I think that that's that's something where Yeah, you know, I've done the digital talk of no, don't don't talk to digital talk of don't talk to me about direct, don't talk to me about direct mail, don't talk to me about that direct marketing.

But we did a little of the tool and we use the tool of who's mailing what to understand, like who is doing these direct mail campaigns? Because we want to see, we want to understand who's doing it. But KASA is doing it. And again, you don't get, you don't grow what you grow. You don't see the growth that you do unless you're doing that consistently. And you wouldn't be doing it consistently unless, again, now they're firing 50% of people. But you wouldn't be doing it consistently unless it was effective. Like that's just something that they have attribution in place.

They would be crazy not to. So they know where things are going. What is effective? What isn't effective? You wouldn't be sending direct mail if it wasn't effective, and it is. It's why we hammer on that so frequently. No, no, no, it is. That's the thing.

Nobody's going to be sending out 50,000, probably 100,000 email pieces a month, I would guess, maybe more, depending on the season and then things like that. But that is a lot of cost invested in there. You're not getting many cost breaks there. You're going to pay for 100,000 pieces $60,000 to $70,000. I mean, that's a lot of the spend to go in there. For something that is direct market, it's offline attribution. So you are going to lose something.

There's going to be some leakage of who's actually opening it, who's doing this, who's doing that. So that's, that's something that I can't hammer home enough that while digital is where I want the focus to be, direct mail works on the homeowner side. That is a reality. And it's because it is that longer cycle, the multiple touch points, and it does take more than just a, hey, the rate is right. The nights are right. Let's book it. It's so much more than that. Yeah. So I'm going to flip over to the guest side. I mentioned this in kind of our intro. Bacasa is going to do and has done, you know, it's the last two years, over a billion dollars in revenue, a billion dollars in bookings on their platform and on OTAs, which is incredibly impressive, right? Like there are companies in our space, large, you know, single market vacation rental companies

that are doing $40, $50 million a year. And many people in our space will consider them to be the biggest and the best property managers. And they're doing, you know, one 10th, you know, if you will, less than one to one 20th of what the cost is doing on an annual basis. Granted, obviously one market versus 50 obvious, you know, that that's kind of the difference when you're a national brand. But I don't think, you know, people understand how complicated and complex it might be to run quite literally a billion dollar business, which Vacasa is from a revenue perspective

on a monthly basis. Now, they're not worth that if you go look at those at the stock market price and things like that. But it almost makes you think like, if we can get things pointing in the right direction for them, why wouldn't the company be valuable if you can keep doing a billion dollars a year in bookings, right? There's so much like to convince that many customers, I don't know exactly what their average, you know, booking value is, but if you just do some quick math,

you know, if they're doing, let's just say the average booking value is $1,200, it means they're doing 800,000 reservations a year, you know, collectively across all their properties, right? Like that is a lot of bookings that are coming in. According to the most recent data that we have, 30% of their bookings are also direct. So maybe 270, 280 million of their bookings are coming in direct, according to the numbers that we can find online. This is all from their public S1 reports and things like that, that they have to file to the SEC, which means that on average, I did the math here because I wanted to make sure I got this right. They're doing almost $750,000 of direct bookings every single day. Again, we have clients that don't do 750,000 in direct the whole year in one market. And Vacasa does that every single day across all their markets. So that is

impressive. The Vacasa website has been through a lot over the years with respect to changes. And they've had so many sites that emerged into the Vacasa website when they buy these property management companies. And I always thought it was a little bit kind of choppy and messy at times when they would buy a vacation rental company and just fold every page into the vacasa like landing page for that particular market i don't necessarily feel like that was optimal but we can't dispute that like vacasa's organic search traffic has grown significantly according to hrf's data this is as of right now they're probably getting anywhere from like 450 to maybe 550 000 organic search visitors every single month again many clients that we work with might get 10 000 visits a month from organic And that's like a really good, really good for a single market property

manager. Not only that, but there's roughly 85 to 100,000 people every single month that just search the term Vacasa. So there's, you know, a football field stadium every single month of people just looking for the term Vacasa, the brand Vacasa. Now, it obviously pales in comparison to Airbnb, we'll get to them in a second. But we talked about Airbnb's brand search dominance. There's three or four times more people that search the term Vacasa than search the term vacation rentals, just generically, those two terms. So again, there's a lot of impressive stuff that's gone on on the direct marketing side of things. And it's funny, Vacasa on their website never talks about getting bookings cheaper on their website versus getting bookings on an OTA with a different value, right? So like, that is not the messaging that they have,

they have the messaging of like, you're booking direct, because you're getting the right experience, and their revenue and what they're able to drive a people who book directly is higher, I'm sure for them from a throughput standpoint, then that same booking on an OTA. So I'm sure they don't want to be 30% OTA, they would love to have more independence, maybe that could build a little bit of a moat, which does exist, I think, in other markets. I was looking at the Sykes Cottages brands recently, for example, and they're almost like their own OTA out there in the UK to where if you list on that, it's almost like you're listing on an OTA.

I know they do property management as well. I'm not super savvy on that brand, but I feel like Vacasa, if anything, one thing that could help them is having inventory in Vacasa that's not accessible on an OTA. So you have to go to Vacicasa in order to buy that. Compass is doing the same thing in real estate, for example. So there's even, I would argue, like they have all the infrastructure. They're already doing $750,000 every day on average of direct bookings coming in their website. And that's, you know, again, with all the maybe downfalls or pitfalls that they're, you know, kind of coming off of there.

So some other guests kind of fun. I had some fun with this kind of reminiscing on 2013-, when I got into the space and what was common then that is certainly not common now. And I think Vacasa pushed a lot of property managers to change their business practices and what they were doing. On the other podcast that I do, Art of Hospitality, we talked to a property manager who said, you know, really until Vacasa came into our market, everybody was very hard on turn days. It was a Saturday to Saturday turn day. There was no flexibility. There's no changes. And Vacasa came in and said, why?

Like we can, why not change the turn days? Why not make lower night minimums? They opened the calendar significantly and that led to a lot more revenue for the homeowner. And it actually led to, in some ways, better operational sort of workflows for the team members because they didn't have all these turns happening in one day.

There were some people arriving on Monday and Wednesday and Thursday. There was this flexibility. Now the weeks get chopped up and that makes revenue a little bit trickier to manage. But Picasso has done a good job of that with building, you know, different tools and gap nights and things like that that we I think are worth highlighting. So all these property managers nowadays love to say how, oh, no, I do it the right way. I'm modern, et cetera.

But a lot of them came to that conclusion kicking and screaming, you know, like the story that I gave to as well, Paul, before we hit record for the benefit of the listener is when I went to my first VRM conference, San Diego, 2014, um, there's property managers there at that time, 2014, who were adamant and completely convinced that they would never do keyless locks. I will never do smart locks. Everything will be a physical key. People like coming into my office. They like seeing my team members. They that's my touch point. I can make sure the guest is who they say they are. You know, that's how we limit property damage. We talk to the guests when we give them their key. Now, and this is before COVID too, this was the case that obviously COVID maybe

accelerated that. If people were on the fence about it, you would laugh if someone said, yeah, you got to come to our office and get a key, right? That's just a ridiculous conclusion there. But companies like Picasa, these more modern, a little bit more tech forward thinking companies pushed keyless locks and pushed push them these systems and platforms, even when it wasn't maybe as popular to do so amongst kind of the old guard, so to speak, I'm putting this in air quotes, the old guard of some of these property managers that are out there. So yeah, hard turn days tech backwards, like keyless locks companies.

This was the last one I had some fun with reminding Paul about this and talking about this idea. So when I started again, back in 2014, it was very common that there was many East Coast beach markets where you did not get linens, there was no linens on the bed, you could like check a box at the checkout, or you could like fill out a form that was like, hey, I want linens, and then I'm paying a separate company a separate service fee to bring me linens. So there's actually something on the bed when I arrive, or there was a button to check like I'll bring my own linens. And again, there was many, many property managers who are very popular and notable and large IV VRMA that were doing this.

Ocean City, Rhode Island, a lot of New England area beaches. This was like commonplace, Cape Cod, et cetera. Now, again, you would just get laughed at if you didn't have like premium hotel, you know, quality type bedding on a bed and it was made and everything ready to go for you. Again, I know COVID changed that. There were some clients we worked with where the sheets were put into like a bag and they were like cleaned and sanitized and stuff like that and left outside the property for cleverness purposes which i think there was there was some science that supported that so it is what it is but yeah generally

speaking today like that would be ridiculous that you would think that you'd book with the property manager and there'd be no linens on the bed but that was commonplace in 2014 and companies like macasa pushed against that so um yeah just the rewriting of history you know i think is is people like to talk about what they do now but a lot of people who do those things now didn't want to do those things if they've been around for a long time. And some companies like Picasso had to push the standards up. And I think in many cases they have done a decent job of pushing the standards up for a lot of, you know, markets and they should be, I think, really acknowledged for that

piece as well. I think that the booking numbers really are like, they're, they're astonishing. think that the booking numbers really are like they're astonishing even if you're i mean even you know to give 30 bookings direct they're only taking 20 of the 21 of the bookings from airbnb that's all that's i mean it is that that's that's still not that much of a reliance there i mean they're doing it through a lot of different ways um yeah 700 almost three quarters of a million dollars daily in direct bookings. Those are astonishing numbers. And they should. They should be given their kudos and proper recognition for having a system, having a directory, giving people a travel outlet that

has worked. That has worked as far as letting people find a place to stay, you know, whether whatever their needs are for travel. And we'll just we'll leave it there. And we'll transition to the other 800 pound gorilla in the room here. All right, so that's Vacasa. So hats off to Vacasa. Claps for Vacasa. Now let's go. Let's go more OTA. Let's go. Yeah, let's go Airbnb. So, you know, I alluded to it earlier, but the brand, you know, you can't dispute that the brand Airbnb has become mainstream. Like, you know, the thought in, let's say, 2012, 10, I know, obviously, Airbnb existed before that. But before it was quote unquote, mainstream, the fact that you would hear someone use the term vacation rentals, I mean, I knew of vacation rentals, because I've lived in a heavily vacation

rental, you know, affied area when I was like moving here back in 2007, when I was still in high school. But certainly, like, if you pulled, I know, Tayan's talked about this research before that, I believe Verbo was doing some of this research as well, that there was like a 20% awareness rate, 15% awareness rate of the product, the vacationer product amongst, you know, Americans, if you were to do surveys and studies back in, I don't know exactly what time frame that would be, let's just say 2010, or 2005, or something like that, which most people just didn't even know this thing was an option. It existed. And Airbnb has certainly changed that narrative significantly. I think the most recent data that I've heard of references like that number is now in like the 80% range, 90% range.

People have heard of an Airbnb or heard of a vacation rental before. So their brand and what they've done from a branding perspective is unbelievable, right? Like people now know this brand. And what I alluded to a second ago, in many cases, people search Airbnb to mean vacation rentals. The idea, it's Kleenex. People have replaced the product with the brand, which we obviously can see as a little bit of a problem,

but you got to give them credit for, you know, that's what any brand marketer wants is that when you think of soda, you think of Coca-Cola, right? That's like the optimal outcome for a brand. And Airbnb has done that pretty well for a lot of people with the idea of a short-term rental or a vacation rental.

It's really a coming of age at the right time because it is. When you think of that concept, right, it wasn't a US thing. We had hotels, we had resorts, we had inns, we had motels, we had any type of accommodation you wanted, but it was a box. Kind of fit in that box. Different size boxes, but they're boxes. but it was a box. Kind of fit in that box. Different size boxes, but they're boxes. And I think the concept of that shared space, hostile experience, that was a European thing.

But as more of that shared space gig economy came around, it wasn't just the home sharing, it was ride sharing. It was everything coming together. I think it was just kind of a whirlwind of events. I don't think they're necessarily relied on one another, but if Uber and Airbnb don't come to kind of come up at the same time, I think there's a lot of parody there that just kind of happened. Okay, we're going to share our homes. We're going to share this. Everybody's going to do it. It's more of a gig economy. How can I make more money on this? I don't just want to work my nine to five. I don't just want to make money here. I don't just want to do this. I want to find a way. And I do. I think that that's part of it is that 2013 to 2015 timeframe of all of these things growing together. Yeah. It helped the whole brand thing take off. I can remember when I was still in late aughts, early teens, we'll say,

I remember my mom was a big VRBO person. She loved VRBO. It was her favorite place because she was just starting to get close to retirement. That was what she wanted to do. She wanted to find these little places. At that time, cost was awesome. All of these benefits were there. So I think there was, there's that travel audience, kind of the boomers started to kind of move into that. We're moving into retirement phase. We're looking for different types of travel options. We're looking for cheap travel options. Airbnb becomes a very nice option for them. But then it is, it's just that ridiculous hockey stick growth of Verbo is actually that next competitor out or VRBO at that point is when you look at the search trend lines, when Airbnb starts to take off, VRBO was that number

two at that time. Now it is still there, but it just doesn't, I mean, clearly, it doesn't keep the same weight. And that 2015, 2016 time is notable because that was also the time that Expedia kind of came in and you kind of thought there would be an arms race between Airbnb, VRBO, what's going to happen. And I think Expedia still thinks there's an arms race there, Expedia still thinks there's an arms race there, but Airbnb is certainly, they have become vacation rentals. They are the brand. Yeah. So, and it is. And now they've transitioned from, they probably started with that older demographic and now they're transitioning right into that younger demographic and trying to make it more of a social feel and trying to make it, yeah, cool and mainstream.

to make it more of a social feel and trying to make it cool and mainstream. It's an interesting timeline to take a look at just what happened and how it happened. And again, I think that corresponding event of Uber coming along and the gig economy really growing at the same time, it just made for a perfect match of, okay, we're going to come together and Airbnb is going to be the be all end all. Right I think I think you you bring up some good points there the timing always matters you know what I mean and there's many people who have the right idea at the wrong time you know and then they they don't seem to get the traction or whatever that they deserve and I think there's like famous stories that um Chesky tells about people you know him pitching Airbnb to investors saying like hey here's what we're gonna do and

someone basically replying back and saying like this is a horrible idea it's never gonna work like no one's ever gonna trust etc and of course And someone basically replying back and saying, like, this is a horrible idea. It's never going to work. Like, no one's ever going to trust, et cetera. And of course, now we look back on it and go, like, it turns out people are actually pretty trustworthy. Like, it turns out, like, most people actually do the right thing and are great people, et cetera. And there's always these edge cases of bad things happening. But generally speaking, it's not less safe necessarily to do a short-term rental than it is to stay in a hotel. You could point at plenty of examples of violence at hotels. I have a hotel client. There was a shooting at their hotel recently. Hate to say it, but it

happened, right? Like that can happen. So yeah, I think, I think you're bringing up a lot of good points there. The other angle I was going to go down is like, to your point of pushing it down to the younger demographic, making it cool, making it mainstream. Now they, you, you, you would go to Airbnb and look for unique stays properties. Like that would not really be the case on BRBO at the time, you know, in Homeway at the time you would see, Hey, you'd see a great beach condo, a three bedroom, two bath condo, you'd see like your typical vacation rental inventory. We all know what it looks like. And many of our clients manage and book that inventory. And don't get me wrong, there's always going to be demand for that. But there's something about Airbnb that they they allow people to kind of push the envelope,

like the potato kind of being the original example. I saw Christy did an interview recently, I feel like she doesn't get the credit she deserves. She like she came up with that idea, like a long time before people today have like kind of made that more popular since COVID. But she was doing that back in like, I think like 2011 1213, like that timeframe. So she definitely had some ideas that you know, I think have now become like you want Airbnb and you can now find weird random stuff in a bunch of different places all over the website. In fact, they have categories that are like, you know, encouraging hosts and people out there to build weird wild stuff and people are going to enjoy that. And I think that's a cool thing that Airbnb is doing. As the time of we're recording this, it was about a week ago that

Brian Chesky released the icons properties, the uphouse and this and that, right? Like the idea that, again, it's a stay that you're going to remember forever. It's not Hey, here's a two bedroom, two bath beach condo in Destin. There's nothing wrong with that. That's fine. But it's not what Airbnb is leaning into. And I think what they're leaning into gets them more attention. The comment they made about the Barbie house, which was the original one, I think about two years ago or a year ago at this point, is that the Barbie house got more press than their IPO, which I think goes to show you that people love this idea and they lean into it, which I think, you know, again, we don't give them enough credit. A lot of vacation managers go, yeah,

that doesn't scale. Yeah, it's not this. It's not that. That's fine. That's not the point, right? There's some other pieces to it. So this is a different angle, but basically making the guests feel comfortable with the middleman, like Airbnb is the middleman. There was certainly a time during HomeAway's growth period, and there was a time during the VRBO period where they didn't want to be the middleman. In fact, the original VRBO worked much more like Craigslist or much more like a directory

where it was like, here's a list of properties, here's a list of, here's their phone number, here's their contact info, et cetera. But for the most part, it was kind of like every VRBO host could have a different policy, every home wing host could have a different policy. There was no consistency. And Airbnb said like,

no, if you're going to come play in our marketplace, here's the rules that we're going to set on both sides of the equation. There's a guest kind of, what is expected of the guest, what's expected of the host. And we're going to come play in our marketplace, here's the rules that we're going to set on both sides of the equation. There's a guest kind of what is expected of the guest, what's expected of the host. And we're going to make these things very clear. And we are the middleman. And yeah, we're going to hold your money.

And if things go wrong, like we're going to give the money back to the guest. Now, I know that opens up a can of worms with respect to when those situations and decisions are made is a very different kind of conversation to go down. But for the sake of being positive this episode, that does make the guest more comfortable. The fact that there's someone watching in the middle makes the guest more comfortable

and more likely to lean in a book vacation rental when they may not have before. And I think it's foolish to ignore that those marketplace dynamics have been largely a positive thing for a lot of people on the guest side. And that is, that's one of those stats that we were talking about before the episode too.

95% of surveyed guests chose Airbnb for ease and security of payment. I mean, that's payment specifically, but I'm sorry, that's a huge thing. I mean, that's the 95% of guests chose it for ease. Now, I don't know of the survey, what the survey question was, all that thing, but that's a high confidence rating.

I mean, that is something that, even if it's a multi-choice and it's one of the reasons that you did it, that's a lot of positive response and creating that peace of mind in a space where I think we all, I mean, now it feels commonplace to buy anything and everything online, but that wasn't necessarily the case as some of these businesses were really starting to take off at this time. So to have that, again, that big brand that is going to take care of you as you see it, we'll worry about what that means for the actual property manager at a different point. But there's something to be said for that. And clearly, it's something that they used and they still use in some of their marketing campaigns about that trust and about some of those pain points that some travelers have. And there's people in our industry that

say, you know, trust is the most important kind of asset if you're trying to get that direct booking, because that's what the guest is automatically skeptical of. How do I know I can trust you? How do I know that you are who you say you are, that the property is what you say it is? And Airbnb, for better or worse, has like done a pretty good job of inserting themselves in the middle and said, hey, you can trust it because we've i mean they're supposed to verify their listings we're so close we're getting there but we're like 99 yeah this is still good we're still yeah we're still compared to other episodes we're still good yeah i will say verbose never even attempted or pretended to attempt to verify their listings like What Airbnb is suggesting that they're going to attempt to do, verify all listings, is a heck of a hurdle to head over, right?

The idea that there would actually be a third-party independent verification of these listings, not a first-party independent verification of these listings. A Herculean effort. Yeah, a Herculean effort. So it goes to show you that marketplace dynamic does bring the traveler in. It brings the traveler in to say, you're in this world now. You can trust us, this world, we built it. We designed it in a way that the host benefits, you are going to get a great vacation. And we take our percentage of the middle for facilitating the transaction. And for a long time, many guests, and to this day, you can make the argument. I say this to clients all the time.

The guest obviously doesn't mind guest fees that much. Otherwise Airbnb's business would have gone nowhere. So the guest fees must not be that bothersome to Airbnb, the average Airbnb guest. Otherwise, they would have found some other way to book or they would have found some other path to booking. So the 12% fee that they typically charge the guest, I know it depends on how your PMS is connected that you may pay that fee, you may not. But regardless, for a long time, it was the guest is paying that 12%, you're paying that 3%. It was never that much of a hindrance to their growth. In fact, it fueled their growth. And that was%, you're paying that 3%. It was never that much of a hindrance to their growth. In fact, it fueled their growth

and that was where all their revenue came from. So very interesting things there. You mentioned this earlier, but like building your brand off Airbnb and you benefit from Airbnb's reach. So we looked this up just to make sure we got the numbers right. Airbnb spends roughly a billion dollars a year

in advertising. So I've listened to a lot of what Chesky says about like performance advertising versus, which is kind of what he calls like Google ads and things like that versus other channels. And he's not the biggest fan of like so called performance advertising. He doesn't like the idea of shoveling money to Google for clicks. He's like, we've done a lot of it in the past. I mean, I've seen numbers in the past that they've spent 10s of millions of dollars in a given month on buying traffic from Google.

But that's not really what they want to do. It's not really Chesky's vision or his belief that that's what's healthiest or what's optimal for Airbnb long term. He wants to be and what he's done very successfully, obviously, is like, you don't even go anywhere else, you just open the Airbnb app on your phone, or you go to the Airbnb website directly, and you make that reservation. And their billion dollar a year ads budget is often not directed at things like book now. But it's directed at things like here's what we stand for, again, live like a local, we touched on that earlier. It's very different things, icons, etc, that give them this kind of attention so we did some math on that really quickly though by the way so if they spend a billion dollars a year in advertising brand

marketing etc now they did roughly uh 10 or like a little under 10 billion dollars a year last year in gross revenue obviously we'll see what this year will hold likely 10 billion if not a little bit more than that so if that same budget were to be the same interesting they spend roughly 10 percent of their gross revenue on ads, but remember, they don't keep their gross revenue, they have to give much of it back to the host who's actually hosting the property. So we did the math here, I think I got this right. Based on their take rate, for example, if they earn a booking where they get $150 cut, they would be paying roughly $100 of ad costs to get that $150 payment. That's like that Airbnb's actual revenue on $1,000 booking

is $150, right? Again, because they're giving so much of it back out to the host. I thought that was interesting because there's not many clients that I work with that would say, oh, I'm okay paying a hundred dollars to make $150. Like that's a pretty tight margin. Maybe, maybe like depending on your margins and what other costs you have. But for the most part, that's not a great like ROAS to be honest with you. And this is the biggest, most successful brand in our space. And they're spending 10% of their gross revenue, gross revenue, not like their take home, if you will, gross revenue on brand marketing and advertising. And there's not a single client we work with that spends 10% of their gross revenue on

advertising and marketing. So I thought that was interesting, you know, just to show you how much they are investing into the brand and how they're trying to build this awareness that you as the host or the property manager are benefiting from significantly if you listen to the platform. So I thought that was interesting. Maybe you're not benefiting with those direct bookings, but the fact that Airbnb is in the auction and that they are showing up for organically,

if you're listed on Airbnb, you're going to indirectly benefit from that. It may not always feel like it. And you're not the only one that's going to be benefiting as with any directory site or any booking site or anything like that. But the reality is you still will have some benefit. And if you're taking those bookings, then absolutely you're going to have the benefit and you will see the value there. So, yeah, I think that that's just it's always something to consider.

It's not it's not just you against Airbnb. Sometimes feels like that. But there is some boost to them being in your market and having a heavier presence in your digital space and, and kind of leveraging and leaning into that a little bit too. Yeah, a hundred percent. So that gives us 35 minutes on what we like about Picasso, what we like about Airbnb. People take their shots all the time at these companies, rightly so in many cases, and that's fine. I don't, I don't necessarily disagree with that, but why not try to, you know, no one, no one's out there defending these companies, rightly so in many cases, and that's fine. I don't necessarily disagree with that. But why not try to, you know, no one's out there defending these companies or at least saying,

hey, what are they doing right? Are they doing well? So we have this kind of fun idea. Hopefully you, the listener, liked it and learned something. And go on Vacasa, you know, with an open mind and look at what they're doing on the homeowner generation side of things and see maybe can you replicate some of that with your marketing, whether it's with Venturi or on your own. Is there things that you can look at that says, hey, these guys are signing 1000 properties a month, 2000 properties some months, that's impressive. What can I learn from that? What's their tech stack? What are they doing on lead gen? What are they doing with direct mail? These are all things, of course, that can help a little bit on the guest side of things like what is what is Vacasa focused on, right? Search

marketing, social marketing, email, these aren't these are things that we preach. And it's good to see that, you know, obviously done in at a national scale, like a billion dollars of direct bookings is absolutely feasible and out there um if they were to keep scaling and growing so we'll see time will tell on both these brands obviously one is kind of headed generally speaking in the right direction as far as growth and interest and more people stock price etc one's kind of heading in the wrong direction but you know sometimes you can be down 10 points come back and win a game right like there's no who's who's to say that pacasa won't find a better footing and grow their business again in the future no who's to say that Picasso won't find better footing and grow their business again in the future.

And who's to say Airbnb will be dominant forever? There's people that said that about Sears and retail, right? Like, oh, I can't imagine Sears ever losing to a startup like amazon.com and now look at that sort of change and what's happened there. So we'll see. Time will tell. But hopefully a fun one today if you, the listener, got some value of it. It's something very positive that the listener could do, by the way um at this stage if they made it all the way through cost them very

little puts a smile on our face we already had smiles on our face recording today is go to your podcast app of choice itunes is where we get the most downloads spotify is where we get the second most downloads so if you're an itunes or spotify user go to your podcast app click five stars and then more people can listen to fun episodes like this and then you know we'll wait a little bit and then we'll do a complete rip down episode of all the mistakes that these companies are making how frustrating they are to work with at times. So we appreciate you, listener. Thank you so much.

We'll catch you on the next episode of the Heads and Beds show. Have an awesome day.