Simon Lehmann: Five new year resolutions for STR hosts
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Profitable short-term rentals manager I’m your host James vley and today we’ll be getting 2024 off to a flying start by talking to short-term rentals Guru Simon Leman he’ll be talking about the current state of the industry and sharing the five New Year resolutions that every holiday rental host should be making if
You want to supercharge your guest experience this is an episode not to be missed now our goal here at HD is to share everything you need to know about buying and managing short-term rentals whether you’re a host investor or property manager to get the most out of
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For the most popular episode of our show so far which I’m sure is a career highlight H in addition to being a brilliant podcast guest Simon Leman is a short-term rentals Guru he’s an investor consultant and keynote speaker and is the co-founder of AGL atellier he works
With some of the biggest brands in the business it is a pleasure to welcome our first returning guest to the hch podcast Mr Simon Leman thank you James it’s great to be here and somebody has to be the first returning right that’s right and we are so glad that it’s you so the
Last time we spoke you said that a storm was coming for short-term rentals how is it it looking now is a storm still Brewing as we get into 2024 yeah I’m I’m still absolutely of the same opinion on in terms of what we see and how the markets have performed over time we
Definitely see a softening within the overall Str strr industry there’s different factors that are influencing that storm I guess uh and you know it’s we always need to be careful not to generalize things um but overall we’ve seen massive increases of refar and and uh occupancy and also ADR so everything
Was perfectly fine interesting that we saw in September is the first time that Supply actually grew faster than demand so what that immediate effect is it will start uh having an impact and softening the market in terms of adrs and occupancies and uh and Rift power as
Well so I do believe that we will not see the rates that we have seen in 23 certain markets have pushed their adrs simply above what the market is capable to carry and and the natural result is going to be that there’s going to be a
Lot of uh pressure on price people might uh want to book um lower quality type of properties Supply still grow so that will automatically uh result in in in uh in lower um metrics and that’s definitely going to happen that’s one piece and the second piece interesting enough is is obviously regulation you
Know we’re hearing every day new things we just heard on France that the Senate has passed a new tax ruling as well for individual homeowners um which have massive impact for individual homeowners in terms of that and also taxes they need to pay on their properties so regulation is
Something we’re dealing with on an ongoing basis and it will increase and we will put a lot more pressure on the on the vacation rental industry as well so with all this in mind who are The Operators that are actually going to thrive over the next couple of years do
You think yeah I you know I think especially the ones who are operating in a more rural area that is less less regulated where tourism is is important uh in relation to Value creation for a destination and you know somebody that can can adjust uh and has multi-locations as well you know larger
Companies I do personally I believe and I don’t have uh facts or proof for it but my personal belief is that ultimately the professional managers are going to benefit from what’s going on uh overall because what you see if you look at if you look at the total data of
Let’s say Europe in terms of listings 70% of listings between one and and and literally 20 is is 70% of the supply is is individually managed very small then you have 20 to 100 and then only 100 plus are 20% of the total Supply so 100 plus properties are managed by companies is
Only 20% which means that the opportunity to gain unmanaged inventory uh and in a more regulated environment is actually a massive opportunity for the ones who will benefit from that and I do believe that if you have a single location where it’s it’s it’s heavy on regulation it’s going to be very
Challenging and we have seen some of that already like strong Urban operators have ventured out in more vacation rental destinations as well to D risk look at seasonality and everything like that so I think the professional managers uh will benefit over time without a doubt and I guess there’s some
Opportunity there for some locations if they don’t Implement regulation to attract more tourism and to potentially attract more Revenue that might be something that different jurisdictions and locations look at over time is is to have a light touch approach to boost this this industry I totally believe so
Because and we what that’s one thing and the second thing we will see is that regulations will change again because they will automatically realize that it didn’t it didn’t actually deliver the results that they were looking for I have a perfect example in in the south of Switzerland they’ve capped it for 90
Days if you think about it what does that mean it’s not going to drive down the real estate market it doesn’t mean that more affordable living space is coming available in these destinations and it will actually have an impact on less tourism so there’s less tourist tax there’s less spending in town so
Actually I believe in most cases the way these regulations are written and implemented they will actually do more harm than they will actually solve um budget housing issues and and and having housing available because these properties are owned by individuals if they don’t rent it okay then they don’t
Rent it but but but actually the the value Creation in the destination is all of a sudden missing and we’ve already seen some of that in in Colorado for example well where they’ve changed things again because it didn’t have the effect that they were really looking for
H so that’s one reason and the second one governments change too is it more socialist is more on the left is it more on the right and that will impact that as well so I think this will be constantly evolving without a doubt yeah as usual with property regulation
Certainly here in the UK it’s the it’s the unint consequences which which are the problem rather than the the intended consequences um so now you’ve been to a lot of conferences in the final quarter of 2023 you’ve been speaking you’ve been moderating panels what have been your main takeaways from the events that
You’ve attended I think I I can add to the point that you’ve just made actually where who will benefit and I think there’s regions and markets um that are very little regulated and still see massive opportunities so this year I also focus on smaller events H in
Destinations where it was the first time for example in Croatia 400 people turned up massive Appetite For Education learn about it learn about the industry first ever vacation rental conference in Croatia and it’s one of the top destinations um I went to Australia they had their second conference ever um I
Went to Mexico in Cancun so what I love about these conferences is the engagement level is massive the people want to learn they want to mingle they want to they want to network and they suck anything in that they can get in terms of Education in terms of knowledge
Knowhow and are also willing to share so I think that was that was tremendous yes of course the topics at the end are all very similar but on different layers Tech adoption Revenue management regulation of course depending on markets certain markets there is none right so it’s not
A topic for them um but they want to learn how it’s done in other places so I think one thing that so there’s a lot of differences if you wish between the different conferences and the audiences and and what they’re focusing on but ultimately we all do the same thing so
One big takeaway for me is what we do in this industry connecting guests with owners is universal no matter if you go to South America if you go to Australia if you’re in Europe or the United States that’s what we do the level of sophistication the level of knowledge
The level of tech ad option it has definitely massive differences and that’s why these markets are actually very interesting to be in I mean mexo Mexico for example is just striving right now they they’re literally 10 15 years behind the North American market and even further behind what the
European market is in terms of maturity product adoption Etc and and you know this is what I loved of of of seeing so one thing very Universal on one side but but then very different on the other as well so where do you think we’re heading in 2024 then what are your main
Predictions for this calendar year and and if we talk again in a year’s time what do you think we’re going to be discussing yeah I think we will head into even more Automation and Tech adoption it’s absolutely key we will face more regulation and an uncertain environment without a doubt we will see
A softening in terms of demand um therefore uh Chang adrs overall more lower adrs uh most probably and therefore lower potentially lower occupancy uh but definitely lower refar occupancy obviously can kept high with lower rates um but refar will will will decrease and we already see that in
Certain markets Australia we already see you know a lower ref par of like 9% uh adrs have come down 67% as well so yeah I it’s I think that’s definitely something uh we’re going to face um we will definitely face uh even stronger is what we talk about global warming and
And everything that is related to sustainability U so global warming will continue which will have an impact on the southern markets we’ve seen that Trend this year already that the the northern markets like Scandinavia H northern Europe have actually also the UK and and and Ireland have actually benefited from higher demand
Whereas markets like Greece Italy and Spain uh in the high summer months have actually decreased their demand because it was just simply too hot and that will definitely have an impact on 2024 as well and international travel they still uh are very they believe that it will remain very strong airfares are still
Remain very high that will definitely have an impact uh on our industry as well everybody re seems to be reasonably positive the inflation have cooled down we’ve seen some news yesterday they believ the interest rates will come down quicker than what they anticipated we’re not through yet so uh let’s see what’s
Happening what about in terms of Supply do you think Supply is going to keep Rising during the next year I think that will depend on markets to markets but I do think uh you know pressure is on interest rates are not going to come down that quickly people have higher
Cost of energy and and upkeep and everything else so it could very well be that Supply actually continues to increase uh obviously Less in in highly regulated markets but um but Supply I don’t think I’ve seen is is going to slow down in increasing okay then so this is our
First episode of 2024 and that means it’s time for New Year resolutions of course um so this episode we focusing on what the five resolutions should be for every short-term rental host and property manager so you’ve got five there in your pocket so give us number one yeah we’ve already started to uh
Allude on that and for me it’s actually prioritized sustainability and this is not just related you know to the business in itself but this is an obligation that we have as human beings populating this planet if we don’t look after it um you know we things will
Accelerate and will get a lot worse for us we have seen reports that you know 70 plus% of Travelers are looking for more sustainable products uh where they stay you know and that’s sustainability is not just obviously only related to to the climate change but also related to you know any other
Eses um and and I think the younger generation makes a a very big point about you know how like I know that myself you know my 22y old how they consume travel and what what is important to them you know is that part of the community what did they do with
The money um are they sustainable in terms of the product offering are they helping to compensate are they doing their own thing within the property so I think we need to take the whole topic of climate change very serious also in our industry despite the fact that we’re
Fragmented and always find excuses why we don’t need to do it uh I think very much so that’s something I would put on a on a on a New Year’s resolution on top of the list yeah if you can of green your properties and I think if you are
Doing sustainable things at your properties make sure that you highlight them in your listing don’t just do it and not tell anybody actually put it there in your listing have it there on your website so that your guests know that you’re taking action and that you’ve got a more sustainable property
Absolutely and on top of that don’t just stick a stick some useless label on your website because labels mean nothing the action uh means a lot more so then uh New Year resolution number too profitability and financial hygiene so we’ve touched on that in our initial conversation James and you know as times
Get tougher you also need to think about hey what is the purpose of my business do you what is my plan think about your strategy where do I want to be in one year two year three years what is maybe my exit plan how does it look like
Financially what do I want to get out of it when do I think is is it surpassing a lifestyle business is it is it a growth business and and and financial hygiene underneath that is is building the foundation you know a lot of people come into accident to this they have fun they
See how easy it is and then all of us but but actually knowing what the cost drivers are what are the revenue drivers what is your profitability at all given times where is your cash from where is your cash coming from during low seasons
And how do I manage that and how can I improve uh my profitability and I think I would put Financial hygiene as the second most important thing for next year as times get tougher it’s going to become even more important and we know how we behave ourselves when when the wallet is
Starting to get empty right so we’re being more cautious and I think that’s something the industry needs to do as well and and there is still a lot of work to do in relation to profitability and financial hygiene yeah I mean it’s important to know exactly what’s going
On in your rental and keeping track of all those expenses because there are a lot of expenses in running these properties and you need to know where your money is going and if you are actually making a profit and then for the long term as well I mean it is okay
To kind of think about uh your properties they might be a pension for you in in later years they might be you know something that you you pass on to your kids right it doesn’t always have to be a oh I’m going to sell this in five years or something like that
Absolutely yeah so New Year resolution number three pricing strategy so I’m I’m amaz Amed how still underserved pricing and revenue management really is in this industry um also from a technological standpoint by the way so we we see very little uh offers I mean we have some four key
Players in the market uh PMS is are now uh providing some pricing uh Solutions as well but I would you know maybe not trust my PMS that much um so I rather would use a a neutral uh pricing uh provider or Revenue provider that looks at the market in a in a different
Fashion so I think just related to resolution number two Financial hygiene and profitability comes immediately pricing and I’m amazed you know everybody’s talked about artificial intelligence and obviously we can’t get around our podcast today not talk about it and I think when we we had a lot of
Debate about how does AI going to affect our industry and and and which areas it makes sense you know content writing automation in terms of customer replies etc etc review replies there’s a lot of use cases I believe that AI has and will have the highest impact on pricing there
Is no question yesterday I just had a question I I just had a conversation with a gentleman who’s been in the hospitality industry 40 years and he says I do the revenue Management on my own and I said to him I’m going to have a bet with him and I respect his career
I respect his track record and everything like that no question but I said to him I’ll provide you a free AI powered uh pricing tool and and um if it if it and and obviously he can use it free and I guarantee him it will outperform him his his performance no
Question and this is not because I question his abilities and in his expertise it’s just sheared by calculative power and the amount of data that AI can use to make pricing decision a human brain cannot make it’s impossible like in terms of Big Data what is happening with airline rates
What is happening so if you take a thousand different data points that you can access out of big data in the internet which we as a human brain are incapable to even put together it’s only obvious that a machine will make a better pricing decision than a human
Being there’s no question so pricing strategy I think is resolution three people think yeah I’ve known my market I’ve been there 10 years I’ve my pricing was always good I looked at the neighbor and it was about the same pricing is has a massive opportunity and I believe there is still 10 to
20% uh on the table that today current tools cannot grab yeah it’s interesting with Dynamic pricing tools as well I I did a newsletter about this a few weeks ago and before I did did it I went into a few social media groups and I asked our
Community I asked people who’s using a pricing tool who’s using a dynamic pricing tool if you do which one do you like it if you don’t why not the most common answer I got from hosts was I didn’t know they existed so this I think
This is where we are with the level of hosts and then when you talk about AI there I mean look very quickly this world our industry and and every industry is going to be split into the people who are utilizing Ai and the people who are not and if you’re not do
Some Google searches and find out because I think you’d be amazed at how it could supercharge your business whatever your business you’re in whether it’s Str Str or or anything else um number four then number four sound like a broken record but it’s enhance um guest experience right
And this is now interesting when you say enhance um guest EXP experience because what’s added to that and that was one of the takeaways I had from the conferences which I forgot to mention is actually changing travel Behavior so the changing travel behavior is actually going to stay and I was
Always under the belief that you know this remote work and covid that’s goingon to go away after two years and everybody’s back at work from Monday to Friday that’s going to it’s here to stay and we have seen report from deoe corporate travel report that clearly
States that even in 23 the average EMP employer uh spend 2.2 days away from work so this is literally 50% of our entire week that we’re still spending not at the physical workplace which means we either do it from home or we do it somewhere else so we we’re not
Talking about this classical digital Nomads uh just to think about what we’re actually talking about remote workers people are now you need a computer screen you need a a a um a fast Wi-Fi you need a desk and a table and maybe a separate room in in a rental and off you
Go it was interesting in Croatia uh we’ve seen the guys from from um Friday flat and he’s asking you know who of you is catering for that group of Travelers you know do you offer a a a workplace a proper desk and a chair and maybe even a
Computer screen that cost you 100 bucks not a single went up so this allows you to grab an additional market so we back a guest experience yes maybe we have understood what the classical Cottage rental guest needs but the remote worker is still totally underserved and I think
There’s a massive opportunity also to offer longer term rents in shoulder Seasons where you know people might stay for two months because they obviously stay all year round and not just in the summer months or in the peak months uh which you still want to have filled with
Str Str so I believe that market is underserved and and should be definitely be tackled so do some research see how Travelers behave how do they consume Hospitality what are they looking for what are their needs for the amenities and I think these are these are professional people so that means you
Definitely don’t have trouble in the properties they stay for longer you have less wear and tear and uh and you can potentially fill shoulder Seasons that you today can’t fill yeah and have a think you know if you’ve got businesses that are nearby to you get in touch with
Them tell them that you’ve got a short-term rental that you’ve got super fast Wi-Fi and that if they’ve got people visiting colleagues Etc this is a place that they can use and then another thing with Wi-Fi if you’ve got really super fast Wi-Fi at your place again a bit like the sustainability highlight
That on your listing show people that you’ve got amazing Wi-Fi um all right then number five well I can’t believe it’s coming from my mouth but I have to make it anyway which is uh market and promote effectively so I’m not starting a direct booking debate with uh Mark
Simpsons and and others um but we have definitely seen that we’re at the mercy of uh of the OTAs and you know ultimately this is not sustainable right and I think you know at least start thinking about a potential strategy that you can be less dependent on on particular channels especially you know
There is Alternatives I still can’t believe to be perfectly honest and and it doesn’t even need to be a total direct marketing strategy but I I still can’t believe how many individuals are out there probably Millions who solely and singly use Airbnb as a channel I
Mean that’s something I would never do I would never put a dollar of my money into a company like that that’s just that’s just that’s like me going always to the same petrol station for my car I mean that’s I think that’s not sustainable I mean these marketplaces
Don’t get me wrong do an incredible job but think about your distribution strategy have your property in as many baskets as you can uh on the OTAs use Channel Managers from the pms’s go in in as many channels as you can which ultimately makes you think about and
What can I do about my direct Channel as well because these OTA are Great lead generation platforms you can still engage with the customer you you still get his details you can remarket to these people and at the end of the day I think we don’t need to have a marketing
Lesson here but every repeat customer is cheaper than anything else so I think talking thinking about your distribution strategy and think about how can you Market your property your property management business more effectively in the market in the region because it will also bring additional owners by the way
It’s has always double effect um is something that I really hope that people put on their resolution for next year how can I Market more effectively and what is for me the most balanced distribution strategy uh using a multi- channel uh strategy I really hope you’re enjoying this episode of the hch podcast
To help us grow I have a small favor to ask you hitting subscribe and rting our show wherever you listen will help us to grow our platform and share even more high quality free education about the short-term rentals industry also if you have a friend who you think would find
Our content useful please send them a link or direct them to the website it’s holiday Cottage hook.com all right back to the show Simon we’ve got a few questions to finish uh number one favorite brand in the St Str industry apart from your own AGL favorite brand in this
Industry uh Moving Mountains in Colorado and why is that it’s a luxury rental company that has done an incredible job uh you know being voted always one of the top Employers in the United States Hospitality by heart uh amazing execution um you know people deep deeply uh ingrained into Hospitality luxury
Hospitality doing an amazing job with their properties with their owners with their staff and it’s a very strong brand and uh has over 70% Direct business so uh yeah that brand strongly resonates with me plus I’m a passionate skier as well excellent uh question number two then which individual in the St space
Would you like to give a shout out to and why yeah that’s a great there’s a lot of incred inredible individuals out there that we interact with uh all the time people who organize conferences who give everything uh what they do and and being so passionate about it I think I mean I
Don’t want to um this is a typical Swiss answer right because I don’t want to upset anybody uh but I think if I think about 23 I want to give my shout out to Antonio bortolotti from vacation rental World Summit um he had the toughest year because his event didn’t work out the
Way he wanted but he puts 200% of his passion together with his wife into this event and and trying to do better every year and that’s challenging you you know always exceeding expectations is very tough and this year uh the the conference venue was at the same was the
Same venue as the exhibition Hall so it was it was not good it was very noisy it was super distractive we didn’t hear people on stage people talking behind at the booth was not good and I felt so so sorry because what Antonio has done for our industry he’s one of the oldest
Events that’s ever been here now we see scale and all these guys doing an incredible job and and new conferences Antonio has always been there he’s for me the one who has brought our industry together and I want to make a massive shout out to him and his wife Christina
For what they’ve pulled together this year in Barcelona they should not feel disheartened the with the complaints they received and should continue uh their path going forward okay lovely shout out there uh final one little bit cheeky who do you like best and why Airbnb or booking.com booking.com uh I
Don’t don’t even need to think about it booking.com Embraces the property managers and I’m all after the Professional Property Management industry that’s what AGL does and always have been I’m a strong believer that the professional property managers um should win this game and and and and professionalize this industry
Booking has understood how to interact and look after professional property managers and therefore booking.com excellent uh Simon thank you so much for being our first guest of 2024 a very happy new year uh all blessings to you and your family and I’m sure we’ll speak again uh throughout the
Year thank you James it was a great pleasure and so do I I wish everybody a very successful and happy 2024 uh stay healthy um be mindful of how we treat our world and our planet and uh the rest will fall into our Labs brilliant as ever to get insight
From Simon Leman and here his five New Year resolutions for St Str hosts and property managers number one sustainability Financial hygiene pricing strategy guest experience and marketing your property effectively make sure you put that into action as we head into 2024 that’s just about it for this
Episode of the hch podcast thank you very much for listening if you like what you’ve heard you can help our platform massively if you subscribe rate and review the podcast for more free education tips and Trends related to the short-term rentals industry head to our website where you can download our free
Ebook and sign up for our free Weekly Newsletter it’s holiday Cottage hook.com and if you need any mortgage support make sure you check out HC H Financial Services their team of Brokers have access to the very best holiday Le products and can also help with other property Finance give them a call on
01206 5726 or email advice hch fs. co.uk you can also visit the website for further details hch fs. co.uk if you’d like to get in touch with the show you can email me directly James holiday Cottage hook.com that’s it for now I’ll speak to you Soon
Kick off 2024 by finding out the five new year resolutions that every short-term rental host and property manager should be making!
Join host James Varley for an in-depth chat with industry guru Simon Lehmann, who shares his insight and knowledge for the benefit of hosts and property managers everywhere.
Simon’s brand shout-out went to Moving Mountains, while his individual shout-out went to Antonio Bortolotti from Vacation Rental World Summit. Tune in to find out why.
4:04 Is a storm still brewing for short-term rentals?
6:04 The operators that are going to thrive
8:05 Regulation will keep changing
9:46 Main takeaways from conference season
12:11 Simon’s predictions for 2024
14:15 Supply might continue to increase
15:03 Resolution No. 1: Prioritise sustainability
17:00 Resolution No. 2: Financial hygiene
18:55 Resolution No. 3: Pricing strategy
22:44 Resolution No. 4: Enhance the guest experience (remote work is here to stay)
25:55 Resolution No. 5: Market and promote effectively (we are at the mercy of the online travel agencies)
28:53 Favourite brand in the industry: Moving Mountains
29:54 Individual shout-out: Antonio Bortolotti from Vacation Rental World Summit
31:37 Which is your favourite: Airbnb or Booking.com?
Links mentioned:
Holiday Cottage Handbook LIVE: https://www.holidaycottagehandbook.co…
Download your free ticket for #HCHLIVE: https://propertyinvestor.smartreg.co….
HCH website: https://www.holidaycottagehandbook.com/
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Free e-book: https://www.holidaycottagehandbook.co…
Sponsor: HCH Financial Services (holiday let mortgages). Call 0333 1234 536 or email advice@hchfs.co.uk www.hchfs.co.uk
AJL Atelier: https://ajlatelier.com/
Moving Mountains: https://www.movingmountains.com/
Antonio Bortolotti: https://www.linkedin.com/in/antoniobortolotti/
Vacation Rental World Summit: https://vacationrentalworldsummit.com/
Airbnb: www.airbnb.com
Booking.com: www.booking.com
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