Real Estate Investing | Real Estate Tools | Hyperlocal Lead Generation
Scott Shatford is Founder and CEO of AirDNA. He’s an AirBNB pro, author, vocal advocate, and industry expert in short-term vacation rentals. Utilizing his economics background and 15+ years of experience as a data analyst, Scott created AirDNA to empower entrepreneurs to make the most of the short-term rental market.
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- 00:00 Vacation rental investing with AirDNA CEO, Scott Shatford
- 00:52 From economics to Wall Street hedge funds to a top HR firm, Korn Ferry
- 2:50 Identifying the arbitrage in short-term rentals vs. long-term rentals
- 06:44 When did AirDNA begin?
- 09:44 Scott’s secret weapon? His software engineer father
- 10:55 Creating AirDNA and how it helped answer: How are you doing that?
- 12:12 Solving your own business problems end sup helping others.
- 13:29 How AirDNA becoming a key part of the short-term rental ecosystem has been key for data relationships
- 16:47 What is AirDNA?
- 18:22 Is AirDNA tracking specific features like Peloton Bikes?
- 21:08 How the vacation rental game has changed with features
- 21:39 Why vacation rentals are doing so much better than hotels post-Covid
- 22:39 Covid trends for short-term rentals in urban markets
- 23:27 AirDNA’s media and press strategy using its data
- 26:06 How vacation rental sites have started to focus on 30+ days rentals
- 28:17 Consolidation and professionalization of vacation rentals
- 28:32 Covid impacts on Sonder, Lyric, Domio and Stay Alfred
- 29:33 Will AirBNB focus more on small vacation rental owners post-Covid?
- 29:58 Why focusing on local operators of vacation rentals helps with villainization of AirBNB rentals
- 30:58 Has the hotel lobby come around to support vacation rentals?
- 31:13 Vacation rentals growing 20% faster than hotels?
- 32:09 What is the impact of short-term rentals on affordable housing?
- 32:42 The main reasons NIMBYs don’t like vacation rentals
- 32:59 How many second homes are there in the US? How many sit empty?
- 33:31 Who is to blame for affordable housing but who gets blamed because it’s easy
- 37:59 Advice for new vacation rental investors and avoiding getting shut down
- 40:16 The importance of understanding local political conversations around vacation rentals
- 41:40 Why isn’t there a professional lobby association for vacation rental investors?
- 43:48 Why weird works with short-term rentals
- 44:52 How have the metrics changed on short-term rentals because of Covid?
- 46:21 50% of AirBNB stays are very last minute. Is it also increasing the average nightly rate?
- 48:59 How attached accessory dwelling units are being used to comply with local regulation in short-term rentals
- 50:11 Will struggling commercial space afford opportunity for repurposing to vacation rental conversions?
- 51:09 Why Covid has scared away the master leasing model for vacation rentals
- 54:00 How seasonal vacation rental markets have changed because of Covid
- 54:34 Hampton market was up 800%!?
- 55:27 The opportunity that real estate agents miss and how they can turn data into massive business and local expertise
- 57:51 What technology is exciting to help manage AirBNB rentals?
- 1:01:21 Does AirDNA connection to property management systems to help with pricing automation?
- 1:03:21 Pricing is the single biggest decisions investors should be making
- 1:04:57 is AirBNB going public presenting any unique opportunity?
- 1:09:22 The opportunities for connected trip with vacation rentals
- 1:10:13 What’s next for AirDNA
- 1:12:17 Opportunities for investors, Realtors, and home service providers in vacation rentals
Aaron Norris 00:00
Hi everybody, welcome to the Data Driven Real Estate Podcast, the podcast for real estate professionals dedicated to driving business success using data. I’m your cohost, Aaron Norris with us, we’ve got Sean O’Toole up in our Truckee office and with us Scott Shatford with air DNA. I’m very excited for this interview. Scott is the CEO of AirDNA. And he’s an author, vocal advocate and industry expert in short-term rentals. And he utilizes his 15 plus years in the data data analyst space to empower entrepreneur entrepreneurs to make the most out of short-term rental market. I’ve used your tool for years, helping investors stay out of trouble. So welcome to the show.
Scott Shatford 00:40
Thanks for having me here. Thanks, Sean.
Sean O’Toole 00:42
Yeah, no, I appreciate you making the time.
Aaron Norris 00:45
Your background data analysts. Tell me what happened after high school. Where’d you go?
Scott Shatford 00:52
To high school? Yeah, whenever the University of Arizona uh, you know, it was a choice. More out of I went to They’re in the middle of the winter and the pool parties look really good. So it was a, it was a choice made out of. Yeah, I don’t know if it’s academics driving my decisions there, but it ended up being great school got a degree in economics over in Arizona, and five and a half years. And then yeah, trying to figure out what I was gonna do next my life. But yeah, it was it was a Yeah, so I went to Arizona, and then, you know, like a lot of college kids didn’t know what I wanted to do. Had this degree, I had some. You know, I did work at some hedge funds out in New York City during the summertime and I was lucky enough to have an uncle that was a hedge fund manager. And so that sort of exposed me to a bit of sort of, you know, how to use data, how to sort of think about it. They were much more complicated quants, guys than I would ever be. But you know, sort of got me interested on the data side of things. But yeah, I’m after college and landed in, you know, at a consulting company. I mean, their recruiting company really called the Korn Ferry International. for nine years there, my formative years, you know, just stuck in Excel as a monkey for about five of those years. And that’s sort of where I just hone the craft of how to you know, create stories, you know, how to articulate things through visualizations how to be able to communicate to executives, through data. So, you know, I definitely, yeah, whatever you want to call it, right. I mean, it was it was a long, five years, but very formative in terms of like, just how to think about massive amounts of data and how to create stories from it.
Aaron Norris 02:30
So how did you… Go ahead, Sean.
Sean O’Toole 02:33
I was gonna say, you were the first guy I met that started kind of hacking, AirBNBs, if I remember correctly, we met back in 2015. Yeah. And you were renting places as long-term rentals and doing short-term rentals. Is that right? Do I remember correctly?
Scott Shatford 02:50
That’s, that’s absolutely right. Yeah. Yeah, I wouldn’t say I mean, I started mean, I started the model, but I was definitely one of the first ones that that really realized that there was this new what we call now as arbitrage opportunity is that you could go rent these properties, even as a corporate rental just being straight up, like I’m gonna have different tenants in here all the time. Maybe pay a 10 to 20% premium on that on that long-term, rental, but then furnishing it for $5,000 bucks turning it on AirBNB within a week, and then, you know, making 100 to 300% more than you could as a long-term rental per month. Right. So the real numbers like in Santa Monica was I could rent a nice property right by the Third Street promenade, main tourist district for about $3,000 bucks a month, I would make at least $7,000 every single month on that on that property with pretty minimal operating expenses. And so it was the early days it was the Wild West see now that these there wasn’t enough supply out there and although towels and Santa Monica were call it $400 bucks a night and so there was just this huge opportunity for a bigger place with amenities and the washer and dryer for people staying For a couple weeks willing to pay 250 or $300 a night. Yeah. And so it was it was the good days, the golden days, as I call them, when you could pretty much just get anything thrown on AirBNB and it would just destroy it, you just have 90% occupancy, you couldn’t mess it up. But obviously, the world’s change is much more competitive and expectations from customers are a lot different than they were back in 2012 to 15.
Sean O’Toole 04:27
I remember after meeting you, right, like it was a big epiphany for me. And I was on the speaking circuit. And I did a whole set of slides basically saying he was everybody’s like, Oh, you know, prices have gone up so much. We’re at a peak. And basically, I did the math to show how prices would likely go up at least 10 to 20% more, at least in areas where the AirBNB you know, model works where there is demand for that short-term rental. And boy, that was So it was it was a good. It was a good day when I met you. It made me look pretty smart.
Scott Shatford 05:07
Yeah, it’s nice. You know, we have a lot of predictions on where the future is gonna go and at least half of them right as well as what I always say. At least half. But yeah, I mean short-term rentals…
Sean O’Toole 05:20
I just got the word likely. And you’re always right.
Scott Shatford 05:23
Right. Um, yeah, it’s been a wild ride, you know, we wouldn’t get to a more but, you know, at that time, there just wasn’t enough. There wasn’t enough data, there wasn’t enough, you know, predictability and like what these properties would do, and so people weren’t willing to take, you know, half million million dollar swings at the plate to sort of hope for the best as a short-term rental. But, you know, you know, now, five years later, you know, with 1.5 million properties and the short-term rental market in the US, you know, you can just sort of look at a lot of comps, there’s a lot of full-time rental investment property. It’s just a lot easier. to triangulate in on like, what is the performer look like what is going to be the revenue in June versus January and so that’s a lot of what we’re doing here is giving people a lot more comfortable about what those projections look like as properties a short-term rental. So yeah, huge proliferation and in these COVID times, you know, there’s a whole lot of there this whole other demand driver, which is, you know, I don’t know people wanting to buy that second home anyways, and you now’s the time to do it. And whenever they want to get out of that second home and return to that Metropolitan market, you know, they have that investment property to fall back on. So we just see a lot of activity in the space right now the more than we ever have on, you know, buying these sort of second homes and traditional vacation rental markets.
Aaron Norris 06:44
When did the, what year did you open AirDNA?
Scott Shatford 06:47
We opened in 2015.
Aaron Norris 06:49
So it’s only five years old?
Scott Shatford 06:51
Yeah, we’re just over five years old. Yeah, I think Sean when he stopped by the garage, and we met, maybe I was too embarrassed to show him the garage five years ago.
Sean O’Toole 06:59
I didn’t see the garage.
Scott Shatford 07:00
The local waterhole, yeah, did you? Yeah.
Sean O’Toole 07:03
Oh, well, yeah. Local watering hole. It was a yeah, Some favorite spotty years down in Santa Monica was pretty cool. Yeah. I remember that. Yeah. This nice hanging outside. I, you know, it feels a little bit like Truckee, you know, in the perfect day in the summer. It seems like it’s like bad down there all the time.
Scott Shatford 07:22
Yeah, it’s not a bad spot, not a bad spot.
Sean O’Toole 07:25
You still there?
Scott Shatford 07:26
No, we went to Denver, so we relocated here, four years ago now. So, you know, right when we’re thinking about scaling this thing and getting out of that garage. Yeah, and we’re just looking for a lot of, you know, talented developers in LA was a very hard place to find. Surprisingly, you know, you think it was good, but back in the day, not even snap was, you know, there and that was sort of one of the companies that really brought tech to LA. But it’s hard to find people, reliable people, affordable people. And so that was one of the big reasons moved to Denver just pulled town out here was better. worked out well. worked out great so far. Yeah, no, it’s been great. I mean, we’re sort of, we opened up an office in Barcelona. We’re sort of split, you know, about 3030 people in Barcelona, but 25 people here in Denver. We’ve got all that the techies, the nerds, I say, you know, adoringly to them here and all the salespeople in Barcelona. But yeah, so it’s worked out great, and that Denver’s been a great place to live.
Sean O’Toole 08:24
Not Barcelona, Spain?
Scott Shatford 08:26
Barcelona, Spain. Yeah, that’s where the other half of the business is.
Sean O’Toole 08:29
Scott Shatford 08:29
Sean O’Toole 08:30
Wow. That’s an interesting choice. That must have been a lifestyle decision or personal interest decision.
Scott Shatford 08:37
Yeah, there’s definitely a part of that. Yeah. I’m one of my co-founders here early employees as well. He wasn’t a US citizen. So I said, yeah, well go find a place you want to live in that. Make sure they have some vacation rental activity there. And Barcelona nice choice.
Aaron Norris 08:53
It’s a great city.
Sean O’Toole 08:56
Aaron Norris 08:58
Talk a little bit about the genesis of AirDNA and how you willed that to be.
Scott Shatford 09:03
Yeah, so we’ve sort of covered the basics. You know, it is one of that kind of classic founder stories is that I was stealing this rental arbitrage business going around Santa Monica convincing landlords to rent me their apartment to put it on AirBNB. You know, I think there was some regulation, you know, some signs that that was gonna happen in Santa Monica. So I started looking, you know, across California, down south and San Diego, maybe up in Napa Sonoma is trying to just think about, you know, I have all this Where should I go next, right, where do I diversify my portfolio? You know, and I was doing great in Santa Monica, but maybe it’s better Newport Beach, right? Just trying to really understand where I want to go next. You know, I had the secret weapon. My father who was a data engineer, you know, who was an engineer and we, you know, we talked about sort of some things I heard about scraping AirBNB. What can we do with the calendars really understand availability and often see how rates are changing? So I could sort of put that data, get some, you know, free Zillow data, and just see, like, you know, where was the biggest mismatch? You know, where were properties, earning $100,000 a year where you could buy it for three or $400,000. Right? And like, just where’d that cap rate make the most sense? And so that’s where I sort of started as my own purpose. And then, you know, just being the, you know, data dweeb, I am just really nerded out on, you know, how do I price more effectively? How far in advance are people booking, you know, what could what’s my price on my weekend versus my Tuesdays and Wednesdays? How much should that really be changing? Just none of that data was really available at the time. So, you know, when, when Santa Monica finally made short-term rentals illegal. You know, that’s sort of when I had that lightbulb moment. It’s like, hey, I’ve got a lot of friends who asked me about this information. I’ve got a lot of people wondering, you know, how the hell I’m doing so well. With these properties. At one point in time, I had to top five one-bedroom properties in all of our Angeles and they were in Santa Monica. They were doing like $80,000 a year in revenue. And the people are like, how are you doing that? I was like, Yeah, well, the data, the data is helpful to help me do it right. And so that was sort of the idea is like, how do you sell, you know, this, the shovels to the Gold Rush instead of mining for it yourself is the analogy A lot of people say so just giving people the tools to sort of creating their own short-term rental businesses. You know, there were a lot then but you know, now there are three and a half million hosts on AirBNB, you know, we think about three-quarters of a million people doing this professionally as a full-time living. So there’s a lot of people out there and sort of support in their day-to-day decisions and investment decisions as well.
Sean O’Toole 11:43
Yeah, I mean, I always think that’s the best. You know, in Silicon Valley, we’re always trying to solve other people’s problems. And it’s so great when you’re, you know, build a product that solving your own problem, which is what happened with me with PropertyRadar, what happened with you with AirDNA, right? And because you have that kind of real-world experience and you know, it works and you know, you know? Yeah, I think that’s, that’s a really, you know, cool, cool thing. I think most of the best businesses come out of that. So…
Scott Shatford 12:11
That’s great too, isn’t it? It’s just such a luxury because you know, you don’t have to do customer surveys, you don’t have to go call 100 people, you’re just like, I know exactly what my pain point is, and I’m gonna go solve, it actually gets way harder as you’re thinking about, like, what new bells and whistles do I need to add and like, as you get further away from your, you know, your problems of past, just sort of make sure you’re building the right stuff and solving the right problems. So, you know, it is, you know, it’s a luxury to because you can spend years this sort of building the product that you wish was on the market when you when you have this problem?
Sean O’Toole 12:44
Totally, you know, when we met back in 2015, like one of my big, you know, concerns we were looking at, you know, we’re working with you to incorporate your data in our product. And, you know, I just couldn’t get around the fact that I just thought you’d get a, you know, cease and desist letter or somehow, you know, AirBNB would come after you to shut you down, or that kind of thing, right? And was just like, wow, do I make an investment in this? And obviously, you decided to go ahead and make the investment. And that was a very good decision on your part bad decision on my part. But, you know, how is that? How has that been? Is that still a risk for you? Or is that, you know, pretty much you kind of worked work beyond that you’re an important part of the ecosystem now,
Scott Shatford 13:29
I think is a key part of it, right? Is, is being a key part of the ecosystem and making sure AirBNB and VRBO and everybody knows, knows that, you know, you know, you don’t have a whole lot to lose early on, right? And so you’re willing to just throw it out there and sort of see what happens but you know, as you mature, and as you hire your folks and you got a real team in place, you got to sort of shore up some of those risks. And so, you know, we do that through having good partnerships with them through having good dialogue with AirBNB, you know, making sure we’re better building stuff that’s valuable to their end-user and is getting people to buy properties and put them on their platforms, you know, they’re not going to shut you down. If you’re, you know, adding another hundred thousand properties that are platform on annual basis, right, there’s a lot of value to that a lot of value to like making people think like professional hospitality, individuals, right-thinking about improving the quality of their properties, pricing them more effectively having better like customer care. And so yeah, as long as you can show that value to them, you sort of become an indispensable part of the industry. And so, you know, we’re thoughtful not to poke the bears as much as we can. But yeah, at the end of the day, you know, if you’re adding value to them, then you know that they need you. They want you and don’t want to shut you down. You know, is people get public and they get big and they’re going IPO you need to be even more cautious about that. Just because this sort of the risk you present to them as a company becomes a lot greater. So yeah, It’s just, you know, it’s a delicate balance that we have to ride is giving enough information to our users, you know, without giving too much to regulators or law enforcement people or people trying to shut down and sue people, right? And so we’re just very thoughtful about, you know, not, you know, providing our selling our data to people that aren’t within our mission and values that sort of grow in the short-term rental space and a motivating entrepreneurs around the world to dive into this market.
Sean O’Toole 15:29
Now, last points really interesting because like some other people have built some good-sized businesses off of things like host compliance and that kind of thing. And I would imagine that would be a lot more you know, combative with for somebody like an AirBNB versus somebody trying to help them grow their business.
Scott Shatford 15:47
Absolutely. Yeah. We feel like we’d be pretty low on the totem pole if they went through that process if we really want to shut down. I mean, there’s a lot of people ahead of us now that we feel pretty good about that risk, but you know, it’s great. Always is risky and you never know if you know there’s just a new CFO or a new CTO that comes into town it’s like, nah, don’t like it and like this make it difficult on people, we don’t see lawsuits as being it, but we think that, you know, there are ways that they can make tech look
Sean O’Toole 16:17
Make it a little harder.
Scott Shatford 16:18
Just more more. More just costly, really to do it at this point in time, but anyways. Don’t give them any good ideas.
Aaron Norris 16:33
I’m familiar with the product. Can we just, can you give us an overview quickly, cuz I know we’re going to cover a lot more complicated stuff, but just in case they don’t know who AirDNA is. Can we cover it real quick?
Scott Shatford 16:45
Sure. Sure, we see we see ourselves as you know, the short-term rental market intelligence tool, and what does that really mean? Let’s dive into it. I mean, so what we do is we cover over 100,000 cities markets around the world. And you know, for an average price of $50 bucks a month, you can see all the details every short-term rental in that market, all the aggregated stats on how much they’re earning, how often they’re occupied. What does the seasonality in the marketplace look like? How to price those properties. So you can actually onboard it, you upload a property, and then get recommendations on how to price it on a regular basis. There’s also investing tools. So you can sort of look at what are the top-performing properties in a particular market, I always like to just tell people stop thinking so hard, find the best performing properties and buy the one next door and decorated exactly the same, and you’re going to be in good shape, right? And so yeah, so like mark, you know, market comparison tools, if you’re going to go to Denver, like should you buy this zip code or that zip code? How are two bedrooms performing versus three bedrooms, like just a lot of data on how to price how to think about investing, how to think about market research on short-term rental properties. So I think that’s the sort of a general gist of what it is. It was up and running. There are all these benchmarking tools like are you performing well or not? And that’s really hard to tell in this space is, you know, I’m making $50,000 a year I’m doing great, like the guy next door to us doing $90k you’re doing terrible and people didn’t know that before. We were around right. And so there’s a lot of that sort of benchmarking components as well.
Sean O’Toole 18:22
One of the things I’ve got a friend who’s got quite a few units and he started kind of trying to build his own brand around it so he’s adding like specific amenities like every unit has a Peloton every unit has like you know, some of these other amenities are you guys tracking things at that level to say like, folks with a peloton get X dollars more a year or folks with you know, some other amenity or, you know, bunk beds or bunk rooms, you know, whatever.
Scott Shatford 18:53
Sure. Yeah, there’s sort of a standard list of amenities on AirBNB and on VRBO. There’s probably about like 40 different amenities that you can track a Peloton is not going to be one of them. But you know, a jacuzzi would be a good example and like Tahoe, right? Like, should I spend $5,000 on a jacuzzi? What’s the return on investment? Are they really making that much more money in the winter time? So you can do that analysis, not really in our Market Minder tool but like you know, people buy our raw data to do their own analysis a lot of times so they can dive deeper into concepts and think about amenities and think about you know, building out much more exact estimates and predictions on how much properties would earn so yeah, we have that in the dataset Yeah, for sure. Yeah, I mean, we know we know that lots of people we found that like you know, hey, there’s there’s some basic stuff a pool, a jacuzzi in location are really important, right, like having a lake view or ski in ski out are really important. But at the end, you know, at the end of the day too I think people want to be doing stuff there. They want to have activities and maybe we don’t really track a pool table or foosball table or you know ping pong table or whatever, like but those things so those things work but I wouldn’t say we have like the perfect stats on you know how much your game room is gonna earn you but it is definitely people are upping their game now you can’t just have you know beds and pillows and a bathroom like you got to be having a fire pit and a jacuzzi and like bags out in the back and like that’s really where how people with small investment can get really nice returns on those little investments on properties.
Aaron Norris 20:31
I was thinking about why AirBNB would love you to be there because it helps a lot of amateurs from entering into the ecosystem and getting into properties that they’re going to get buried in. So I love the feature on the website where you can see the top performing properties just for that seeing the kind of features that they installed. Why recreate the wheel if you notice what’s working in the market, my it’s had some investors in Florida very interested in air, AirBNB being properties or VRBO. And I was showing them, well, if you’re going to do that you better build it with a pool. There’s definitely a set of criteria that if you didn’t meet, you’re gonna make so much less money.
Scott Shatford 21:08
Right? Yeah, there has to be super compelling property. You know, it’s not like how I used to do it just like no art on the wall, just you know, throw it there, IKEA that up, then you’re in the money, right? It’s just so much more competitive now. So all the good people, it’s, it’s free now. It’s really curated in terms of all your color schemes and your How do you get cheap a good looking artwork, but how do you create sort of that experience and these properties and that sort of just the name of the game is, you know, not just having a place to sleep but having something to do while you’re there. And that’s, you know, that’s that’s how people are making the big big bucks these days is, you know, group travel is huge, getting 12 people into a spot now or getting a big family. It’s you know, that’s, that’s critical right now. That’s why short-term rentals have been so much better than than hotels and hotels just can’t compete with the short-term rental environment with the amenities with the to...to cook your own meals, not go out to restaurants to be able to get your whole extended family into one place for a vacation. mean vacations have a super bright future. I mean, especially in the sort of COVID era where everybody’s scared of strangers. You know, there’s no check in, there’s no elevators, there’s no common space, there’s none of that. That stuff, which is sort of, you know, scary to people these days. And so, that’s why you’re seeing this, you know, crazy numbers and these traditional vacation rental markets, so like tacos or Myrtle Beach or, you know, panhandle of, you know, sort of Florida area, and then they’re putting up numbers they’d never put up before even in this day where people are scared to get in the airplane or really go anywhere too far away. You know, vacation rentals are holding up really, really well. You know, the city’s different story. You know, nobody wants to own a vacation, right all in San Francisco right now. Even that’s not really illegal market. Yeah, the urban markets are pretty decimated at the moment, as people are sort of fling fleeing the urban center. But, you know, it looks like it’s coming back a little bit. Now. It’s not as terrible as it was, you know, the last couple months, but it’s definitely not the place you want to be right now.
Sean O’Toole 23:09
Are you guys doing or working with reporters or doing any reporting on that kind of stuff are you pretty much just stay focused on helping the investors and stuff? Because you got a lot of really interesting data, but like, kinda like you were saying early, right, it could be used in ways that are kind of anti short-term rental too.
Scott Shatford 23:25
Yeah. Yeah, we do tons of research into blog posts, and we’re in a ton of newspapers. And that was one of our initial strategies was like, how do we get in as many newspapers and you know, publications as possible? Because, you know, we knew AirBNB was a big part of the conversation, whether it was disruption to hotels or how it was, you know, reducing affordable housing or whatever the conversation was and how much merit it had. There was a lot of conversation about it. So we’ve Yeah, but we’ve been in every major publication. Like literally in the world, like you know, even the Wall Street Journal, New York Times, Financial Times all in the last week. And so like that was a big part of our strategy was how do we become the data provider of record? Where anybody writing a story on what was happening in the short-term rental space came to us. And now that you know now as you know, a lot of research reports, you know, we work with hotel data companies sort of merge it all together, compare what’s happening across hotels versus vacation rentals. We work with CBRE, we work with just a bunch of people yeah, trying to figure out what’s what’s the new and interesting trends. So yeah, come to our blog. We’ve heard a lot of content there.
Sean O’Toole 23:26
So… Awesome. Are you guys tracking the corporate use separate from the vacation use at all? You know, there’s some new companies popping up there like Zeus living and others that are trying to really go after you know, more of the corporate AirBNB and I think vo both have corporate departments too.
Scott Shatford 24:52
Sean O’Toole 24:53
Are you able to track that separately? Any insights on that?
Scott Shatford 24:56
I think it’s a good market. I think it’s an interesting market. It’s not a market that we track particularly well. It is complicated in this space where nobody really knows how to define a, an apartment a corporate rental. I love the term apart-hotel because I get very confused and apartment or hotel like I tracked it or shouldn’t attract that. And so a there’s so much gray area. Anyone today it’s like we try not to think about too much as 30-day plus rental, which we call a sort of mid-term rental, which is what most of these Zeus living it’s pretty much all 30-day plus as far as I’m aware. And so I think it’s a big market. There’s a lot of people raising a lot of money around that. And now in that space, I think right now that it’s digital nomad movement, this sort of 30 to 90 day rental is probably the fastest-growing segment in lodging right now. But to be honest, it’s not really the space where my data, my algorithms, my partnership, sort of releasing the track that are really kind of understand that As much as I do like the three day, 14 day booking sort of marketplace.
Sean O’Toole 26:06
Yeah, I didn’t even know until very recently, like AirBNB and I don’t know about VRBO had gotten into that, like 30 day minimum, you know, kind of rentals. And you know, I have said it’s kind of tempting, right? Go check out a new area before if you’re thinking about moving and go do that long-term. Stay. So it’s definitely an interesting space.
Scott Shatford 26:27
Yeah, a lot that was out of necessity. Like, you know, nobody was booking one-night stays or two-night weekend getaways with their spouse, right. And all they saw was demand for people getting out of San Francisco and going booking something for three months out in Napa or something. And so they knew they had to sort of facilitate like bigger discounts. They had to figure out like how to motivate their host to be like, here’s the demand, go over there and like figure out how to price your place appropriately for the only, you know, demand that’s out in the marketplace right now. The market opportunity is huge. All right, like how many people don’t want to go through the hassle of signing a six-month lease you know or working for it you’re doing it for work or even an annual lease I think there’s going to be there’s going to be a big migration to using these tools so like just reduce all the headaches of like, the credit checks and the application process isn’t everything to sort of get into a property. And so yeah, I think…
Sean O’Toole 27:25
There’s furnished right because the only furnished offerings have been like these long-term stay hotels and it’s just just a dreary you know thing to go do you know when you want to go check out a new area or something and so the AirBNBs get really nicely furnished, especially in a competitive market. So that’s where those long-term furnished, you know, nicely furnished units become pretty interesting. Anyways. I just thought that that was an interesting thing. I was wondering what your guys’ take on it was. Aaron, I’m sure you’ve got a lot I’ll let you get one in here.
Aaron Norris 28:01
Okay, yeah, I got a ton before COVID-19. Were you seeing any specific trends as far as the professionalization of the space or COVID-19 has definitely changed some things, but anything in particular, sort of three years run up to COVID some things that were happening.
Scott Shatford 28:17
Yeah, lots of things. I’m sort of thinking about what’s most relevant for your listeners here. I mean, I think you sort of hit on it, right sort of consolidation, professionalization, there’s always this sort of thought there’s going to be the brands and short-term rentals that there had to be a brand that emerges. And so you saw a lot of money, money being thrown into companies like Sonder, Lyric, Domio, Stay Alfred, these are companies that raised $100 million dollars plus, and they thought that this would be like the new brand emerges as a short-term rental option of a cos as another sort of unicorn in the space. I think COVID put those business models to test and sort of seeing that like, really, you know, consolidation is hard in this day. Having 10,000 disparate units in disparate locations with, you know, different cleaning crews, and different furniture and different pool types, and like, it just became like, too hard to figure out how to do this at scale, and like the most efficient way to run these businesses is with, you know, a guy with three properties that can go and sort of give them the love and attention they need. And, you know, be somebody that they’re that had asked in the phone calls from people that they check in or check out. And so I think, you know, it’s, it’s interesting, and I think AirBNB is changing their business model to really focus on this small host, individual operator instead of like, you know, the behemoths that were sort of emerging running up into the COVID era. So that was definitely one thing that’s, you know, it’s being tried, I think three out of the five of those companies I mentioned are now out of business or close to being out of business. So that’s pretty interesting. What else, what else?
Sean O’Toole 29:58
I just I think it’s a good, better story for AirBNB, too. Like, if it’s small local hosts, you know, making a living in the community, it’s a lot harder to go attack them then, you know, national companies that have raised a ton of money, right?
Scott Shatford 30:11
Totally, they were being villainized out there, as you know, just taking up all the housing stock and increasing the home prices and, you know, really, you know, turning multifamily buildings into hotels that really weren’t in need for hotels. But somehow they’re sort of able to gain the zoning and permitting and turn into the de facto hotels, and there was a lot of bad press about it, for better or worse, whether it was really having any meaningful impact on the city with a population of 10 million to half, you know, 1000 short-term rentals. I think there’s, you know, not a whole lot of credence to that mathematically. But yeah, it wasn’t it wasn’t great press coverage for them for sure.
Aaron Norris 30:48
Did the hotel lobby eventually come around? Or are they investing in the vacation rental space, and they change their tune?
Scott Shatford 30:58
It’s a good question. Yeah, I think there’s definitely that love hate relationship with short-term rentals, they are there, they can’t deny that there is this big future where short-term rentals call 8 or 20% of housing supply in the US that’s a pretty, pretty good number that it’s growing four times faster than hotels and eventually you’ll be 50% of the of the lodging supply unless it gets regulated out of existence. But you know, consumers love product. They love it right now.
Sean O’Toole 31:28
And maybe there’ll be stockholders of it too and AirBNB goes public, that it’d be pretty hard to sort of rip away that income potential from people in markets like Lake Tahoe, even though they try their hardest in South Lake Tahoe in other markets to make it a real pain in your butt to do it. Got it going on here in North Lake Tahoe again, right now, there’s a real push for saying you know, you can’t do short-term rentals more than x days per year. And you know, the, the starting number there is a pretty small number and you know, it’s like, changing these rules after the fact, and let’s talk a little bit about exempt. I mean, that’s one of the biggest controversy areas, right is like how this impacting affordable housing in the rest. And you know, I do have big picture thoughts there like on his short-term rentals, are they really the core problem? I have my own answer. So,
Scott Shatford 32:21
You know, housing economics is very complicated. And so it’s really hard to sort of have that sort of two sentences. I’m like, you know, what is housing economics? What I can say is in a market like Lake Tahoe, having a bunch of second homes that nobody’s at is impacting your housing economics a lot more than people coming in and check into a short-term rental. The only people don’t like the short-term rentals, the nuisance, the parking, the partying and like, just really like the NIMBY population that’s like, I don’t want this in my backyard. I miss my gray-haired neighbor. But that’s not really that’s not really impacting, you know, home values. If you think about like, I think they just think about though like how many second homes are there in the US, there’s 7 million. How many of those are occupied for less than 30 days out of the year and sit vacant, like a lot? A lot. And so you’re not going to build more, you’re not going to let us build higher, you’re not going to let us fill those properties, then something has to give, we have to build more build, hire, or let us populate our empty spaces. Right. I think that’s the conversation that has to be had with local planners or local city councils is you got to give us something here because people want to come there’s nowhere to go.
Sean O’Toole 33:31
Yeah, I mean, I think these local, they’re all looking for somebody to blame. And for somebody who passed the bill to, you know, buck to on affordable housing, but at the end of the day, it’s usually you know, it’s usually a problem they brought on themselves and it would exist with or without short-term rentals. Right. affordable housing, especially in California has a lot more to do with regulation and lack of building and everybody wanted to close the door behind them. So, you know,
Scott Shatford 34:03
Sean O’Toole 34:03
Vacation rentals are the punching bag of the day.
Scott Shatford 34:07
Right? There’s just so many things are going into, like, why are home prices going up so much? You know, this foreign investment, it’s our, our tax policy is a lot of things. It’s definitely not short-term rentals, but every likes to sort of scapegoat to to wring their neck, and it’s easy to wring the neck with big tech company these days. It seems like the trend to do, obviously, but, you know, I think when you when you look at all the different things going on like that, you know, just new asset classes, single-family homes, right people buying these up and a million homes is owned by these, you know, large companies, you know, nobody talks about that there’s probably more homes owned by this sort of, you know, I don’t even know even what uh, what’s the right term, but people just buying up 150,000 single-family homes and then renting them long-term and nobody talks about that. That’s it. The market which is controlling a lot of this hundred thousand at $300,000 home value, right and that’s a lot more than this affordable home you know affordable housing supply stock that it is a million-dollar Lake Tahoe property.
Sean O’Toole 35:14
Aaron’s Dad and I went back to Washington during the crisis and you know, tried to get them to free up some of this bank owned inventory to the small local investors. And, you know, Fannie, Freddie, etc. And it was just incredible when we were in those meetings like they had no interest in the small local investors even though they would pay more like they just wanted to do big deals with big funds, you know, likely so they could go get a job with that funds later and pad their resume or, you know, I don’t even know what the driver was, but it is it was, you know, really disappointing. I know we came back from that trip pretty disappointed in the in that result. And of course, we saw hundreds of times thousands of homes get bought by big institutional players.
Scott Shatford 36:04
Right, exactly. Yeah, you know, and back to my economics degree in college, you know, I feel like these things all worked themselves out in a natural market environment, right, like, you’ll build more homes, you know, like, there’s only so many people that want to stay in a short-term rental property and pay a premium on a daily basis. So, you know, when that happens, that hotels will build more and take some of that supply and like, it’s all gonna work itself out in a free market environment. And whenever the government steps in and says, like, oh, we’re the smartest guy in the room, and we’re gonna sort of you know, manipulate everything control housing stock, it always just goes the wrong way. And then like, Denver is a great example. They came in sort of put a limit on, you can only rent to your primary residence on AirBNB. And so what he did is he kicked out every like, you know, local guy with one property and when it is a brought in saunder brought in dolmio. And they were then like, oh, there’s this massive lack of supply in Denver. Yeah, just kicked out all the average guys out of the market. Now they started, you know, buying, you know, hundreds, more than 1000 properties here. But these big institutional investors that could get the right permit, get their rights own convert the right asset into accommodate that sort of rental supply. So, you know, by trying to, I don’t know, you know, sort of has all of these unintended consequences you start to go in there and check in with the system because the smart connected guys always going to figure out the way around your your new rules and regulations.
Sean O’Toole 37:25
Yeah, hundred percent agree with that. The whole unintended consequences thing, right. Like, and I think I would add is that we haven’t had a free market and housing as long as I have looked at it,
Scott Shatford 37:41
Yeah, I hear ya. And that’s why I just my very altruistic, naive self. It’s like, why can’t you just like let us figure it out. And the short-term rental market it was the Wild West when I started and maybe I just I still dream and those good days when there was no oversight, no regulations, no permits.
Sean O’Toole 37:59
What advice do you give an investor who’s looking at jumping into short-term rentals? Right? So hey, I’m looking at a taco or whatever. And I’m trying to figure out which market to go into. Is there advice you’d give them to give them a better chance of avoiding having the rug pulled out from under them?
Scott Shatford 38:19
Yeah, that’s good question. I mean, I think, you know, there’s a few ways to think about it. And Lake Tahoe is it’s a sort of a in between exam because Lake Tahoe seems like it would be a great example of a history of being a tourist destination, both winter and summer. Great. Yeah. And like, it’s a lifeblood of a lot of the businesses and the restaurants and their everything that’s going on in that market, all the tour operators and you know, all that stuff. And so that’s one of the things that people are typically looking for, like, how much is this really the lifeblood of our local economy? Like how much is this really impacting all the businesses the local Chamber of Commerce, and like typically, people aren’t going to pull the rug completely out of that industry, because there’s such a backlash from every business owner, every mainstream, you know, operator, that, you know, they’re going to go out of business if you pull that away from them. And so you know, it used to be in the cities, that was the best opportunity, but talking about regulation is just keep it there. That’s typically how we thought about it. But we’ve continually been surprised, to be honest with you. Like, it’s gotten to a point now, they haven’t done anything draconian at this point in time, it’s probably not going to get too terrible. It might put a few more limitations on here to increase your permit fees or increase your tax or something like that, but it’s not going to go to an outright ban. And we feel more confident in going into the next year that these cities are trying to shut down economic activity, right. They’re trying to get more people to visit. They’re trying to put some more money in the pockets of their local residents. And so there’s a much louder voice or let’s stimulate the economy and let’s not pull the rug out from our local residents. So I do feel like it’s a more Positive regulatory outcome, you know, in the next 12 months is that a, you know, affordable housing conversation is pretty moot at the moment.
Sean O’Toole 40:10
Right, gotta get the economy going gotta get Yeah, businesses
Scott Shatford 40:16
There’s is not really a good public resource for me. I know a lot of these companies have internal sources that like are all tracking on the city council notes. And a lot of people are getting pretty sophisticated about like, really understanding, you know, which way the winds blowing on regulation and every in every city. It’s not something we specialize in. But there’s no doubt in my decision, you know, when you’re looking at investment is really understanding where they’ve been, what the conversation that been locally, where they landed, and if you’re in a market, you should get involved, talking to your city council people, donating funds, getting people organized around it, because if you don’t hotels come in and do it for you. It will kill your way.
Sean O’Toole 40:56
I think it’s probably time for I mean, I’ve thought this for a long time. Just for the small real estate investors that it’s probably time to, like, organize, you know, an association lobbyist group like the I’m a pilot, the ALPA for pilots, right has a really strong lobbyist arm and we all pay dues every year and they’re always asking for more money, but that’s okay. Right. Like, it really helped make sure that airports stay open, but I’m really seeing that for real estate investors and for short-term rental folks and that that feels like that’s an opportunity. I know, I would certainly give generously to something like that. And have you ever had those conversations or talk to anybody who’s thought about that?
Scott Shatford 41:40
Yeah, I talked to I talked to a fair amount of them, you know, and it’s, it’s a tricky one. It’s sort of this like, I don’t know, chicken in the egg conversation. And it’s just like, you know, how effective Can you be right? And thisn’t like an industry full of a bunch of multi gazillionaires where you can just go and sell Say, Hey, you know, we’re gonna take a nice little fee from you on the basis like it is it’s a it’s 200,000 individuals that are sort of making a little bit of side cash on it. So it’s really hard for the individual person to see that they can sort of make a difference. So from a lobbying lobbyists perspective, yeah, there’s a couple that VRBO and AirBNB have hired to sort of like, you know, take the brunt of that effort on themselves, they have the most to lose. And so, you know, they’re willing to spend the most. Well, I think what they’ve tried to do is motivated at a very local level, because what they found to be impactful is maybe not spending in Washington, but hearing voices and local cleaners, local residents, local business owners, you know, telling their story about you know, how this going to impact their lives. And so, it’s more about sort of rallying the local residents into getting and just being present and being a part of the conversation. And that’s typically what’s even more successful. And it’s almost always at the city level, if we can talk about for a while, but you know, there we go. There’s been a lot of work and trying to get this done the state level, right, you know, like so Arizona has state policy, you can’t Oh, you can’t regulate short-term rentals any further than you are a long-term rental in terms of like, what residents can be there or you know how long you could rent it out as one or the other. And so that’s the most effective way to do this. Because the problem with City Council is they swap out very often they always have different reviews, and they don’t have a lot to do apparently. So. Yeah, they just sort of waffle back and forth between yes and no, depending on each seat. So state legislation, legislation is the way to go. Yeah, there’s a couple organizations that actually slipped my mind right now. So maybe get back on some notes on who’s out there doing this in the moment.
Aaron Norris 43:48
A couple years ago, I was doing a lot of research and I stumbled upon a report that said the number one fastest growing trend in the experience category was treehouse AirBNBs. Is…
Scott Shatford 44:00
Yeah I love it honestly anything funky but it tent up put it in like a shipping container in your backyard like people love weird thing. And I that is like the key I’ve got guys putting up yurts in Joshua Tree and just making a killing and like, it is really about how creative you can get the unique supply. I got a guy dragging old airplanes to sleep in it’s in different locations and yeah, there’s a bunch of like people love created unique, funky. They love to tell a good story. Take a good Instagram photo. And like that’s really what’s out it’s just different and unique.
Aaron Norris 44:35
Sean O’Toole 44:35
Twig, inner leaf twig nests. Yeah, crazy stuff.
Aaron Norris 44:41
I knew somebody in Mexico doing that he was creating mud huts for AirBNBs I don’t know how it went. But that was his goal. The mud hut experience sounds wonderful. Now COVID-19 It seems like a lot more people are staying local. Has any of the metrics changed as far as how long people are wanting to stay Is it just they’re getting away for a week because they’re tired of being in LA?
Scott Shatford 45:04
Yeah. So your length of stay is gone up dramatically. So it used to be just shy of four days was sort of the average like this day across the US. I went up to about nine days depth of COVID back down to about a week now but that’s a pretty seismic shift for you know, that’s, that’s pretty big. So, with that is a lot of people staying 30 days or longer, a lot of these people are, you know, 30 day Plus, it’s a relocation thing if they’re packing their bags or getting out of Dodge, so you know, like, and so people are much more in this nomadic lifestyle now, right now, just getting out of the major metropolitan hubs. So that’s a big trend. The other trends people have no confidence in the future so people aren’t booking Christmas anymore. People are booking Thanksgiving, people are gonna wait until two to four weeks out to book that just because they don’t know what’s happening, what’s going to be shut down, what’s going on. So that’s the hard part is starting to predict where things are going to be trying to like do revenue management right now it’s just it’s really difficult because it’s a lot of people booking for tomorrow and not booking for six to 12 months. That’s just pretty unheard of at the moment, which, you know, makes sense. Obviously
Sean O’Toole 46:12
It makes, but it’s a huge insight that it’s gotten that short-term I mean that you know, tomorrow right I already kind of doing last minute.
Scott Shatford 46:22
Data is showing that over 50% of their stays there for today or tomorrow. And so that’s not like a planned vacation. That’s like, I’m on the I’m in the car and I’m going to go here or I just need to get out of my house because my I don’t know my dad’s in it or something right?
Aaron Norris 46:38
Sean O’Toole 46:40
Well, I’ve had days I’m ready to go right then.
Aaron Norris 46:45
With that being the case is it impacting the per night rate, since it is so last minute, are you seeing the average stay amount per night change much?
Scott Shatford 46:54
Surprisingly, not actually. Average daily rate is up year over year and we sort of keep like making sure that Numbers rikes it doesn’t make a whole lot of sense but it is larger properties getting booked gets higher and properties getting booked some of that’s just like sort of the makeup or distribution of bookings is not going to studios in Tulsa, Oklahoma, that’s going to the four-bedroom properties and the nicer spots more in the suburbs. So that’s sort of driving a little bit, you know, EDRs obviously down in major metropolitan markets, but, I mean, in Lake Tahoe I didn’t look at it, but I would be out it’s up towards probably up 20-25% year over year would be my guess. You know, everybody’s calendars were empty, coming out of COVID. Demand sorry, came up out of nowhere, as soon as lockdowns are removed and people yeah, I’ve just seen you know, unheard of demand in these markets. So people are pricing accordingly. But it’s all you know, everything right now is market by market by market. There’s not like one it’s hard to find threads these DC Besides, every market is different in So, so go buy your market minor. I don’t even think about that. It’s perfect plug for your day. Perfect. Yeah.
Sean O’Toole 48:02
Are you seeing? Are you able to track or see? Or do you have any insights on like ADUs is becoming a really hot topic I can assess? Are they delivering units, you know, these things that you put in the backyard that are one-bedroom, you know, whatever. Is that? Is that a thing that’s popping up for you at all, or…
Scott Shatford 48:21
it’s only thing I hear about in California. I’ve got two startups that I know about friends, friends of friends starting that it’s cool, it’s cool business obviously, solves a lot of problems. You know, affordable housing is one of them and just getting more housing supply without having to deal with, you know, the government and the planning, folks. So I think it’s an interesting, I just, I’ve only heard about it in California. So I’m sure it’s a thing there, but I just don’t hear about it elsewhere.
Sean O’Toole 48:53
Oh, interesting. Because we hear about a lot here. Yeah. So yeah, no question. No, that’s great that you’re not..
Scott Shatford 49:00
Cool business models, lots of purpose-built building like a lot of people are trying to figure out how to get around regulation at the end of the day when it comes to short-term rentals. So a lot of people are building multifamily units with like an attached like think about like adjoining hotel rooms, but that sort of door that sort of connects. And that sort of then qualifies as being a, you know, attached via unit so that like you can get through all of your Denver regulations like it has to be attached dwelling unit or whatever. And so people are building a purpose-built that meets the regulatory letter of the law. And but he’s really just built to AirBNB, the property. And so we see lots of people getting creative, to try to figure out how to sort of get around, you know, the silly regulations of all these markets.
Aaron Norris 49:50
Just a funny story really quick. Last time I was in Denver, I stayed in an AirBNB. I went to dinner with Josh Dorkin oddly enough of BiggerPockets and I lost my key, and I ended up having to stay at a hotel as I was in an apartment building that had a doorman and she was asleep. Do you see any opportunity because of COVID-19 the conversation about commercial and different property types really struggling as small businesses go under you see the interesting opportunity there to go after maybe small hotels or anything like that?
Scott Shatford 50:28
Interesting. you know, I don’t know the hotel market entirely well, but I was talking to my banker friends ever, you know, Bank of America who saw this pretty well and I was like, when are they gonna go to business? Where are they gonna like you know, start boarding up their windows and like, yes, that’s not gonna happen for a while like there’s still there’s this gonna come back and kill that too much invest in these properties to run away from them or think about converting it. What are you going to convert it to right now? You know, office space, are we retail space and so like there’s just not really a whole lot of optionality on it. So all I really know is the hospitality logic space. Yeah, nothing really like clever is coming to mind at the moment about what’s going to be the new usage of commercial real estate. I’ve seen scared a lot of people away from Master lease models, and, you know, nobody’s really going to take on that risk anymore. And, you know, doing what I was doing, but times 1000 you can nobody can predict a black swan event, right. And that’s really what it is for lodging. You know, no matter how good your, your, your business strategy was, you know, it was just random luck with your exposure to what COVID sort of presented. But, you know, with hotel occupancy being so bad with so many hotels being built, and when you know, nobody really wants to get into the, you know, studio apartment and whatever, call it downtown Chicago. There’s enough of that right and the beauty about the long-term Yeah, the short-term rental market is you can convert that to long-term, you can get a tenant in there, it might be under market value, but if not sitting there vacant, you can’t convert hotels too much like it is expensive to convert a hotel room. And so they’re sort of stuck with that, for better or worse, unless they’re just going to demolish it and start from ground zero. So…
Sean O’Toole 52:19
How about conversion of RV parks where you take the empty spaces and you put a tiny home on it, and or a park model is what they’re called. Right? And are you are you guys seeing, seeing some of that or any other, you know, interesting conversions of property and do it into the, you know, short-term rental space.
Scott Shatford 52:43
There’s lots of creative stuff out there. I don’t know. It’s nothing that is really coming to mind right now. I think we talked about a little bit earlier, but I’m not really seeing this conversion of space really. It just made me seem to listen a little bit harder, you know more intently to that. But, uh, trying to think? No, not really, I think yeah, it’s just not, there’s like there’s just not enough short-term rentals, especially in urban environments where that’s where conversion happens. I guess there’s nothing exciting about having a, you know, a smaller short-term rental in an urban environment right now. So maybe some of that creativity will come like once it’s sort of known, like, Where, where are prices for retail for office or whatever, and, like, you know, how does the short-term rental concept work, but I think it’s just too early in the cycle to figure what’s going to make sense moving forward.
Sean O’Toole 53:35
This going to be stuff on sale, right as a result of COVID there’s gonna be some commercial there’s gonna be some types of properties that are gonna be on sale and if you can get those cheap and convert them like for our you know, our audience, right, that’s, that’s the million-dollar question. Where is the opportunity in this market, to buy something that’s out of favor and turn it into something that’s in favor?
Scott Shatford 54:00
Yep, no, I mean, I think I spend most of my time on the rice resin residential side. And this one of the biggest shifts that we’ve seen as well, there’s a couple of things, which is, you know, what was very seasonal markets are becoming less seasonal. And then maybe Palm Springs is a good example. They’re putting up the most ridiculous numbers I’ve ever seen in August, August, July, are the best months of the last 12 months for that market. And if you've ever been to Palm Springs in August, it’s like just walking.
Aaron Norris 54:30
I live very close by it’s like 120 degrees right now.
Scott Shatford 54:32
Right? And so it’s doing some of these things like just extending sort of seasonality. It’s extending where people are living and working from and so a lot of the metrics that may didn’t allow the market maybe didn’t make sense a while ago is because there are two seasonal or you know, Hamptons, you know, they were up 800% in April and May in the Hamptons, because everybody was just getting out of New York and it’s like all they knew the Hamptons apparently. It’s the only place they want to go.
Aaron Norris 55:02
So New Jersey is off the table?
Scott Shatford 55:04
Right? Yeah, I don’t know. So there’s a lot of these kind of cool up and coming markets that are sort of just outside of the city center that are smaller markets like less than like 50 Vacation Rentals that are all these sort of like new thriving, interesting opportunities. So I think there are a lot of like fundamental changes in like, what’s earning money, what’s not earning money, right now. So what how can I be more specific about that opportunity? It’s about you know, buying the properties. You know, the thing is, most real estate agents don’t know any of this stuff. Like if you ask a real estate agent in any of them like how much these property Kickers, a short-term mentor, like how do you think the market sort of moving here they know nothing, right. So if you just know a little bit that like the short-term rental market is, is making 20% more here over the last, you know, 12 months, you know, you can sort of figure out what property prices are going to move because I do believe they move In these markets, because I have a lot of friends buying properties using my data, a lot of people getting into certain markets like Galveston, Texas is a good example or Pigeon Forge, Tennessee or Destin, Florida. A lot of these markets I’d never really heard of before, that are probably 20-30% investor owned at this point in time, just because that is the returns on short-term rentals are so great.
Sean O’Toole 56:25
You have a lot of Realtor customers who just I’ll just take a second to say, if you didn’t understand what he just said, it’s go sign up for AirDNA. Get an understanding of what’s happening with short-term rentals in your market understand what they rent for and, and what the trends are and all there so that you can be smarter than your competitor and close those deals.
Scott Shatford 56:47
So thank you. Appreciate that. Yeah, it’s like, yeah, I think it’s all about differentiation in this market. Right. There’s a lot of investors a lot of second home owners coming out. I try to teach these teach these agents I have not really but I go to Inman in the special events say, hey differentiations, but it’s all about how are you going to become the expert on short-term rentals in your market? Did you know that there’s, you know, 4800 properties in your backyard that are Vacation Rentals? You know, how do you upsell people that are looking to spend $300,000 were like, Hey, this a profit center property. If you buy Lakeside spend $700,000, you can qualify for it and you’re not going to pay $1 for this property, you might make money on that property. So you know, how do you just sort of facilitate more transactions get higher value transactions with knowing this data? I just it’s always fascinating to me, but maybe I’ve just been at it for so long. I’m like, yeah, how come you aren’t doing this? It’s like, it’s just still this still new takes time. Like it’s, it’s been 11 years since AirBNB started. I can’t wait another 11 years.
Aaron Norris 57:51
What some of the technology you’ve been excited about in the space that helps with things like noise control or whatnot. Is there anything you’re about?
Scott Shatford 58:02
Now all that home automation stuff is awesome. I just I mean, I just picked up my Tesla yesterday I’ve never driven way until yesterday and I’m like, this how like the home experience should be right? You get in it like knows your name it says hi unlocks things it gets your refrigerator all ready to go. Like, you know, it was thermostat, the right place that heats up your pool, like all that sort of home automation stuff is super cool. Like just having your entertainment system ready to go. I just that whole experience I think has become easier. Do you ever walk into a vacation rental with like seven remotes and you’re just like, I’m not even gonna attempt that experience. I’m not even gonna try that. So just like some of those basics, just making it really flawless. You know, Amazon echoes and that sort of just whole ease of walking into a home knowing the technology I think is always interesting to me. But, you know, sort of just a techie nerd.
Sean O’Toole 58:54
Three to four times I get to use Netflix on the previous stayers. Oh I don’t know what’s wrong with that. You know that I mean, I had my Netflix account on all 10 of my properties. I think they may be limited at some point in time, but like, yeah, who cares make it easy on people who even remembers their Netflix password? It’s always such a pain in the ass. It’s so stressful. And the kids are yelling at you like, Where’s my show? You’re like, I don’t know my password. I can’t do it. So yeah, just making things easy in the home. Automation is good. What else exciting. I guess it Noiseaware stuff is cool. I mean, I know those guys really well. I mean, I think that’s interesting. Yeah, I’m not actually monitors sound levels, or is it I know there’s I met a gal who has a Wi Fi and she looks for how many Wi Fi connections like to see if it’s above the occupancy limit. And I’m gonna forget the name of her company and I feel bad for not plugging her But yeah,
Scott Shatford 59:49
I know you’re talking about I should know it too. I’m sorry.
Aaron Norris 59:54
Maybe on the show notes.
Sean O’Toole 59:56
Is the NoiseAware where one has sound? It’s listening?
Scott Shatford 1:00:00
Yeah, so it’s sort of a you plug it into, you know, an outlet and it’s sort of just measuring decibel levels. And so if you get above sort of a sustained, sustained decibel level, it will send you like a text alert or notify you in some way, shape or form, you know, then it’s then it’s like then what right then you’ve got to like yell at your guests at 1:30 in the morning, and yeah, that’s a whole another down day, but at least it’s good to know.
Sean O’Toole 1:00:23
Scott Shatford 1:00:28
I think the technology is cool. And I think it’s even more powerful, I think at the regulatory level to just talk about all the sophistication you have how you have your, your party squasher is it called Party Squasher? It might be that yeah. Yeah, and are NoiseAware. So it’s like, Hey, we have ways to monitor we have ways to sort of make sure this not bothering neighbors. And that’s really their sort of strategy is just giving a, you know, local city some more comfort, you have some, some technology to control that component. I don’t know ya know, there’s there’s not a whole lot you can do for getting a home like once you get in the home, you know that that’s sort of the biggest problem was just automation of getting in homes you know locks, you know keys and the most awaited thing on the planet and so anything you do to get away from keys and get into digital locks I mean that’s the first step you got to take the short-term rental space.
Sean O’Toole 1:01:21
Have a favorite digital lock now
Scott Shatford 1:01:24
Don’t ask me I’ll get in trouble because they are. They are they are like, like to try to talk me into promotion. There’s one here Remote Lock is a local one, but they’re more of a big property managers at scale. There’s so many of them. I don’t really I can’t really tell you that there’s August Locks, Schlage locks, are all good. I don’t know I don’t know. Really whatever taps into your PMS. So like look at like gas tea or whatever you’re using and just sort of see what integrates because you want that all to be connected custom codes going out to each new gasps Without you thinking about it, all that things sort of interconnected.
Sean O’Toole 1:02:03
Now in the revenue optimization side are you integrating with some of these platforms? Is that a business for you guys where you’re giving them the, you know, these the guest or the PMS system? They PMS is the right word, right?
Scott Shatford 1:02:18
It is. Yep.
Sean O’Toole 1:02:19
Yeah. Are you supplying them data so that they can like automatically set rates and that kind of thing?
Scott Shatford 1:02:25
We are, yeah. We have a couple of partnerships like that, where we’ll provide all the pricing for the properties on our platform. One of the bigger ones is with BookingSync. They’re out of LA and they use our pricing algorithm to like you know, display rates, change rates and push those out. accordingly. We’re, you know, it’s a big part of our strategy is thinking through how we want to approach it. It’s just sort of a, you know, there’s 70 players that are like PMS is with properties at scale. They’re all different places and sophistication and ways of pushing and it’s sort of just a rat’s nest of connectivity in the vacation rental space. So we’ve been sort of like waiting for the dust to settle on some real sort of clear standards and like, you know, what is a rate? And do you push pricing? And what about the minimum stay? And, you know, I didn’t really want to lead that whole charge. But yeah, we have some partnerships and revenue management. Pricing is the single biggest decision people should be making on a not a daily basis, maybe, but on a weekly basis, you should be really thinking about, what’s it looking like, what’s your occupancy over the next couple weeks? couple months? What’s the competition doing? And that’s sort of a headache, right? Like a lot of people don’t want to do that across 10 properties. And so we have enough data, we have enough information to be able to do that automatically for people. I definitely see that as a big place. We’re investing time we already have it and market minder, you can see recommended rates are but you can’t go into autopilot mode and just sort of like push it wherever. So that’s definitely a big thing we’re working on,
Aaron Norris 1:03:57
Especially now with everybody waiting till the very last minute to book, it’s a lot of stress.
Scott Shatford 1:04:03
It is a lot of stress. Right? And the hotels have a really good because they’ve got it, you know, 100 rooms to get it wrong on. They don’t have to get it right. You know with a vacation rental. It’s like, either you’re booked or not you screwed it up or you got it perfect, right? There’s only one opportunity to get it right. And so it is pretty stressful and you want to not be too big of a weenie. I remember being very concerned. You know, we gotta got to get booked. I’m going to go to $99 night, and then I got booked in like five minutes. I’m like, No, I underpriced it. I should have felt strong. Like, why am I such a weakling? Just no confidence. So yeah, it’s super hard because you can’t Yeah, you can’t really? I don’t know. It’s just it’s binary. It’s either booked or not. You don’t have a chance to adjust. You know.
Sean O’Toole 1:04:46
I got one more. I don’t know where we are…
Aaron Norris 1:04:51
We are at that mark. So go for it. And I’ve got one last one too. If it’s not you that’s asking it so go ahead.
Sean O’Toole 1:04:57
Okay, so um, No big one everybody’s talking about right now is AirBNB filed their S1 to go public you know as these companies go public there typically tends to be even more opportunity, even more stuff that happens any you know anything there that you’re seeing Did you get friends and family shares you know
Scott Shatford 1:05:21
Sean O’Toole 1:05:23
Any comment on that event and what you think and what you think their prospects are should we all go out and buy stock?
Scott Shatford 1:05:32
I mean, I like it but you know, I’m AirBNB’s biggest poster boy right. I started there I made money there I created a business off the backs of their business and, you know, so maybe you should find somebody with like a more like tempered view or a more like, you know, unbiased view of them, but I mean, I love it. I mean, obviously, AirBNB was crushed in this in this COVID environment, they had to go raise a bunch of money $2 billion at terrible terms, which I do think is forcing their hands in some ways to go public maybe before it’s perfect. But yeah, have you looked at the NASDAQ it’s not a bad time to go public I mean the numbers are pretty ridiculous at the moment. So I don’t you know, I think they were trying to go in March unfortunate there, you know, a couple months too late to do that. I see big things for AirBNB The brand is, is phenomenal around the world, going public, you know, gets a lot more of your host as shareholders as people are more invested in your business. I think it’s such a good consumer brand right now. People are loving the consumer brands like you looked at like the Tesla stock lately. Like it doesn’t make any sense. And like, AirBNB is any one of these things. And people with millennials with stock portfolios now is through the roof. They got no football to gamble on I can’t gamble on the NBA Finals or whatever. And so they go, they’re all getting stock portfolios now. And when are they going to go invest in the one thing that they know is AirBNB. So I really do feel like there’s going to be you know, it’s a great consumer brands, a lot of young people are gonna be investing in it, you’re gonna have all these stakeholders that feel like they’re, they’re responsible for the bottom line these hosts that are gonna come in and pile into the IPO or, you know, post IPO price. So I think I think I’m pretty bullish, but you know, take it with a grain of salt.
Sean O’Toole 1:07:17
And, you know, just on the opportunity pieces there. I mean, ecosystems been around for a while now, is there any spot in the ecosystem obviously, that, you know, there may be something you’re working on that you want to keep to yourself, but something that you think, God, I wish somebody would come in and do this because there’s an opportunity here?
Scott Shatford 1:07:38
Good question. Good question. I think you know, with all of these companies, you know, AirBNB, really, what is it at the end of the day, it’s just a brand. It’s just, it’s just a place to go book, a vacation rental, and you don’t have to go into AirBNB. It’s just all about our distribution network. There’s always room for disruption, right? Like you look Get Expedia, booking.com is you know 10s of billions of dollars a company’s basically just because they’re smarter paying for ads and like getting on the first page of Google search results so there’s always a huge opportunity and being able to disintermediate that stuff consolidate supply across three platforms create a new place to see and view and book properties that are offered these main brands and so and you can always charge really good commission’s on that if you can get it done right. So that’s, that’s what the big opportunities are is there’s no reason this a three-horse race. It’s just because why is AirBNB unique? This supply is not exclusive to them. It’s not that you can’t go find that same property and VRBO or book it directly to go to the kasa.com and so I’ll leave it there but like yeah, marketing distribution, everybody’s trying to get away from having to be reliant on AirBNB or be reliant on VRBO every is looking for independence just like the hotels. Don’t want to pay 20% of booking.com for a booking, there always be opportunities if you can sell distribute properties at cheaper price…
Sean O’Toole 1:09:09
Any niches to like waterfront properties or, you know, mountain properties or stream properties or ski in ski out does that
Aaron Norris 1:09:18
Sean O’Toole 1:09:20
Scott Shatford 1:09:22
I sort of like the whole connected trip thing that’s something that AirBNB coined is you know, for, it’s called for the, you know, executive like, you know, what’s your private plane to your Aston Villa and your experience and your chauffeur and your butler and all that then I think there’s still a lot of opportunity maybe not at that like extreme of like, find your private island level but a sort of the whole thing booked for you, right your experience. Now, everything is sort of a package deal without the travel agent both.
Aaron Norris 1:09:53
It’s interesting said that the lady that I stayed with at Denver, she moonlighted on the side doing marijuana experiences. With an AirBNB and she also had 50 jeeps that she rented out as part of the experience with some of her properties. So she had sort of expanded on that concept. So I could see that.
Sean O’Toole 1:10:09
Get them high and put them in a Jeep sounds like a great plan.
Aaron Norris 1:10:13
Not the same vacation package. But what’s a last question? What’s next for AirDNA? What are you guys working on?
Scott Shatford 1:10:22
We’re looking at crawling out of this COVID hole that we found ourselves in as a lot of us are. We got a lot going on. I think it’s all about getting data from people. It’s all boring stuff, to be honest with you, it’s gonna bore the hell out of your listeners. But you know, there’s there’s 11 million properties, we only have access to less than a million of them in terms of source data. So for us, it’s all about data is king and environment. Accuracy is the name of the game. And so just continue to think about how we compel people to give us data. So we can sort of always be that record, like data. Yeah. Source of record from the industry. You know, beyond that, I’m going to be looking at you know, there’s good tech challenges, pricing is always going to be one of them. And really real estate real estate, real estate is where we think that the final frontier is for us is, is, you know, why isn’t every piece of property even thought about or valued in terms like what the short-term rental value is? So we talked about with residential real estate, you know, properties, values never traded on like a cap rater would be with commercial real estate. But why not? Why isn’t this sort of the way that vacation rentals are changing hands? Because that’s what it should be. It’s a business. It’s predictable revenue, like you’d have five years of rent roll. And so like, why isn’t that sort of a clear or like, why isn’t that part of the buying process, especially for vacation rental properties? I can sort of go on and on and on. But would you think that when people are building real estate purpose built with short-term rentals in mind or converting or whatever it is, there should always be this component of, you know, what is the one floor, two floors of short-term rentals, we should be building on terms you know, below the condos but above the retail and like that, that will be a conversation that’s happening with sort of every new piece of you know, high rise real estate is like you know, what is actually detrimental component. Anyways.
Sean O’Toole 1:12:17
I’ll bring this back to our listeners, right so real estate investors hopefully took away from this that you should be paying attention to the short-term rental market, right? If you’re not looking at that as one avenue of exit on a flip, right, you may be leaving dollars on the table. Realtors, same thing like understand what’s going on in your market, you’ll be able to better serve customers coming in and market help them make better decisions. And I would say for our home services companies to you right, like, think about the value ads you can bring. You just heard Scott talked about the fact that you know, pools, spas, firepits, outdoor barbecues, right, all those things out value, those are pretty nice sales for you in the Home Services space, right? So to be going and finding these folks on the short-term rental side and reaching out to them and explaining it to them in terms of what it will do for their income, right, so you can look at Scott site, look at the difference in income that adding that thing will be and you can then you can now say, Hey, I’m gonna sell you an outdoor barbecue, it’s gonna cost x, but you’re gonna make why that’s a whole different pitch, then gonna buy barbecue. So anyways, lots of good stuff. Definitely. Good. Pretty good service and very cool. Very cool business. So thanks, Scott, for being with us.
Scott Shatford 1:13:44
Thanks for having me. Good to see you again, Sean That’s another five years into Alexa.
Aaron Norris 1:13:48
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