Bob discusses best practices for managing all of the moving parts of a short-term rental, commonly referred to as vacation rental, with Matt Hoffman, Head of Short-Term Rentals at Kigo, a RealPage Company. The software as a service (Saas) provided by Kigo is specifically designed for managing short-term rentals. Bob and Matt exchange views on the definition of a short-term rental, what distinguishes a short-term rental from a long-term rental, and the ideal characteristics of a property owner thinking about renting their home as a short-term rental. Matt also offers his insights and opinions on the rapid growth of the STR market as well as valuable advice to owners of short-term rentals looking to maximize their income and book great tenants. Bob also offers his experiences in implementing and using Kigo as a current subscriber to the software at North County Property Group. For more information about Kigo, click on this link to the Kigo website. This episode is always available for listening, sharing, or download at Property Management Brainstorm.
Bob Preston: 00:49 Welcome to the Property Management Brainstorm podcast. I'm Bob Preston, your host of the show, broadcasting from our studio at North County Property Group in Del Mar, California. Today we're going to talk about short-term rentals and the various moving parts that need to be managed with that class of rental property. As a longtime real estate agent, myself and many other agents are familiar with the RealPage brand and software company. Lately it seems like they're getting into some new areas in terms of property management. Specifically, what we're talking about today is the managing of short-term rentals. I have with me today by telephone from Dallas, Matthew Hoffman, Senior VP at RealPage and Head of Short-term rentals for Kigo. Kigo is a property management software for managing all those moving parts and details in short-term rentals. So, thank you for joining this Matt.
Matt Hoffman: 01:40 Thank you very much for having me Bob.
Bob Preston: 01:42 I already provided a brief introduction, but I'm sure it didn't do you and your company justice. So maybe we can start by you telling us about yourself, your background, and what you do for RealPage and what Kigo does.
Matt Hoffman: 01:55 Absolutely. Well, again, thank you very much for having me. I came into RealPage through acquisition. I've been in the short-term rental or vacation rental space for about 10 years. Started a small business back in college on doing essentially an eBay for vacation rentals in a time when online booking was not even existing yet.
Bob Preston: 02:17 Right? Those were the days of putting up a sign and putting an ad in the paper and the driver's seat, a lot of that.
Matt Hoffman: 02:23 That's right. You know, it did take you five days to hear back if a unit was available or not. Freaking make a decision. Kigo today is the enterprise level platform for short term, and it's really all designed around helping to tech enable, uh, a lot of the manual processes that are involved in, in this business. You know, you're one of long-term property management. You're doing one turn a year, you know, in this world you're doing 17 a year on average, you know, that is just a whole host of elements that define what a professional is in this space and delivering a hospitality experience that's the modern hotels but has differences and, and Kigo is a platform that helps professionals achieve that.
Bob Preston: 03:04 Great. Well full disclosure here, my company, North County Property Group is a Kigo client. Yeah. And we've just come over from another property management software for the short-term rental side of things. You know. So, for today's purposes I know a lot about the short-term rental market but with Kigo I'm I know just enough to be dangerous cause my marketing team did the implementation with your team. So, if it's okay with you, I'm going to ask most of the questions and just kind of let you, you know, answer the questions and educate our audience if that works for you.
Matt Hoffman: 03:35 I’m at your service, go ahead.
Bob Preston: 03:36 Okay. So, let's start with what is a short-term rental. I know you know this probably, but I think for the audience that would be important to differentiate. How are we defining this? I often intermixed with the term vacation rentals so I don't know if there's a reason I noticed you guys try to stick I think to short term rentals but I'd love to hear your definition of it and then maybe I can share some of my thoughts.
Matt Hoffman: 04:00 Absolutely. So, the short-term rental is an umbrella term for a variety of different, uh, name for nomenclature to define, know the business model. In Europe you've got villas and holiday homes. In the US you have vacation rentals, short term rental I look at is a non-hotel accommodation. It's being rented for one night or multiple nights, but always less than 30 minutes.
Bob Preston: 04:25 Okay, good. And typically, will be furnished, right? For somebody who's thinking about renting and we're going to get into this a little bit, I mean I get a lot of owners who have these properties coming to be like, well I'm thinking about a short term rental that maybe I should do it long term. What's the difference?
Matt Hoffman: 04:44 You look at it as a combination type is being equivalent to what you get in a hotel suite. I mean it's an additional space, right? More often now there's additional bedrooms and as a, it's a home away from home, uh, so to speak. And, uh, you know, that is something that if the surface layer and the convenience you can get with a hotel can be achieved in something like a short term rental, then you'll start to see that the guests are travelers will find more value, uh, understanding that the economics are usually in line with that of at least in urban markets.
Bob Preston: 05:15 Right. And you know, not only were the vacation rentals or the short-term rentals typically furnished, but all of the amenities, the, the utilities, cable TV, a Wi-Fi, all this kind of stuff is kind of rolled up into one offer for the stay. And of course, you know, it was short term rentals. The owners have to be willing to invest in all the various amenities that are provided with that short-term rental.
Matt Hoffman: 05:40 The point between a host and then a professional as a host. What it allows someone, uh, not by intention but to go in and understand, you know, what is the Wi-Fi password or somewhere I can go to actually get that information and professional would have a printout and or some communication.
Brett Preston: 05:59 So, so you must study the market data. What do you consider to be kind of the average day in a short-term rental and you rattle off of, you know, one night a week, you know, anything less than 30 days? What do you think is a typical day?
Matt Hoffman: 06:11 So it's important to understand off the bat there are urban markets and vacation markets, right? Urban markets have had throughout the year versus seasonal demand and vacation markets. And then what you'll then have to look at is where did the guest originate from though, depending on where your demand is coming, you know, HomeAway, booking.com Airbnb, yet that a largely depict the type of guests you're going to receive. The occasion markets an averaging a longer length of stay in the US about, let's just say five and a half to six nights. Then urban markets a significantly shorter stay in the US an averaging around, let's say three, three nights, first day.
Bob Preston: 06:52 Oh that's interesting. So, in urban markets, maybe you have people dropping into town, not dropping in the town, but maybe staying for a business meeting or are shorter duration perhaps. I don't know.
Matt Hoffman: 07:03 That's exactly right. So, the, the proximity between the booking origination and the check in date is typically less than 30 days for urban markets and indication-based markets. We know that a guest or traveler is making that decision three months out and making that first payment to work.
Bob Preston: 07:22 Right. And we're coastal San Diego, you may be familiar with the area, I don't know. I mean it's a very popular vacation destination and also, believe it or not during the winter, so we have a lot of what we call snowbirds coming in during the winter and maybe people from Canada or cold weather or they want to come in and they want to stay for maybe two, three months, maybe the entire winter. So that is not uncommon in our portfolio, which is kind of a nice compliment to our long-term rental side as well. And one thing I've noticed, Matt, is that some property management companies, I know they will not even go near short-term rentals and furnished rentals and they, they kind of avoided like the plague. Right? I don't know. That's a really good question then. That's I guess what I wanted to talk about. We see it as a terrific complement to our business. We have the staff in place, we're use to managing properties. Yes. Short term rentals for us as a completely different business model because of all those kinds of moving parts that are involved. And we need a separate platform. That's why we have Kigo. But have you talked to many people who sort of have that attitude or you're trying to convince the team, maybe you should, maybe you should consider this?
Matt Hoffman: 08:30 Yes, we have. So, uh, whether it'd be a multifamily, single family, anyone that is managing units and has available, uh, available space or capacity that's underutilized, should absolutely consider all the ways in which to drive occupancy. Right? And so, the economics are the first thing I find professionals look at in the world of a short-term rental model, you look at as an owner, I said, hey, I got to a long-term resident, $2,000 a month. Or if I convert over to a short-term rental, I can get, you know, $200 a night. And having a nice rock to boat to obviously supersede that. Now on the flip side, there's additional costs to support the modern, but we're in a market like San Diego, uh, where to your point, you know, you've got seasonal demand. Uh, it ebbs and flows, but for the most part throughout the entire year, um, you know, that's why would you not, uh, have, uh, a unit convert over to this verse sitting there empty and generating new income.
Bob Preston: 09:26 Correct? Yeah, we, and we have a lot of people who have second homes here and that's a perfect candidate because when they're not staying at the second home, they would love to get some rental income off of it.
Matt Hoffman: 09:39 That is the big opportunity. I'll just throw that out there. Right. Our homeowners with second or third homes, the, the data is not, I wouldn't say it's absolutely accurate, but I will tell you that a large portion of we'll call the total addressable market or short term rentals and with the growth of this industry, your year is going to be interesting to see the amount of homeowners out there who simply just don't have anyone renting their second home when they're not there. And if they get and work with a professional that could actually bring in, you know, income during that period of time. That is absolutely a very real opportunity this year. We think there's probably a couple million a second home, uh, units or homes, if you will, and owners out there that are not currently dissipating in a short-term rental pool or having it rented at all. Yup.
Bob Preston: 10:27 The best or the ideal profile for a property owner who wants to do short term rentals. Have you ever thought about that? I mean, is there a, uh, sort of, I guess your target market is companies like North County Property Group, but if you were to suggest what our target market should be, what would that, what would that individual, like how would you describe that individual?
Matt Hoffman: 10:46 So I knew right then what is the persona of guests you're looking to have it and what are they looking for? So, um, yeah,
Bob Preston: 10:53 And knowing that word persona. Yeah, exactly. Better than profile. I don't like to be.
Matt Hoffman: 10:58 All right. So, some know me, I'm a business traveler and I'm coming to San Diego for a couple of nights. And, uh, perhaps that means that I'm looking for something downtown. Uh, something that can accommodate me for maybe a longer stay than a couple of nights where I want some of the amenities of home. Uh, but uh, you would then maybe have something that was located downtown that is more in with where you see a, in a, in a hotel rents in a multifamily building, a, if it's a vacation market and you're looking for perhaps families who are planning to come there, uh, you know, during that peak time of year and you want to be able to then say, okay, that persona was coming on vacation is the core inside my home or the amenities, a, you know, a, a pool, certain things like that. Is it going to cater towards that type of an experience that you know that guests are after it. And really it comes down to understanding where you're bringing in the guests from. So, you look at a platform such as Homeaway, VRBO, uh, you were going to get a large aggregation of travelers who are looking for Airbnb, booking.com you're going to find a lot more variety of traveler that's looking for maybe corporate stays. You're traveling on business, things of that nature. So, so understanding the persona that you're uh, you're aligning with or we're going after for your market is important than how you decorate.
Bob Preston: 12:16 That's a really good description of the sort of vacation renter or the person who's traveling to stay in one of our properties. I couldn't agree with you more. What about the owner profile though, the owner of the property? What do you guys study that at all and sort of the ideal situation when like if you were talking to a buddy or a friend of yours and said, hey, I'm thinking about renting my home and he kind of started to describe his needs and what he was looking to do. Is there something, are there any buzzwords or anything you'd look forward to saying, hey man, you should be a short-term renting?
Matt Hoffman: 12:45 Yeah, I would say I first start by saying to homeowners out there that a professional short term rental companies in this space today, effective owner acquisition strategies or you know, marketing out to those homeowners to interest them in converting their home to a short term rental is an effort that has been lagging behind, right? Is it a, you know, they wanted to be able to find as many units that are home, they can bring in as they can, assuming that they have the demand to fulfill that, but it's a real challenge. So, I would say if I'm a homeowner and I want to know, you know, what is the, how can I maximize the conversion potential or income generation for my second home, what would I do? I would go and literally you use vacation rental or, or short-term rental management companies and just Google and look for those companies that have a very good online presence with their own storefront or website, right? That brand that you carry is a really good indicator and how they're managing themselves online, right? That's, it doesn't have to be Hilton or Marriott, you know? And then you can work with that company that and they'd come in and do an evaluation and help you understand. You may be worth some areas of improvement would be and if the home that you have now is immediately available to market and generate demand or if there's some improvements that have to happen with that cost would look like and you know maybe with that market can do in terms of the payback typically in a market like San Diego, even $10K of improvements now you could generate an ROI back on that.
Bob Preston: 14:13 In fact pretty quickly for sure. I get a lot of potential or prospective clients calling into our office and I think I mentioned this earlier in our, in our episode here and there, trying to figure out what to do, should they go short term, should they go long-term and they're kind of weighing the disadvantages, advantages. And so, I became so familiar with this conversation that I actually posted a blog post about it and said, you know, short term, long term, which way do I go? And I kind of, the first question I ask when somebody's considering short term is, is look, is this a second home that you use and want to use on a basis? And are you, do you actually live in another city? If answer yes. Okay. That one's checked, right? And then, yeah, I mean more of a personal enjoyment and then it's like, okay, how important is the rental income to you? Is it, is it critical to your survival or lifestyle or is your goal a nice to have that if you generate some income off of your second home got, wouldn't that be great? And maybe that would allow me to afford to take more time off or do some other permits on the home. And if they answered the ladder then okay, check that one. Smart. And then you know, what are your cash resources, right? So, I kind of get into what you call the persona, you know, if you are willing to do that, willing to take on a little bit more risk. I mean it is a little bit more risky venture because people are coming in out of your property than short term rentals are for you. I don't know if you would kind of agree with that description.
Matt Hoffman: 15:40 No, I mean you have to understand the, uh, you in, in the world of short term rentals, you've got to customers as a property management company and then you've got the guests and bringing them into an accommodation experience that, you know, you're wanting to be a good one. And so, knowing that a homeowner is looking at this is supplemental income, not a, you know, primary income. Yeah. Then that is a great way off the bat to then manage expectations and then, uh, under promise over deliver for them as a management company. And those are, you know, in that scenario I would look at then at, depending on the mix as you would say, of where their needs are, a market like San Diego, you've mentioned, you know, they have snow birds well perhaps you can have a scenario where a, for a portion of the year you're renting out 30, 60 or 90 days stays. No, the average daily rate is lower combined over for a short-term rental, uh, when you can maximize the economics and the high season. And so, um, you know, really what you're seeing on shifting in the spaces, this sort of notion around flexible living and if it's furnished and you've already meaning sort of the prerequisites, right, that would qualify then? No. Is it a lot of my expectations, you know, is the information correct on the listing and is price, you know, obviously justify me moving forward. I believe that a hybrid model is absolutely and the company.
Bob Preston: 17:04 Yeah, we've done that. In fact, you know, some of our, some of our vacation rentals or short-term rentals there, we call them, we put them in that classification, but they're actually in condo associations where there's a minimum of 30 days anyway. Right. So technically and the state of California, I'm not sure how it is in Texas, but in the state of California from a legal standpoint, that's still viewed as a long-term rental. So, I have to explain it and the clients said, okay, your kind of in this gray area where we could market your property both ways. So, and in addition of putting it out through Kigo on Airbnb and VRBO, we will also put it up on Zillow and Trulia and realtor.com and all those kinds of things. All right, great. That was a cool conversation. I always like talking to this about someone who knows the market, knows, knows a lot about short term rental laws. So, we have that in common. Yeah, you're kind of speaking my language here. Okay. So short term rentals are booming all across the country and I know you do a lot of international business, so it seems like throughout the world as well. What would you attribute that to? I mean what is the driving force behind that? Yeah, major expansion in short term rentals?
Matt Hoffman: 18:08 Great question. There are three challenges facing non hotel accommodation, short term rentals today or professionals and or homeowners. Let's just kind of talk about you as the professional. Integration, fragmentation, professionalization, and those are the three big words. But you've got pockets of short term rentals around the world that are operating differently, right? A than other areas. You book a, for a long time, you book a short-term rental in Miami and you, book one in San Francisco a month later you could have two very different experiences, right? And so, it was Lou, we mean to, to standardize a process. Well hotels have done a great job over a long period of time refining what they define as hospitality. No, for short term rentals of the guests. You know, it, it really starts there right then and understanding, you know, is this something that is going to be as expected, as advertised, you know, or not. And uh, for a lot there's this growing pain, let's just say we're a technology and best practices and markets and regulatory compliance. All of these things have been impacting growth and you're starting to see now when you talk about it to short term rentals are booming. You know, is really where the demand or this accommodation type has surpass available supplied. And many US markets. That's really where at that boom is happening is that they're just there. You're seeing urban markets where they're just wanting to get more supply available to meet the demand. Uh, and then you know, what you'll start to see over the course of the next two to three years is this convergence of supply types where you've got a short-term rental accommodation sitting grant on them alongside of hotel. You know, on the backside. It's who's facilitating that service experience. That's where we're trying to move the needle, right. Technology that helps drive, uh, service to the delivery and exceeding expectations of the guests. That's, that's where we're at now. And you starting to see hyper growth. The more companies like you are seeing technology or adding that to this and are becoming flexible with their business practices and not being so rigid around. It has to be short term or has to be long term. The efficiencies gained in a, in technology and innovation.
Bob Preston: 20:27 Yeah. Perfect. Um, do you see kind of the market's acceptance of this sharing economy as a factor? Like, I hardly ever take a taxi anymore. It's always, you know, I press my, get on my cell phone or my mobile phone and I look, hire an Uber, you know, it's instant, right? Isn't there some correlation there? Not just Uber, but maybe that's one of the aspects of Airbnb attractive. You know, today's Day and age, you know, you can go on one of these maintenance websites or apps. You can get a plumber to your house, you know, within a half an hour. What do you do you think about that? Is that one of the factors?
Matt Hoffman: 21:00 It’s a fundamental shift in mindset for, uh, uh, let's start with millennials generation here in the US, but, you know, my generation is definitely more inclined to convenience over ownership and, and really driving, you know, how do I just get to what I need the fastest, uh, you know, is absolutely something that is playing into accommodations. Airbnb was the big, the biggest driver for this sharing economy. Uh, and being able to say, you know, I have a home and I'm not going to run out my whole home, but I will absolutely rent out my second or third bedroom. And then what does that look like? And so those types of accommodations, I would say it's important to delineate, you know, if you are a secondary homeowner and you're thinking about this, you know, the economics are, are best when you can hire someone that uh, you know, it was the single or you know, you've got available space or perhaps a, a mother in law suite on property or whatever the case may be. Uh, you should absolutely look at it, which to monetize underutilized capacity or space and that that sharing economy just opens up another vertical for demand and income generation.
Bob Preston: 22:12 Okay. So, this has been a great conversation related to kind of high-level stuff, you know, in the market and the description and who's doing what and how it's done. I'd like to get a little bit more into the details here and here we'll be able to talk about maybe some of the features that Kigo offers. And I know Kigo does not take on individual homeowners, but the process of what you guys do for companies like North County Property Group are managing all those moving parts. So, let's jump into that a little bit. So, you know, in your mind, what are the biggies, uh, for somebody who wants to rent their, what are the various aspects of people should be paying attention to people as a secondary, a homeowner or a science? Yeah, somebody who wants to, I mean, I tried to explain to people all the moving parts that are involved in this business and there are a lot of them. Yeah. So, what are the biggies in your mind?
Matt Hoffman: 23:01 The biggies are led by my, and I do on vacation. I was myself. The first thing you have to understand is not underestimate the communication demand. So, we're looking at instant gratification. We all want it, you know, I need my ride now. I want this now. But in hospitality or travel, you've got a five-minute golden window with which to really kind of respond, you know, and uh, or trusting. And in this short-term rental industry, up until this point, you need a lot of communication is required prior to booking or prior to checking in. So, then that's, you know, understanding expectations and managing that, you know, demand on you is, uh, is something that, you know, give a fulltime job.
Bob Preston: 23:50 Yeah. So, if you're an individual homeowner wanting to put your home on the up on Airbnb, you better be prepared to answer people quickly. Otherwise you're not going to get it
Matt Hoffman: 23:56 Exactly right or else your performance will drop and all these other things. And then you've got these scenarios now where once they're in unit, you know, assuming that you provided a very transparent way with which, why by directions of where to go, other things of that nature. You've got the incidentals or mishaps that happened while someone else staying in and then it's your duty while they're on say to get somebody out there and turn that around or fix that problem quickly because they're not staying there for a long period of time. Hotel and the water heater broke a hotel, you're not going to wait around for a day. You know, you're just going to go to another hotel room. And so, we got to understand that you should something go wrong. You know, you are then at a very real risk for a poor review and know and reviews are very important and travel in the world of short-term rentals, right? And so, any business they are, but in this scenario, it can be even more damaging because that could be a deterrent or that person that was then they're going to check in a couple of weeks later. So just the surface level of the say while they're there, uh, is also a big deal. And then it's the constant remarketing and reaching back out to ensure that we have the cost to continue to bring in the income or the demand. You know, it can be very high and can be very variable. Year one, but over time, you know, you should be able to develop an experience or a brand that hopefully is memorable and they're coming back to you every single year, uh, you know, as a return guest. And there's a lot of effort and work that has to go into that type of communication as well. And the checkout side, uh, that, uh, I find is just ends up being underestimated by most who are getting into this space.
Bob Preston: 25:34 One thing I find with a lot of the homeowners of short term rentals and come to us is that they kind of have a general idea of what the rental value might be on a nightly or weekly, but it's typically your anecdotal data like, oh, my neighbor told me he's killing it and charging $6,000 and I'm going to go on a, or, you know, I think the market guide is more like three. And so, there's this sort of negotiation takes place and then they typically haven't really factored in well. Okay, you, you will get higher rates in the summer, but during the winter and fall, I probably not so much. So, there's that challenge to determining realistic rates, right. And then sending up all those different websites, Vrbo, Airbnb, TripAdvisor, and figuring out each individual side if you're, if you're basically posting them directly yourself. That's right. Tough undertaking.
Matt Hoffman: 26:26 I would just say this to any homeowners out there who are listening to take it easy on guys like Bob because you got an expectation of what you want to be able to charge per night. Uh, and you maybe had gone on Homeaway or another site out there and he found some comp sets that are similar. But at the end of the day, you know, it is an iterative scientific process. There was the business model looking at kind of data, right? And Revenue Management, understanding, you know, when is the optimal price point to generate demand, when can I maximize my value? My its, that is a full-time job. And I find that the rollers out there who are most successful are the ones that trust property management company. That's right. We are, we have this, I want to put in as many dollars to the door as they possibly can. You know, trust me to do that, but let's not be so rigid around our requirements. Now granted, I understand that if I have a, you know, a higher, uh, you know, home, that's a luxury home, you know, and I don't want a group of let's say coming in on a bachelor party over the weekend and we have to be able to screen for that. But you know, pricing flexibility and being able to analyze demand points and fluctuations route course of the year, it's something they should have absolute in the hands of a professional. If you look at hotels, you know, over the last 20 years, you see very volatile, you know, ADR, our average daily rate and pricing. You look at our industry, you really see this very flat line because they've got this, my high season rates and then I got my shoulder season and my low season and what does that even really mean anymore? Right? You have to be able to understand how many units are available in the market. Is there a big event that's actually happening? I'm going to trust you Bob. I know that because all the hotels were booked. I could probably get two times my average rate. Now you know, and I want to go and allow you to charge that. And we're all going to share in economics in the wind when that happens.
Bob Preston: 28:26 Yup. Right here in Del Mar for example, where we're located, we've got thoroughbred track. I don't know if you're heard of the Del Mar race track and the thoroughbred season is typically from July to September. We're just also the peak vacation time. So the rates usually go way up during then, so you said one thing, it kind of made the analogy to hotels and one of the differences I've seen, there's been this shift as of late for this industry of short term rentals to become our baby, try to behave more like the hotel or travel industry. Can you comment on that a bit? Is that true?
Matt Hoffman: 29:01 I think there's been a lot of comparison to hotels in the U. S specifically is because of the accommodation type that US travelers in the US or have been most accustomed to. If you go to Europe, you know, you see that it's not really been about a combination type, it was simply an accommodation, whether it be couch surfing, hostels, things of that nature. It's not, they were looking uh, in their mind for something specific. So now what you really see is an advancement of the short-term rental industry is understanding what non hotel hospitality looks like and really defining that for our space. Knowing that you're not going to have all the conveniences perhaps of the hotel, but in what you relinquish on one side, you gain in the others.
Bob Preston: 29:44 You get a kitchen, right and you'll get your own personal sometimes pool and hot tub to have all these things that you wouldn't necessarily get from being. One of the things that uh, we were, and I'm going to admit this, we were probably slow to the table on his, the notion what we've traditionally called yield management. And this is sort of a concept that was born out of hotel industry and maybe travel industry, you guys call it rate management. We've implemented, implemented it with Kigo. Some of our owners are having a warm up to the concept. Tell us about what that is and, in a nutshell, and why important for short term rental.
Matt Hoffman: 30:24 Let's say revenue management, revenue management concept. I guess you'd have to quote me on this I would say is British Airways, uh, in the early eighties, late seventies, uh, that, uh, you know, is looking at availability, right? And figuring out ways of which to maximize, you know, the, the actual unit price point during different fluctuations and periods of time. And so, right. I mean, that's what they're trying to do. That's exactly right. And so, you know, yield management or Intel or rate, you know, as a former user of your previous platform in there, that's where you're getting that binocular from. Uh, you know, they were a really, I'm going to give them credit, the first to start to build out, um, you know, customization rate plans that, uh, would analyze gaps in eligibility and figure out ways in which to place bookings that would come in based off of that. Uh, you know, there's been a, um, a notion the short term or on vacation or space for a long time where they've got, you know, minimum stay requirements during times of the year, right? Seven-night minimum stay during this time of year, 30 night minimums, let's say this time of year. But if you could get the same rate per 15 nights day, why would you not just simply allow someone to stay for 15 nights? So, so I, I think rate management because it's not just the rate, it's also looking at achieving the goal that you're after and understanding that if there's a three night minimum but someone's willing to just book for one night at half that same rate that they would prefer allowing that to happen, knowing that the economics of the model all the way through to facilitate our facilitator. Uh, and, and now we're starting to see is, you know, you can look at it now these flexible cancellation policies and say, if I'm going to allow someone, if it's to your point, the season of where they were racing in Del Mar are you look at it and say how many days prior to check in is this person looking to book? If they're looking to book within three days, well, they are clearly right the last-minute traveler or where we should maximize the rate, you know, a sort of percentage, right? And maybe it's two x or three x that time period. But you know, your overall portfolio performance is below us or occupancy where you want to be on the year. And then maybe you're more flexible. The further out there looking at books. And this is a science, it's really evolving. Uh, very much so for our space. I think you'll start to see a convergence of a hotel revenue management.
Bob Preston: 32:58 Yeah. I the, the thing that I like about your solution is that we have a base, we have, we established with the general, we call a base rate. And I don’t know if this is the proper vernacular, but that's what we call it. Yeah. And so then we say to the owner, okay, you know, if you're unit is booked to a very high occupancy during the forthcoming period, then you know what, we're not going to discount it very much because it shows that your unit is in high demand. But if you don't have high occupancy, say for the month of July or March or whatever that might be, and we're getting close to that date, say within a week, what the heck we should, we should start getting this unit booked. And so, one of our taglines is maximizing your rental value and income. And that's our goal as a company are our objective. And so, it takes a little bit of educating, educating the owners, but once they understand it, typically they'll agree to, okay, let's try it, see what happens and then we'll reevaluate after search.
Matt Hoffman: 34:01 That is where that statement I made to be flexible and trusting, you know, and uh, in the professional that you're working with to manage your home yeah. Is really important. And it doesn't mean that just because you're being more flexible around the rules that you're sacrificing on the screen or the type of guests you're putting in there, you're simply just allowing you to maximize that conversion potential, if you will, or occupancy and income by having that type of a strategy. And I'll tell you with our tool, uh, you know, it absolutely will serve exactly that purpose of strategy for you, where it's limited and where we need to make some additional innovation is to then start to analyze comps that data and markets. So, it's beyond just the existing portfolio performance and as holistic performance of similar comp sets of units in market. Then make it predictable analysis. And suggest to you what that optimal price point would be. You know, and that is something that we absolutely are aware of and are going to be addressing and that's what you'll start to see that evolve. Whereas they can get market data not just to do that inside the system.
Bob Preston: 34:59 One of the things I want to jump into, and I'm going to skip around here and move ahead a little bit because I know we're up against a time crunch. For us it became super challenging as I described to you before we even started the Webinar or the podcast, the whole notion of all these disparate sites, Airbnb, VRBO, TripAdvisor and getting everything to be right on those sites as you try to communicate your rent rate, your photographs, your cleaning deposit, you know all that, all the chart, all its charges and fees, you know the security deposit, damage protection insurance if you have it. And so, I think in more recent years, this notion of a channel management has become a big deal. We use Kigo for both our property management software and we use your channel management module. Can you touch on channel management, what it is and why it's so important in today's market?
Matt Hoffman: 35:54 Absolutely. So first and foremost, all of the scenarios are pain points. I would say that you just mentioned connectivity to the different channels there. There isn't a, in a world of multifamily or local property manager, they like a standard where they've all in and we've agreed upon, you know what we're going to call him, and you have a challenge. Is it, is it a hot tub? Is it a Jacuzzi? Is it a whirlpool? Is it a spa? I mean those are all variations of the same thing that okay, and now I've got this very strong selling feature because I've got that a whirlpool or a Jacuzzi out on the balcony overlooking the water that I have labeled as a spa and now that doesn't map over to the channel because they're not accepting that amenity set mapping to be the same thing. And now as a result of my listing is missing the one of the strongest selling points that I have with my unit because it's not one thing it, so this is the world that we are living
Bob Preston: 36:53 Like a king bed. We were talking about that story.
Matt Hoffman: 36:59 Who are joining us at a time that is for tourists because we've had a one size fits all approach to this indication but it's been with challenges just like the one that I mentioned. And now what we've done is we've built a technology platform for a little bit of a shameless plug that allows you to then now are articulate and understand, you know, what your listing will look like on each individual channel and then build out a strategy based on that channel and how they work cause there are or a hotel based channels as booking.com Expedia and there are our short term rentals eccentric ones like a HomeAway and Airbnb. And uh, it's important to know the differences. Uh, it's also important understand that each one of them operates a little bit differently. Customer acquisition, and variable customer acquisition costs is difficult for this space or really anyone to consume me. It's like a, it's like a variable mortgage, right? I mean fixed. At the end of the day, you know what you're going to pay a, but in this scenario you can now create a strategy, understand the type of persona each of these channels are going to bring to you, understanding what they're going to charge you, and now we allow you to then craft the, maximize the benefits of that channel, but minimize some of the downside risk of things such as you're talking about there where you've got fee compression on cleaning fees or taxes and things of that nature that can now be done with this so you can maximize the upside. Also protecting the business rules that you have and then the that you've set in place with your own.
Bob Preston: 38:38 Perfect. I use the description for channel management because people generally understand that the layman, I kind of call it middleware and I don’t know if you like that or you appreciate that term, but.
Matt Hoffman: 38:50 Your mediation, right? It is the connectivity layer between.
Bob Preston: 38:53 Exactly. So, we have the property management software where we kind of put it in the raw data. This is how I explained it to a homeowner, your photos, your base rates, your property description and all the amenities. And then we have this really cool and that's Kigo awesome. So that's kind of a plug. And then there's this channel management layer also we use Kigo for that. Not all property management software's in this market have that. And then you guys kind of normalize the data to translate it, so to speak, to go out to Airbnb, Vrbo, all these bookings.com, all these different sites, which for us, I mean it's so refreshing to have that kind of built in.
Matt Hoffman: 39:33 Shows you what your listing is going to look like on that channel before you even connect it to the channel so you can understand and set the expectations with your owner about what that's going to look like. I would just say this, the, the, the quality demand channels out there are responsible for 80% of demand, booking.com Expedia, Homeaway, Airbnb and those companies are working very hard, uh, to attack and address the same challenges that I just mentioned. So, you know, we're seeing a lot of collaboration here Kigo uh, in the last year with these partners more so than we ever have before. And it's refreshing to see that even though they're competitors to some degree, they still are identifying these same symptoms that we're all being impacted by and are working collaboratively in ways with a technology partner like Kigo to address those.
Bob Preston: 40:21 I can tell you that Matt, I told you this before we started the episode today we were having challenges with our previous property management software. And so, in Q four we evaluated it. We looked at all the alternatives. I mean you name it, rattle the name. I can tell you we looked at it. Yeah. Right. And yeah, I'll, I'll talk to you about a later. I'd give you some good competitive info. We probably receive demos from about eight. I will tell you that the Kigo demo blew us away. I mean the guy who did the demo was excellent, really good. He knew his stuff. It was simple to understand. It was, you could tell it was easy to navigate through the software, very intuitive. And right away we were kind of, we ended the meeting or kind of like, okay, I think we found our partner. Right. And that's kind of how much we were impacted by the demo. So, congratulations on that. You've got a good team behind you. And here's the bonus. We got up and running in about 30 days.
Matt Hoffman: 41:25 There is a, I see this talked about in our space a lot and blogs, LinkedIn, you know, VRM Intel, typically easy implementations lasting six months. Uh, and the truth of matter is, is that there's a phase for getting you all the data in place to actually execute the business. And then there's another phase for adopting the technology to your business or relinquishing practices. Maybe you've had to adopt the technology and is a separate phase. And there we have areas of which we are building upon to improve. But I think from a sales perspective, your experiences back to we're running our own property management company, you know, for our, uh, we call it the Real Page Suites and uh, we, we are living in the shoes of the customer that we're building technology for and all the professionals that are coming in to Kigo after spend time operating as a professional manager to understand what that's like. And it also allows us to look in the mirror and see where we maybe need to improve upon as well. So, I'm very happy you had a good experience.
Bob Preston: 42:26 I get kind of excited. It Geek out a little bit when I have this type of conversation. Today's been wonderful. I really appreciate your time and so we do need to wrap up now. It's been filled with lots of great information. Do you have any last thoughts or comments before we conclude?
Matt Hoffman: 42:39 The last comment I would say is if you are a homeowner it as a secondary home that is unrented in the same way that Bob did his due diligence around technology providers shop around or what you would determine as a professional short term rental company. Someone that already has short term rentals in their portfolio or his eyes already proven to be able to execute and deliver a great guest experience that look at the rear view their guests are having on the properties are managing that are short term rentals and, and find someone that represent your whole well, but absolutely don't let the fear out there or, or anxiety around uncertainty stop you from getting into this space because there is a lot of opportunity available for those that are willing to get in at this point in time.
Bob Preston: 43:22 Really Great. And if someone wanted to get in touch with the team and Kigo, how would they do that? What would it be? The best way.
Matt Hoffman: 43:31 Best way to find you guys ready to go to kigo.net and see right on the initial home page it says a platform for professional vacation rental or for terminal managers. And you just click the contact us right there and enter your information. Someone on our sales team will reach out.
Bob Preston: 43:42 Okay. And if anybody was interested or needed further information on Kigo, feel free to call me at North County Property Group. Happy to give the reference and tell you what I know about Kigo and so far, we're really impressed. Awesome. Matthew, thank you so much for taking the time to join the show today. Appreciate you being honest. Guest.
Matt Hoffman: 43:59 Hey Bob. Listen, it was an absolute pleasure. Thank you very much for having me.
Bob Preston: 44:02 That concludes today's episode. Thank you to all of our listeners for joining the property management, brainstorm podcasts. Until next time, we will be in the field working hard for all of our clients to maximize their property value and rental income and maintain top renter relations. And we'll see you next time.
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