Mike Bayer

You're listening to the Vacation Rental Success Podcast, and we are proud to welcome back our returning sponsor, OwnerRez. Providing a powerful and flexible system for managing vacation rental properties, OwnerRez provides booking and maintenance management, payment scheduling and collection, as well as insightful reporting. OwnerRez will provide you with a long-term booking foundation that is scalable for your vacation rental business while fully managing your channel listings, but still focusing on your brand, your website, and your way of doing things. If you sign up now using the promotional code VRF30, that's VRF30, you can get 30% off your first three months. Make sure you listen in to the mid-episode break where you'll hear some great testimonials about OwnerRez and more about this incredible company. For more information about OwnerRez, click on the link in the description of this episode on your smart device. Let's get started. Here's your host, Heather Beyer.

Heather Bayer

In this, our 500th episode, I have brought together threeindustry thought leaders to talk about what we can do now to make our businesssuccessful in the future. Steve Schwab from Casago, Robin Cragan from MovingMountains in Colorado, and data genius Evan Dolgow from Aidaptive, join me foran absorbing discussion of where we're going and what we need to do to make ithappen.

Heather Bayer

This is the Vacation Rental Success Podcast, keeping youup-to-date with news, views, information, and resources on this rapidlychanging short-term rental business. I'm your host, Heather Bayer, and with 25years of experience in this industry, I'm making sure you know what's hot,what's not, what's new, and what will help make your business a success.

Heather Bayer

Well, hello and welcome to the Vacation Rental SuccessPodcast on this, our 500th episode. So exciting. I feel it's just such anachievement. I can't believe we have got there. We've done 500 episodes.

Heather Bayer

But you know what? I first heard about this new mediumcalled podcasting back in 2007, and I'm a perennial early adopter and I getexcited about anything that's new. So without really thinking about it, I wentoff to Amazon and I brought a microphone and a mixer, but sadly, I couldn'tfigure out any of the tech and there was nothing out there at that time thatwas really helping newbies start a podcast. And it was way more complicatedthen than it is now. So the equipment just got buried in an office cupboard forthe next six years until I came across a guy called Cliff Ravenscraft and hisshow, which was called Podcast Answer Man. And Cliff had a course.

Heather Bayer

It was an expensive course at that time, but I just went forit because the course ran over 13 weeks and was going to teach me everythingabout creating a show, from getting the equipment together to interviewtechniques and everything in between. And I just had to do this thing. Andthere was one thing that Cliff said that still resonates with me today. And Ialways talk about this to other people who are thinking about podcasting. Hesaid, if you can get past seven episodes, you're 80% more likely to succeedthan if you abandon it before that point.

Heather Bayer

When he said seven episodes, he meant seven consecutiveones, not recording one every few weeks and then leaving it another couple ofmonths.  So I did seven episodes. I madeit to the seven episodes in 2013, but then I abandoned it. So approaching 2014,[son] Mike and I sat down to do a plan for the year ahead for Vacation RentalFormula. And the first thing we said was that if we were going to succeed, wehad to be consistent. And we kept that promise to ourselves. Nine years later,as I record this 500th episode, I'm so proud we've never missed a week. So overthat time, if you've been around with me for all these years, you've heard metalk about the weather - I talk about the weather a lot, my RV trips, my dogs,and my family. But the best part of it all is that I've been able to talk to thebest people in this industry. So many successful hosts and managers and thoughtleaders who have shared their experience and expertise without looking foranything in return. So I want to thank them. I want to thank my faithfulaudience, the ones who listen every week, you know who you are, the ones whostop me at conferences to tell me how much you enjoy it because it can be alonely little task sitting here down in my basement studio on my own and notactually knowing if people are out there enjoying it.  And I do thank everybody who has left me atestimonial.

Heather Bayer

In this 500th episode, I wanted to bring together three moreoutstanding people to talk about the future of the business and what we asmanagers and hosts need to do to get ahead of the noise and disruption thatwill inevitably occur as we move forward. So I'd like to welcome Steve Schwabfrom Casago, Robin Cragen from Moving Mountains in Colorado, and data geniusEvan Dolgow from Aidaptive, as they're joining me today in a panel discussion.So without further ado, let's head right on over to that panel.

Heather Bayer

I'd like to welcome my panelists today for what is going tobe the 500th episode of the Vacational Rental Success Podcast. We've been goingfor nine years. We've got 1.3 million downloads, leading into 1.4 million very,very shortly. It's a massive milestone for us and I wanted to get together someof the leading minds in this industry to have what I hope is going to be areally lively discussion today. So thank you for joining me, Steve Schwab, EvanDolgow, and Robin Cragan.

Heather Bayer

So let's start with some introductions. Steve, it's anabsolute pleasure to have you on the show. You're the founder, CEO of Casago,and you described yourself as a property management nerd. I always used to callmyself a nerd too.  I think Matt Landauand I did a podcast on vacation rental nerds once. So welcome. Tell us a littlebit about Casago, where you are, where you come from, and where you are now.

Steve Schwab

Thanks. Well, first of all, congratulations, Heather.Amazing. Nine years every week. That's fantastic. What a commitment, right?

Robin Cragan

It is so, yes.

Steve Schwab

Yeah. Casago is a company that was founded back in 2000 downin Mexico, Rocky Point, Mexico, when I was 28 years old. Got started down thereand had been growing it out. Hit about 16 cities, mostly Mexico, a couple inthe US, and realized that there had to be a better way. And you can only be alocal in one place. And the people that were on the ground and had ownershipand knew what to do there at the time were really the right people to run avacation rental property management company. And so we pivoted towardsfranchising, where the people that are on the ground actually have ownershipand get to grow their business and own the business and owned Casago. And we'vebeen working on that model ever since. And so far, so good. It's beenfantastic. We're up to 54 cities now.

Heather Bayer

That is fantastic. And I had the pleasure of watching the premiereof the documentary that Matt Landau did. And I can't remember the name of thewhole show.

Steve Schwab

Homerunners.

Heather Bayer

Homerunners. And it was your story. And my goodness, I willmake sure there's a link to that episode of Homerunners because it was soinspirational. And it's such a pleasure to have you here.

Heather Bayer

Robin, thank you for joining us, getting your video fixed,and being with us on the show today. It's the first time I've had you on theVacation Rental Success Podcast. We haven't met, and I'm sure we will do solater this year at some point. But I feel I know you because of what I hearabout you. Your company, Moving Mountains, you manage luxury rentals in BeaverCreek, Steamboat Springs, Vail, Breckenridge, all in Colorado. And I'm sureeverybody would like to hear a little bit more about where you've come from,where you are now.

Robin Cragan

Thanks, Heather. And yes, once again, congratulations. I'vebeen a long time listener and follower of your podcast, and it's been fun torecognize a friendly accent from across the pond. Sometimes, I revel in thefact that anyone can join into this industry. You don't necessarily have to bewithin the US. You don't have to be from around here. They definitely know allpeople have been welcomed. Anyway, I've enjoyed sharing the cultural referencesthat you bring into your podcast.

Robin Cragan

We've been going for 25 years, so we've been in thisindustry for a while, but I feel like anyone, we've been experiencing theroller coaster of changes over recent years. In many ways, I feel like in thelast five years, our growth has meant that we're almost a new business at thescale that we currently operate. We've grown our business very slowly over thefirst 20 years and then gone through a rapid growth spurt. But we stillconsider ourselves to be a pretty small player. We manage about 200 luxuryhomes, as you pointed out, in the Colorado market. So very excited to be partof this conversation.

Heather Bayer

Well, thanks for joining us. And last but not least, EvanDolgow, who I credit as being the one person ever who has helped me tounderstand data, which is why this is your third time on the show.  Evan, I saw you speak in Miami and again in Barcelonaearlier this year, and I learn something new every time. Evan is the head ofpredictive hospitality at Aidaptive, and he's going to tell us a little bitmore about where he's come from, and what he does now.

Evan Dolgow

I'm honored to be on a panel with all of these vacationrental legends such as yourself, Rob and Steve. I'm an aspiring vacation rentalnerd currently in training. But long story short, I entered this industry twoyears ago after being a real estate guy. When I entered it, I was shockedbecause I came from the physical side of real estate and now I'm a machinelearning consultant with Aidaptive. As a machine learning consultant, I've beenfortunate to peek under the hood of over 100 vacation rental companies in thelast year. So today, I hope to share those frontline insights. And what we doat Aidaptive is we take machine learning capabilities, artificial intelligence,and we gradually integrate them into vacation rental businesses. Because as weknow, artificial intelligence is very much a crawl, walk, run approach, andthat's the approach we follow. So I'm looking forward to sharing those insightstoday and learning more from all of you three.

Heather Bayer

There was something on your bio that stood out to me, and Ithink hopefully we'll cover it a bit later. It says, "By predicting whatguests want before they have the thought, Evan leverages a best-in-classecosystem".  I just like,"before we have the thought", and I thought, that's really somethinginteresting we can touch on. But I want to jump straight into the main theme ofthis discussion. We're talking about, are you prepared for the future ofshort-term rentals? And it's what we need to do now to go forward successfully,given the speed of change. And I know I was in the business for 20 years, and wayback in the period from 2003 to 2013, everything went nice and slowly. And infact, there wasn't really much of a change. But as we know, in the past sixmonths, the change has been so dramatic that I think it's taking a lot ofpeople off guard. And there's always this potential of disruption in theindustry, but it seems to be coming at us harder and faster than it ever hasbefore. I want to go backwards a little to start with, because there seems tobe a lot of baggage that came out of the pandemic that's still impacting thebusiness.

Heather Bayer

And it was raised in an article I read on short-termrentals. I've just interviewed Paul Stevens, in fact, from Short Term Rentalz,and he keeps reminding me it's Rentalz with a Z. And the article was by SimonLehmann of AJL Atelier, and he talks about learning from the mistakes made inthe pandemic. And he says, and I'm quoting here, "Operators aresleepwalking into a crisis and threatening to make the same mistakes they madewhen the pandemic hit". And he cites companies that let go of staff andthen had problems finding them again. And he talks about the need to deliver onoperational efficiencies, as well as he talks about the hiking of rates leadingto an investment surge and oversupply. And then there's the data companies thatwant us to believe that demand hasn't slowed, but we hear a different storyfrom so many owners and operators this year. So that's a lot of baggage tounpack. So go. Do you believe that this is the case? Let's start - Steve, aremanagers making the same mistakes they made at the outset of the pandemic, andwhat do you think those mistakes are?

Steve Schwab

I think from the point of view of are property managersmaking mistakes? Yes, I think this is coming, but I compare it more to the '08crash. I remember in '08, I thought that business was easy. Going into '08, Icame up through the first run like, This is easy. Why does anybody say businessis hard? I was at a mastermind about a year and a half ago, and I heard thisgentleman say, I never lose. I can make money on anything I do. I never lose.And I thought, Oh-oh, I heard that before when I was a young man.

Steve Schwab

And we lost a lot of the community in the '08 crash. Andthey fell away, those who weren't ready, those who didn't have savings or hadbeen running off with cash flow and building as fast as they could. And I thinkthat's more in alignment with what I see coming. It's getting softer. We've gota whole bunch of inventory out there that's creating lower occupancy per property.And a lot of loaded companies that don't have money and reserves for thefuture, we saw that at the beginning of the pandemic.  Right? Suddenly, companies just after 30 daysstarted dropping off.

Steve Schwab

It was shocking. And yeah, do I think we're heading backthere? Yes. Do I think it's more of a slow crash train wreck thing thathappens. It's not like suddenly COVID in one weekend was here. I think it was,I mean, as per the shutdown, not as per the transition of things. But I think that'smore in alignment with how I see it happening over the next year and a half.

Heather Bayer

Robin, what happened with you in the pandemic? Do you thinkyou made mistakes that perhaps you wouldn't do the next time as we go throughthe remainder of this year? And did you think that you were going to be able todo that in the future?

Robin Cragan

During the pandemic, I think there was a lot of time therewhere we were literally felt like we were in freefall. And that uncertaintycost us all a lot of sleep, pretty much created a lot of stress in ourbusiness. But I think Simon's message is a message that we always should behearing in our ear when we're thinking about the next year, what's coming isnever to look back and assume that what happened in the past is a predictor ofwhat's going to happen in the future. Having gone through '08, like Steve said,business was so hot in '07 and '08, it felt like you just couldn't keep up.Then as we quietly rolled over a cliff and saw the market downturn, it was interestingfor us being in the ski markets that I'm fond of saying to people, it's likethe primary driver in our business is actually the amount of snow that fallsevery winter. And maybe, fortunate for us that even during that big marketcrash, people that had money still wanted to ski as long as we had good snow onthe ground. The time for us that the recession showed up is in 2011, which wasthree years into the Great Recession when things were bottoming out and we hada bad snow year combined with the economic downturn.

Robin Cragan

And that was a devastating drop in demand for our market. Iremember going to local meetings and seeing big players in town saying, Well,our best strategy that we've come up with is to cut prices by 40%. And it justleft my jaw on the floor because at that point it was clearly a race to thebottom. And those are the things that you want to avoid. So lessons from that,that I think we carried into the pandemic is fundamentally nothing was reallywrong with our business. We just had to wait for travel to resume. We were assurprised as anybody that travel bounced back as hard as it did. And for a lotof the time after that, it was a question of just trying simply to keep up withthe demand, that 'revenge travel' demand that started to gather momentum. Wedefinitely had to work through some operational challenges, just the localregulations to do with health restrictions and occupancy size and things likethat. Constant, constant paying attention to what's the latest message, what'sthe latest thing? I think we reinvented ourselves a dozen times in thattwo-year period as to how we were going to muscle through this.

Robin Cragan

So I think at this point, having made it this far, I justnever take any day for granted. I think constantly you have to go back and bereminding yourself that you can't function without a budget. This question offinancial hygiene, I think Simon has been broadcasting this for a couple ofyears. I think it is still surprising that there are managers out there thatare not looking at their budget every month, that are not looking at theirexpenses. There's one part that you get excited about driving the top-linenumber, but you've got to be looking at what you're spending behind that.

Heather Bayer

I think that is such a great point. I know it too. I wentthrough exactly the same thing and we were financially healthy. We were shutdown for six months. We could have been shut down for a year and we would havemanaged and we would not have had to let anybody go. So I'd learned that fromprevious years. But I think that is a great message that Simon is giving isthinking way ahead, not just the next three or four months and not justthinking, Is recession going to happen and going to be over by Christmas, butby taking things way further forward? We mentioned oversupply, and I thinkSimon mentioned this in his article about people buying into investing andstruggling now. And I saw a post from Lance Stitcher from Seaside Vacations onMatt Landau's site. And he said some of the entrants that jumped into thislittle niche will realize that it ain't so easy, and some will pull back.Others who confuse technology with hospitality may be pushed out. Do you wantto jump in there, Evan, about confusing technology with hospitality?

Evan Dolgow

Absolutely. And thank you all for those historicalperspectives because I actually see it from a little bit of a different angle.I see the pandemic as, in a way, I know it was very hard times for many, but asa necessary evil to propel the digital revolution. We weren't able to see eachother in person, so it forced everyone to increase their investment intodigital education. What we've seen is a lot of companies transition from theirpen and paper traditional ways into becoming digital businesses, where all oftheir touch points, everything they do from operations to direct bookings arelogged and documented in their databases, which is extraordinarily importantfor where we're heading. And yes, I totally agree, I think there are lessonslearned from these major companies that went technology first. They forgotabout hospitality. The lesson learned there is that hospitality comes first.But at the same time, and I think all of you can relate, you chose this industrybecause you're hospitable people. You want to give good hospitality and createexperiences for your customers. But at the same time, hospitality doesn't juststart when they arrive at your door. It starts before the stay when they're onyour website or in your marketing.

Evan Dolgow

It's after the stay when you're trying to create loyalty. Sowhen it comes to oversupply and it comes to focusing on technology, there'scertainly a balance that has to be found. The question becomes, where do youdraw the line on technological investment and hospitality? And that in thepriority, at the end of the day, 100% should be any technological investmentyou make, better optimize your hospitality operation. Because withouthospitality, this industry is nothing.

Heather Bayer

That's such a good point. I'd mentioned a podcast episode I'd listened to recently, the No BSpodcast, where Bill Faeth was interviewed from the Short-term Rental WealthConference, and it was a very interesting episode. If anybody hasn't listenedto it, I would go there and take a listen and think about, Is this the futureof this business? Because hospitality did not come across as the number onething that you should be thinking about when you're investing in properties.I'd love your take on that, either Robin or Steve, whoever jumps in first.

Robin Cragan

You speak in my language, Evan. We feel like we've alwaysbeen in the hospitality business, and I've sometimes gone to conferences and Isee up on stage people talk about the latest funding round, or that they're atech enabled business. I wonder where the 'H' word disappeared to. It's like,fundamentally, if we don't deliver a great experience to our guests, thenwhat's the point of everything else? From our perspective, we're definitelyawakened and excited by where we are at this moment in time. We have so muchgreat technology available to us. If you've been in this business for a while,you remember, and I think I've heard you speak to this, Heather, running yourbusiness from spreadsheets and being cautious about the first time that youbring tech into your business and whether it really is a solution, whether itactually completely takes up your day, taking time away from the hospitalityexperience that you're trying to deliver. I think it's an exciting time, butyou cannot lose the focus on... If you're not delivering a great experience toyour guests, it doesn't matter what tech you have.

Heather Bayer

That segues nicely into what I wanted to ask about wheremanagers should be investing their time and their money now to create thatsuccessful future.

Steve Schwab

I think that at the end of the day, we are in the businessof human connection, and that's through providing place and time and allowingpeople to be seen and heard and enjoy these experiences with their families orfriends or even alone sometimes. When we invest into technology, I think theimportant thing is to understand we have to invest in it to make us bionic, notrobotic. It drives Jennifer crazy when I tell the story. I always talk aboutlocks. For me, the industry changed a lot when remote locks came into place. Ithink they're fantastic and they have their place.  Absolutely, there's no two ways about it. I'm not against remote locks and automatedlocks. But when I first started the business, we'd have people come into theoffice, I'd hand them the key. Also, eight dudes would pull up for a onebedroom, throwing cans in my parking lot. Now you're not giving me the key, getout of here. But we'd build all these fantastic relationships with people.They'd come into the office and I met this couple who was just dating, and thenthey'd gotten married, and then they brought their baby into me the year afterto introduce me, and these fantastic relationships.

Steve Schwab

And we've lost a lot of that. And in reverse, we startedlooking at... Well, at first we started looking at all the efficiencies of itand how it could drive revenue. But I think we lost a lot of our humanconnection through that because the entire industry is focused on scale andefficiencies and even lack of mistakes. There is a lot of human error thathappens when you're this one on one thing. I think that if we're going to beinvesting into technology, how do we find our human element, that hospitality,the soul of the company that you want brought across? What technologies can youfind that help you do better at that? How do you find connections that allowyou to have the conversations that you want to have or the experiences withinyour properties that you want to have? Because at the end of the day, if we'renot giving people an experience, all we're doing is giving them a concrete orwooden box in the middle of somewhere pretty, and we're just logisticscompanies. And that's not who we should be. We need to be hospitality companiesthat find a way to bring back that human connection because at the end of theday, with our homeowners and our guests, that's who we are or who we should be.

Heather Bayer

I want to go back to Evan on this one and back to his biowhere he says "By predicting what the guests want before they have thethought". That to me does point to a human connection. If you understandwhat they are thinking before they have what they want before they have thethought and you deliver that, is it just a matter of delivering it, or is theresomething about the way in which it's delivered that is going to create thatconnection?

Evan Dolgow

Yeah. It comes down to scaling because scaling is not uniqueto our industry. Everything has scaling laws, from biology to cities togovernment. Those scaling laws exist throughout all aspects of our life. So asproperty managers, you need to figure out how do you double your revenuewithout doubling your workforce, because you need to work at becoming leanerrather than larger, and that way you work at scale. So when it comes to theidea of predictive hospitality, the reason your business is important to be adigital business is because you get all of these touch points from; How arethey using your website? What type of marketing are they clicking on? Millionsof touch points that our brains can't process, but the computer can. Forexample, when you use Amazon, Amazon follows you throughout this site. The moreyou click, the more it learns about you. Next thing you know, you have 10things in your cart. The idea of predictive hospitality is how do we predictwhat the guest wants before the stay, during the stay, and after the stay? Bydoing that, we can essentially blur the lines between a luxury hotel with aconcierge and short-term rentals.

Evan Dolgow

But the only way to do that is to cultivate those datapoints through digital touch points. That's why I think, yes, investment intoyour digital practices are important. But at the same time, and this may soundcounter-productive, everyone is looking at AI as a magic bullet. Like it'sgoing to solve anything. The reality is 99% of businesses out there don't needAI to solve their problems. I just want to make that loud and clear as amachine learning consultant that AI is likely not the solution that you'relooking for.

Heather Bayer

Well, that's interesting because everything we're looking atat the moment is telling us that AI is the solution. I think post-pandemic somuch has changed because for three years during the pandemic, you couldn't openan article or blog post or listen to a podcast without hearing the word COVID.Now, of course, you rarely see one that doesn't mention AI or ChatGPT.

Robin Cragan

I think that has a lot to do with the fact that it's arevolution that is right in front of us. I feel like it is a new and excitingtool in our toolkit. But just as Evan said, there are no magic bullets in thisindustry. Fundamentally, you need great people that understand what yourcompany is in the marketplace and what experience it is that you're trying todeliver. You need strong relationships with your owners, and then you need tofind the right guest that is looking for that experience that you want tooffer. That is people, people, people all the way through. How you operate yourbusiness, what happens behind the scenes, that is where smart use of the righttechnology... I definitely think that one of the challenges for the smallermanagers, people like ourselves is, and I've heard you speak to this too, islike, what tech do you need and what tech don't you need? Having an optimizedtech stack and having an integrated tech stack and finding the efficiencies,these are the tools of the trade, but it does not take away from having peoplein the front line delivering experiences.

Robin Cragan

And I mean, in many cases, we say we're problem solvers, andwe're not yet the point where I can say, speak to this machine and it can tellyou what's wrong with your house. I think there's many tools to the toolkitthat are going to help us do this better. We need to be paying attention tothat, because I think many of these things are going to be developed in thenext coming years. It's exciting to see what we can already use AI for, but Ithink many of the things that AI is going to help us with in the future, thoseare just beginning to take shape.

Robin Cragan

I was listening to the founder of the Plum Guide talking atthe Skift STR Summit about how they have gone down the rabbit hole trying tosee what AI can do to help the business. I would say it's not conclusive yet asto whether they've moved the needle. They've identified opportunities, but it'sstill - he's very quick to say - it's still at a very formative stage. Weshould be paying attention to this for sure. Evan, you're sitting in the rightplace. There's going to be some great opportunities in this area in the future.

Steve Schwab

Yeah, I think Evan's at the vanguard of what's going tohappen. Even if we're not all exactly sure what it's going to be, I thinkEvan's going to be there with Aidaptive. I read this great article interviewingBrian Chesky and talking about what he had said at a conference. I thought hisapproach to the AI was probably one of the best I've heard or read in this case.But he said, basically, people don't want to talk to a bot. The bots aren'tgoing to be forward facing, but they're pretty heavy and they're making a pivotright now and they're pretty heavy into the AI. He talked about how they had,and I may misquote this but they had hundreds of different clauses and piecesand policies on cancellation. He's throwing his customer service people upfront and saying, Okay, here's all these hundreds of things and you need tosort this out. As you're having conversations with people about cancellationpolicies, you need to get it right. They're working on how does the person onthe phone through AI get to the proper cancellation policy and procedures, andhow do you make them buy on it?

Steve Schwab

How do you create a place where the person on the phone issuddenly able to access and understand the information in a congruitive waythat's consistent and have better customer service with better answers asthey're on the phone. I thought that was actually fantastic. It goes intoEvan's business model and how he's doing things within that same line ofthought of how do you know that through theory of mind and these things when itcomes to AI?

Heather Bayer

So how are you guys using ChatGPT?  This fascinates me, because I've been acontent creator for many, many years and my first thought was, Wow, I didn'tthink my job is going to be taken away because I don't actually have a job. Itdidn't really bother me, but I started to use it and I'm fascinated by what itdoes for me. But I still spend probably a similar amount of time inputting myown voice and my own tone into it. We use it for building the new website andI'm writing a lot of material for it and ChatGPT is helping me with that. Howare you using it, Robin?

Robin Cragan

Yeah, Heather, the word you just said there, contentcreation, that's the most obvious and most proven use that we found so far. SoI think that would be interesting in that I really wonder... I do find that alot of people in our industry haven't yet realized that content creation is ahuge 'can and should be' part of your marketing strategy. To provide the rightinformation, to be effective on your SEO, your blogs and things like that. It'sobviously a great time saver. It's helping bring... It's like having anothercreative person sitting next to you saying, Here's a blank sheet, I want towrite a blog article. I want to talk about this, this, and this. And it cangive you the bones that in a busy day, that's going to save 20, 30, 40 minutesof brain damage that you might go through in order to get your outline onto thesheet that maybe an hour later is a blog article that you're ready to post. Sofor us, that's been the first learning. Some of the communications that we'vebeen drafting, I think it forms a perfect skeleton on which you can hang yourvoice.

Robin Cragan

But that would be the message that I would give to people isnever assume that ChatGPT can speak for you. You've got to put your voice intoit. You've got to fact check it. There have been some good examples out thereof people using ChatGPT and not everything that the computer found out...because it's working from a set of data that it's been programmed to understandor refer to. And not everything in there is as accurate as it needs to be. Soyou've got to fact check. Never make an assumption that ChatGPT has it down100%.

Heather Bayer

Steve, what about you?

Steve Schwab

There's a content explosion happening right now. There'sinnocent arms race free content. If you're not keeping up, you're going to beleft behind. We were originally worried that Google may see, because it cantell if it's AI content, there's checkers for that. We thought, Well, we werebehind the curve a little bit. We were thinking, they're going to get a hold ofthis and think this is AI written and we're going to lose rankings onthis.  Through David Angotti, indiscussions, they're saying that they don't care how it's produced as long asit's quality. We're using it for content, but making sure that the humanelements are there, make sure that it's really quality, highly usable content,not content for content sake. It's fantastic for our team who has to write anemotional response to a bad review, putting the bad review in there and lettingit turn out something and then going back through it, taking your own emotionsout of it. It's been fantastic for that. We use Jasper AI, because you canbuild your own brand voice inside of it. It's closer to what you want yourbrand voice to sound like.

Steve Schwab

We've been doing a lot of that with it. We've played aroundwith uploading a lot of content into some of the....  Zapier into it and see what pops out. Stillnot there yet, but those are the roads we're heading down.

Heather Bayer

Really interesting, particularly the response to reviews,and I wish we'd had that because.... and Robin, you've been there. There'stimes when you do get, or maybe you don't get negative reviews for your luxuryproperties, but we used to get some negative reviews here and there. It was astruggle to not respond from a knee-jerk position. I used to tell myself, Writewhat you want to write, sleep on it, and then the following day, you write whatyou should write. But that takes up so much less time if you just put thatreview into ChatGPT and you get what you should write at the outset.

Robin Cragan

I have to say, I think we are fortunate. I don't spend mydays writing responses to negative reviews. But I would say that to your pointis like never... before you hit the send button, a moment for reflection isnever a bad thing. Obviously, not every guest is 100% satisfied, so you have towork through some of those challenges. I don't know that I've really got towriting a response to a guest complaint or a problem based on ChatGPT, butwe've drafted some employee communications that way. I think we'll see ithelping us more with internal communications. Again, it's creating an outline.We're definitely learning as we go. It's formative stages at this point.

Heather Bayer

Evan, what do you think about the whole use of ChatGPT?You're there with the knowledge and the experience and seeing the whole worldjust jump into it in January, February of this year going, Wow, this is the newthing. What are your thoughts?

Evan Dolgow

Yeah, well look, ChatGPT has become one of my best friends,because the more you talk to it, the more it understands you. But at the sametime, it is a double-edged sword in my world. The reality is that it's taughtus this expectation that deploying AI is easy. You plug something in and itspits something out. That's just simply not true. Now everyone expects to startrunning with AI before they even have the infrastructure to even begin with it.Because the idea with AI is, it's not a solution to solve your problems, it'san optimizer. It's meant to enhance your existing operations. How do you pourfuel on the fire and not actually build the fire? So ChatGPT, it's excellent;I'm not going to say anything revolutionary here because it's pretty simple tofigure out its use cases. But at the same time, it's very frustrating thateveryone expects to be an AI expert without even putting in the effort; one,into education, but two, into the infrastructure of your business to actuallydeploy real AI solutions like Steve mentioned before with Brian Chesky. Steve,I don't know about you, but I don't think Brian is going to tell us about hisplans that he's doing tomorrow.

Evan Dolgow

In reality, I think they've been using AI for the last 5 to10 years. He was playing a little PR over there. But yeah, it's the idea of howdo you reduce the friction, reduce the cognitive load to get that guest to theend zone, to make sure they spend the most they can on a property they reallyare going to enjoy. So it's about connecting the dots, reducing friction, andthat's a much more complicated equation to solve than just typing something inand spitting something out.

Robin Cragan

It does feel like there's another evolution that's tocome.  I mean I love that concept thatyou could say to ChatGPT, I want to go to Steamboat Springs. I'm looking for ahouse, ski-in, ski-out. I've got my family group. I've got mom, dad. My parentsare getting old. Perhaps we'd like to have an elevator. We definitely want agreat view of the mountain. This is our price range. All the things that aretoday, the data points around which someone's going to make a decision.Currently, the tool that's available to us is traditional. It doesn't matterwhere people are doing their research. I always say the ground zero is Google.People start on Google, you've got to win that battle first. If they find theirway to your website, here we have 100 homes in the Steamboat market and theybegin a search based on dates of travel and initial outline of the group andthey're filter, filter, filter down to ideally two or three choices andhopefully something checks the box. At some point they may, if you're lucky, inour case, I think we are lucky, pick up the phone and actually decide that theywant to talk to somebody.

Robin Cragan

But increasingly, if you're talking about friction, we allknow that picking up the phone is a friction point. How much more informationcould you deliver in a somewhat interactive conversation with technology tosay, Here's the home you're looking for. This is the perfect home in your pricepoint, in the right location, and it has 7 out of the 10 amenities you'relooking for. It feels to me like we're still some ways away from that. From myperspective, it's like, Okay, I'm leveraging the tools that I have today, but Iwant to look over the hill and say, How do I align myself with this scenariothat is probably coming where something interactive is going to help the guestmake that decision in the future?

Steve Schwab

It sounds like, Robin, what you're envisioning is theavailability search bar being transformed in something with natural language,right? Where you start describing it.

Robin Cragan

You'll be able to talk to the machine and say, This is whatI'm looking for.

Steve Schwab

Instead of punching in dates and bedrooms and area and allthat, you have a conversation with it. That'd be fantastic.

Evan Dolgow

Can I just caution that right now, I think the biggest trendare these chatbots. All over the place, we have these AI chatbots that aregoing to answer every question. I read, so Booking.ai is actually Booking.com'sdata science and machine learning team, and they publish all of their studies.About a few months ago, they published a study that they've spent somewhere inthe realm of several hundred million dollars on their chatbot over the lastdecade. And their chatbot currently solves about 40% of inquiries without ahuman-in-the-loop. So, we have all of these companies that are spawning out ofnowhere saying, We have a chatbot that can answer every question. Then you goand look at their team. They're not engineers, they know nothing about AI. Sodo you really think that these chatbots that came out of the blue are going tosolve all your problems when Booking.com spent almost a billion dollars ontheir's and it's only solving 40%? I think that's just something for everyoneto consider.

Heather Bayer

This is such a great conversation and we're going to be backwith Steve, Robin and Evan in a few minutes while we take a short break to talkabout our sponsor for the next 10 weeks, OwnerRez.

Heather Bayer

I started CLRM because I saw that the competition wasmissing the mark in our area and knew we could do better. And this is how somany successful businesses start. And it was exactly the same with the foundersof OwnerRez, who just happened to be software engineers. They were strugglingto find a management company to look after their own properties, so decided tomanage it themselves. But the lack of good software made it challenging. Now,remember, this was before Airbnb existed. And at that time, Vrbo was calledVRBO, and it was just a glorified classified ad site. But in the years since,the founders have grown OwnerRez to an award-winning software option for hostsand property managers. And because they've been homeowners and propertymanagers themselves, they like to say, We've walked a mile in your shoes. Andthey know what's really important and necessary in a good property managementsoftware. Here at the Vacation Rental Formula Business School, we're selectiveabout our sponsors, and we only work with those whose products we've usedourselves, or where we've personally collected feedback from their users.

Heather Bayer

So over the next nine weeks, we're going to be sharing storiesfrom both independent owners and property managers. They'll be talking abouttheir successes with using the software and how it streamlines theirbusinesses. And I know from personal experience how challenging it is to decideon the right software, so hearing from other users is just so important. Take alook at ownereservations.com and see for yourself how OwnerRez brings years ofbeing in the same business as you, to making their property management softwarethe perfect fit.

Heather Bayer

That is a great segue into what I was going to ask next,which is there's so many platforms out there. You go onto the websites and AIis all over the front page above the fold, and it's "We've incorporatedAI". And it's very easy for a lay person to look at this and to fall intothe hype, just as you said, let's get a chatbot. Here's somebody out therethat's telling me that they can do everything. It's a little bit like propertymanagement software. So how do you know what's worth buying into? Or should yoube buying into anything at the moment?

Evan Dolgow

100%. And I think it comes down to that we've actually beenusing AI for the last 10 years, even though we haven't noticed it. Whetheryou're on social media, whether you're on Amazon or any of the OTAs, the reasonall of those platforms are so successful is because they personalize theexperience to you in real time and you keep coming back and they remember you.They know what you like, they know how much you could spend. The idea of havingan OTA as a billboard means that, okay, you brand your profile on the OTA verywell and the idea is that they Google you and then they come direct. But ifyour website doesn't fall in line with the OTAs, it's much clunkier and it'smuch more friction, they're going to leave you and go back where they camefrom. So I think the question becomes is, at what point is AI really apriority? And that becomes the priority when conversion rate optimization isthe priority. And what that means is right now everyone has customers landingon their website. But are they happy with the amount they're converting?Because what I've seen is the average conversion rate of a hospitality website,specifically a direct booking website, is about 0.3%.

Evan Dolgow

In E-commerce, it's around 2%. We are a long way behindtrying to convert at a higher rate. So if you have all the tools, you have thewebsite,  everything looks great, yourmarketing is flowing, but you're still at 0.3%, then it's time to look at othersolutions to increase your conversion rate, increase the velocity yourmarketing team is able to deploy, to increase loyalty. So it really becomes,have you hit that threshold where you've done everything humanly possible toachieve what you can? Because then it's time to level up your technology.

Robin Cragan

Evan, would you agree that there's a trickle down effectright from the bigger players? I mean, the guys that are small propertymanagers are not spending tens of thousands, even hundreds of thousands todevelop this technology. I personally would say nor should they. But the peoplethat are most likely to figure this out are the Expedias, the Booking.coms, theVrbos, and so on and our job is really just to stay in alignment with thedirection that they're going. But fundamentally, having a strong direct bookingwebsite, that's a tool that's available today. That's something very attainablethat you shouldn't ignore the potential of that. I still hear a lot ofconversation about should you and how do you develop a direct booking strategy.But by all means, leverage the fact that the other big players are investingmillions of dollars.

Robin Cragan

I love hearing Graham Donoghue from Sykes cottages talkingabout his team of over 100 data scientists. I would argue that probably most propertymanagers are not using half the data that they have available to us. It'ssomething we're working hard to try and do a better job of is understandingthat you have data from your previous customer that can help make that previouscustomer return to you again and understand who other customers similar tothem, how you reach the other similar customers who haven't found you yet.  That to me is much more in front of us, moreattainable, more realistic using the tools that we have that we can afford to usetoday.

Evan Dolgow

That's why I'm so excited about it. AI is leveling theplaying field. It's only been accessible to big technology for the last decade,but then in the last two years in my role at Aidaptive, we're democratizingthat. And that gets me really excited because the reality is the OTAs don'twant you having that technology. They need customers to book on their platform.And if you can equalize the playing field by having the same technology, that'sa threat to them. So that's what gets me excited. I love empowering the littleguys with big technology. And, Robin, I think you nailed it.

Heather Bayer

I would encourage anybody that is watching or listening tothis, that if you go to a conference and you see that Evan is going to be onstage talking about this stuff, please go to it. As I said right at the verybeginning, it just gave me some big aha moments. One of the biggest ones wasabout all that data that Robin was just talking about that is there, that wehave at our fingertips, and certainly for a lot of the small operators, I'msure many of them don't even think about what they have, just so easilyavailable to them.

Evan Dolgow

It's impossible to unlock it. A human's brain is not meantto handle trillions of lines of data. Our brain doesn't work like that. We'rein the hospitality industry, not the data industry. Even data scientists knowthat they can only handle so much data. I love to think that, for example,people think that on Amazon that there's a human behind the screen, controllingyour journey and serving you things they like. Impossible. They have 10 millionpeople on their site every second. So it's about how do you take your existingteam? How do you take them? Give them the tools to grapple with that data. Butmore importantly, focus on deployment, focus on going on offense. Because rightnow, so much time is spent trying to organize that data, make sense of it,build audiences and cohorts. But that is a brutal process which is alreadybeing solved with artificial intelligence that can go through those millions oflines of data in a split second and give you those answers. But again, that isnot an immediate effect. It takes time to get to that point and you need tohave all of that data.

Evan Dolgow

This is exactly the point that I want to make for thesesmaller managers that look up to you, Steve and Robin and Heather, is that youneed tons of data for machine learning to be effective. Anyone trying to sellyou an AI solution when you're really small, 20, 30 properties and only been inthe business for two years, there's no chance you have enough data for themachine learning engine to be effective. You need to have 100 plus properties,10,000 monthly web visitors. There is a threshold that AI needs in order to beoptimal.

Heather Bayer

Well, thank you. This is such a great discussion and Ialmost hesitate to move on from it. But I do want to cover something elsebefore we wrap this up, because this is something that's out there on LinkedIn,it's on Facebook, it's on podcasts. It's being discussed everywhere and it'sthis growing division, which I'm seeing a growing division. I don't know if youare and I'm going to ask you that question between what some are callingtraditional property managers, ie, those who've been in the business beforeAirbnb, and the new generation of investors and hosts. I've heard on some ofthese podcast episodes where they talk almost scornfully of traditionalproperty managers being embedded in the past. Then we talked to Steve, we talkedto Robin, you've been in the business a long time. You are not embedded in thepast. I think you are the voice of the experienced property managers goingforward. I'm just curious what you think about it all because it's got quiteacrimonious in some areas.

Robin Cragan

I think you could be sensitive to being labeled an Airbnb.And that is something that there has certainly been a lot of discussion about.I don't know if my sense is of the acrimony. I definitely think that eachdifferent group of property managers, it's a very, very diverse industry. Youdefinitely see that when you go to an industry event and you meet that crosssection that goes from people that have been doing this for 10, 15, 20 yearsdown to people that amazingly have been in the business three years and they'vesomehow amalgamated a portfolio of 300 properties. I'm personally in awe ofpeople that have managed that level of growth, but I'm also worried about thebusiness that they've just created, because if you created that business in thelast 2-3 years, you may not be aware of what's ahead and what challenges youmay have to face as the market takes a slowdown. Then what keeps you in thegame is the relationship. If you never took the time to form a relationship, afirm, grounded relationship with an owner, that owner is probably going toreject you the minute that the revenue goes out of tolerance with theirexpectations, which if they based it on the last few years is going to be skyhigh.

Robin Cragan

So you have to be in a position where you're trusted toshare market data that says if demand is going down, we should all expect fewerbookings. Potentially, we might have to move on price to go with the market alittle bit. And so we're going to get fewer reservations and at a lower price.That should lower everyone's expectations. You should be in a position whereyou're comfortable to have that conversation with the owner who's not going toturn around and say, Well, clearly you don't know what you're doing. But ifyou've been in the business of acquiring clients on price and this year you'relosing them on price and you're in this race to the bottom, I feel like some ofthose pop-up property managers that have just shown up and leveraged the valueof the platform, Airbnb or Vrbo or something like that, never really had adirect booking strategy, therefore never really had a relationship with theirguests. I wonder what their future is, because there's going to be a division.There's going to be a separation, if you like. Those that are left wondering,why is it that I can't sustain my overheads now?

Robin Cragan

And those that are, what I would say is where we are rightnow, it feels like riding out another mini storm. It's not as hard and heavyas, by no means close to, what the pandemic was or even the Great Recession,but it is definitely a leveling off of where we currently are and coming backto reality. But I think what I like about our industry still, is I see a lot ofpeople sharing ideas and trying to lift each other up. And Steve, working withMatt Landau on their Keystone Retreats, I'm sure you've seen everything. I'vemet such a range of different property managers through that gathering ofproperty managers, that I sense that the smart ones are paying attention to whatmaybe the more experienced managers have been doing all these years.

Steve Schwab

Yeah. I think to underscore some of Robin's points is, Iremember when it was just VRBO first just came out and suddenly, the bar waslowered because before then, if you didn't build an entire website and youweren't there on the ground handing out keys, you had to have a vacation rentalproperty manager. That democratized and changed the industry forever. Suddenlywe had self-renting owners, which was not a thing. Then everybody thought,Well, VRBO is unstoppable. They'll always be king. Then the transition toAirbnb came. Then we've had this big run up, especially since COVID, of a lotof people jumping on the bandwagon. I think it's described by certain groupsare calling themselves STRs. People are calling themselves VRs. I was at theSTR Wealth Conference and they were talking about 'all the old people'. Theycall themselves VRs. I was like, oh, when will I become the old guy? There'sdefinitely a shift in thinking. A lot of these guys who call themselves STRs,they're co-hosts, they're buying a lot of properties themselves. Quitehonestly, the truth is, Airbnb intentionally created co-hosts to undermine thetraditional vacation rental property managers.

Steve Schwab

They don't have to go through the regulation we have to gothrough. They don't have to have trust accounting. They don't have to have abusiness license. It was a way to undermine this section of it and it wasintentional. It's an unlevel playing field because now you can operate as aco-host without all the regulation and all of the professionalism and the toolsand things like that. Is it necessarily wrong? No, things change, marketschange, industries change. We're going to have to adapt to it. There's a lot ofgood ideas coming from these young co-hosts, young property managers, youngshort-term rental investors that we can get better at what we've done over theyears. I think we need to listen to them.

Steve Schwab

There's people in the industry who have a vested interest inmaking the vacation rental property managers traditionally, the traditionalones, and the new guys almost not like each other. It creates this acrimonioussituation where they can make the other guys be the bad guys. Hey, be afraid ofthese guys are coming. Hey, the old dudes don't know what they're doing.  I think that that's bad for all of us. We'reall one industry. We may be different corners of the same industry, but everytime I hear that, I try to go make friends and find out about them. I'mlearning a lot. I've tried to go into these with a beginner's mindset and learnfrom them. I am learning a lot from these guys.

Steve Schwab

We have to understand that the market is shifting and wehave to shift with it. But at the end of the day, we can be better propertymanagers. We can be better advocates for our homeowners. We can be better hoststo our guests. If there's some people doing it at small scale better, there'ssomething to be learned from it and we should jump into it and embrace them andlove on them and bring them underneath the tent instead of trying to push themout.

Evan Dolgow

Steve, that's brilliant. That is absolutely brilliant.Sorry, Heather, I just want to say that we just came... Heather and I just camefrom Barcelona where we attended Short Stay Week. What I learned there is thatthere might be an industry divide, but what we really have here is an Americanproblem. It's a mix of hubris, attitude, ego, putting competition overcollaboration. During Short Stay Week, I was shocked at the level ofcollaboration amongst competitors, because they realized that they have to bein this together to move the entire industry forward. It's not about me beingbetter than you or I'm doing great this year and you're not. Because if youthink like that, then there's going to be a lot of people left behind. I thinkin America, stateside, regarding our conferences, we've got to stop thispay-to-play to be on stage. We need to take the voices of these smaller playersthat are innovative. They're the ones who are collaborative because people likeSteve who've been in the industry for years. If they're learning from theselittle guys, how much more so we all can learn from these little guys. So Ireally want to just make that point that we need to put collaboration overcompetition.

Robin Cragan

I could not agree more. You could not have said it better,Evan. That was a great perspective. I've been to a couple of those Europeanconferences a couple of years ago, and I would say that was my experience too,is very much more elevated level of collaboration and sharing. Not that itdoesn't exist within the US. I think it exists strongly within certain subsetsof the US population of vacation rental managers. But I think that we're doing ourselvesa disservice. I use that expression, crabs in a bucket. We're a little bit likea bunch of crabs in a bucket over here that we're pulling each other back intothe bucket instead of lifting each other up. That should be a message. I thinkit speaks to.... Steve loves to talk about culture. I think there's somethingnot yet fully formed in terms of the culture of the industry that we want tohave in the US. We can have it within our own individual companies about whatour values are and what our ethics are and what we're trying to do together.We're still in a formative stage as far as developing a positive, upliftingculture within the industry in the US.

Heather Bayer

Thank you for that. Just briefly from my perspective, justto be able to marry the experience of tradition and the new ideas that the newentrants are bringing, I just don't see why we are not really capitalizing onthat. I think that goes to what you were just saying, Robin, that we may bemoving towards something like this where we bring these two, I hate to saycamps, but two factions together under that umbrella of experience and newideas.

Heather Bayer

So on that note, we are reaching the hour and this has beensuch a great discussion. I want to thank you all so much for joining me tocelebrate this 500th episode. I don't think I could have, well, you could havedelivered anything better to celebrate this milestone than you just have. Thankyou so much.

Steve Schwab

Congratulations, Heather.

Robin Cragan

Congratulations, Heather

Evan Dolgow

Congratulations, Heather

Heather Bayer

Thank You.

Heather Bayer

Thank you so much, Steve Schwab, Robin Cragan, and EvanDolgow. Wow, so much knowledge and experience in the room today. I hope youenjoyed that. There were so many topics and issues we could have explored. Wecould have gone on for so much longer, but I do try and keep our episodes toaround 50 minutes to an hour, and this one's going to be just over the hour. Sounfortunately, we had to call a halt at that point.

Heather Bayer

So I've got a lot of guests lined up for podcasts over thesummer, and I'd also love to hear from you if you have any recommendations. Didyou like that panel format? Should I do it more often, do you think? And thirdquestion, would you like to hear from anyone in particular? Please let me know.This show is for you and we like to make sure we're covering topics that are ofinterest and bringing you the guests that you want to hear from. So you canconnect with me at heather@VacationRentalFormula.com if you've got anysuggestions for the show, or you just want to get in touch, whatever you'd liketo do. So that's it for Episode 500.

Heather Bayer

We've come a long way since January 2014, when we committedto an episode every week, and we're going to continue to bring you the best inknowledge for another 500. Thanks for listening.

‍Mike Bayer

This episode was brought to you by the kind returningsponsorship of OwnerRez. Don't forget, if you sign up, use the promotional codeVRF30, that's VRF 3 0, to get 30 % off your first three months of usage ofOwnerRez, which is an internationally recognized leader in vacation rentalsoftware. You can click the link in the description of this episode in yoursmart device or head over to vacationrentalformula.com/OwnerRez to find outmore.

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Heather Bayer

It's been a pleasure as ever being with you. If there'sanything you'd like to comment on, then join the conversation on the Show Notesfor the episode at VacationRentalFormula.com. We'd love to hear from you. Ilook forward to being with you again next week.

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