VRS475 – How To Navigate The Ever-Changing Short-Term Rental Business In 2023


This episode of the Vacation Rental Success Podcast is sponsored by OwnerRez
The World's Most Powerful Vacation Rental Management Platform That Homeowners And PMs Rely On


It’s been an eventful 3 years on every front and as we enter 2023 and reflect on the last one, there have been plenty of changes to review.  Andrew McConnell from Rented.com has shared his thoughts on the passing of another year in the industry every January and we’re happy to hear them once again.

The quote ‘there are decades when nothing happens, and there are weeks where decades happen’ describes 2022 in Andrew’s terms.

It’s been a momentous twelve months for Andrew as his first book was published, climbing quickly to the top of the non-fiction best seller lists, and he sold his own business, as did many other leading figures in the vacation rental world.

In this episode he shares:

  • The biggest surprises of an interesting year
  • What the ‘changing of the guard’ means for the future of the industry
  • The most rewarding thing he has ever done
  • Why he believes the theme of consolidation, convergence and contraction will continue into 2023
  • Who Airbnb is looking to attract going forward – hint….it’s not managers
  • Where owners and managers need to spend their time…and what to stop doing
  • The opportunities and threats everyone needs to be aware of in 2023

Links mentioned:

Get Out Of My Head: Creating Modern Clarity With Stoic Wisdom

Andrea Bayer

Welcome to this episode of the Vacation Rental Success Podcast. This episode is brought to you by the Kind Sponsorship from 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. Listen in to the mid-episode break, where you will hear more about this internationally recognized leader in vacation rental software. For more information about OwnerRez, click the link in the description of this episode on your smart device. Let's get started, here's your host, Heather Bayer.

Heather Bayer

Happy 2023, and in this episode I am talking, as I always do at the beginning of a new year, to Andrew McConnell of Rented.com.  We're looking back over the last year, looking forward to the new one, and talking about convergence, consolidation and contraction; so listen in, this is an interesting discussion.

Heather Bayer

This is the Vacation Rental Success Podcast, keeping you up-to-date with news, views, information and resources on this rapidly changing short-term rental business. I'm your host, Heather Bayer, and with 25 years 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 another episode of the Vacation Rental Success Podcast and the first one of 2023. Gosh, these years seem to go by really, really rapidly. So I just had my first Christmas without snow for 20 years and actually I really quite enjoyed it down here on the Gulf Coast of Alabama. The sun was shining and it was a very pleasant alternative to watching snow out of the window, chipping off ice from the windscreen, etc. Don't know what we'll be doing next year.

Heather Bayer

Maybe I'll backtrack and spend another Christmas in Ontario, but we shall see. Anyhow all speed ahead for a new year. And I know all of you will have so many plans for the new year. We always do this. We set our goals, we start mapping out what the next few months is going to bring us, and we all head into a new year with lots of motivation and hopefully some inspiration. And that's what I wanted to bring to you today. As ever, on the first episode of a New Year, I talked to Andrew McConnell from Rented.com, and in the last couple of years we've actually been doing bi-annually. So I do an interview with Andrew the first episode of January, and then we do it again towards the end of June as well, because over the last few years things have been pretty hectic with lots of changes in the air. So while this continues to be the same, I will probably be talking to Andrew every six months as we go on. Certainly in 2023, I will be doing that, but today we are talking about what went down in 2022.

Heather Bayer

And of course, there were so many people who sold their businesses. There was a lot more consolidation going on. There was a ton of money still coming into the industry. So I want to talk about that and ask Andrew what impact it had on him and his business. I also want to ask him about the sale of his book. He wrote the book called “Get Out of My Head – Creating Modern Clarity with Stoic Wisdom”, and that was published back last June, and I know it was doing really, really well. So I want to catch up with him on that, see what feedback he's got, and then we're going to be looking forward, looking at the changing of the guard in many areas of the industry and how that illustrates the theme that we're bringing to today's discussion, which is of contraction, consolidation and convergence. So without further ado, let's move on over to my interview with Andrew McConnell.

Heather Bayer

So, once again, super happy to have with me today Andrew McConnell from Rented. Happy New Year!

Andrew McConnell

Happy New Year! It's great to be here.

Heather Bayer

Yes, well it always is. This is the time of year that is so set in concrete for me. Beginning of the season, we talk to you and get your take on what went down in the past year and what's up-coming in the new year. However, having just had a chat with you before I pressed the record button, and you saying you're not that good at forecasting. And I think it was because a couple of years ago, you took off – I say took off – you relocated to Bermuda for a month because the Bermudans were allowing people to come in during COVID and set up, and there you still are three years later.

Andrew McConnell

Yes, my wife just renewed her residency permit, so it's very open-ended right now.

Heather Bayer

But you're still loving it, right?

Andrew McConnell

I am, yes. We have a great friends group here. Our backstairs go into the ocean, so this morning swimming with huge parrot fish and all sorts of angel fish, everything around it's pretty great.

Heather Bayer

It sounds like something that would bring joy into your life because I know you love the swimming.

Andrew McConnell

I do. I also say (this might tie back to another one of the podcasts) that I can be happy anywhere, right? Like, it's a mindset of find what I love, love what I find, and it's two sides of that equation. And so I love it here. I loved it in Atlanta. I loved it when I lived in Cambridge, Massachusetts. Or Cambridge, UK. Or Copenhagen. I can be happy anywhere.

Heather Bayer

Well, that's a great segue into just having a quick chat about the book “Get Out of My Head”, because that was published last year and it sounds very much like you're walking the talk from the book. So how has that gone? How have sales gone? You hit bestseller lists. Tell us about where it is now.

Andrew McConnell

Yes, it has to be, for me, the personally most rewarding thing I've probably ever done. So helping people with their businesses and make more money and getting the feedback, that's been great. But having people reach out and say, my life is different and better today after reading your book, that's why I wrote it, because as you say, I'm walking the walk, and it's not always easy to walk the walk. These are exercises I have to go back to, I continually use. And that's why I wanted to document them and share them, because this isn't a one off. This isn't like you eat healthy for a week and then you never have to eat healthy again. Or you go to the gym for a month and then you never exercise again. It's your mental health, your physical health, that you have to invest in continuously. It's part of life, and it's not a one-and-done thing. And so my wife says, “Wait, how can you write this book? You're not perfect at this.” I said, “That's that's exactly why I can write this book, because I'm not perfect at it, and I have to work at it because that's what it is.” And so I think it's totally resonating and working.

Heather Bayer

That's wonderful. I still have it open on my desk, a lot of the time I pick it up, and it's one of those books that you can pick up, just start a chapter and be inspired and motivated. So I love it. You still haven't signed it, because I've never made it to an event that you were at. So wherever I go, I'm going to be bringing this book so I can finally get your signature onto it. I'll put a link in the show notes for anybody who's not sure what I'm talking about. It's Andrew's book, “Get Out of My Head: Creating Modern Clarity with Stoic Wisdom”, which was published last June, and it really is a great read. If you haven't got a copy, get one.  There's so many great stories, and I think that's what I get now. I read a lot of personal development and self-help books, and the best ones are the ones that tell stories about people I know, people I don't know, and I come away so inspired. There was a story – and I never knew that you'd run with the bulls in Pamplona – what a fabulous story that was.  There's so many stories in there. Get that book.

Heather Bayer

Okay. We normally kick off this discussion with talking about the year that's just gone, and it was pretty monumental for me. It was quite monumental for many other people in this industry. But I'm going to turn it over to you, because I can talk about my experience of selling a business at what I think was exactly the right time. But I know that you've talked to many, many other people who've done similar things, and I would like to get your take on the highlights of 2022 in the vacation rental market, in the industry.  What were the biggest surprises, and what came as no surprise at all?

Andrew McConnell

That was the funny thing.  Preparing for this, thinking about, okay, if we were looking back at 2022, what is the headline of the year? And I think there's this line of ‘there's decades where nothing happens, and then there are weeks where decades happen.' And this year seemed like a decade where so much happened. So obviously, you being a huge name and personality in the industry, you selling was a big thing. And then it happened at the same time as another giant of podcasting in the industry, Sarah Bradford sold her business and other female giants, Amy in Tybee, Jodie in Deep Creek, and Dawn at Miss Kitties. All of these just foundational women in the industry sold at very similar times. And it's more than that, there's so many businesses; Mike Harrington sold, Southern down in the panhandle sold. It was just so much activity. And then we talk about the monumental personally, Rented.com – we sold. I sold my company.

Heather Bayer

I didn't know that. Why do I not know that?

Andrew McConnell

I don't know.

Heather Bayer

I introduced you as Andrew McConnell from Rented.com. So it's no longer…

Heather Bayer

Yeah, well, it is. I'm still with Rented, so we're part of the TravelNet Solutions family now.

Heather Bayer

Right… I did know that… I'm sorry… Yes, I did.

Andrew McConnell

They're running Rented, but under a bigger umbrella, serving ever more clients. They really believe in what they've been building for the past two decades there and continue to build, and very excited for that. So I think the consolidation and convergence continues. I think some of the names we already talked about with the consolidation of all these companies getting bought up, whether it's on the manager side or on the technology side, and the convergence, Mike Harrington was part of this big move of all these former presidents of the VRMA to sell their companies. So Steve Milo and VTrips bought Mike Harrington's company, and that was the vacation rental arm. So Mike had been doing a thing for a few years, managing vacation rentals, but he was also buying up these old motels, hotels and revamping them to make them this blended hotel vacation rental experience with kitchenettes, and redesigning the whole thing. He's gone all in on that and continues to expand in Oak Island and elsewhere. Just a perfect example of this convergence of what's happening. We're in the process, me and my business partner here in Bermuda, of bidding on a contract for a bunch of vacation rentals, but also, potentially, some hostels that we can take over and manage – again on that blending of what is that hotel/what is that vacation rental experience.

Andrew McConnell

And I think this is something we're going to see more and more. Phocuswright just put out data that I think it was 64% of people staying in a vacation rental looked at hotels as well. So before it was, hey, if I'm going to a vacation rental, it's specific to vacation rental. If I'm going to a hotel, that's all I'm looking at. Now, more than half the time, people are saying, you know, honestly, I could go either way on this. What is the right thing for this trip? And so 36% of the time, people say, no, we're gone for a week. It's a big family. Of course we're going to do a vacation rental. We're not looking at any hotels. But almost two thirds of the time, people are saying, we can go both ways. And that's interesting for both sides of the equation. Hotels, with what Marriott's doing, they just announced their service department new launch in the US. They're blending into the vacation rental from the hotel side.  We have the Extended Stay – Longer Stay, and so there's real competition coming and already existing, pushing into hotels and hotels pushing into what we have traditionally considered our realm and domain.

Andrew McConnell

So that's the convergence side. We have the consolidation and convergence.  And then one thing we started to see for those that really maximized in 2020 and 2021 when it was gangbusters and you kept putting up the prices to see where the ceiling was, and it didn't seem like there was a ceiling. We see in 2022, and I think we're going to continue to see in 2023 some markets where there's contraction.  Yes, the category is growing, especially now that people are back to urban travel, but for the traditional leisure and resort markets, I think we're going to start to see some contraction, even in an inflationary market; right? So people are expecting… Oh, it's hyperinflation, my prices should go up. Well, yeah, a lot of markets, they got ahead of that inflation a year or two in advance, pushed all those prices up, and there's not as much room to do it now as people are feeling the pinch. These travel dollars are discretionary dollars, and while the luxury end, I think, can continue to push up because those people never seem to get hurt, people are still buying luxury, it's that middle tier, yeah, you're really competing against hotels, and you're competing against grocery and gasoline and other things people have to buy.  I mean, you're seeing some real wallet contraction as well as ADR [Average Daily Rate] contraction. So I think this is something we're going to continue to see in terms of what else happened this year.

Andrew McConnell

Right as we were finishing last year, Vacasa went public, and right as we started off 2022, Sonder went public, and man has that been a year for both of them. I think investors poured hundreds of millions of dollars into Vacasa, they took it public at billions, and it's now trading at less than the investors put in. I think Sonder was a similar rate, some $800 million got poured into it and it's valued at $200 million now. And it's an interesting time where you say, wait, all these companies are getting bought, so there are some companies doing really well and making money out of this. But then the really high profile ones, people outside the industry, aren't getting that same benefit. And why is that? What's going on? It seemed to deter money pouring into the industry. You still hear of companies very much wanting to invest in good managers and where the money is, and technology firms.

Andrew McConnell

So obviously very big financing rounds at TravelNet Solutions, very, very big financing rounds at Guesty and others. Avantio sold, Transparent sold to AirDNA. There's still plenty of money coming in, so I think it's just coming in to the companies that make money, you have to show that you can actually make money doing this. And the idea of – we can mortgage A and magically make money in the future, if you aren't making money in the best of times, it's very, very hard to believe that somehow when things started getting tougher, you're going to magically be able to flip a switch and start making money in that environment.

Heather Bayer

Let's talk a little bit about Airbnb and what happened with Airbnb in the latter part of 2022, with the whole issue of cleaning fees and other feedback that they were getting from guests that was obviously spooking them.

Andrew McConnell

Yes, Airbnb could have its own podcast, obviously with everything going on there; they're such a big player. It's interesting because coming out of Q3, all these travel companies had their best quarter ever.  Expedia, Booking.com, Airbnb, record revenues and profits. And then the market did not reward Airbnb for that. They were making more money than ever, but the market was actually dinging them.

Heather Bayer

Can you explain? What do you mean by that – The market was dinging them?

Andrew McConnell

Their share price went down. So they come out and they're ahead of earnings. They're making more money than ever as a company and people say, oh, you're now worth less than you were yesterday. Okay? And I think it doesn't matter about today. It matters about what does a long-term future look like? And I think they were seeing a lot of slowing of growth. The big thing, and this is what managers have said for the longest time, supply is King, who owns the inventory? And as a distribution platform, Airbnb has been absolutely incredible at building that brand awareness for guests and for consumers. But they haven't always been the best friend of the professional manager. Right? They got started for the individual host, for the shared accommodation. Their whole bread-and-butter wasn't vacation rentals, it was shared urban accommodations. It was – Hey, I have the spare bedroom, please pay me some money to come stay here. And so I think what we're seeing ten years later, 2022 is a very similar environment potentially to what we saw Airbnb in 2008 to 2012. They launched in 2008 on the back end of the financial crisis, and there was this real economic contraction.

Andrew McConnell

So that's where they'd have the shared accommodation. And too, if they were traveling, they were looking for more cost-efficient ways to do so. And so Airbnb initially got started as – Hey, we're cheaper than hotels. That was kind of the period of, oh, it's cheaper than hotels.  Ten years down the line, that's not the case anymore. Right? Now that they were such a big distribution platform, so many vacation rentals and other properties ended up in there that the price went up. Right? If there's the demand, we're going to push up prices. It's not about being cheaper, it's about a better service, it's about a unique experience. And I think what Airbnb's learning in that is… Whoa, these managers!  They're potentially dependent on it, right? You look at some local companies, they're getting 90%+ direct bookings. They don't need Airbnb as much as Airbnb needs their supply. And so what Airbnb is trying to do is build more of a closed garden, a walled-off garden, to attract new supply as the economy contracts again. What they're doing is trying to say – Hey, we want to build the next generation of hosts, the next generation of people who are going to put their properties in, who need this income, who are going to be the small managers built fairly on our platform, be entirely dependent on us, as opposed to us just being one of the many channels they put us on.

Andrew McConnell

And it's a lot of the changes that they've put in place, I think, are trying to build these tools for hosts as opposed to managers, but they also have to keep guests happy. There's been a lot of anger – I see $129 a night, but then I go and there's this cleaning fee, and there's this fee, and I end up paying $416, where did that come from? And so it's a tough situation with any marketplace of you need to make both sides happy. But the hard side, actually, of the equation is the supply, because people are going to want a place to stay, but supply can go distribute anywhere.

Heather Bayer

So where do you see this going in 2023?

Andrew McConnell

I do think there'll be a lot of people that entered the industry in the gangbuster years and say – Oh, I can become a millionaire – who are going to have a very hard time. If you built your entire business model based on the best of times, as we go into this type of market, you're going to have a very difficult time. For those that weren't even making money in the best of times, they're better off hanging up, like, get out before you lose your shirt. If you couldn't make money back in '21, things aren't getting better than that in the foreseeable future. If you've built a great business and you have a great profitable business, you can sit it out. You know how to go through this.  Right? There's so many of these managers who've been through the '08 crisis and know how to turn the crisis into an opportunity and deliver. But you can see it on social media. You can see it on all these posts. “What's going on? Where are all my bookings? I bought this property expecting these kinds of returns.”

Andrew McConnell

I don't know who is giving you this advice.  I mean, you bought it at a record price when you had record rental income. But the only thing that's going to be a constant is the record price. The rental income can go up and down. What's going to stay the same, is whatever you paid that day, you bought the property. And so that buying at record asset prices is just a very dangerous proposition.

Heather Bayer

We saw this in Ontario, we just watched with horror in fact, as this all went down, in 2021 mostly.  And the bidding wars, and people buying properties with absolutely no backup of home inspections of any sort.

Andrew McConnell

Without even going to look at the property or paying record amounts for properties they never saw?

Heather Bayer

Yes.  There was one. I went to see the property on the same day that the owners had seen it for the first time, and they just paid $200,000 over asking for it. How can you do this? They're going to go along. They're going to see the property for the first time. They're taking along the rental manager who's going to look after it, and we're all seeing it, as I say, for the first time!  Fortunately, they loved it, and it's been a very good prospect for them. It was a very good prospect for them then, but it's slowing down now. It's slowing down for everybody. Maybe not so much for them, it was a high-end property. You mentioned earlier on that, once you're in that luxury bracket, it really isn't changing a huge amount. And I've said this many times, that the people who are out there looking at spending $10,000 – $15,000 a week, they're not worried about the odd $500 extra or $1,000 a week extra here and there. That income is going to come in for those people in that market. But I do feel for those who did the same thing for a more modest property, going for that middle market, because that middle market, and we were seeing it a while ago, and I know it's still going on, that is dropping off.

Heather Bayer

People are just not affording it.  It's the first thing that goes out the window, isn't it? That discretionary spending.

Andrew McConnell

Exactly. I mean, the budget side always has a place. The luxury side, they always have money, it always has a place. And it's just how much you're able to get in that fat metal. And if it's commoditized fat metal, it can be a race to the bottom, because then you're competing against anything that looks relatively similar. They're not paying for this incredible one-of-a-kind property and you didn't enter it expecting very low margins, like cheapest that we can do. And that's just a very dangerous place to play. Regardless of your industry, and especially in our industry, where you're talking about real estate, where people are spending their savings, this isn't buying a small item, this is investment in your life.

Heather Bayer

Yeah, exactly. That's something I think we're going to be seeing in greater proportion as we go into this new year.

Heather Bayer

Well, I'm just going to take a short break from the interview with Andrew to go over to Paul Waldschmidt, the Chief Executive Officer and co-founder of OwnerRez, our Sponsor.  Paul is answering another question that potential clients of OwnerRez often ask. So Paul, welcome back. What do your clients typically tell you about the value that OwnerRez brings to their business?

Paul Waldschmidt

Yes, we see this routinely, actually, in our testimonials or reviews, user stories. People will come to us and they'll talk about – I was able to grow with OwnerRez, and they say a lot of things, but that line kind of always stands out to me because in any business, if your business is failing, you don't do more of it. Businesses that tend to grow tend to be businesses that are succeeding, at least on some level. And in the vacation rental space, there are owners who do fail, who do end up walking away or they bought in at too high a price, or it's just something that they decided they didn't want to do. So, when we see owners come back to us, particularly when they're transitioning from homeowner-sized businesses to PMs – starter PMs/small PMs space is where we see a lot of these testimonials where people will come back and say, the ability to keep doing what I was doing as a homeowner, but then just quickly expand that out from one or two properties to eight or ten. And now I'm managing for my friends and, man, it all just kind of keeps working.  The channel management, the website, it scales well, it's still fast, it still works exactly as it did with one. So typically we see the value where there's that transition from homeowner to PM in that starter and small range.

Heather Bayer

Well, thank you, Paul, for those comments on OwnerRez. So back to my interview with Andrew McConnell.

Heather Bayer

What else do you see, what do you see as opportunities for managers as we start 2023?

Andrew McConnell

Yeah, I think there's a lot of opportunity in terms of signing owners because there's going to be so much churn. Not that the manager that has them today did anything wrong. But people are going to look for scapegoats, and when the numbers are not matching what the magic spreadsheet told them when they acquired the property or what it looked like in '21 or in '20, they're going to want to blame somebody, and it's likely going to be their existing manager, even if they did everything right. So being there and ready to tell the story of how and why you are different and better, what you're going to be able to do on revenue generation for that homeowner, that is going to be the biggest opportunity. I think there's also, with all the things pouring into the technology space, there are opportunities to implement new technologies, new systems, new software into your business that can be game changing in terms of how you run it. So as you're adding these properties, how can you run them more efficiently? How can you take tasks off of your plate, that other people can do more efficiently?

Andrew McConnell

It should always be – Okay of what I'm doing, what can we just stop? What's not going to hurt us if we stop.  If we can't stop it, can we automate it? Can we use software or some kind of automation? And then can it automate, can it go to a cheaper resource for me? And then you, as a business owner, as the manager, as whatever it is, what was it that you uniquely can do that others can't? Okay?  Look, I'm the mayor. I grew up here. I went to high school here. The literal mayor is my buddy from middle school. I can build relationships with owners unlike anyone else in my business. And that's the single biggest act that I can have on my business. Well, then every hour that can go towards owner recruitment and retention that you can put in, that's more valuable than anything else, because you can hire people to do everything else, but they're not going to be able to do that.  Or, I am the most incredible design-eye and I can go into any property and show them exactly how to change things around to make it go up in value from that mid-tier to the luxury-tier in terms of those and what people are getting.  Well, great. Put more and more time into that. Like, find what your unique value to the business is and put your time into that; hire, outsource, automate, stop anything else.

Heather Bayer

Yeah, that Is such great advice because I think we went through the formative years of this before technology really came into its own.  Where every owner/manager had to be master of all trades, had to do everything. And now we do have that luxury of choosing what we're good at and maximizing on that and letting the rest go to third parties, whether it's, staff or whether it's automated software.

Andrew McConnell

Yes, I mean, if you think about starting a business today versus ten years ago, versus 20 years ago, where 20 years ago, you didn't really have online distribution. I guess Vrbo exists, but Airbnb didn't, Home Away didn't yet. Right? Like you had this whole world that didn't exist on distribution, it had to be you because you couldn't afford to hire anybody else. But now you have stuff like Extenteam, you're like, actually, I came to my team in this super, super efficient way. And then the software accessibility, it's dangerous, but you could start just using Airbnb.  Right? That's the whole thing, they're trying to build out that suite. If you just have one home and then you have two, and then you have three, and at what point does it make sense to say, okay, now I need to start looking at outside software. I can't have my higher livelihood dependent on this third-party channel that you hear too many horror stories of.  Oh yeah, they just turned me off, or they held all my revenue and wouldn't pay it out.

Andrew McConnell

And so at what point does it make sense to start building that tech stack?  That tech stack doesn't have to be expensive. There's so many options, I mean, you've seen the landscape. There's so many options and there's no singularly right answer of it. There's the right answer for you at this stage of your company's development. And so the right answer today at one property renting for a few months a year could just be Airbnb. Hey, I'm not going to complicate it. Once you get a handful of homes, okay, maybe look at one of these lighter weight PMSs and then I can start distributing on other channels, I can do better guest communication, etc. And then if you're building a real company and you're hiring other people, okay, now I need sophisticated enterprise solutions. All of these are out there, and that wasn't necessarily the case 10-20 years ago. I mean, it's a very different world now.

Heather Bayer

Yes, and I'm testament to that. When we started, there was nothing. It was back in the day of fax machines and checks in the mail. I guess there are fewer and fewer of us now who experienced that. So we were there, we've said this before, that for many of those companies, we've come full circle. We were direct booking and then we immersed ourselves in HomeAway and then Airbnb, and then came out the other side going back to direct booking. But we had that experience of it before, so we knew the strategies and the tactics, the actions that we could take. But I think for many, how do they know? How do they learn this?

Andrew McConnell

By doing. You learn by doing. Look, conferences are great and you can sit in the session and hear and take some notes, and talk to peers even better from somebody who's actually done it, but doing it yourself and say, okay, yeah, 80% of it's the same as what Heather did, and I'm really learning from that. But this market at this time, or my particular owners or my particular market has these little nuances that are different that I'm only going to know and learn and know how to respond to once I start doing. So, first do – to keep in mind – because it's back to ‘there's no singularly right answer' – it's just the right answer for you at this point in time. Well, that point in time is going to change you change it's back to the Heraclitus “No man ever steps in the same river twice, because it's not the same river and he's not the same man.” It's the same for you. Your business is not the same and the market is not the same, so you need to constantly do stuff like this.  Right? Listening to these podcasts, hearing what's happening in the industry, staying on top of what's happening in your market, what's happening with guests, what's happening with your technology partners and distribution partners, so that you can adapt and evolve as necessary to stay ahead of the market.

Heather Bayer

Yes, I love what you said about – there is there is no right answer. There's no cookie-cutter solution for anybody in this business. Whether you just have the one property or whether you've got 100 or 1000, there's no one way of doing it, and I certainly know that and I know that Pillar49 who bought our company, they're going off in different directions. They're making their own path now and doing things that I wish we'd done years ago. They didn't cross my mind or maybe I didn't have the right motivation, but yes, and I think a lot of people who are maybe starting out on the property manager route think that there is ‘the one'. I just have to do this pattern of things and everything's going to go right, but it's just not the case. My answer was always try something, if it doesn't work, do something different.

Andrew McConnell

Yes, I mean, that's the thing. That is the difficult thing, because there are people out there that will sell you – “Hey, here's how to get rich. Here's the playbook.  Here's what to do.” Well, there is no the playbook. Hey, here are things that can work and have worked for others at a certain point in time for their particular business. And some of those things may be totally right for you, but guess what? It changes. Right? Businesses built entirely on Google AdWords, that was amazing for a point in time when it wasn't competitive and you're buying AdWords for $2.50.  When it's $250 the economics break. Facebook ads, that totally worked for a period of time when they were cheap and you could target the end user. One, it stopped being cheap. Two, Apple changed their privacy policy and it's not as targeted anymore; it doesn't work. So it's not just our industry, it's any business. You have to change as the business changes. And if anybody's telling you, oh, here's the way to do it, well they're either lying or just wrong.

Andrew McConnell

So maybe they're just wrong, they're not being malicious, but it's not a realistic take on a market as dynamic as this is. This is a market that's five X'd over the last 20 years. This year the US alone is supposed to do 50% more than the entire global entity did back in the year 2000. Just way too big and growing way too fast for there to be – ‘Oh, this is the right way to do it.'

Heather Bayer

So do you think…. are we going to have any surprises? I mean, here I'm putting you on the spot and saying predict the surprises of 2023, but is there anything out there that's showing signs it could impact the industry and maybe something that we should be aware of?

Andrew McConnell

Yes I would say, and maybe I shouldn't be surprised because with the consolidation and convergence, I think it was just sheer numbers that all sold at the same time, especially for the tier of managers that did, including yourself, that was surprising, and volume.  In fact to some it wasn't surprising, it was the name brands and the volume that it happened in. And I think as we look in the surprises going forward, I think we may be surprised who wins and who doesn't in the coming year of people who got a lot of attention and some that didn't and how that plays out. But for me, we are now in another 2008 to 2012 time period. So if you go back in years, Airbnb wasn't a thing. It was so nascent, it was just getting started. TravelNet Solutions, Track wasn't a PMS, Guesty was not a thing, Vacasa was not a thing. All these names that dominate the conversation today did not exist 10-15 years ago or were not in the mindset at the same point. And as we see this chaos, as we see the economy contract, as we see compression on our ADRs, the exciting part is the companies we're going to be talking about in ten years, they don't exist yet, they're not household names yet.

Andrew McConnell

And so the opportunity is for those that can come in with fresh eyes and say – Hey, I'm not tied to the old way of doing things. I see all of this chaos and flux and instead of holding on to what I have today, I see this as a huge opportunity to do something new and different – and that to me is a surprise of what is going to get created. Is it something like Mount, which she's doing in terms of monetizing at the homeowner level?  All these ancillary sites – so you can rent the bikes; I can monetize all these pieces. Okay, she's going to be talked about a little bit today, but is that going to be the Airbnb of ten years from now? I think that's the exciting thing. What is just getting created today, that's just going to take over the conversation and the market. That's the truly exciting part.

Heather Bayer

How do you find these things that have just been created today? Years ago, I would say, I jumped on every new thing that came along and I seemed to have that knack of finding this new stuff and jumping on it, a lot of it. I'm very happy that I did, but where do you look? And I think perhaps what I'm saying is one thing that I think all owners and managers should be doing is reading and networking and looking around them outside of their own business and see what's happening outside. Where do they find this information?

Andrew McConnell

Yes.  One – is talking to each other, being with the community, looking outside the industry. Probably, I could be wrong, but when you say you were jumping on stuff and looking at other things, think about it – you created podcasting for this industry.  Right? Podcasting. Think about when you started podcasting. Does anybody say there are too many books? We shouldn't publish any more books. Podcasting is another way of getting information out there. And so I think being willing and able to look outside the industry, not just within the industry, you see all sorts of opportunities. So that could be for creating businesses of what are the corollaries, what have other industries gone through and how did they come out the other side, how did that work? That's a huge opportunity. And in terms of the new ideas coming through, it's keeping an open mind, it's reading, right? It's listening to podcasts like this, following Skift and Phocuswright and Short Term Rentalz and just seeing what the buzz is, as well as going to the conferences and talking to your peers. You don't have to do it all the time, but there's a reason on my calendar I have specific times and days of the week dedicated to learning because it's changing so much. If I don't, I'm behind. I don't know what's happening unless I invest that time to go learn what's happening and go try to investigate it. And so if that's something you care about, which you should, if you want to be in existence and relevant, come next year, come ten years, then you need to invest the time and dedicate to investigating what's going on, what are the new things out there. And that doesn't mean you have to be the early adopter, like – Okay, I'm going to sign up for every new piece of software that comes out. It's just you need to be aware of it. You need to find who's on it, talk to them, their feedback, how is it helping or not, and just stay on top of it.

Heather Bayer

So when we come back and talk again in June, which I I hope we will, what do you think we'll be talking about then?

Andrew McConnell

I think we'll be talking about some flux in terms of some of the companies. I think that 2022 was hard for some people, especially the back half, because their businesses ran on certain assumptions and certain ways of operating that stopped holding true. And I expect to see that accelerate in 2023. And I think we're going to be just like we talked about – Wow, all these things are doing so great in 2022 and sales and companies growing – I think we'll be talking a little bit about the other side of the equation, as well as, I hope, what are the new exciting things we're saying – Wow, this one, we didn't even see it coming six months ago. Didn't know it existed. But wow, what an exciting thing.

Andrew McConnell

If I knew what it was, I'd tell you. I just don't know what that exciting thing or those two exciting things are. But I am I'm really hopeful because it is in these times of chaos and flux that the new exciting things take off. It's those people that can see things differently and build things that make the difference, that continue to drive not just our industry, but the global economy.

Heather Bayer

And what will you be doing this year outside of Rented.com?

Andrew McConnell

I'll continue doing speaking at workshops around “Get out of my Head”. So doing a lot of personal development work for companies, events and corporate workshops, trying to invest in people, in mental health, and being and working with TravelNet Solutions to get that enterprise solution out for more and more managers, and solving that. I'll be swimming a lot next month. It'll be nice and warm here in Bermuda. Yeah, well, I do live a great life.

Heather Bayer

Well, I do hope we get to meet sometime in 2023, so you will sign my book. Until then.

Andrew McConnell

Well, come visit.

Heather Bayer

Oh, gosh, Bermuda. Yes, that would be lovely.

Andrew McConnell

Yes, Bermuda. Do it.

Heather Bayer

Yeah. Okay. Thank you so much, Andrew, as ever, it's always an absolute pleasure to have you on the show. It's one of the highlights of my podcasting year to do this. It sort of sets the scene for a new year and I hope we continue to do it for many years to come.

Andrew McConnell

Let's do it. It's always a pleasure. Thank you.

Heather Bayer

Thank you so much. Andrew McConnell, as ever, delivering some great insights and discussion on where we've come from in 2022, where we're going to in 2023. And a lot of food for thought there. Just talking to Andrew after we recorded the interview, he has so many great quotes that I was trying to make notes as we went along. One of them is no one man ever steps in the same river twice. So I'm going to I'm going to research that one a bit more and then a couple of the others, and I'll make sure they're in the Show Notes because some of these – I love quotes – and I hang them on my wall and put them on my computer screen as desktop material and they inspire and motivate me. So if you're interested in some of those really great quotes that Andrew came up with, and of course, you've forgotten about them now, because that's what happens when you listen to something, you think, that's great, I'll remember that, but you don't. But don't forget that we are now transcribing the podcasts so you will find the full transcription on the Show Notes.

Heather Bayer

So if there's something that you think you missed you'd like to go back to, you can go back to the written version, which for some people I know is very, very helpful. So that's it for the first episode of the New Year. I hope you enjoyed that. There's a lot of really, really good stuff to come. I hope you stay with us, hope you subscribe. Would love it if you wrote me a review as well. That's always nice to have. So until next week, enjoy whatever you're doing with the rest of your day, and I'll be with you again soon.

Andrea Bayer

This episode was brought to you by OwnerRez. For more information about this internationally recognized leader in vacation rental software, click the link in the description of this episode on your smart device, or head over to Vacationrentalformula.com/OwnerRez to find out more.