The "Hard Reset" being a metaphor lots of vacation rental professionals can get behind, we decided to make it the theme of a whole podcast season!

In Dana Lubner's relatively short time in the vacation rental industry, she has emerged as an advocate and leader for responsible, professional rentals in a tough market.  By pioneering 'The Good Neighbor Summit' in Denver, Dana learned how getting public and private stakeholders together can change the narrative about the industry and generate positive press.

In our first Season 5 episode, she sits down with Matt remotely to talk about the summit and what it has meant for her business, as well as dogs, quarantine zoom dance parties and what the future holds.

Please visit our sponsors, which made this episode possible:

• Breezeway’s operations platform makes it easy to ensure quality, safety, and cleanliness across your properties so you can deliver an amazing guest experience. https://www.breezeway.io/
• PointCentral, the leader in business grade smart property solutions designed for rental properties.  PointCentral's technology helps vacation rental managers increase property safety, reduce operational costs and improve guest satisfaction. https://www.pointcentral.com/vrmb/
• With over 1M Property Owners, Thousands of Property Managers, Hundreds of Software Partners and counting, RentalGuardian is one of the most complete and trusted travel and damage protection platforms in the industry. https://rentalguardian.com/

Other links and people mentioned in this episode:

• Effortless Rental Group: https://effortlessrentalgroup.com
• Cooper, Lola, Hendrix and Jake: https://effortlessrentalgroup.com/about-vacation-rental-property-management-company/
• VRMB: vrmb.com
• The Good Neighbor Summit: https://www.9news.com/article/news/local/short-term-rental-owners-gather-for-good-neighbor-summit/73-2689a391-3691-40b1-8c78-f70b2cff00e5

BEING A CONTRARIAN CAN PAY OFF

Making strategic decisions that defy conventional wisdom can often pay huge dividends. Earlier this year, hedge fund manager Bill Ackman believed that the coronavirus pandemic was a massive risk for the United States, its economy, and global financial markets. He was able to invest $27 mm in hedges, which turned into $2.6 billion in less than a month. He then took most of those gains and bought the beaten down stocks of companies like Starbucks, Berkshire Hathaway, Hilton, and Lowe’s— stocks that were available at “fire sale” prices, yet will most certainly go up in the long-run. He was a contrarian and saw the opportunity: this is why he is a billionaire.

At the absolute height of the 2008 financial crisis, when markets were tumbling amidst a wave of bankruptcy filings, Warren Buffett penned an Op-Ed in the NY Times urging investors that now was the time to buy American stocks. He followed through on his recommendations and purchased equities in many American companies, including Goldman Sachs. Ten years later, his advice proved to be correct. The S&P 500 was up 130% and Goldman’s stock had jumped by approximately 196%. Both Buffett and Ackman demonstrate the immense benefits of going against the grain.

ONCE IN A LIFETIME OPPORTUNITY

“Whenever there is change, whenever there is uncertainty, there is opportunity” ~ Mark Cuban

I believe we are at the beginning of a once-in-a-lifetime opportunity in our industry. More vacation rental inventory will be spawned out of this crisis, and during the next 6-12 months, we will see more management contracts change hands then we’ve seen over the last decade. Second homes that have never rented before will begin renting. “Rent by Owners” who were frustrated by cancellations and dealing with irate guests will be happy to turn them over to professional management companies. And unfortunately, some management companies will not be able to make it through this crisis. Vacation rental managers that seize the opportunity of this inevitable wave will be poised to grow exponentially and be well positioned on the other side of this pandemic.

A study by management consulting company McKinsey & Company found that when the economy turned down, as it inevitably does, the most successful companies looked for opportunities to expand. These companies increased their valuations by more than 38% over companies that simply battened down the hatches. The most successful companies found opportunity and pressed their advantages. As companies today look to weather this storm, they should consider that managing risk doesn’t mean avoiding it altogether. Echoing this sentiment, an article from Harvard Business Review in 2008 talks about Steve Jobs’s strategy around capitalizing on the opportunity of doubling down during recessions. “... we would be ahead of our competitors when the downturn was over. And that’s exactly what we did. And it worked. And that’s exactly what we’ll do this time.”

WHERE WILL ALL OF THIS INVENTORY COME FROM?

Our agency, Vintory, specializes in helping vacation rental managers grow their inventory. One of the steps in our sales and marketing system is to create and define personas of potential inventory targets. There are several personas that I feel will be changing hands with the current state of affairs. First Time Frank, RBO Ruby, Upset Ulysses, Venture-Backed Victor, and Shut Down Sheldon. I’ll go into more detail on each below.

First Time Franks

In the midst of the Great Recession of 2007/2008, my business partner at Vantage Resort Realty and I were targeting just about every property owner in Ocean City, MD. As we started signing up new properties, we found an interesting phenomenon: about 25% of the owners we were signing up were “First Time Franks,” second home owners that had never rented out their homes before. They were forced to begin renting their personal vacation homes, their prized possessions, due to their personal financial situation related to the downturn in the economy. Given the deep financial impact Coronavirus has already had in just a short period, I am predicting that we will see a similar situation to the Great Recession where countless homeowners will be forced to rent out their homes when previously they would have never considered it.

RBO Ruby

RBO Ruby has been self-managing for several years now. She lists her home on Vrbo and AirBNB and times have been good to RBO Ruby. She casually does this on the side while taking care of her 2 school age children. However, recent events have changed how Ruby feels. The wave of cancellations, wrestling and arguing with guests over refund policies, and having thousands of dollars pulled directly out of her account have all left a bad taste in her mouth. Now, Ruby’s cleaner has stopped cleaning leaving her in a pinch. She desperately seeks reliable, professional management. RBO Ruby is ripe for the picking.

Upset Ulysses

Justified or not, Upset Ulysses has been extremely frustrated with his current management company. He feels that they have given “his money” back to guests. He doesn’t understand that in some cases, it was out of their control and dictated by the OTA. Ulysses is also upset over the lack of communication from his current management company. Ulysses has already started calling other management companies looking to make a move.

Venture-Backed Victor

Venture-Backed Victor is listed with a large, venture-backed, national conglomerate. He was impressed with their slick marketing and claims of technology. However, Victor’s management company has had massive layoffs and furloughs leaving Victor unable to communicate with anyone. He has called and emailed dozens of times with absolutely zero response. His primary contact is no longer there. Even his secondary contact has been laid off. He feels vulnerable about the status of his home. He just wants answers! Victor will most certainly be looking for new LOCAL management.

Shut Down Sheldon

There is a new persona that we have never defined previously but will most certainly come into play in the near future.... “Shut Down Sheldon”. Shut Down Sheldon is a homeowner that is left “manager-less” after their management company has faltered and gone under. This is an unfortunate consequence of our current situation. I feel great sorrow and pain for the companies that inevitably will have to close their doors due to this black swan event. Nonetheless, it is going to happen and there will be tons of inventory looking for new management.

A well laid out plan to get in front of these personas is essential right now and time is of the essence. Clearly defining each profile and segmenting your data by persona will make your marketing much more effective. Ideally you can customize your messaging based on each persona’s pain points and how each of your unique selling propositions (USP’s) solves those pain points.

CONCLUSION

There has never been a better time to step on the gas and grow. As counterintuitive as it seems, don’t hunker down. If the forward-thinking of Bill Ackman, Warren Buffet, and Steve Jobs can teach us anything, it is that great results can come out of a time of chaos and uncertainty. By using the unique circumstances we are all under to your advantage, you can come out the other side in a fantastic position that could have the possibility of setting you up for years to come. This is a once in a lifetime opportunity— don’t miss out on it!

The following guest post comes to us from Nancy McAleer of Florida Rental by Owner and Anna Maria Island Home Rental.

Airbnb falters but probably won't disappear

Airbnb hosts shift to a love-hate relationship with Airbnb dictatorship decisions similar to what VRBO has experienced. They will lose some supply and be lopsided in their business model of having more travelers compared to hosts/units. They will recoup many of their stimulus host programs and losses on the backs of the travelers who gained loyalty through the COVID refunds. - Airbnb has already increased its traveler fee average from 13% up to 14.2% (I think the increase occurred late March but don't quote me on that).

Diversification of marketing and advertising

More experienced business-minded VRMs and Owners explore Book Direct marketplaces to diversify their portfolio and gain ad space market-share to compensate for lost bookings and streamline as well as solidify their business operations. Many are already improving their listing descriptions and photos in their downtime, as well as starting their own websites getting ready for the relaunch.

Loss of Many New Commission Based OTAs

OTAs that work on a commission-based business model will falter in 2020 into 2021 where many will close as well as large funded companies like Vacasa that don't run with a solid annual profit or already have a "slush fund" in place will also fail with the lack of bookings.

Rental arbitrage will lead to less supply in the urban marketplace

First-tier recovery areas

"Close to home" drive to locations that have few crowds and short-term rentals will be the logical choice versus crowded hotels as a viable, affordable post-COVID vacation choice. This is where owners and VRMs will have to regain traveler trust through transparency with cleaning protocols, etc...

Rate Disparity

There will be diversity in rental rates in the short-term recovery period (relaunch) where hosts that found themselves in a dire financial situation will be offering discounts, shorter min stay periods to gain quick cash flow to make much-needed operation expense payments. I don't expect this to last too long into the future.

Rebuilding Insurance into Business Models

Many VRMs and Owners will create a travel insurance checkpoint with each guest's journey to minimize the risk to their business model. Now is the time that these players will revisit their business and change how it operates. Travel insurance will become very important to VRMS and Owners... and a better system to track which guests have it versus those that don't will transform the marketplace and the way we work with insurance companies.

Certification and/or Legislation

There will be a call for certification/legislation into the business practices of vacation rental properties in order to comply with new health guidelines and policies.

VRMs and Owners Better Accounting Practices

Where VRMs and Owners were spending profits before the actual check-in date there will be a shift in better accounting practices where money will be kept in accounts until the guest departs. At the same time, VRBO will have to shift to the same payment at the check-in model as Airbnb to avoid financial losses. Whether owners and VRMs will accept this change is another matter.

Vacation Rentals in the USA will Open Up this Summer

In analyzing the number of FLARBO inquiries from Feb 1st to date, there is steady growth in the number of inquiries since the lowest week on March 21-27, 2020. Early estimates of this week's inquiries (2 days of data) show that April 18-24, 2020 will have 66% of the number of inquiries compared to the first week of February (pre-COVID in the USA). Consumer confidence is returning even while living with stay-at-home orders.

Watch How Large Corporations are Relaunching

Looking to Disney World Florida's actions by current CEO Bob Chapek who by the way used to serve on Trump's advisory board in 2016-2017, (past CEO Bob Igor has also returned to the crown to help get Disney relaunched) their opening up of their reservation system for June 1st for new reservations is something I will be watching closely for an indicator that relaunch will be imminent this summer (right or wrong). Their new flexible stay cancellation policies for June reservations is also a good indicator of ways to gain early relaunch business.

Today I am sad because in my heart I knew that the world was becoming less civil over the past few years, but in the last few weeks in my community it has become abundantly clear.  And it is not “THE” world, but it is MY world that has changed.

My world has always been focused on welcoming guests to the Outer Banks.  

In fact, I know no one in this community who can truly say they are not dependent on tourism.  Zero.  From the housekeeper, to the butcher, to the doctor at the community hospital no one survives here without visitors.

I’ve had the fortune to be involved in this wonderful business called vacation rentals for the majority of my 57-year life.   My Dad was one of the original REALTORS on the Outer Banks when he opened his vacation rental company in 1964.   I had tremendous pride being the “linen boy” which involved loading sheets and towels in guest cars in 1970 something.  I then became the youth ambassador for my Dad’s company as I met my new friends each week in our family’s cottage court and then welcomed them back every year.

I never felt put upon by the visits from the Burns family, or the Soto children, or the Harringtons, or the many other annual families that visited every year.  In fact, I developed lifetime bonds with them.   To this day I speak to Patrick Burns on a regular basis whom I met on the beach as I was picking up starfish one day when I was 6 years old.  50 years later his children are extended members of my family and my children often ask about him.

Back to my pain: Recently my local community’s response to the closing of the Outer Banks.  

You may be aware that our emergency control group closed the Outer Banks to visitors on March 17th.   Non-resident property owners were then turned away beginning the evening of March 20th.  Since then it has been difficult not to notice how the “locals” have treated anyone in the area with an out of state license plate (even if they actually do live here).  Spoiler alert – it has not been good.

Somehow our locals (you can spot them because they have bumper stickers that say “local as it gets” or “some of us are not on vacation”) evidently feel that we may not need guests any longer.  

I was not aware of how many people that live here who feel no need to always portray an attitude of welcome.   These defenders of safety have taken it upon themselves to police the roadways, parking lots and stores to find people who do not belong here and advise them with a raised finger, clenched fist, or high volume insult that they and their diseases are not welcome on the Outer Banks.    They also scour social media and have been increasingly vocal and vitriol there as well.

Clearly anyone with an out of state license plate doesn’t belong here, and it is their responsibility to shame them back to where they belong.  Anyone who disagrees is filled with greed and is reckless about our collective safety.

Call it fear.  Call it entitlement.  Call it ignorance. Call it what you will, but I call it a loss of civility and I think it is dangerous, and it disturbs me greatly.  

When we do open the roads what will it be like for our real visitors?   At a time when we need to worry more about our own house and what is happening there than ever before it seems judgement and accusation of others is the focus of too many.  At a time when we all should know the importance of a job and being kind it seems neither is happening.

It makes me sad, and it is my hope that we can recover from it as well as we will undoubtedly recover from this virus.  I have a feeling that this character exposure of our locals will came back to haunt us all.

This is a guest post from Tim Cafferty of Outer Banks Blue, one of the premier vacation rental management companies in the Outer Banks of North Carolina. If you'd like to listen to Tim and myself, here's a fantastic podcast (pre-Covid19) which gives context to his concerns:

Travel trends are changing daily as the world navigates through the COVID-19 crisis, especially within the vacation rental industry. We’ve been monitoring markets impacted by COVID-19and have focused on key indicators to identify important trends ahead of time. While there is still uncertainty regarding recovery, below we have provided  actionable revenue management strategies you should make and plan for today to ensure you’re ready for the recovery.

Do Not Drop Prices More Than 3 Months into the Future

Because of the uncertainty of the exact timeline for the recovery, make sure you do not discount more than 3 months into the future. It can be frustrating to see booking volume drop 90%+ YoY, and you may be tempted to drop all prices for your entire portfolio for the entire next year. Do not do this! Robert Cross, Chairman of Revenue Analytics, writes “Hasty steps taken in desperation will screw your recovery” in his piece Revenue Management in A Crisis - First, Do No Harm. Each week, only if booking pace stays flat or down, then consider extending short-term discounts rolling one week at a time, but never more than 3 months out.

Drop Minimum Stays to 2 or 3 Nights Through Summer *If contractually possible*

When the recovery starts, you will undoubtedly have more availability heading into summer than you normally would. This is likely due to a combination of cancellations and a massive slow down in booking pace.  As travellers are fed up with being stuck at home, and have not used their allotted vacation days, we will likely see an increase in last minute long weekend trips.  For this reason, make sure you take advantage of these shorter stays by relaxing your traditional four to seven night minimum stays..

Automate Your Last Minute Discounting

Demand in the next 30 days will likely be low, but if shelter in place restrictions are eased beginning of May, you need to ensure you capture some of that limited demand. We recommend discounting up to 40% for any availability in the next week, 30% for any availability 7-14 days into the future, 20% for any availability 14-21 days into the future, and 10% for any availability 21-28 days into the future. Many revenue management softwares and/or PMS providers allow you to set these rules in place so you do not have to revisit them daily.

Keep 2021 High Season Pricing High for New Listings

Should you acquire new listings over the next couple of months, do not open up availability for high season for that new listing if high season falls more than 6 months from today. Underpricing high season for a new listing can have ripple effects on the performance of that listing for years to come.

• For example, if you bring on a listing in Destin (FL) you will want to use a similar property in your portfolio to price this summer, but do not open up the calendars for summer 2021 until you have more data to make a more informed decision.
• The same is true for a listing in Park City (UT), do not yet open up availability for Christmas and winter until we have more knowledge on the speed of this recovery.

Open that availability for new listings only after you receive normal ADR bookings on the rest of your portfolio, and use your portfolio for internal comps on where to price that new listing during high season.

—About this author: Kam Bain and Beyond Pricing are dedicated to tracking vacation rental data to help our property managers navigate the recovery process. You can find other helpful information regarding the COVID-19 crisis as it relates to vacation rentals on our Coronavirus Support page here (updated daily!).

With the rapidly evolving situation surrounding the spread of COVID-19, property managers everywhere are thinking about how to reassure their guests and take proper precautions to prevent the spread of infection.

The short-term rental industry is uniquely positioned to provide assurance to guests at this time

Once a property has been correctly disinfected, the only people occupying the property are the guests themselves.

Which means that if you have guests who are concerned about traveling, you can help them feel comfortable keeping their reservations by letting them know your properties are correctly disinfected.

While you certainly already have cleaning standards in place, disinfection requires an additional level of attention to detail and conscientiousness about how germs are spread.

Beyond the current COVID-19 coronavirus, disinfection is an excellent practice during flu and cold season to keep both your guests and your cleaners healthy.

Here’s what to add to your process to properly disinfect your rentals.

How Does Disinfection Prevent the Spread of Illness?

For many illnesses, including the coronavirus, people can spread infection before they themselves show symptoms. Transmission is possible through tiny respiratory particles that are produced when an infected person coughs or sneezes.

If the infected person coughs directly onto a surface, that is an obvious infection site. Less obviously, if an infected person rubs their mouth and then touches a surface, that site is also infected. It’s surprisingly easy to transfer respiratory particles from person to person.

UPDATED INFORMATION: Multiple studies are attempting to determine how long the COVID-19 virus can last on surfaces. An NIH study concluded that it can last for 2-3 days on metal and plastic surfaces, and the Journal of Hospital Infection concluded that if it behaves similarly to other coronaviruses, the maximum time it could survive on some surfaces is nine days. We suggest you presume COVID-19 can be active for as much as nine days until we have more solid information. (Updated March 20, 2020)

This means it’s entirely possible for a guest to check out on Tuesday and infect a guest who checks in on Wednesday – even though you cleaned the property in between those guests.

The typical short-term rental cleaning job will sanitize many surfaces in the property, but it may miss many of the “high-touch” areas of the property that need to be disinfected to prevent infection. That’s why adding steps to your cleaning process is essential.

Protect Your Cleaners First

As we’ve established, it’s possible to transmit this virus from a surface the previous guest touched to your cleaners, which means we want to make sure your cleaners are protected.

This is why it’s a good idea for your cleaners to wear gloves, and to avoid touching their face while cleaning.

UPDATE ON MASKS: Previously, this article did not recommend the use of masks while cleaning, as the virus is primarily transferred person-to-person and a cleaner will not encounter an infected person at the rental. However, new information has proven that asymptomatic people can be contagious and shed the virus onto surfaces, which means the cleaner themselves may have no symptoms of the virus, but still possibly shed the infection while cleaning the rental. While it is unlikely the virus would survive on a just-disinfected surface long enough to infect your upcoming guest, a small chance is not a 0% chance.

We are now recommending that cleaners wear disposable or homemade masks to prevent the spread of the virus in case they are an asymptomatic carrier. We are still recommending that N95 and other medical-grade masks not be used, as they are desperately needed by medical personnel at this time.

Cleaners should not work at all if they have symptoms of COVID-19. It’s highly contagious and your cleaners must understand that they pose a risk to others if they clean your properties while infected.

Before beginning to clean any property, cleaners should:

• Wash their hands immediately on arrival, following correct procedure for hand-washing
• Wash their mobile phone with soap and water (this is important because cleaners often use their phones during a clean to listen to music or podcasts, communicate with their clients, or check off tasks on the Properly app)
• Put on sanitary gloves or rubber cleaning gloves (NOTE: make sure your cleaners know how to sanitize their rubber cleaning gloves after use)

Now that your cleaners are ready to clean, let’s talk about what new tasks they should add to their process.

What to Sanitize

Many of the surfaces in your property simply need to be sanitized. Sanitization means reducing contamination or bacteria on a surface to a safe level. A safe level is pretty darn safe: sanitizers kill or render inactive 99.9% of all known bacteria, viruses and fungi.

You should sanitize, if you are not already doing so, all linens at the property (don’t forget throw blankets!), even if they were not used by the previous guest. Guests may still have opened the closet and riffled through the available linens even if they did not use them – and infection can still linger on those items.

Similarly, sanitize all of your dishes and flatware – not just the ones that the guest used. A guest will touch many of the available forks while rustling around for the one they want – you definitely want to make sure those forks have been through the dishwasher.

Most dishwashers have a sanitization setting, which simply means the water is hot enough to kill 99.9% of bacteria. This is 150 degrees Fahrenheit; 65 degrees Celsius.

Sanitization is perfectly reasonable for the vast majority of surfaces – one of the reasons handwashing is so effective at fighting against COVID-19 is that soap and water disrupts the virus.

However, some surfaces get more contact and deserve more attention than others. Which is when we turn to disinfection.

What to Disinfect

Disinfection means killing everything on a particular surface, and it means you’ll be using stronger cleaning products. During this time, it’s not a bad idea to replace all of your cleansers for all surfaces with an approved disinfecting product.

Be sure your cleaner is using an approved disinfecting product. The Center for Biocide Chemistries has produced a list of products that can be used to disinfect against COVID-19. Make sure the cleanser you’re using is safe for the surface you intend to use it for. Bleach products, for example, are not safe for some surfaces.

You should make sure the cleaner knows the correct “dwell time” for the product you’re using. The dwell time or contact time is the amount of time the product needs to sit on the surface to be effective. It will be listed on the label of the product.

Make sure your cleaner is following correct protocols for how to clean without cross-contamination while disinfecting.

You will want to disinfect entirely the room where bodily fluids are most likely to linger – the bathroom. Every surface in the bathroom should be disinfected with an approved cleanser.

You’ll also want to disinfect high-touch points in your property, which include:

• Light switches, outlets, lamp and fan pull-chains and switches
• Window sills, pulls, and handles
• Cabinet pulls and knobs
• Controls for large appliance and electronics (washer and dryer, dishwasher, stove)
• Controls and cords for plug-in appliances and electronics (coffee maker, toaster, television, hair dryer)
• Temperature controls
• Hangers and luggage racks
• Bureau drawer knobs or pulls
• Remote controls
• Amenities like soap, shampoo, and cleaning supplies
• Toys, games, and child guest amenities like high chairs
• Stair railings and outdoor porch railings

Have a lot of cloth furniture at your property? Take a moment to spray your couches and easy chairs with a disinfecting spray like Lysol – which is included on the list of approved disinfectants. Make sure you select a cleanser that is safe for use on the fabric your furniture is made of.

Commonly overlooked but critical disinfection areas:

• Indoor trash bins (disinfect the entire outside and inside of the bin)
• Cleaning supplies (do you provide dishwasher pods, laundry detergent, sponges? Disinfect all of them – and replace that sponge with a brand new one)

After they’ve completed the clean, your cleaner should make sure to walk through the property and disinfect all door knobs and handles. It’s helpful to do this step last, as it is easy to re-infect a door knob as the cleaner goes in and out of rooms to complete the cleaning process.

Finally, make sure your entry process is disinfected. The keypad, lockbox, or keys should be disinfected to make sure your guest arrives to a pristine property.

Pay Your Cleaner for Additional Time

Your cleaner is likely as concerned as you are about reduced travel and cancelled bookings. Cleaning properties is how they earn their bread and butter.

When you ask your cleaners to complete additional tasks to disinfect your properties, make sure you also pay them for the additional time and effort.

As an industry, we all need to make sure we’re looking out for one another. Your cleaners have been putting in hard work for you over the years. Giving them some extra work for each booking benefits them and it ensures your properties will be safe for your guests.

Adding a disinfection process to your turnovers is a great way we can all give each other a little peace of mind during a difficult time.

During this difficult time, Properly is creating free resources to help property managers protect and inform themselves, their guests, their owners, and their service providers. You can find all of those resources here at Everything Property Managers Need to Know About COVID-19.

Photo by The Honest Company on Unsplash.