Jeff Iloulian left law, ran 150 units, built HostGPO

Quick Summary

Jeff's argument is that hotels buy sheets, mattresses and furniture at prices a single host will never see, so HostGPO pools its members and negotiates as one buyer. He says the average host in the group saves 39.4% off retail, close to $13,000 a year. The rest of the conversation is about risk, from New York's rules to the LA guest who crossed the six month line and stopped paying. If you're underwriting a property in a market where the rules could tighten, start with the numbers on BNBCalc Markets.

Key Points

• Jeff was a lawyer first, and he says he actually liked the job. Short term rentals started as a side thing and grew into 150 properties, luxury homes plus apartment buildings and cabins, mostly in Southern California. He built HostGPO after doing it the hard way himself, including an IKEA checkout with 48 shopping carts and 30 different lines of linens.
• The horror story he retells is an LA host who rented out the guest house behind their own home without a permit or a certificate of occupancy. The guest stayed past six months, which in LA triggers a protection putting the burden on the landlord to show cause, the unit then got treated as rent controlled, and the guest sued for the roughly $20,000 he'd already paid while still living there and not paying. The owner offered to cover a hotel for a month. The guest said no.
• Jeremy's rule for medium term rentals is that a 30 day guest picks up tenant rights a weekend guest never has, so you vet them like a tenant. He walks through the workarounds hosts use, back to back 29 day reservations, a bigger security deposit, no mail delivered to the unit. For New York he tells mentees to underwrite the property as a 30 day rental, with an in unit washer and dryer and a real desk and monitor setup.
• What worries Jeff about New York is the target. The rules reach the platform itself, so Airbnb can be fined over what gets listed, and he reads that as a precedent other cities can copy. Jeremy's favorite absurdity in the same rules is the homestay permit, where neither the guest nor the host is allowed to lock a bedroom door.
• On savings, Jeff says the average host going through the group saves 39.4% off retail and close to $13,000 a year. Contract pricing is confidential, so you only see it after starting the free three month trial. The one figure he'll put a number on is the Helix hospitality mattress, sold only through the group and stripped of the retail packaging, which he hedges at roughly 60% to 65% less expensive than you'd expect.
• His case against furnishing off Amazon is the coffee table whose corners give out after eight months. Contract grade goods cost more up front and survive the turnover, and Jeff says the group's pricing beats what an interior designer's trade discount gets you at partner brands like West Elm and Crate and Barrel. Members also get a free interior design program through the Williams Sonoma family, though it only pays off if you're furnishing a whole home.
• His closing tip is to do the right thing, and he means it literally about the setup. A house that sleeps eight needs more than eight glasses and eight forks, because one breaks and now somebody's drinking out of a mug. Nobody opens your drawers before booking, which is exactly why it's on you.

Full Transcript

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Jeremy: What's up, everybody? We are live with the Short-Term Rental Pros Podcast. And I'm excited to be here today with Jeff. Jeff, I'm not even going to try your last name, but I had the opportunity to be on a boat with Jeff actually last week at the STR Nation conference. And we had a great conversation.

Jeff is a super knowledgeable guy from many different aspects, and not only the short-term rental space, but just everything going on. So we had some really interesting convos and thought he'd be a great person to have on the podcast and talk about some of the really relevant things that are happening today.

And also talk about his experiences growing an arbitrage and property management portfolio to 150 units before saying, you know what, I want to actually do my own startup company. I feel that there are some issues that I'm feeling as an operator. And he started HostGPO to solve those issues.

So I'm going to let Jeff kind of give a little bit of his background as well as what HostGPO is. And then we're going to get into just some of the things that are affecting hosts all around the country. So you guys are going to want to stay tuned for this episode. Jeff, thank you so much for coming.

Jeff: Yeah, thank you so much for having me. Really, really excited to be here, Jeremy. And it was great meeting you on the boat last week. Different, slightly different weather and setting today. Less sunsets and glistening water, but still excited to be here and chat with you.

And yeah, my background, I've been in this industry, in the vacation rental industry, in the short-term rental space, for about 10 years. And started out kind of falling into the space that I think a lot of people who get into this industry kind of fall in by accident. And that was definitely the case with me. I was a lawyer before, who decided, maybe I should try out the short-term rental thing on the side, and really just fell in love with it, and fell in love with the industry and kind of the ability to be an entrepreneur in a pretty seamless way, kind of getting started.

And I grew my business over those six years or so to have a pretty large portfolio. We had 150 properties, luxury homes, but also we were doing apartment buildings and cabins and you name it, mostly down in Southern California, and started HostGPO about four years ago.

And HostGPO, the idea behind it, it was a private group. GPO stands for Group Purchasing Organization. It's actually a type of business that exists in a lot of other industries. It exists in hospitals and pharmaceuticals and food. And the idea is it's just a buying group. It's a collective group of people who are looking to buy the same types of things. And the group goes on behalf of all the members and negotiates for pricing and products that are the best for its membership base. And by kind of pooling all the power together of all of the buyers under one umbrella, we're able to kind of get favorable terms and the guaranteed best pricing with each of our vendors that we work with.

So that's the quick background on HostGPO. And we offer everything from furniture to supplies to linens to amenities, you name it. If you're looking for kind of toilet paper that's less expensive than Amazon and Costco, or sheets that are the same kind of sheets that Marriott and Hyatt and Hilton buy, as opposed to just kind of banking on whatever's at your local store and having mismatched stuff, those are the kinds of problems that we really focus on, in addition to kind of the West Elm, Pottery Barn, Crate and Barrel, Article furniture of the world as well.

Jeremy: Awesome. So we're going to dive into kind of like how you're saving hosts around the country money, and how you're using this kind of collective power to have negotiating and pricing power with your partners.

But first, what I want to dive into, and I actually got some great feedback. Well, first of all, conferences are amazing because you just get to meet people. And I think being on a boat is a very prime example of just like in a very natural setting, like literally feeling the waves. We don't have to talk about the alcohol component, but definitely reinforced. Yeah, reinforced to me just like how awesome it is meeting people in person. Jeff and I actually happen to both be in New York City at the moment, which is definitely a coincidence. So maybe next time if we run it back, we'll do an in-person pod.

But what I want to get into is like a lot. And people were telling me like, hey, we like when you talk about the not so good things. Obviously short-term rentals for me, it seems like for you, you went from being a lawyer to having your own business, and using that business to then start your own venture, which actually is the same route I've taken with like BNBCalc today. I wasn't a lawyer before, but kind of that same high level, like more of like a nine to five corporate type job to short-term rentals to then having the freedom to go after my own thing and solve a problem I saw in the short-term rental industry.

But I want you to give an example of what's a not so good thing that's happened. Like, can you share kind of your quote unquote like Airbnb horror story?

Jeff: Oh, my gosh. We could do a whole hour podcast on the horror stories. You can imagine, not only did I probably host tens of thousands of guests, but over the course of all those years and all those properties, especially some of the larger ones.

But back in the day, in 2014, 2015, the industry was a little bit more wild than it was now. So there weren't a lot of the solutions that were in place, but there wasn't a lot of like background checking going on. We used to show up and actually physically check people's IDs before we checked them in. We used to do all of our check-ins in person just because there was so much fraud going on. And that's kind of subsided.

But you talk about horror stories. I was thinking, I read an article in the LA Times yesterday that was about a guest that was refusing to leave, a squatter. And that brought back some very terrible memories. I went through some of those similar situations of squatting guests that didn't want to leave. And this one was a particularly, I don't know, did you catch that article? It was pretty bad.

Jeremy: I saw that line. Yeah, it was like someone's been staying in my house for the last year. But it looks like you actually read it.

Jeff: Yeah, it was.

Jeremy: Give me your SparkNotes.

Jeff: Yeah, I've done the same thing. I mean, I've had to go through the same thing in a similar way that this person went through.

Essentially, it was a host who lives in the main home, rented out their guest house. And the current guest that's there had to do a 30-day rental because it's LA, right? I think so. I think they probably did it, a 30-day rental through. I mean, I think the original reservation was like 50 days. I don't know if they had to. It sounds like they didn't have a permit at all. So assuming they did a 30-day plus rental, even at the outset, all of the terrible things that could have happened, happened at the same time for this host. And they're not totally free of culpability either.

Essentially, they rented out this back home that they'd renovated, but they didn't have a permit for it. So it had an illegal shower, and they didn't have a certificate of occupancy. And then this guest was staying there. The guest ended up staying and ended up staying and extending past six months.

LA has some really, really, really nuanced regulation around housing rights. So they ended up having, there's a special protection you get if you're there for six months that says that a landlord, if they're going to evict you, has to show a reason why, like put the onus on the landlord. Then the property got deemed that it was a rent-controlled property, so you had a rent-controlled tenant, so eviction is even harder there. Then the tenant ended up suing the host and saying, actually, this place was unpermitted and I want all my money for the original reservation back.

And the guy's been staying there for 541 days already, in addition to the reservation, and not paying. So he's been staying there, not paying, refusing to leave, wanting his money back for the time that he did spend there, which was like $20,000. And then on top of that, the guest won't let the owner and the host into the property to do the repairs to get the permit.

So this host is in a terrible situation, but it was a parade of horribles. And yeah, talk about horror stories. I tell people this a lot, especially because there's this very big kind of movement, and there has been over the last few years, that grow your business and anybody can do this and just hop into the space. And sure, it's easy, just rent a property and put some furniture in. But if you jump into this without knowing what you're doing, or without having some clear guidelines, or doing it the wrong way instead of doing it the right way, you could end up in a real bad situation like that.

Jeremy: So this story had a lot more juice than even I thought from the headline.

Jeff: Yeah, it was a bad one.

Jeremy: Yeah, it's funny. So I did like a post, and we're going to get into this super relevant current topic for both of us. We're both in New York City, who just created some of the strictest and, in a way, to me, like the most odd short-term rental regulations I've seen.

But I did a post where it was like, all right, if you're in a city, and worst-case scenario, short-term rentals get restricted. There's a lot of times a lot of demand for medium-term rentals, so 30-day rentals. However, if you're going to do a 30-day rental, you need to vet that guest. Like at that point, they have a lot more rights. They stay for like a week or two weeks, and they overstay their welcome. They overstay their stay. They don't really have, in most cities, most states, that much of like tenant rights. So they're there. You can get the cops. The cops will come. You can get rid of them.

And a lot of places, once you either hit that 30-day threshold, or, like you just said, I guess Los Angeles is that six-month threshold, it is really difficult to get somebody to leave, especially in places like Los Angeles, which is kind of funny.

I'm thinking like while you're saying this, I'm like, wait, because I didn't read the article, the owner is actually living in the main house. So they're having to see this person come in and out. And if it was me, I mean, at that point, I might just be so angry that I would literally just put their stuff on the side of the house. I'll buy you an Uber, and I'll give you a two-week hotel stay somewhere.

Jeff: They tried. The owner tried. He was like, I'm going to put you up in a hotel for a month. I'm going to pay for it. Let me just do the repairs, blah, blah, blah. And the person was like, no, I'm not leaving. They know what they're doing. I mean, it's dangerous.

Jeremy: Have they not physically left? Have they been Uber-eating for the last 15 months?

Jeff: No, I think they're leaving. They're just not letting the owner in the property, is my understanding. So it's a dicey situation. You don't want to get into a, I changed the locks and prevented them from moving in. And then you get sued for some real stuff. You don't want to be interfering with somebody's tenant right like that. Who knows? Probably go to jail for doing something messed up like that. So it's tough.

I've done that. I've gone through evictions. I've gone through calling the cops and having people removed and all that stuff. I mean, look, few and far between, right, and tens of thousands of reservations, right? These are the horror stories that come up. But it is important to remember that, because if you don't, you got to know, you have to know where the landmines are, and what red flags to look out for, because you get caught up in that pickle if you're not paying attention.

Jeremy: You need to plan for the worst-case scenario. So that is a unique risk to medium-term rentals. Short-term rentals can't happen, like I said earlier. Long-term rentals can happen. So there's unique risks to short-term rentals. Someone comes in on a Friday, leaves on a Sunday, and they rent the place to party. That's pretty much a unique risk to short-term rentals. However, long-term rentals have unique risks to them, too. So it's really just you always need to have all these edge cases, all the specific things that can happen, taken into consideration, and put in as many preventative measures as possible so they don't happen.

And you can do it. I mean, look, there's a million little hacks, right, that people talk about. Do it for 29 days. Get the person to leave. Do another 29-day reservation, right? Don't let them receive mail there in some places. There's a million ways to do it. Collect an extra security deposit. There are a lot of ways to do it. I'm just saying, this sounded like literally my horror story.

Jeff: Been there.

Jeremy: You're like, been there. Been there. Never lived in a house, but sh*t. God, it's a perfect [inaudible]. We went and we're going into a little bit of the darker side. Sorry, sorry.

And I always say this to people, like, yeah, just like in anything, not everything is going to be all sunshine and rainbows. Everything is going to have its nuance and caveats.

But compare the short-term rental life to being a lawyer. Like, what was that point when you said you kind of fell into it haphazardly, but did you love being a lawyer? Or, yeah, tell me kind of what was that migration like from probably a stable corporate job to this world?

Jeff: Yeah, it's a great question. I mean, I actually did like being a lawyer, which is crazy. I wasn't one of those, like, miserable, like, drones going into the office and, like, being a paper vendor. Like, I actually really enjoyed the people that I work with. I enjoyed my life and all of that. But I think that I just didn't see that as a long-term career for me in terms of what I wanted to do for the rest of my life, even though I liked it.

And then I think that what really appealed to me in this industry was the ability to be an entrepreneur, and to create my own work for myself, and create a sense of financial freedom and make decisions on my own, and have no limit to kind of what you can do, right? I was only limited by my own effort in a lot of ways. So that was so appealing.

And then, separately, I just, I love travel and going to new cities. And I love staying in Airbnbs and VRBOs and you name it. Like, I like staying in hotels, too, in different places. But I loved creating, especially in my hometown, I love creating these places for people to have amazing experiences. And I was, like, one of those hosts very, very into curating the list of, okay, when you stay at my house, this is the coffee shop that I like. This is the restaurant that I like. Say hi to this guy when you go there. Tell him you're staying at my place.

Like, that was very much a part of my vacation rental company. It was very, very much based on showing people, LA is a kind of complicated city, and being able to show them a little bit about how to really enjoy it and create those experiences, that part I really loved.

So I didn't get that sense of fulfillment working for a giant bank. It was cool, and I liked parts of it, and it was mentally stimulating, but it wasn't a thing. And I think a lot of people probably who are listening who have had that experience of starting out down this space, it's why a lot of people don't have one property, right? You kind of get the first one, and then all of a sudden you blink, and you got five or ten, and kind of just keep going from there.

Jeremy: You catch the bug. And I put things in comparison. People who get into this, and I think at the conference is a prime example, people who get into short-term rentals and hospitality, they like people. Like, they enjoy the kind of human connection aspect of it, and at the end of the day, you're creating experiences for guests. Like, that's how you win, is you make sure your guests literally have fun, or they enjoy themselves. When they take the Instagram photos, they're getting the likes.

So, that being said, I want to go into, we're both in New York City.

Jeff: Yeah.

Jeremy: Quick question. When you started your business in LA, in Southern California, were you in New York, or did you move out west?

Jeff: So, I was in LA back then. I'm from LA, went to college in New York, and then ended up going back to LA, and so I kind of split my time a little bit between the two, but I was in LA when I started.

Jeremy: Bi-coastal.

Jeff: Bi-coastal, yeah.

Jeremy: Whenever I hear there's so many people in New York and in LA who are, like, quote, unquote, bi-coastal, and I'm like, I don't know how you guys do it. Like, I hate that flight. I hate that. Like, if you're flying west, it's like a six-hour flight because of the whole jet stream thing, but.

Jeff: Yeah, it's even worse when you're flying east, and it's like nine hours of the time change. You just lose the whole day.

Jeremy: Oh, you've got to do the red eye. You have to do the red eye, or you literally lose an entire day.

But, yeah, so that being said, we're both in New York. New York passed strict regulations, and then the thing is, like, I think there was a little bit of a misconception that these rules in New York were new. New York has had rules for a while, but they just, like, added steroids to the rules. Like, before, you wouldn't really have, like, a cop showing up at your door if you had been reported or they had seen online. Before, they didn't literally ban Airbnb from collecting payments. So now, if you do a short-term rental in New York, you don't have a permit, New York City, listed on Airbnb. Like, Airbnb is effectively illegal in New York, and some of the strictest regulations we've seen.

So, kind of, what has been your takeaway? And, actually, I want to dive into a couple of the funnier parts of the New York short-term rental regulation rules. But, yeah, what has been kind of your, you're in New York. Have you talked to hosts? I mean, you probably engage with hosts here a lot. I mean, that's where you're from, and you have such a big collective at this point. But, yeah, what have your conversations with these New York hosts been like?

Jeff: Yeah, I mean, I think you're right. It's not brand new what's happening, but the two big takeaways for me, and this is definitely the less exciting part, and I'll let you tell the funny parts of it, but the two big takeaways from here.

One, the dangerous precedent that this could set, in that the regulations apply to the platform itself. So the fact that Airbnb itself can be fined for what's going on, and that they're actually restricting what Airbnb is doing, that sets a very dangerous potential precedent for regulation in future cities. So that's kind of one takeaway.

The second takeaway is that there's this thing called the Communications Decency Act, which is Section 420, and the whole concept behind that is, if you have a marketplace or a platform or a website, so think of like Craigslist or Facebook or whatever, right? There is a protection that is given to these platforms and marketplaces as places for people to either share or sell to each other or whatever, right? And there's this section that federally protects anything that happens on it, protects the platform itself from anything that happens on the platform.

So one of the reasons why Craigslist can exist is because if somebody sells you something and it's not what they said it is, it's not Craigslist that's responsible, they're just the platform, right? Or if somebody posts something and it's libel or slander or defamation, and it's on Facebook, Facebook isn't on the hook just because they created something to use it.

So the fact that this actually attacks Airbnb, I think is super interesting, because the defense historically by Airbnb and other platforms has been, hey, Communications Decency Act, like this doesn't apply. We're just a platform. We're staying out of it. And this is the first time that I've seen the city say, and the judge say, you know what, actually, I don't know if that's true here. And so that also kind of is a potential big kind of red flag for me.

And then the last thing, I think the third takeaway, is just this happened in LA. Everybody was kind of like, this will never happen. This will never happen. They're going back and forth on the regulations. And then one day the regulations went through. And so I think that it really, really, really emphasizes the fact that if you're in the space, you're listening to this podcast, you should be involved in your local alliance, [inaudible], municipality, regulations, making, lobbying efforts, whatever you can do, whether that's joining responsibly, or figuring out what your local group is. If you are not involved, it will happen when you're not paying attention. So I think that that's kind of the third one for me.

Jeremy: Yeah, I think my takeaways for me, well, first of all, I'm going to start with like the funniest one, and I think it's some of the most crony, cronyism aspect of things.

But New York is claiming that this is because of the housing crisis, which, you can read tons of articles online about how regulations the city has imposed on landlords has literally encouraged landlords to not rent out their own properties, kind of for some of the reasons we've talked about earlier, like tenant rights, rent control, like they'd rather not have a rent controlled tenant in there. So there's like tens of thousands of apartments in New York that landlords are choosing not to rent out rather than have them be subject to New York City's tenant landlord rules.

But second, you can get a permit to do a homestay. So like, let's say, for example, I have, [inaudible], I have an apartment in DUMBO. It's a one bedroom with an office. I could probably turn that office into a bedroom. However, according to the New York rules, that guest would not be able to lock their door. So they could come, they could stay, but they wouldn't be able to lock their door. I, as the host, would not be able to lock my door. So I have my bedroom. I would have to keep my door unlocked.

I don't know what argument you could possibly make that that is somehow like helping the housing market. I mean, New York, it's historically a corrupt place, and who has the most to gain with these rules? New York rental prices are still hitting all time highs, regardless of the ban on short-term rentals. However, hotels have a lot to gain.

So I was reading an article about the expected price increases of hotel rooms because of these new short-term rental regulations. And it's like pretty insane. It's like before, they expected a 6% year over year increase in prices. Now they're expecting a 13% year over year. So it was like, imagine how much money Hyatt, we're going to actually get into Hyatt in a little bit and something they've done recently, but imagine how much they're willing to spend, and not because of how much they have to gain having this new pricing power and not having the competition of short-term rental.

So it's like, if anyone could give me a good reason why a host can't lock their own bedroom. If someone's sleeping on their couch, I have my couch right behind. My cat was on it earlier. I feel like I should, if I'm renting out my couch for a weekend, maybe there's like a big event, I can make a few hundred bucks renting out my couch. I'd want to be able to lock my door. I don't think there's anything inhumane about locking your own door.

Jeff: So I don't disagree. I think that there's a lot of nonsensical stuff in here. And when you start thinking about, I don't like to think about it, but you're putting people in potentially bad situations by forcing them to do that, right? And that's not really what I think the industry has become, or what it even necessarily should have started as.

I mean, you could make the argument that if Airbnb and Chesky, they started this with the concept of somebody should be sleeping on your air mattress in your living room without a locked door, but that's not really what the vacation rental industry is, and that's not really what things have become. So I think nonsensical legislation is frightening. So I feel you.

Jeremy: Yeah. Well, I think they're showing their true colors. And like that point was the most, is like the most evident aspect. They're like, are we really in it now to help people like have their cost of living down? No, we're going to act like that's the reason, but really a large part of this is we're helping out Hyatt.

And then the point I just want to say, I do like, so I personally do not have any Airbnbs in New York. However, I do have like mentees who do have properties in New York, and they've gotten them, either they had them before New York started being really strict, or maybe they got them during. And what I told them and what they've done is like, all right, just make sure that whatever property you get, it can be a 30 day, like it is underwritten to be a killer 30 day minimum rental.

And there are specific things you can do to be a highly desired 30 day rent, but one of them is you got to make sure you have in-unit washer and dryer. As someone who's staying for two, three, four months really cares about that. You got to make sure you have like a remote work setup, meaning you have a desk, you have a monitor. So a tech worker who's bi-coastal, like Jeff, wants to stay in New York four months of the year, they're going to pick a place where they can pull their laptop out and plug it into a monitor. So like things like that can set yourself up for success, even in the worst case scenario.

So that being said, let's talk about Hyatt. Jeff actually, he filled me in on a lot of the current events before the show, but we were talking about the move that Hyatt has made into vacation rentals. So yeah, fill me in on that.

Jeff: Yeah. I mean, look, I think it's in line with kind of what Marriott started to do and what the hotel industry started to do in general. I mean, there's a big pivot to move from traditional hotels into the vacation rental space, because the line is pretty thin, especially when you start talking about apartment buildings. The difference between a hotel or a boutique hotel and a vacation rental is pretty narrow. You start talking about a lot of people that are out there buying motels, then renovating them and turning them into short-term rentals. In a building, a short-term rental and a hotel room are pretty much differentiated by a kitchen.

So I think it makes sense for Hyatt to get into the space. I think that I saw my first, my personal first Hyatt House building this week, which was pretty nuts. And I'm not sure like what part of the rollout that that is, but I mean, this is something that's been coming for a long time.

And I think, just being aware that not only, like you were talking about, are they focused on getting an extra 7% increase on year-over-year hotel room rental rates, they're also really focused on capturing the part of the short-term rental industry's growth that they can. I mean, they're uniquely positioned, and again, like not to tie it back to HostGPO, but in this very unique like scenario, if you are an individual operator and you have to compete with Hyatt's sheet pricing and the pricing that they get to furnish their unit, like that is not a fair balance.

And so I think when you look at kind of what is out there and what the hotel industry is trying to do, I think having your eyes open and planning what you can do to differentiate from that, and how you can compete with that, is super important now more than ever.

Jeremy: And so you're saying they are getting into, it's called a Hyatt House. So essentially it was just, it was a vacation house, or was it a boutique hotel?

Jeff: Well, Hyatt House is like their extended stay hotels, and I'm not sure how long that kind of has been going on, but they recently announced they're coming back into the vacation rental world with, I think they're calling it like Hyatt Homes and Hideaways. And it's just, I just happened to see my first Hyatt House this last week.

But I mean, look, I think the big takeaway is that they are very much focused on the short-term rental industry, and they're focused on trying to break into the space now in a different way than they did before. I think they tried to step into the space a handful of years back, couldn't figure out exactly how to do it. And now they're kind of coming into, and that was through their, I think the Hyatt House, which are their extended stay hotels that have kitchens, et cetera. I think they're doubling down on that effort.

And so I think it's just going to be interesting to see how the hotel industry starts to break into the space more and more, and just being aware of the fact that the difference between a short-term rental and a hotel is not that much.

Jeremy: I think it's so funny. And there's a lot of hype in boutique hotels. I think it's kind of like that, seen as like that sexy thing in short-term rentals.

Jeff: Sure.

Jeremy: And also for a lot of operators, like as myself, it's like, all right, keep leveling upward, and it seems like that natural next step. But really, I mean, a boutique hotel, the difference between a boutique hotel and a motel is not as much as you would think. It's effectively branding a motel and calling it a boutique hotel. I listened to a lot of podcasts myself, and people talk about boutique hotels, and it's like, is this just a glorified motel? So I don't know if you agree or disagree with that.

Jeff: Yeah. I mean, I think it's hard to argue it. I mean, I think that you probably get people blue in the face saying the opposite sometimes. And there's a lot more intentionality and a lot more luxury. And I think if you're calling something a boutique hotel, like, I don't know what, what is artisanal cheese? Like I have no idea. Isn't it just cheese with branding?

I mean, I think that these words don't really necessarily mean the same thing that they used to. So same thing here, like what is a short-term rental? Like what is a vacation rental? Where is it? What, where does, what's the difference? And why isn't it just a hotel room with a kitchen?

Jeremy: Exactly. So obviously people talk about cities are out to get us. I mean, it's evident. Hyatt, Marriott, again, New York City, there's no surprise that this happens. Like the hotels make a killing in New York. They make a killing in Los Angeles. And obviously they're seeing the growth of short-term rentals as impending on, or is it something that might be a detriment to their core business, being hotel rooms with no kitchens, but now they're trying to move into growing space.

So I want to, how are you and how's HostGPO helping to help hosts compete with hotels?

Jeff: Yeah. I mean, look, first of all, we're leveling the playing field, right? I mean, that's right out of the gate. You as a smaller operator, property management company owner, operator, you can access pricing and products that you wouldn't be able to access otherwise.

And it's not just that we have major discounts that are better than the trade discounts with West Elm and Williams Sonoma and stuff like that. Like that stuff is all great. It's also that you get access to products like, okay, like a great example of that is we partner with Helix. And if you're familiar with Helix, the mattress company, they're actually based like literally right next to where you are, I think is their headquarters. Everybody's in that little area of DUMBO over there. But I think that, great place to be, but they're a great mattress company.

And we have an amazing discount with them on their retail mattress. But what's really cool is, what HostGPO does is we get access to products that you cannot buy through Helix otherwise, because they're not meant for retail consumers. They're meant for operators and businesses. So they have a hospitality mattress that's exclusively distributed through HostGPO. And it's essentially their normal mattress, but it doesn't come in fancy packaging. And because it doesn't come in fancy packaging, because as an operator, like you don't really care, you're going to open it up, you're going to put it on the bed, and that's what it's there for, right?

So because we eliminate the packaging with them, and because they manufacture it for hospitality use, you're getting the mattress from a reputable mattress company. It's extremely comfortable. It's made to work, all these things. And they're getting it at an insane discount, like pricing that's beyond competitive, beyond what the Amazon Zinus pricing is, that a lot of people kind of go for. They're buying these foam mattresses, they just don't know any better. But you can have such a better quality mattress at the same price or better by going through something like HostGPO. We're opening up the lines of access.

Same thing with Standard Textile, right? That's our linen partner. And it's like, yeah, Marriott and Hyatt and Hilton know that that's the best linen company, right? They've figured it out. You think that they haven't done their research and figured out who's making the best linen that can go through the most washes, that are priced the most competitively? They've done all of that, and they have all these little things too. I can go really, really deep, so I'll stop myself.

But like the best example of this is I can't tell you how many HostGPO members have signed up and they start talking about, or like you go to like the Facebook groups and you see people, like they're literally sewing labels into their sheets so that their cleaning teams can tell queens and kings and twins apart. They're literally like sewing thread in. And they're not wrong. Like you came up with something brilliant, but this linen company's been doing that for 80 years, and it just comes standard on most of their lines. Like they have like a color coordinated thread that runs around the inside. They come pre-laundered, with ties, and don't have to do it.

So again, like we're bringing these specialized products that aren't even accessible to your normal average consumer, and removing the middleman, and allowing you to just get access to them if you couldn't get access otherwise. Or if you were going to buy them on Amazon, we usually have the same products that a lot of people are buying on Amazon, just cheaper.

So that's what we're doing. We're leveling the playing field and allowing people to compete with the large hotels, and trying to help educate our membership base on, like, look, you can buy some furniture off of Amazon, right? You can get a coffee table. But the reason you shouldn't do that is because that coffee table is going to come and the corners are going to start holding up, right? And it's going to last for eight months until it's just totally destroyed. Whereas if you bought like a real coffee table at a big discount from a brand that had contract grade furniture, that thing's going to last you a lot longer.

And these are the types of furniture, the types of supplies, the types of commercial grade, contract grade products that hotels have access to that just aren't available to your regular vacation rental host. So we're trying to bring that, and the amount of research and thought and testing and product analysis that goes into curating what those brands are together, to kind of provide that really, really competitive pricing to this entire industry, to allow people to compete with the enormous hotels.

Sorry, I was a little bit of a, I got on my pedestal a little bit there.

Jeremy: I just, I love that energy. I can feel it.

Jeff: I just want to help. I did this, I did all the wrong things. I did the IKEA checkout with 48 shopping carts, and I tried 30 different lines of linens, and it was at a conference where I'm like, this is something that should exist for our space. And so we've really been on a mission to do it.

And it's amazing how big the group has gotten over the last four years. And we're over 300,000 units sign up, which is insane. But it's just, yeah, it's something that we're really passionate about here. And like our whole team, we're all hosts. And like we love getting in with other people that are operating units and trying to help figure out how we can make it easier and make your life easier and save you money.

Jeremy: So I'm a numbers guy. So first question, how much for the Helix mattress?

Jeff: So I have to say, we cannot publicly disclose the pricing. It is confidential. So that being said, there is a free three-month trial where you can log in and see all the pricing, get product samples, free samples of stuff, look around and figure out what it is and see what the pricing is. I can tell you that it is probably about 60%, 65% less expensive than what you would expect-ish.

Jeremy: Got it. So I'm not going to give my guess, or maybe give me the wink, wink or something. But that's interesting.

So yeah, what numbers can you give? Like how many, you said you have 300,000. Is it 300,000 hosts on the platform?

Jeff: Units.

Jeremy: Units. Yeah. So, yeah, what does that mean?

Jeff: I mean, I can tell you like, well, some of our members are really, really, really big vacation rental companies, with a couple.

Jeremy: So units is like listings, like units is properties.

Jeff: Exactly. So like.

Jeremy: So some people have two, three, 400, 500.

Jeff: Yeah. Or more. And then our smaller members can have three or five or 10, right? And that kind of is the range, but it gives you an idea about how many people have signed up and are interested in what we have, and understanding that the bigger the group gets, the better the deals get, the more we align together and kind of like purchase together, the better we can go out and negotiate new partnerships.

But there's some really fun data that we have recently from the last, I think, I don't know, six months or a year or something like that. It's like the average host is saving 39.4% off of retail pricing by going through a GPO. And it's like people are saving close to $13,000 a year on all of their stuff as members, which is pretty cool.

Jeremy: And I'm curious, how does it, cause a lot of times like designers get design discounts in places like Wayfair. How does the HostGPO discount compare to like the interior designer discount?

Jeff: It's always better. We have the guaranteed best pricing. There's no other company, designer, anybody else that partners with any of our brands, including any individual vacation rental company, that has better pricing with our brands than we do. It's something that we put into all of our contracts to make sure of.

And it's the only way that we can, we think it's worth it. Look, if you can go to a website and put in your email address and get a 15% off your first order, there's no way we're doing a deal where we're just going to get you 15% off. So again, we always focus on really, really, really competitive pricing. And if you're an interior designer, like our pricing is way better.

Jeremy: So you have like your, and you probably have your, does every user on the platform, like if I'm, let's say I'm like launching 10 houses at the same time versus like launching one. Like I'm looking at houses today, even, you know, people, high interest rates, high prices. Like I am on Zillow every day. I'm trying to find deals. But that being said, I buy my next house. Is it best to like do multiple at the same time, or kind of tell me like, how does it work? Like if I'm getting my next house, and disclaimer, like I'm not a HostGPO user, so like the next deal I do, but how would it work for me? And what could I expect?

Jeff: Yeah. I mean, look, if you're getting a new property, it's a no brainer, especially because we have a free interior design program, which is pretty cool. So we partner with Williams Sonoma and their family of brands. We're like, they'll do the interior design of the home for you for free. I mean, that's huge by itself.

Jeremy: I don't know if you guys, we have like kind of like our internal team, interior design team, and we offer folk like mentees we work with very, very competitive rates. People at the conference, I think they were charging like 10 bucks a square foot or something. And granted, they were extremely good designers, like extremely good. Like don't get me wrong. Sometimes you need a designer. The ROI is there.

Jeff: For sure.

Jeremy: Yeah. But free, free design is crazy. So that's really interesting. I hadn't heard of that before.

Jeff: Yeah. It's a cool program.

Jeremy: How does that work?

Jeff: It's a really cool program. The two best parts about it are, it's really great if you're doing an entire home. It doesn't make sense if you're doing like an apartment or something, but if you're doing a full home.

And the way that it works is we've partnered with Williams Sonoma, so it's Pottery Barn and West Elm, Rejuvenation, Williams Sonoma, et cetera, to one, have a team of designers, senior designers there who can help, you can send your mood board, et cetera. We have somebody on our team that'll work with you. But we also have educated them and worked with them to develop like the things that, when you're a short-term rental host, like, hey, like opt for a pullout bed, potentially, if that's the kind of room that you're going in. Or don't have a full bed, like even if it fits in the room, like you probably want two twins or a queen, if you can squeeze it, depending on it. It's like those types of things, where to put contract grade furniture, where to spend the most money, right? We've worked to try to develop short-term rental specific design. And also like, like you were mentioning earlier, if you're doing a midterm rental, what kinds of things do you want to think about there versus your short-term rental? So a lot of that thought is put into it. So, which is great. And they help with the floor plan, the layout, et cetera.

The other thing that's really cool about it is you can do a consolidated delivery. So what's amazing there is let's say you order an entire home's worth of furniture, and rather than order it from whatever, you know, Alibaba, whatever you're going to order from, and have to put it together with a hundred pieces of it and you're like screwing it forever, et cetera, or having a whole team of people there, you can pay a flat rate for them to come consolidate the delivery in the warehouse, you schedule it, and then they will come and build it and install it for you. And it's extremely cost-effective to do this.

So if you're doing a full home, especially [inaudible], it doesn't mean you have to get every single thing from them, right? Like I still think you should probably get the Helix mattress, right? That's my personal belief in most properties. But there is a real value in that free service. And we've had hundreds of people go through the program that love it. So that is a cool thing that we offer.

So you mentioned signing up for a new property, but to your second question of like, do you need to do 10 properties at once? No, not really. I mean, you can save the same thing on one chair that you would save on buying 40 chairs. But sometimes if you're doing something like setting up 10 properties, we can help educate you on when is the right time for you to actually stop buying sheet sets, like a sheet set that comes in a pack with like two pillowcases and a fitted sheet and a flat sheet. And maybe your business is at a point where like, maybe you're not even doing fitted sheets anymore, maybe you're just buying boxes of flat sheets and you're doing triple sheeting. That's like a big scaling thing that a lot of people get to.

Or maybe you're at the point of your business where you want to be buying boxes of pillowcases because you realize that you have 15, 20 units and the number one thing that gets damaged is the mascara on the pillowcase. And so those are the ones that usually end up having to be replaced the most often. And so you realize that you can just grab from your inventory of pillowcases rather than having to break apart sheet sets, and then you can't even figure out like, wait, is this a fitted sheet? Is this a flat sheet? Like my warehouse looks insane.

So again, it might make sense if we're doing 10 properties to start shopping in that way. But regardless, there's kind of something here for everybody.

Jeremy: So how does it work? So I obviously get the next property. I go to the website. I'm assuming I put in, yeah, walk me through, what does that user experience for me look like?

Jeff: So you go to HostGPO.com, you sign up, you start your three month free trial. I highly recommend doing a member advisory call. So those are free calls that we do. Our team, again, like we're all hosts. We've worked at big vacation rental companies, or a lot of our team just has like five or 10. A lot of our team is just members who over the years have signed up and been like, I want to help other people do this too. And so you get to talk to somebody.

And what's cool is that once you log in, everything is instant. Like there is no, like you're not buying from us, you are buying from the brands themselves. So for example, let's say you wanted to order a Helix mattress. You can either, it'll be like, you go to the Helix page and it'll tell you what our discount is, you request a coupon code, and then you go to the Helix site and drop that coupon code in and you check out. Crate and Barrel, CB2, same thing. Or you can go to our site, some of our brands that don't have e-commerce website, like Standard Textile, you literally just check out on our site.

So the site says all the different brands that we partner with. Staples, Ace Hardware, if you're in person, you can go to Ace Hardware and like get a discount at the register. Or Google Nest, if you're buying Nest thermostats or Wi-Fi, whatever you're buying from them, regardless of what it is, you're able to transact immediately with those brands and you can see what the discounts are.

And if you want to talk to a member advisor on our team, again, it's free and I highly recommend doing it. You can get free samples. If you're like, hey, what shampoos should I try out? We can get you a couple of different shampoos that you can like actually feel, or a couple of different sheet sets that you can like understand which ones are the ones that are going to make sense for your property and make sure that you like it first, so you're not just kind of flying blind.

So you'll sign up, you'll go through a three month trial, and then we do charge an annual membership fee, but it's super low. If you have one to 10 properties, it's $120 a year total. So if you have 10 properties, it's $120 a year. And the idea behind that is that's how we pass on the discount. I mean, they're the guaranteed best discounts, and we have tens of thousands of members that are paying a couple hundred bucks each. And that makes us exist. It's kind of like your membership too.

Jeremy: Awesome. So this is all great. So everybody, I recommend, go to HostGPO, go HostGPO.com.

Jeff: HostGPO.com.

Jeremy: Go to HostGPO, check it out. It seems like you guys have a lot of information on your website.

So yeah, I always, when I wrap this up, I like to ask the question, what is your short-term rental pro tip for someone either starting or scaling in 2023? What is the most important thing, tangible tip you have for them to succeed?

Jeff: I mean, other than don't let somebody stay in your place for more than six months in LA, I would say.

Jeremy: Exactly.

Jeff: Other than that, no six months in New York or LA. I mean, I don't know. This is, okay. So also, every time I get asked this question, I try to come up with a different one. So my tip this time would be do the right thing. Do the right thing.

And so what I mean by that is that philosophy is like, not just don't rent out an illegal property in the back of your house that doesn't have a permit because you're going to end up with crazy headaches, or don't just, make sure that you're in compliance with the local regulations, et cetera. But do the right thing in terms of like creating an experience that is actually what you're trying to sell.

I think a lot of people, especially the newer folks who get into this industry, it's like they're kind of dipping their toe in it, and I think that they think, all right, well, like, I don't know what's going to happen here. I don't know if this is going to work. Like, I'm just going to go grab like this couch from my aunt's house, and here's my posters from my college dorm room, and here's my whatever. And they kind of throw it together to see if this is going to work.

And I think that doing the right thing in this industry is, it's not just about doing things on board with your neighbors and making sure that you're setting up something long-term. I mean, it's a lot of work to do this, so you can't just kind of like scrap it together. But be intentional about like what type of property you're setting up. Try to create these guest experiences. They're great. Create a beautifully designed or like really intentional property for somebody. Maybe it doesn't have to be like luxury, but maybe it really should be like geared towards the specific person, and do right by them, by that guest, because those people are succeeding right now.

Those people are always going to win, because not everybody's going to go that extra mile to do it. So if you do the right thing in this industry, like you're way more likely to succeed than, I think, the folks that are kind of scrapping things together and just kind of trying to wing it. So do the right thing.

Jeremy: Yeah. Sometimes I like to, before the show, just show my listings. So then when something's like, yeah, that's, I mean, 2023, it's about designing and setting up the right properties and doing it very well. Like those are the, getting into that 75th, 90th percentile is where I like to live, and it's like, in a way, kind of like where you need to live now.

And it's actually BNBCalc, we're going to release a feature where you can see where the property stacks up, or what different percentiles look like. So if you're 90th percent, what's the income there? If you're 50th percent, if you're 50th and below right now, like it's kind of, it might be harder, it might definitely. And you can tell, you look at those listings and they look like sh*t. They just don't look, they weren't intentional.

Jeff: And it's the crazy thing. It's not just like, people think that this is just luxury, right? I'm not doing the luxury. Look, there are things that you can do that are the right thing. Like when your guest shows up and your property sleeps eight people, you can't just have eight glasses and like eight forks, and you can't expect that your guest is going to be there and like do the dishes after every time they eat, because you didn't want to buy another eight plates. Like that's not the right thing. And I'm not saying like, be like, I'm saying like, create a great experience for people, like give them what they want and what they expect. They're not going to look inside the drawers of your listing to see how many plates you have. And one of those glasses is going to break, and then all of a sudden you're going to have somebody like, what, like drinking out of their hands or drinking out of a mug. Like, do the right thing for the guests.

So if you will, I don't know, you show your listing sometimes at the beginning of the properties. If I ever come back on again, we do a thing called Fix My Listing, where we'll look at your listing and we'll tell you what we think. We have a couple of designers on our team too. So they're always really fun. If you ever want to do that in the future, it's always a good time.

Jeremy: Yeah. And I usually do it before, so then when someone is talking about like how to do the right thing and being intentional, they like use me as an example and they gas me up. That's honestly, that's actually why I do the podcast, is so people can gas up my listing. But if someone tells me how to do them better too, I'm all for that, because I'm intentional about me.

Like right now, for example, we are adding hot tubs. I'm trying to get, I'm talking to you, I mean, I don't know if you guys do hot tubs, but I'm trying to get like a bulk discount and add four hot tubs. I'm actually talking to my neighbors too, like [inaudible] hot tubs, so we can have like a bulk discount and maybe get like 30% off five hot tubs.

But continually leveling up your listing, like not just taking that profit that you make, then go spending it on a Maserati, I don't know why I chose Maserati there, but spending or reinvesting it to make that experience more attractive to guests moving forward. So I totally second everything you say.

Folk want to follow your journey. Seems like you've honestly been an OG in the short-term rental space. Like I feel like I'm an early adopter, and I'm really kind of like beginning at COVID time is really when I dove into it. You've been almost 10 years, so I'm sure that you've had an amazing, amazing time and really seen how this space has evolved, and are really at this point, honestly, one of the true OGs. So how could folk follow you and your story, and then how could they get in touch with HostGPO?

Jeff: Yeah. So me personally, I'm a big LinkedIn guy. So feel free to add me on LinkedIn if you're listening. And then generally speaking, our social media, at HostGPO, we're at HostGPO everywhere. And definitely recommend following us, especially on like Instagram there, because we do a lot of cool like member transformations. We'll talk to our members, we showcase what they're doing. And it's a really great place to get ideas for your rentals too. And we try to drop a lot of like pro tips in there as well.

Jeremy: Awesome. Well, Jeff, thank you so much for coming today.

Jeff: Yeah, of course. And thanks for having me, and really looking forward to welcoming you to the HostGPO community too.

Jeremy: Beautiful. Yeah, we'll stay on after the call, we'll talk, but yeah.

Thank you, everyone, for joining as always. Stay tuned until next time. Give this podcast a follow. Message me. I want to hear. At the conference, it was so great hearing what people liked me talking about, and guests I'm having on. So send me a message and just let me know what you want me to talk about. And your wish is my command.

Jeff: And just so people know, when you leave a review on the podcast, it's like somebody leaving a review in your Airbnb. Five stars means that you took something away from it. Anything less than that is, this ruined your life in some way. So make sure that you're leaving a review. Also, it makes a big difference for the podcast itself.

Jeremy: Exactly. No, it really does. I'm learning all about podcast SEO, similar to Airbnb SEO. So please, those reviews really do matter. So I appreciate all that in advance. And as always guys, stay tuned until next time.