Jamie Lane on why STR RevPAR fell about 6% in 2023

Quick Summary

Jamie's framing is that the past four years were a supply story. Listings fell about 20% in 2020, demand had fully recovered by April 2021 while supply still hadn't, and that mismatch is what pushed occupancy to record highs.

The 6% RevPAR decline he reports for 2023 is the other side of it. His pre-pandemic benchmarks are the more durable part, since normal was RevPAR growth of 3 to 4% a year, built on occupancy up 1 to 2% and prices up 2 to 3%, which makes the 20% jump in 2021 the abnormal one. Market level occupancy and ADR history live in BNBCalc Markets.

Key Points

• 2023 was the first year in AirDNA's data, which goes back to 2015, that RevPAR fell year over year. Jamie puts the drop at about 6%, since falling occupancy left hosts with less pricing power and average daily rates came down some. Even so, he says revenue per available listing was still 17 to 18% above pre-pandemic levels, with occupancy about on par and ADRs significantly higher.
• The pandemic years were a supply story more than a demand one. Listings dropped about 20% in 2020 as second home owners took their places back and urban short term rental companies went under, and by April 2021 demand had fully recovered while supply was still 20% down. That is what pushed occupancy to record highs, and RevPAR shot up 20% that year, which he calls abnormal.
• His pre-pandemic normal is the number worth writing down. RevPAR grew about 3 to 4% a year, made up of occupancy rising a percent or two as more hosts picked up dynamic pricing tools, plus hosts raising prices 2 or 3%.
• Speaking in early 2024, he forecast supply and demand roughly back in line after four years of disequilibrium, with occupancy about flat, average daily rates up about 2%, and RevPAR up about 1 to 2%. Treat that as his forecast at the time rather than a settled outcome. He also said new bookings had been running about 10% ahead year over year over the previous couple of months.
• Fewer investors were coming in, and he names why. Home values sat at all time highs, interest rates were 6.5 to 7%, and RevPAR was declining, so fewer deals penciled than two years earlier. Fewer new listings arrived in 2023 than in 2022, and he expected 2024 to come in lower again.
• On comps, his point is that a rental calculator finds comps, averages their historical performance and hands you a number, when the earnings behind those comps can vary enormously. The diligence is going through each one, throwing out the ones that aren't relevant to your property, overweighting the good ones, and coming up with your own average.
• Jeremy, who says he runs 25 properties and manages some of them for other owners, walks through a rural lake market where supply went from about 20 listings to 80 in two or three years and the market grade came back at about 31 out of 100. One owner he manages for sits eighth of 80, while three houses Jeremy owns take the top three spots and run about $50,000 a year ahead, which he credits to pricing, repeat guests who book direct, and what the first five photos show.

Full Transcript

Listen to the full episode on Apple Podcasts, Spotify, or YouTube.

Jeremy: We are live with the Short-Term Rental Pros Podcast. And today we are with Jamie, who probably knows more about everything that is going on in all the different markets in the country, as well as just probably the Airbnb ecosystem as a whole, than anybody else in the world. So you guys are in for an absolute treat today.

Jamie is the Chief Economist at AirDNA and someone I've been following for a long time and pestered a little bit to get on here. So I'm excited that he finally took the bait and we're going on today.

So Jamie, thank you so much for joining. And I would love your story on how you got into short-term rentals.

Jamie: Awesome, Jeremy. Thank you. So my journey into short-term rental started quite a while ago. I think it was maybe 2008, 2009, where I started hosting and traveling on couchsurfing. So way back in the day.

I joined a hospitality research group called PKF in 2010, where I was focused on analyzing and forecasting the hotel industry. And as part of that, began hosting on Airbnb in, I think, 2012, had a private room in my house, ended up investing in some properties with my parents throughout Maine.

And then really, as part of my job at PKF Hospitality Research, which was eventually acquired by CBRE, we became really interested in what was happening in the short-term rental industry, primarily of how it was impacting hotels. Because that's what our job was. My job was to forecast the hotel industry, and became one of the first subscribers of AirDNA back in 2015, after it was launched.

And then fast forward to 2020, joined as the VP of Research to just be able to dig into the data and provide insights to our clients.

Jeremy: Awesome. So I want to touch on something. I'm sure this is something that people have asked you a bunch of times. But when I really started going through the web of your content and things that you've reported on, was when a viral tweet came out. I'd say at this time, what was probably like 8 or 9, 10 months ago, about the sudden collapse of average daily rates and RevPAR, or RevPAL, Revenue Per Available Listing, at properties, short-term rental properties, in 10, 20 major metros.

Can you tell us about that firestorm there of that tweet, which wasn't your tweet, the initial one, and recited a different data provider from AirDNA. And then you went back at them with your data. So yeah, I'm curious, what was that all about? And then frankly, you were thrown into the limelight there. So what was that experience like?

Jamie: Yeah, it was funny. There's an analyst, Nick Early, that put out this tweet. And I'd actually seen his analysis the day before. Someone had forwarded to me that he had put out on his blog, analyzing these markets and the collapse in short-term rental revenues that they had seen.

So being the data nerd that I am, I immediately went in our data set to see if I could replicate what he had done, and essentially tried it like 20 different ways. Like if I added all these different filters, just looked at entire homes, just looked at large property managers, just looked at really any different way I could cut the data, and I couldn't replicate it.

Went into and talked with some of our other colleagues across the sort of short-term rental industry just to see what they were seeing in their own properties. They weren't seeing it. So like out of my head that he must have just done something wrong in the analysis. And that was on Monday.

Tuesday, he sent out the tweet. I sort of saw it around 4 p.m. and started doing some analysis. And then later that evening, I mean, essentially it replicated in the exact same way, trying to do the analysis, and just put it out there that I know this and we've gone through our data set. We've got a lot of experience doing this type of analysis. And yes, we're seeing a decline in RevPAR, RevPAL happening. And in the markets that he had called out, it was about a 3% decline that we were seeing, where he had called out a 40% decline.

And I just wanted to show people that. And because the tweet at that point had generated 30 million views, it eventually got up to 35, 36 million views. So clearly went viral.

Jeremy: I heard it from so many people. Yeah, I don't mean for that to be the first thing to touch on, I'm sure.

Jamie: Yeah, I know it was. It was a bit traumatizing. I actually lost my voice that week. We did so many media interviews about it.

But it also caused, I feel like, a lot of damage. A lot of property managers, owners, investors sort of reached out that their homeowners were freaking out that there was a collapse in this industry, that they needed to sell their property and get out while they still could. And where they were able to show them sort of the counterpoint from AirDNA of like, no, this isn't happening, and that the data really ended up being helpful, sort of calming the storm.

And I think just about every major media organization, yeah, they reported on sort of Nick's viral tweet, but they also provided sort of the counterpoint that we provided, that it wasn't probably actually happening.

Jeremy: And I think it really cemented you guys as the industry standard for market, or just what's going on, what's going on in the world of short-term rentals. So question, what's going on?

Jamie: Yeah. So it's definitely been a tough year. So we've been collecting data since 2015. So going on nine years now of reporting data on U.S. short-term rental performance and now global performance. And this was, 2023 was the first year that we actually saw a decline, year-over-year decline in RevPAR. And that's the average amount of revenue that a listing is earning over the course of the year.

So, but there's a lot of factors that sort of go into that. We saw so much volatility over the past four years with the pandemic. It was really a supply-driven surge in occupancy. So actually in 2020, we saw a 20% decrease in listings. And people that had second homes actually wanted to start using those second homes. They had a newfound ability to work, live and work remote. We saw urban short-term rental companies sort of go out of business. So there was a big decrease in the available short-term rental listings.

And then you fast forward a few months later, sort of after the onset of the pandemic, we saw demand really start coming back quickly. By April of 2021, demand was fully recovered to pre-pandemic levels. And there's still 20% fewer listings out there. So that pushed occupancy to record highs in 2021. And we've been slowly coming off of those highs.

And in 2023, the declines in occupancy meant that hosts had less pricing power. We saw some decrease in average daily rates as well. And that pushed RevPAR down about 6% for the year. So not ideal in terms of, and we'd all like to make more money and continue to make more money as hosts, but we're still 17, 18% higher in terms of revenue per available listing from pre-pandemic levels. We're about on par on pre-pandemic levels of occupancy and ADRs are significantly higher. So overall things are still good. They're just not as good as they were sort of during the highs of 2021.

Jeremy: Gotcha. Totally. So I guess what would have been a normal increase in RevPAR leading up to 2019, 2020? What would have been like a pre-pandemic norm, like 5% increase a year? What would that look like?

Jamie: Yeah. Normal is about three or 4%.

Jeremy: Got it.

Jamie: So we had been seeing in the industry sort of, and getting more professional people using dynamic pricing softwares, using tools to help them sort of manage rates, manage occupancy effectively. We'd been seeing occupancy increase about a percent or two per year. We generally see people raise their prices two or 3% per year. So anywhere from three to 4% increases in RevPAR on an annual basis was about average. And then in 2021, it shot up 20%. And that was abnormal.

Jeremy: Gotcha. So I guess that's where we've been, but I guess where are we going? Are we reverting to the norm where we can expect two or 3% RevPAR increases per year? I saw one of your recent posts about supply and demand, because ultimately that's how you forecast, right? You look at incoming supply relative to incoming demand. So what are your thoughts or your predictions? What's your crystal ball telling us?

Jamie: Yeah. And our expectation is after four years of, call it disequilibrium, like supply growing faster than demand or demand growing faster than supply, 2024, we expect supply and demand to roughly be in line. We do expect fewer new listings coming in in 2024 than came in in 2023. And that's fewer than came in in 2022. So supply growth is slowing.

For existing hosts, that's a good thing. But for investors, there's a reason why, and there's fewer investors coming in. The sort of math of short-term rental investment doesn't look as good as it did two years ago. And home values are still at all-time highs. We're still at 6.5%, 7% interest rates. RevPARs are declining. So you look at sort of average investability of just how many deals actually pencil, and it's definitely fewer than two years ago. So we are seeing some slowdown investment. That means fewer and lower supply growth going forward.

Demand growth, the other side of the equation, is very healthy. We're seeing new bookings up about 10% year-over-year the past couple months. And as we look forward into 2024, there's nothing really that sort of causes us major concern in the overall economy. There's no longer the expectation of recession or major pullback in consumer discretionary spending. So we expect the consumer to be healthy, the consumer to continue to spend on travel.

And also we expect more and more international guests to be coming into the US, which doesn't help every market, but definitely helps a lot of markets where short-term rental hosts are. And that's going to, in the end, sort of bring supply and demand roughly in line, occupancy about flat. And then with occupancies no longer declining, we expect about a 2% increase in average daily rates, which should mean that RevPARs are up about 1% to 2% next year.

Jeremy: Okay, now that was great. That was gold. Definitely, everybody, click replay and take notes there.

So this all being said, how can, and I know we touched on this earlier, and I'll take this into how AirDNA did a big, I don't know, relaunch or new, I don't know what you would call it, new version. What about, I'd say probably about three or four months ago.

And before Jamie and I went live, he explained that one of his big responsibilities is to help customers effectively use the data that they're providing to make good investment decisions. So how can someone listening most effectively, because there's nuance in this game. And I think you would admit it that you can't just look at something online and, oh, say, oh, this property right next to it is doing $92,000 a year, thus I should do 92. Like there's more to it than that.

And I think those days are over, where investors were literally just doing that. And based off that they were making investments, and then they're like, oh, this actually worked out, oh, it looks, things are better year over year than they were last year. If AirDNA is looking at the last 365 days, and 365 days from when I started are 20% better than the last 365 days, provides you a pretty good cushion or margin of error there. But I guess that's not what we're seeing today. You can't really throw darts blind.

So I guess, yeah, how has the new updated version of AirDNA, which you've been a big driver on, how has that been created to help today's investors?

Jamie: No, you can actually see up here, I've got my dartboard. And that's actually how we do the forecast.

No, we wanted to take a wholesale new look at how we provide data and the tools that we provide to investors. So one of the biggest changes was getting rid of market subscriptions. So where before you had to come in and subscribe to an individual city to get access to that city's data. Now it's sort of one subscription, $15 a month, you get access to our entire global data set.

And one of the major changes that sort of we saw was that people weren't just interested in the market that they were in or the market they maybe always traveled to. They were really taking a much wider view of I'm willing to invest in just about any market in the country or in my region, if I can see that there's good deals to be had. So we wanted to sort of open that up and provide tools, one to help with market discovery, finding which markets are sort of top for investments, whether it's in our investment scores or market grade scores, or just sorting by occupancy, ADR, and be able to filter into the type of properties that you're interested in investing in.

Then second is, and we still have our rentalizer and we've got some major improvements coming for it. But when you think about a rental calculator, which is what we had, it's essentially just helping finding comps, bringing those comps back, averaging their historical performance and presenting, I mean, if this property earns what on average the comps that we found earn, this is what it should do. But for anyone that's actually dug into those comps, you know that there can be massive variability in the earnings of each of those properties. So the diligence that you actually need to do is go through each of those comps, evaluate each one for if they're relevant to the property you're investing in, throw out the bad ones, maybe overweight the really good ones and come up with your own sort of average.

And in doing that, we found that a lot of people are like, can you just let me filter and find the properties that I think are most relevant for me? And that's one of the other changes, was essentially giving a list of every single property in that market, providing robust filters where you can filter to full-time properties, those with 20 or plus reviews, two bedroom, three bath, luxury homes, provide a real good sense of filters so you could get down to just properties that are going to be relevant for your investment. You can evaluate those and then invest with confidence knowing that the numbers sort of behind that are all sort of relevant properties.

Jeremy: Definitely. And so I guess, how are you, or what can we expect? I mean, already, obviously four or five months ago, that was a big change. I was honestly surprised. That kind of was like, wow, I went on AirDNA one day and I was like, oh goodness, I did not anticipate that. You get bought by a private equity firm, you don't necessarily think that everything's going to change, but I guess you guys had a more ambitious approach.

But yeah, what can we expect? What changes or updates? Are there any, are there not? I mean, I'm not saying you need to make updates. It was a couple of months ago. I'm sure it's like a learning phase right now, but yeah, what can we expect?

Jamie: No, you alluded to it. We did get bought by a private equity group and it's actually been one of the best things. So prior to getting bought, we were privately owned by our founders, Scott Sheppard and Tom Caton. They had bootstrapped the company from day one. It was profitable. But they operated it very, let's say, efficiently. They're very tight in terms of growing the team. I wanted to do it, didn't want to grow too fast. I didn't want to spend too much on engineering resources. And the development time was very slow. It took a long time to release new stuff, because we had such a small team.

So with Alpine coming in, they're willing to invest more in the team. So our product engineering team has grown 4X and it's four times larger today than it was in 2021. And that's just provided it. We wanted to take sort of a new approach on a lot of different things, and the website had sort of been duct taped together in different ways of like we launched this, we launched this, we can put this in there. So we wanted to step back, take a new approach.

And we do have a lot of stuff coming down the line. So we're making a few big bets, one on revenue management, and you're going to see a lot of new releases around our revenue management tool. So the ability, we already launched the ability to push rates directly to Airbnb. We're going to be rolling out more channels and really having a more robust revenue management functionality. We think with the best data that we know that we have, that we can create one of the best revenue management tools out there.

And then secondarily around just operating your property. So we made an acquisition late in 2023 of Uplisting, which is one of the really premier property management systems out there, really known for their reliability and their connections and be able to manage your property across different channels. And we're going to be leaning heavily into that, coming out with a, we're calling like a PMS light type solution, of being able to manage your rates, manage messaging, unified calendar view, and all these really robust tools to not just invest in property, but actually manage it after you're invested. And we're really excited to bring that into a really easy use, simplified technology.

Jeremy: And I love that you guys are essentially taking customers through, our investors, through the entire life cycle of being a short-term rental. Like first you got to find a market, frankly, which now, instead of, hey, you're only buying this market, I would say you guys are more of a tool to like find a market in general.

Jamie: That's a fair characterization. Absolutely. And it's part of the new screen that you come in, like where before the AirDNA app sort of took you into Santa Monica,

Jeremy: Takes you to the world now.

Jamie: Takes you to the world. And you click on a country and sort of go into that country. You start seeing a list of markets ranked by some of the best ones and highest investability grades. And it really brings you into that decision-making process from the beginning of looking at markets, sort of the filter, to the market that you're interested in and then dig into the data further.

Jeremy: Definitely. And there's certainly a degree of nuance there. So just to kind of give an example, so I have 25 different properties, of which some of them I manage for homeowners. And I had a call this morning with one of them who wanted to just kind of see what was going on in the market and kind of essentially express like, can we make more money here? I mean, that's frankly what people care about.

And I showed him an AirDNA screenshot of the supply in that market. First, I took like three screenshots. I had the properties ranked in the market based off revenue. And that was one thing I did. And then I had a screenshot of the supply. And then the third one was like the market grade that AirDNA gave the market. And at first I was going to send that first. And I was like, yeah, I should probably give him the context before I just sent him a number. Because I think the number was like 31 out of a hundred. That's pretty bad, right?

Jamie: That's pretty bad, like relative to a lot of the numbers out there.

Jeremy: But so yeah, I first showed him that the supply had went from like 20 to 80 in the last like two or three years. And this is like a rural lake area. So a bunch of people bought lake houses during COVID.

And then what I saw was that it seems like recently, and I was wondering if this was due to like your guys' app change or data change, but a lot of listings, like it started going down pretty drastically. So I guess this is a personal question. I'm curious, was there something, because I know there was like Airbnb listings, VRBO listings, and there's a whole like merging them is challenging to do from your guys' data. Was that something that happened recently where it may have made supply look a little bit lower because you guys effectively merged Airbnb and VRBO?

Jamie: Yeah, it actually should typically make it go up. So we did change our merge logic. So in bringing in Airbnb and VRBO and other channels, essentially before, if it was on Airbnb, we sort of use the Airbnb data. If it was exclusive to VRBO, we would then overlay on that VRBO data. But then let's say a property delisted from Airbnb and it was still on VRBO, we would not show that property because we would still be overriding the Airbnb data in our data set.

So the change that we did was we wanted to look at each channel sort of uniquely in any given month. And if a property was active on any channel on any given month, we would use that data. So in reality, what it did was make the supply overall go up a little bit, because there were properties that had been on Airbnb that had been delisted and stayed on VRBO. And just to make sure that we're continuing to pull that VRBO data forward.

So the other sort of changes that you see in supply is fluid, and especially in seasonal markets, which a lot of lake markets can be. And when we're showing active listings on the website, it's going to remove out properties that have blocked out their calendar entirely during that season. So a lot of times you can see supply being very seasonal, and total active listings being very seasonal, because so many people don't make their property available during the offseason.

Jeremy: Got it.

Jamie: So that's really the way to think about that number is like total active listings. Because someone could have listed an Airbnb for two weeks, and then they hit it.

Jeremy: There's just so much freaking nuance in this game. And yeah, so I showed him that. I showed him the supply. I'm like, yeah, supplies went up a lot. Your property has actually done better year over year. And that's because he actually added two more bedrooms. He blocked off a month or two. And his property did better year over year. But the market as a whole has gone down.

And I showed him the list of the top 80 properties, the ones that I manage. So I own four on the lake and manage four. And I think seven of them were in the top 10, like the top 10 that showed up. And I was like, you're sitting there at number eight. Yeah, you're sitting at number eight of 80. This house that's number six was just bought for $1.36 million. I didn't say what your house is worth, but his house might be worth like, frankly, like half that. So it's like you're doing as good as a house that was bought for $1.4 million.

Here are the reasons why you're doing good. We price the right way. We have a lot more data on this market than anybody else. We have return renters that only stay with us at this point that hit us up directly. You currently have a renter in there for a month and a half who's, again, a previous relationship. In the offseason, we have those types of relationships, people who are construction workers or factory workers who are more seasonal. So you're doing about as well as you can.

And yeah, there's a big difference between... But then if you look at the top, it's like... And I hadn't actually done this analysis. So I felt I wasn't trying to be pompous about it. But number one, two, and three properties are ones... And those are the big houses. So we have four that we own. The three that were one, two, and three were our houses that were five-plus bedrooms. We do have one two-bedroom house, and I think it was on the second page.

And I was like, all right, well, these are the three we did. And they're actually the same bedroom situation as yours. And they're doing $50,000 of revenue a year better than yours. And I'm not trying to rub it in your face, but I'll just tell you frankly why. And literally, just go to our pictures. You look at our first five pictures, and they show the Instagrammable moments. They show the fire pit with the fire coming out with the lake in the background. We've got the string lights. We've got... We make it look...

So I guess there's so much nuance in this game. And a lot of it is operator skill. So how do you communicate that? That this isn't just... Even all the data in the world, you got to roll up your sleeves and do it and make it look good and create it.

Jamie: Yep. And that goes a lot into the uncertainty around the number of why it's so important to look at each property. We've got some stuff coming out soon that's going to further refine the comps and actually allow you to evaluate those comps further. But there's so much nuance in the comp selection. And something that I'm really focused on both internally and externally at AirDNA is that comp evaluation process of helping people and making it easier to actually go through that.

And that's part of with the relaunch of the site where we've created our own property pages, where any listing you see, you can click on, and it's going to take you to the page where all those photos are there. We've brought in all the amenities. You can evaluate each property for its comparability. You can actually see the history of performance of that property, all in that one view, all within the app. So we're not constantly sending people [inaudible] Airbnb, or VRBO. And if you want to click onto the listings, you can still do that.

But trying to keep as much in app as we can and make that comp evaluation process as seamless as possible, because it's so important. And you choose or not choose one comp to use in your analysis, it can dramatically change the estimates that you're going to use in evaluating that investment.

Jeremy: Absolutely. Exactly. And I totally respect and appreciate that you're really trying to make... Because it's hard to explain this nuance to people. And really just explain the entire process. I think a lot of times people want just that simple, give me the number. Give me the number.

So I feel like it's our job as people who are in this space. It's our duty to explain the nuance. So I love your approach. I've never talked to Jamie before, so I didn't know if he was just someone who hopped on news interviews. But seeing that he has the mission to really explain and help people make good decisions. So I want to say thank you. Thank you for that, for investors such as myself who use AirDNA.

And I'm excited to see... Are you involved with the pricing and revenue management stuff? And is that kind of where the... I know you guys hired, I guess you said 4 times, 400% the engineers. Is that really the next... AirDNA is what we can be on the lookout for. It's some really powerful stuff there.

Jamie: Yeah. And that's one of it. Revenue management. We've got a whole team looking at our... And we call it our host tools. And I'd put... That's on the operation side, revenue management and property management systems. Those... That sort of functionality together.

We still have entire squad around our investment. So you're going to see a lot coming out. We've got a whole roadmap around making rentalizer or calculators better, improving the algorithm around comp selection, making it where people can add, remove properties. They can evaluate amenities. All that coming in.

On the market selection side too, we've got zoning data, regulation data coming in. We've got better sort of mapping tools, the ability to filter, draw on the map, get to just properties in certain areas, different overlays in terms of be able to look at a map and see, okay, what sub markets have the highest occupancy within an area? So different ways to visualize the data. We're really excited about bringing forward.

So we're just going through the product roadmap this morning with the team. And everything I've sort of called out is like Q1 and Q2, first half of the year. So second half of the year is even more exciting. So happy to come back on and talk about that as this first phase of 2024 gets released. A lot of it is sort of building on, but it gets into better functionality around property management systems. And then very much bringing full force of Uplisting functionality to the average host.

Jeremy: Got it. Okay. Okay, cool. Well, awesome. Well, so Jamie, you mentioned earlier, you'll be in Nashville. I don't know if this podcast will come out before then, but I'm excited. I'm excited to meet you in person. How can folk stay in tune with all your findings and everything that you and the AirDNA team have going on?

Jamie: Yeah, so I'm very active on Twitter, Jamie underscore Lane there. I have a podcast where we talk about all data all the time called the STR Datalab. And then if you're on LinkedIn, you can hit me up there, respond to all my DMs, feel free to reach out.

Jeremy: Gotcha. Awesome. And actually I have one more question. This is again, kind of just like a personal question. Is buying or, well, I guess you're building the pricing and having the direct access to like Airbnb and VRBO and people's listings, like you can then get like a more actualized number for how much they're making. So you think that'll also kind of conversely like help make your guys' data better?

Jamie: Oh yeah. So we've got a whole data quality squad that is really focused on making our data as accurate as possible. Like there's a whole team on that. I think it's up to five people now.

And one of the things that they are doing is taking that actualized data that we get from properties that are connected. And because we still estimate and performance of every property around the world. So those where we know the actual data, we're testing it versus our model data. And then seeing where the variances are and constantly improving our algorithm in terms of how we estimate.

There's been massive changes that are happened on the endpoints that we collect data from on both Airbnb, VRBO and Booking.com. That team is sort of, they've earned their salary over the past year of keeping up with all those changes and making sure that our data is as accurate as possible, because that is a full-time, full-team job to do.

Jeremy: Yeah. And it's definitely something on the social media is that people, AirDNA, is it right? Is it wrong? How much right is, is AirDNA 6.2% off all the time? I love how everyone has like their opinions are like, oh, I found AirDNA was like 11% off what I actually did. Thus, it must always be like 11% off.

Jamie: Yeah. And I can say it can vary. A lot of properties we get exactly right. And others, there's a variance, and we could probably spend a whole nother half hour to talk through all the reasons why the data can vary based on length of stay, based on that you're getting, based on seasonality of your property and all sorts of fun stuff that sort of can impact it.

And I would say if you have a preconceived connotation of AirDNA's accuracy, maybe based on historical data, I'd say, take a new look. We've done some pretty significant algorithm changes in the past sort of six months that have significantly increased our accuracy across the board. So with that team working, it doesn't just impact accuracy going forward. We do occasionally make changes to historical data if we see that there's a reason to, which could maybe change your view of our data going forward.

Jeremy: Gotcha. Okay. Awesome. And you guys have, I'm sure, tons of reports and help documentation that just explains, contextualizes. I think that's all we can really do in this world. In this world full, we're not doing long-term rentals where there's a thousand rentals in a specific city or whatever, like all within a few blocks of each other. And it's pretty commoditized at that point. Like this is not that world. Like if you want that world, well, honestly, it's probably hard to make money in that world.

Whereas I do want to say you can still, and how do folks still in 20, people are adding to their portfolio. I'm under a contract on, and I don't want to like leave off on like a gloomy note. So I just, I want to say like, I mean, I'm setting up, sorry, I'm setting up another property. Properties I bought in 2023 are like some of my best performers yet. And I credit that to like being better, like knowing how to set up a property better.

Because at first it really, I'm going to be honest, like I did get lucky, like rural properties when rural vacation rentals just like went through the roof. And then I reinvested some in the properties, got hot tubs when I realized like, dang, people aren't going to book at this point. A hot tub isn't like a, in the winter, a hot tub used to be like, you're definitely going to get booked amenity. Now it's like, you need it to get booked.

So kind of figuring out those trends. And my marks, I'm also in some urban markets, and just figuring out, okay, a house without a backyard that's fenced in won't get booked. The one that you pimp out the backyard and fence it in and you do the right things with the fire pits and all that stuff, like we'll get booked. So like figuring out these little intricacies took me time. And like, maybe I was like a little bit lucky where I started in a time where you could throw darts at the wall. But that being said. I think I said 2023 earlier, again, I'm still growing.

Jamie, how do you succeed? Is there still opportunity out there? What's that opportunity? I don't know, numbers, what are you seeing? And how do you do that?

Jamie: There's absolutely still opportunities out there. They're absolutely harder to find. And that's one of the reasons why we've made the changes. Let's talk about the address search stuff. Let's say you're on Zillow, you find properties, you sort of go to AirDNA or BNBCalc or whatever calculator you're using and run those addresses through, and sort of a constant process of evaluating properties of do they get through that initial filter? And that's a lot of work. I know I've spent hours, days of my life doing that sort of analysis.

And with the launch of for sale properties on AirDNA, we're trying to take a lot of that initial filter work and automate it. So run every single home that's available for sale through our calculator. And yes, we've talked through the issues with comps, but at least that initial sieve of, okay, if it operates on average across the comps, and what are the returns that you're potentially looking at? So you can start at a high level and then sort of dig down deeper and just focus on those opportunities that seem like they will pencil. And then yes, you've got to do that next level work.

Jeremy: How do you communicate that? I'm curious, because I know this is something you're passionate about. I think people probably take that number. I know you guys have the for sales and also help connect with realtors and kind of facilitate that process. You guys are really doing the full customer journey here, connecting with realtors and whatnot. But how do you... So you see that number, you see they have for sale, you said it's kind of an average. But then how do you kind of encourage someone to go in, click through, look at the comps? How do you communicate that to them?

Jamie: Yeah. And right now it's primarily just through sort of the training that we do, but one by sort of bringing those comps to the forefront of actually showing each comp that's being used in that estimation and allowing people to see both what the...

Jeremy: If you click the for sale and like populate with...

Jamie: Yeah. If you click on that listing, it then takes you into a view where you see the current estimate of that property. We actually show how the estimate for that property has changed over the past two years. So is our estimate based on comps increasing or decreasing over time? We sort of give a variance around our sort of monthly estimate of revenue.

And then just below that, you'll see each comp that went into creating that estimate. So you can evaluate each one of how many days was available, what was the revenue that it earned, what the revenue potential is, what the occupancy and ADR is. And then you can actually click into each of those comps and see the more detail behind them. But all that on that one page for looking at that for sale property.

So really all the information you'd want to know about evaluating the earning potential for that property is all accessible just when you click on a property that's for sale. So makes that whole process, brings it all really into one place to do that evaluation to hopefully allow you to find deals. Because the deals are out there and we see... And every day people are making investments, making good investments. They're just harder to find in this sort of house price, interest rate, earning potential environment. And they're definitely there.

Jeremy: They are there. They are there though. I mean, I work with Coach Folk and one of the guys I work with is doing massive... And I give him a shout out a lot on this pod, but I also talk to him a lot because he's doing really cool stuff. So it's top of mind. But he did a six-bedroom barndominium that cash flowed $200,000 in his first year in 2023. And there actually wasn't data there. That was an example where there wasn't data.

So maybe it's like, oh, I guess what's your shot or your thought about going to places where there's not data, but doing something really cool and unique and big?

Jamie: Yeah. And I think it's... One of the neat things with being able to search around the entire country now, where you're not just limited to your city, is you can go into... Let's say it's a barndominium. You can search for unique properties. You can go into other rural markets and see what they're earning and then get a sense of... Okay. And go through the reviews, get a sense of why people are coming, how they're describing their property.

And you've got to piece that together of, okay, I'm going to go into this city. I can see other unique properties like that that are actually performing well. Let's try to understand why they're performing well. Like, okay, they're within an hour of a major MSA and that they're really attractive for doing weddings. So I've got a 6 million people that potentially could want to do a wedding and my venue's within an hour away. That's potentially a great investment because I can see this other property. Maybe it's a different MSA, but was able to do it and really do well because of it.

So I'm really bullish on being able to use the tool to find different investment strategies that aren't necessarily already taking fire in your market, because you can go through other cities, other similar type markets, look at the top properties and see what they're doing and adapt some of those strategies to your own.

Jeremy: I love that. And yeah, that is literally exactly what I preach is like, look at the Scottsdales, look at the Palm Springs, the Joshua trees, the Gatlinburg, Tennessee's, see the properties there that are absolutely crushing it and go somewhere else and where nobody's doing that. And I've firsthand seen that be successful and see that be, so is that kind of something that at a high level you would recommend to folk?

Jamie: Yeah, absolutely. That's sort of tried and true. What I like now is doing that same thing, but going to another country, like going to France and some of the key mountain markets there, some of the key coastal markets, going to Germany and see what they're doing, going to Norway and see some of the unique properties in what they're doing. Because you might be able to find that sort of next thing that will be coming or just is super unique that no one else is talking about yet.

Jeremy: Wow. Don't tempt me. I might need some more business trips. I guess I got to go to Scandinavia apparently and see what's going on there.

Jamie: Well, that's the thing there. AirDNA can take you there. You don't even have to fly.

Jeremy: Oh, I don't have to go. I don't have to buy each country or buy each city.

Jamie: No, the same $15 subscription gets you access to every single market in the entire world. So you can do that exact same analysis for any other country out there.

Jeremy: Got it. And then the 15, really that's kind of like the first level. And then there's like the, I don't know, 30, 40, 50, just kind of explain that, what the differences there are.

Jamie: Yeah, there's this sort of basic $15 a month. There's our pro version, $25 a month. It really just gets into sort of depth of data that you can sort of go into. Basic's going to give you two years of data. Pro's going to give you three years of data. At both versions, you can go through property comps. You get some further charting and exportability in the pro version, which is $25 a month, but still $25 a month.

And when you work for the entire world, when you were paying 50 or a hundred dollars per city per month, we really wanted to provide a better value for people where, and yes, people were using AirDNA when they were sort of in the depth of the investment decision, but we wanted to make it where it makes sense to be an AirDNA subscriber sort of, I mean, even when you're not in depth, like maybe when you're just operating and want to be able to be at a price point where you can use it to evaluate and how you're performing on a regular basis, like look at how your monthly performance is relative to the other properties in your market.

You can look on a real-time basis for bookings. So how is your market pacing going forward? How's your property compared to the market? Or go in and actually select your comps and see how they're pacing out in the future, both on the price they're getting booked at and what other listings are available at, and then what the demand is out there.

So it's sort of that next phase of not just the invest part of your sort of plan, but into this sort of ongoing maintenance and then just discoverability of like, what's next? What is my next investment going to be? And even when you're not sort of ready to pull the trigger and you're actually actively underwriting, but just like thinking about what could be cool for your next investment.

Jeremy: Awesome. So really, AirDNA, full life cycle. Like you're no longer finding a market that you like and going away and finding a property and see you later. Now it's like you can really do everything. Pricing, property management. So really cool transition to have seen you guys.

Because I think I talked on the phone to you. I think you guys were in Barcelona or something when I guess your culture was less cost or more cost efficient or whatever. Is your team still in Barcelona, by the way?

Jamie: Yeah. We have two offices, one in Denver and one in Barcelona. We've got about 80 people in our Barcelona office now.

Jeremy: Oh, wow. So you're still growing in Barcelona? Because that was like first time I'd ever talked to AirDNA. It was like someone I think in Barcelona and I was like, oh, that's pretty cool.

Jamie: Yeah. Our customer service team is out there. I was actually just out there. They're a great team.

Jeremy: Awesome. Cool. Well, Jamie, I look forward to hopefully... I know you'll be busy. You're going to be speaking this upcoming week?

Jamie: Yeah. I'm going to be at the STR Wealth Conference speaking at 8.30 on Wednesday morning. So kick off day two with some data. Don't have too much fun day one at the open bar.

Jeremy: Awesome. Well, I look forward to seeing you there and thank you so much for joining us today.

Jamie: Awesome. Thanks, Jeremy.