How to Increase Direct Bookings Using StayFi with Arthur Colker

Quick Summary

Arthur and Jeremy explore strategies for increasing direct bookings for short-term rentals (STR) by leveraging StayFi, a Wi-Fi-based tool that collects guest contact information. It emphasizes building a direct booking channel to reduce dependency on platforms like Airbnb and Vrbo. Key strategies include collecting guest data, building email campaigns, and creating value-driven communication to encourage repeat bookings.

Key Points

• Implement tools like StayFi to collect email addresses from all guests, not just the booking party, through branded splash pages during Wi-Fi access. Validate collected emails to ensure high-quality data for marketing purposes.
• Establish an email marketing campaign to nurture guest relationships, including automated welcome emails, follow-ups, and seasonal promotions. Educate guests on the benefits of booking direct, such as lower rates or exclusive offers, to build brand awareness and loyalty.
• Provide local recommendations, amenities, or concierge services (e.g., late checkouts, mid-stay cleans) to enhance the guest experience and increase mid-stay revenue.
• Highlight property-specific features and incentives, like discounts for direct bookings or early reservations.
• Create a unique property name and identity to set yourself apart from generic Airbnb listings. Use direct communication to promote your brand and retain control over guest relationships.
• Use tools for automated email campaigns and pre-built templates to reduce workload and ensure consistent communication with past guests.
• Focus on operational excellence and personalized service to stand out in a competitive STR market.

Full Transcript

Check out full episodes on:

1. YouTube
2. Spotify
3. Apple Podcasts

Jeremy: We are live with the Short-Term Rental Pros podcast. I'm here today with Arthur, who is a tech founder in the short-term rental space. He is helping hosts across the country, or across the world at this point, own their direct booking channel.

And when I say that, I mean get in direct contact with their guests in order to upsell them or just have them book directly and not have to go through Airbnb or Vrbo. So Arthur, you know, is a big player in the space. I've, you know, heard a lot about him, I've heard him on other podcasts, and I'm super excited to have him here today.

Geographically, we're actually pretty close right now, but Arthur, you know, tell us about yourself. Where are you from? How did you get into short-term rentals?

Arthur: Yeah, so I actually fell into short-term rentals pretty accidentally. Um, so my background is in marketing and branding, and I had my own consulting shop here in New York City. I worked for companies in all different verticals: furniture, commercial artwork, fashion.

And I just happened to have gone to business school with someone who owned a short-term rental property management business called Heirloom, which, when I met them, they had around 120 properties—and now they have a lot more than that. They had a very interesting business model where they purchased and renovated homes with investors, so not a traditional property manager.

They came to me with the issue that they were 100% dependent on Airbnb and Vrbo. And that's definitely the case for a lot of newer, quote-unquote, property managers that are from the last, you know, five to ten years who came into the industry where they built their business totally on third-party platforms.

Which is a great way to start and a great way to get a ton of bookings. But over time, they realized—like most other folks in the hospitality space—that having a direct booking channel is really beneficial for a ton of reasons. Whether it's OTA fees, controlling the terms of your booking or your stay or your contract, having that communication with the guest, being able to upsell things—there's all sorts of reasons why they wanted to build their own brand.

So they asked me, you know, to come in and both develop the brand and figure out the strategy to drive direct bookings. And, you know, based on my understanding of their business at the time, you know, the most logical place to me to start was with the guests that already stayed and loved them.

Just because in this industry, Airbnb is like Kleenex, right? It's so ubiquitous; people say they stayed on Airbnb. So it's very hard to get your brand in front of guests that haven't stayed with you before or maybe aren't familiar with the idea of booking direct for a vacation rental. That's a much harder audience to crack.

But people that stayed and loved their properties—I thought, you know, this is a, you know, they have homes for 10, 15, 20 people—that's the audience we can start marketing to, to drive, you know, considerable bookings. And they came back to me and said, "We actually don't have any guest data either," because Airbnb and Vrbo don't share it with us.

That's how I kind of got introduced to the problem that we solved at StayFi, which was seamlessly collecting marketing data from not just the booker but everybody staying in the home when they stay at a vacation rental.

Jeremy: And this model has been around in hotels for years. and yeah, Arthur and I actually talked the other day, and I'm looking to implement StayFi into my portfolio. I mean, things have been going well for me. They definitely, over the last few years, Airbnb and Vrbo have brought in hundreds, if not, you know, thousands of guests.

Also, at the location where I have a boat rental business, I've gotten a ton of, you know, emails through renters who have rented a boat, whether at my house or another house or what may be. And I've done some email marketing and had some success. But really, like, lately I've just felt the urgency to just take it—to get to another level.

And, you know, honestly, a big reason for me is just the realization that, like, Airbnb's algorithm can, like, change at a moment's notice. I've seen that a couple of times now where, I mean, I've done things to adjust and, you know, kind of play into what they want you to do.

But just the fact that—it just scares me. Like, I didn't like having a boss when I had a, you know, when I had a boss. I mean, I'm not gonna, I'm not going to go deep into that, but essentially, you know, I felt like they had control over, you know, obviously my salary, my well-being. And to be frank, Airbnb has control over it too at this point.

Yeah, and, you know, I think Airbnb—it's a partnership. You know, it's a partnership between them and guests, and they're, you know, they're looking out for the guest. And it's a partnership between them and hosts. And I do trust that they're going to do the right thing, but kind of as like an insurance policy to—I don't know—they, you know, make some radical decision

I don't even know. I'm not going to forecast what exactly that is. I need to have a means of filling up my calendar that's not them. And, you know, the first step in direct bookings is you need a means of contacting the guest. So Arthur, tell me—physically, what do I need to do to get—I mean, I'm getting some guest emails, you know, I send a form, a feedback form.

But if I want to, like, super—the issue with that is I only get one guest email, you know, and that's the person who booked, who fills out the form. But how do I get the email of every guest who stays at my house?

Arthur: Yeah, so our solution is we looked at a bunch of ways to collect this data, and the solution we landed on was what you've experienced as a guest at a hotel, or when you're at an airport or a coffee shop, where when you join the Wi-Fi network, a branded splash page or captive portal launches automatically on your device, where you enter in your name, email, phone number to get access to the internet.

So we were the first company to bring this technology into the short-term rental vertical. And so, initially, I just wanted to purchase, you know, what the coffee shop used. But for a lot of different reasons—price, software, hardware compatibility—for all sorts of reasons, the stuff that works great in those environments doesn't work well or is too expensive for short-term rentals.

So that was really where we kind of decided to build a very simple version of our product, which obviously has evolved a lot over time. And it's a great way to collect data because joining the Wi-Fi is something that every guest is going to do no matter what. So we really want to collect it kind of in the natural course of the stay.

Jeremy: They'll complain about—they'll complain about the checkout chores, you know. "Oh my gosh, I'm not gonna strip the bed." Like, "Oh no, I'm not gonna close all the windows." Oh, but you will do whatever it takes to get the Wi-Fi.

Arthur: Yeah, so like products that, you know, we've seen that collect data—like a guidebook or, you know, a tablet—it's, you know, it's going to get some percentage of use. But it's nowhere near what you're going to get from the touchpoint of the Wi-Fi, where you're going to get basically every adult that stays in the property.

And then we also, like, validate that emails are real, right? So we don't just collect a bunch of garbage. And then within Stafi, we have our own email and text marketing tools that are built for short-term rentals, and we also integrate with a ton of third-party ones. If you already use something like MailChimp and you love it, we can send the data too.

So, like, our system is totally open, and we don't, like, force you to use our marketing tools. But that's always an option, especially for people that, um, haven't done marketing before. We try to make it as easy as possible to set up your first email newsletter or to send an automated email to every guest that joins the Wi-Fi.

Because the most important thing is just to start doing it. We see a lot of people that are kind of afraid to pull the trigger, like they're going to send the wrong thing. But for smaller operators or hosts or people that own properties, right, kind of that informal feeling is kind of the vibe of the authentic experience of being a short-term rental host.

So, you know, I tell people, you know, even plain text emails—just introducing who you are, why you're not Airbnb, right? We let Airbnb take all the brand value for the great experiences that people are offering, right? Which is a real shame.

Jeremy: Or all the, all the shade and hate when someone has a bad experience.

Arthur: But if you're offering, you know, experience that guests love, you know, and the guest says, "I stayed in Airbnb," Airbnb is stealing all your brand value that you could be creating for yourself.

Jeremy: Exactly. So how many emails—and I, I've listened, so I know the answer here. I think it's—I'm just gonna answer it—you've collected two and a half million points of data, right, in the last—since you've started here?

Arthur: And a lot more every day.

Jeremy: Yeah. And so that's like—think about it. I mean—and you guys, what, what are you? In the United States? Are you around the world? Where are you located?

Arthur: Yeah, so we offer services anywhere in the world. Although, I'd say just because we're a U.S. company and started here, we have, you know, 80 to 90% of our customers in the U.S. But now we have customers—you know, South Africa, Egypt, many, many countries in Europe, Australia. So we're starting to get out there more and more globally.

But definitely most, most of our customers are in the U.S. and definitely centered around those traditional vacation rental markets. Uh, that, you know, whether they're urban like Austin or Nashville, Scottsdale, or a ton of, you know, ski destinations, beach destinations—the more traditional vacation rental markets.

Jeremy: And probably the places where there's traditional property managers who have really seen the value, uh, of your service. So if you've collected, let's say, two and a half million, and two million of them are in the US, you're at like almost a percent of the US, you know, has given Arthur their email.

Arthur: The funny thing now is I meet people, and they're like, "Oh, I've used your product," or like, "I've logged in," or we get customers that used us at, like, another customer's home, right? So we're starting to reach that point, which is, like, a little creepy where I could, like, you know, look in our database and see if you've stayed in a property that used Stafi, which is kind of exciting that we have that level of reach.

Jeremy: Arthur knows where you live. If you are listening to this podcast, there is a 1% chance Arthur knows everything about you.

Arthur: Yeah, I mean, thankfully, we don't. All we know is you log into the Wi-Fi. We don't see anything…

Jeremy: Everything about you.

Arthur: Yeah, so, yeah, none of that is visible to us. Although people ask us all the time. They're like, "Can I see what the guests are doing?" I'm like, "Definitely not." That's not…

Jeremy: Yeah. "Can I install a camera too and then record the camera?" No, that's—that's not.

Arthur: So, well, the one nice thing is that because of the captive portal—we don't talk about this much—but, like, people can't, people can't add nefarious devices to the Wi-Fi. Uh, because if the device, like, can't handle a splash page, you can't get online. So you can't add, like, weird creepy cameras and other stuff to listings just because you can't get them on the internet.

Jeremy: That is good. I'm glad to hear. So Arthur has everyone's emails. But also, obviously, the hosts—you know, they have the emails. And what do they then—like, what do they commonly—like, let's say I get—let's say I get your email. Arthur stays in one of my properties, you know. What's, like, an effective thing for me to, like, email to you to—you know—is it an upsell? Is it like, "Hey, stay at my place next year and get a 10% discount?" Like, what—what's kind of the common successful best practices you see, uh, your customers doing?

Arthur: Yeah, I'd say the step one is to set up—it's called an automation or drip campaign. You may have heard of it. Basically, you can trigger an email whenever someone logs into the Wi-Fi, and then you can trigger subsequent emails certain days after that, like in a series. That's definitely the most effective thing to start with.

In the welcome email, there's a bunch of cool things you can do in our product to, like, insert property-specific merge fields. So, basically, like, if you tell—if you put into StayFi the URL of the guidebook of each property, or the link to book this property again, you can create one email that says, like, "Hey, first name. Welcome to property name. You know, here's the guidebook for your stay, and if you want to book this again and you get 10% off, here's a link to the property to book." And it will insert, you know, all the specific names, links.

So you can build one email that works for all homes. I'd say, in that welcome email, outside of just introducing you as a company—because you have to remember, most of the people you're going to be emailing are not the booker. And even the booker, if they booked on a third party, probably doesn't know that you have a brand and that you're the operator, because most of the time they just think you're a quote-unquote "Airbnb," right?

So we got to start just educating the guest to differentiate between you and Airbnb and how you are the reason why they love to stay and want to come back. So that's kind of, like, number one, is education.

And then, obviously, value. You don't want to just be emailing people, "Book again. Book again. Book again." You know, what value can you offer? In a welcome email, obviously things like local recommendations—you know, what do you recommend in the area? What are activities you like to do in the area? What are potential services you offer during the stay?

You know, we have a lot of customers that use things like The Host Co, which has a bunch of—it's basically like a store for your listing that has a bunch of partner, you know, partners already in a bunch of areas, like massages, chef, yoga classes—things like that. So all that stuff you could offer to your guests. It's kind of like a concierge service.

But definitely local recommendations—if you have it in a guidebook or just in an email—just so it's not just marketing, right? You're actually providing value for the guest during the stay.

And then, I'd say, you know, in seven to ten days, people typically will program, like, a "Thanks for staying with us" kind of email. Whatever your average booking window is—booking length of stay is—plus a few days, "Thanks for staying with us," reminding them again, you know, how they can book again with you directly.

Often, you don't even need to present, like, a code. Most people, when they set up their pricing—you know, their direct booking website by default will always be cheaper than third-party sites.

Just because you're going to remove those, like, Airbnb fees, which are changing. So, like, they used to be more like guest fees, and now we're moving to this other model. But if you just—if you have your rates be kind of like the price minus the third-party fees, they will already be cheaper than what someone would get quoted on an OTA. So you can really emphasize that fact.

And—but of course, if you want to give them an additional code to use on your website, that can also be an additional incentive to get them to book again. And then, typically, people will follow up in, like, 30 to 60 days, maybe with the reasons to return.

Then it kind of really depends by destination or seasonality. Like, are you a ski destination? Are you in, like, Breckenridge, where someone's going to want to ski three times a year? Then you might want to push them to book again, like, because they have so many drive-to guests from, like, Denver, right?

But are you more like a once-a-year destination, like Hawaii? Then maybe in, like, six to nine months, you email them again, asking them when they're going to return to Hawaii next year. And use some form of scarcity to be like, "Hey, you know, like, January is already 80% booked, so if you want to, like, come back to this rental you love, you know, you should book now," right?

So you use scarcity or, like, peak availability to drive, you know, like, "Oh, all of our weekends are filled," and when you typically come to X destination, so make sure you book now. So then it kind of—you have to go into the mindset of, like, who your guests are, how often would they typically want to return, like, what's normal. And then you can kind of build a cadence or messaging around that, right? And that's really more destination-specific.

Jeremy: Gotcha. So you are essentially—you know, there are best—you guys train on, like, the best. Because I—I think it's cool that what you guys do, uh, I mean, the analogy, you know, I'm going to give is like the—the fishing rod but also teaching them how to fish. So you provide them the tool to get the emails. You provide them the software to do the direct marketing. Do you also teach them how to fish?

Arthur: Yeah, so we have a lot of trainings on, like, types of emails to send and what to do. That's something this coming year we're really focused on. From, like, a technology standpoint, we’re going to be building more kind of pre-built email use cases in a way.

Like, "Oh, you want to send an email around a new property launch." So I don’t know if you've ever used, like, Klav—like, what we're, like, basically looking at is, like, a product like Klaviyo, which is, like, the premier email tool for Shopify, which is, like, the most common e-commerce platform to build your stores on. And they have so many, like, pre-built, like, checkout abandonment, you know, loyal customer emails, right?

So we're kind of building these, like, pre-built templates or stories that you can really leverage. And that's definitely—will be coming, like, next year, and we'll be releasing them sequentially. So we'll, like, release them as we build them.

But for now, we just have a lot of trainings around it. And then we also, within Stafi, we have a partner called Switchback, and that's for somebody who typically is a little larger and just, like, doesn’t want to do anything themselves. They hire an agency to do all the email marketing for them.

And that's definitely very common. You get to the larger 20, 50-plus size listing property managers. You know, Switchback is an email marketing agency just for short-term rental and vacation rental companies.

So we provide a lot of content and information about how to do it. But in terms of, like, if you want to actually have someone else build all your emails for you, then we also have a partner that can do that.

Jeremy: Gotcha. Because that—we’re going to talk startups now. We're going to get into the little start—I know this show, mostly I talk about best practices, pro tips for short-term rental hosts.

Those of you guys know I'm the co-founder of BNBCalc, a software company where, you know, we help investors or Realtors, property managers grow their business through in-depth property analysis and then sharing branded, branded reports.

So it seems like, you know, for you guys, you want—you want to have a sticky product, you know? You don’t want someone to sign up, buy a device, and then a month later be like, "Well, I’m not getting anything out of this. I’m going to stop. I’m going to stop doing it.”

So, you know, for you, it’s, like, really in your best interest to have your customers get value out of it, right? So you—you want people to be using it and, you know, making more money effectively, right?

Like, is that kind of, you know, one thing you guys look at or think about? Or—yeah, walk me through kind of your way of thinking of, like, how to have, you know, the best—let's talk startups. So give me, give me the rundown, not a sales hat—from the Founder Hat.

Arthur: Yeah, so I mean, when I look at, you know, how can we be more—like, our success is only going to come when our customers are successful and perceive value in the product, right? So you're totally spot on there.

And historically, we've had very low churn. But I will say, when we see customers decide they don't want to continue, the number one reason—other than which is actually people deciding they don't want to do short-term rentals anymore, which is one that we're seeing more actually—just because people are like, "I'm converting it back to a long-term rental," which is fine, right? Short-term rentals are not for everybody.

Then the next one is, like, they've been collecting emails but they never did anything with them. So coming in January, we're actually going to change some of our pricing works, where email marketing will become free at, like, the lowest tiers.

So we have, like, this add-on email marketing product, and we're actually lowering the price for it because we want people who have 10, 20, 50, 100 contacts to start right away and not be like, "I don't want to pay a monthly fee to email 100 people," right?

So we're going to make it free for those lower tiers just so that there's no cost barrier to getting started. And then—then what will come after that are kind of those pre-built—there's, like, a bunch of pre-built templates. But really, like, we're going to do one, two, three, and you'll launch this specific type of email, right? So it's all kind of laid out for you step by step.

So that's kind of on the email engagement side. I'd say the other side is, right now, the product value is really built around this rebooking story, which is a fantastic one. And direct bookings are a huge priority for many people in the industry.

And now, taking direct bookings is also way easier than it's ever been, just because every property management software has really easy-to-use direct booking website tools. And some of them, like Hospitable, are going, like, an extra mile, where they, like, wrap in insurance and, like, every other product you would need to feel comfortable taking a direct booking. So doing it is way easier now, um.

So, you know, we want to help people do that. But the other area where we're now placing a little more emphasis is: how do you achieve ROI with StayFi before you even ever get a repeat booking, right?

So we're launching soon some new partners within StayFi, where you'll be able to build or create free, you know, stores for your rental property that will have a network of partners that you can, like, sell to guests, as well as the ability to sell any product you'd like.

As well as, like, mid-stay cleans, stay extensions, late checkout, if those are things you want to offer. So we want to start using our ability to get in front of every guest during the stay—because every guest will go through the Wi-Fi—to then market those upsells that now we're going to help enable.

So within StayFi, we're going to have all the upselling capability and the ability to present it to every guest when they join the Wi-Fi and a bunch of other ways via text, email, QR codes. So that we can help demonstrate not just value from direct repeat bookings, but more revenue per stay as well.

Jeremy: So, Arthur, your success is hosts making money. That's really—that's what makes the product sticky. And something that I think that you've done that's cool, that shows, you know, kind of that buy-in from your customer base, is you raised—I’m going to say raised—money. You raised money directly from your users. Can you talk us through that process, what made you want to do that, and, you know, if that was successful or not?

Arthur: Yeah, I mean, I would say as a consumer of software, I think it's very valuable to understand how this company you're buying a service from—especially if it's one that you're planning on using for a long time—how does this company operate, and how do they raise money, and what implications does that mean for their business and, like, their stability and what they're going to do, right?

So, you know, you see a lot of companies in the space raise money from venture capital. The thing is, when you raise money from, you know, VCs, you may have some success in this current whatever offer you're, like, providing or product you develop. But then, because venture capital demands such a fast growth rate and needing to raise money again and again as you burn through cash very quickly and grow fast, those companies may have to pivot many times.

And so, whatever you bought from them may not be available in the future, or they may just cease existing as a company because their, you know, cash flow situation is not great for a lot of companies. And most VC-backed startups fail or are acquired, right? So, you know, when you buy from a company that's VC-backed, that can be a little scary—especially with early stage—in terms of, like, does this company have a lot of longevity, right?

Or if a company is, you know, purchased by a private equity firm, you know, what is going to happen to that service level and pricing, right? So a lot of these companies are going to have to raise prices in the future, or their business plan is to acquire a ton of different companies in the space and cross-sell and then also raise prices, right?

So having some understanding of, like, how is this company made can kind of give you some idea of what may happen in the future or what's…

Jeremy: Arthur, do you vow here today on this show to never sell out to a private equity firm?

Arthur: I—I'm not going to promise anything about the future of StayFi because I don't know what's going to happen. But for us, right, like, I wanted to take—basically, there's a lot of new ways to raise money as a startup because of some new laws that came about recently.

Yeah, I'm not a lawyer, so I don't know all the details, uh, obviously. But—but basically, there are—you know, we use this thing called a rollup vehicle, which is through a company called Angel List, where we could basically combine a bunch of investments from smaller dollar investments into one, like, entity that owns part of StayFi.

And then that entity, like, manages distributions among all of the constituent investors. And that way, we didn't have to go to institutional investors who may have, you know, unrealistic—or their strategy is, right, "I'm going to have one $1 billion company, and all 99% of the other ones can just fail," right?

Like, that can be great if you're the one company that has that outcome. Or otherwise, for most people, they're not going to have a great outcome as a founder, and the business may have a lot of turmoil and, like, issues as it scales—tries to scale very fast.

So I kind of wanted to take a middle, a middle route in terms of raising money from partners who really care about the success of our business, and we really care about their success as investors and customers.

So, through the Angel List rollup, you know, we could go to our customers, solicit them, provide them all the financial information about Stafi they wanted to know—our pitch deck, all that stuff. And then, through that portal, they could invest $1,000 or $50,000—totally up to them—to own a piece of Stafi and then be really invested in our success.

And then, of course, we lean on them to give us advice about what they want us to build in the future.

Jeremy: So, in VC speak, the—the phenomena of a venture capital firm wanting their portfolio companies to be multi-billion-dollar companies is called, like, being a "fund returner." So when they analyze potential startup opportunities or investment opportunities—if they're talking with each other, the venture capitalists are talking with each other—they go, "Oh, is this a fund returner?" Meaning, is this a company that has potential to be an exit for billions of dollars?

You know, Arthur might have a company that's, like, on a very good growth trajectory to be, you know, 10, 20, 30, hundred-million-dollar company, which is awesome, which is great. They're just going to go, "Oh, you think that, like, your projections are $100 million, you know, whatever acquisition to a private equity firm? Like, next, next meeting."

So you really—like, as—it's kind of like a—kind of like a, I'm gonna say this, it's kind of like an adverse incentive network, where it forces people who want to raise money to kind of be like the Adam Newmans, where they just say such outrageous things. You know, "Oh, this is going to change the world," you know, "This is going to be the next, you know, whatever. This is going to be the next Tesla."

So it forces you to, like, just say things that are just so grandiose and really encourages that type of behavior, which, as you know, we…

Arthur: It also—yeah, and I'd say reflects on the buyer side. I'm not—I won't name any names, but they present a lot of vaporware to potential customers. You know, not only are we going to revolutionize and change the world with AI and, like, whatever other buzzwords they throw in from the investor side, but then they present that also to the software buyer of, like, you know, "We're the end-all, be-all solution that does these 10,000 things."

And then you look at the company, and there's, like, four engineers that have worked there for two years. So, I mean, like, it doesn't add up, right? Like, how can it do what they're saying? And then, you know, sadly, we see people try to onboard with these products, and it doesn't work out because the promise is so big, right?

So our approach has always been kind of incremental improvements over, you know, a longer course of time that we really, like, test out with our customers. And that's not to, like, sht on anybody else because if you raise a lot of VC money, you can build really cool things that you couldn't build under any other conditions, right? So it's great—really very cool and awesome for certain types of businesses.

In this industry, it's really hard because the short-term rental market is not that big compared to some other ones too.

Jeremy: On a relative—relative basis.

Arthur: Yeah, like, as opposed to—what's the market size of, like, AI, you know, software for, like, factories or whatever? You know, it's like hundreds of billions of dollars, right, compared to, like, what other sectors—or energy or whatever—that VCs are investing a ton of money in right now. Those are ginormous.

When it comes to, like, what percentage of—if you're only working in short-term rentals, like, what percentage of the market in terms of, like, software spend do you have to capture? It's very significant to have a VC-appropriate outcome.

Jeremy: Exactly. So I guess this was—was this, like, an internal battle of, like, should we try this, this, and, you know what, screw it, we're just going to dive in and lean into our customers? We're going to, you know, use them, allow them the opportunity to invest in us if they choose, and then, in turn, that's going to create, you know, a good—a good incentive alignment structure where you're now creating products that actually help your customers.

And if your customers provide you good feedback, that makes it a more valuable product, thus, and then a more valuable company—they're rewarded. You know, they're bought into your success.

So I guess, was this a conver—like, this was the route you wanted to do from day one, or was, like, you toyed with multiple options and decided this was the best one?

Arthur: Well, I've worked for companies that raised VC capital before, and I just see, like, how destructive that can be to, like, a company culture. It just, you know, can be—so it's not even, like, high pressure, just, like…

Jeremy: Hypergrowth or die.

Arthur: It builds very, like, toxic companies. And as a founder, you know, what kind of company do I want to build? Like, I want to build a cash flow-positive business where we, like, reward employees that are, like, very successful doing their jobs, right? That's a fun, exciting business to build.

It's not fun and exciting to be, you know, chasing VCs around the world and spending 60% of your time trying to raise money. And then raising money, and then having to grow really fast, and then start raising money over again—that just had—I had no interest in that, having seen other people do it.

Jeremy: Yeah, so in VCs, they say "triple, triple, double." Like, they want you to grow 300%, you know, first year they invest in you, 300% the next year, and then double the year after. And, like, if you're not…

Arthur: We're still growing 300%, which is the good part. So I—you know, it's better if you can do that and don't need their investment.

Jeremy: Exactly.

Arthur: So, okay, any software founder out there, figure out any way you can do it without, you know, raising money from institutional investors, especially at the beginning.

Jeremy: Yeah, and—and for context, BNBCalc, we have not raised any ascent of external capital to this point. Now, it's a question of, like, are there different accelerator programs who could put us in front of the clients? Like, that's kind of the conversation we're having internally.

It's not, "Oh, who should we raise money from, or should we?" It's, "Are there, like, distribution PL or partners who would make sense?" And that's what you call—what's—what's the word for that when you, like, partner with a strategic—like a strategic investor?

So, but yeah, we didn't want to raise. And, you know, for me, short-term rentals allowed me to, like, not have to raise money because prior to building my short-term rental business, I did work for a startup that needed to continuously raise money.

And I was like, I gotta create, like, a business that cash flows, that's profitable, so when I go back into the, you know, the startup game. I'm not, like—I can build an MVP and build that first product without needing to, you know, raise a quarter million dollars or whatever, 100 grand or whatever it might be from investors. So I think Arthur and I have kind of had a similar head on our shoulders in regard to that.

But yeah, what can you share? So I guess the information on your—like, you know, you had to share things with investors and kind of make some stuff public. But, like, I guess, what are your—what are your growth goals? Or, you know, feel free to, like, share or not share where you're at and where you want to be.

Arthur: Yeah, so just in terms of, like, we're in about 20,000 listings today. Um, you know, we'd love to triple again next year. That's probably going to be a lot harder, obviously, to grow. It's harder to, like, sustain that pace. But yeah, I mean, I think, you know, getting to 50-ish thousand listings by the end of next year would be a great outcome.

So, like, doubling in context—like, the biggest software players in the space, from what I can tell, like a Breezeway or Price Labs or Beyond, they're in, like, 250 to, like, 700,000 short-term rental listings. And I'm pretty sure that's larger than any PMS, although I might be wrong. Guesty might have more listings.

Jeremy: How many short-term rental listings are there in general? Like six million or something?

Arthur: In the US, it's—there's a lot of different numbers. It's like three million, 10 million. What is a short-term rental? There's a lot of people in this, like, gray zone between a hotel and a short-term rental.

Yeah, so there's a lot of different numbers. But from, like, software company sizes, like, I'm not aware of anybody that's in a million listings other than, like, the OTAs, obviously. Um, but I could be wrong. But, um, you know—and those are all pretty global companies up in the 700,000 range.

So I think, you know, that would be a very ambitious goal to get to one day. But there's definitely tons of room for growth, even in just the US.

Jeremy: So I'm curious. So, like, Price Labs had—you know, you said, like, quarter million, 300 grand or 300,000?

Arthur: They definitely have more than half a million. Definitely on the bigger side.

Jeremy: Yeah, what would, like, AirDNA have? I don't know if you know that number. I don't know the number.

Arthur: No idea. I think it's different when it's, like, not a per-unit—do they have a per-unit subscription?

Jeremy: No, they are—they sort of—they want you to import your listings, but, like, you don't have to. So yeah, you don't go in and say how many you have when you onboard.

Arthur: Yeah, I'm thinking of all the businesses where you pay, like, per listing.

Jeremy: Sure…

Arthur: That model is like apples to apples.

Jeremy: Yeah. Granted, those models—you know, once you've got a listing that's onboarded and you're helping them—and you're actually helping them—I would assume churn, which—churn is, like, when a user stops using you, like stops paying.

And, uh, you know, I'll just, you know, be honest. For, like, BNBCalc, for example, if someone finds a property that they, like, want to buy, or that they move in on, and let's say they're not trying to buy their next one for, like, two more years, they'll be like, "All right, love your product, see you later." You know, they churn.

So that's the word when they—they cancel. Or, you know, someone might say, "Hey, like, love your product, but my priorities in life have changed, like, I'm no longer looking for a short-term rental."

Whereas you're on the other side, it's like—they already have one, you know. So I would assume, like, it's pretty sticky in the sense where, you know, they've already made that commitment. They've already made the investment. They have to buy a physical device, you know.

Which, for you—I mean, for me, I'm looking at—I mean, I've got, you know, my 25 listings. Like, if I'm gonna buy your—a device, and I have, you know—most of them are bigger houses—that's, what, like a couple hundred bucks? For me, I'm like, if I pay that $200 per listing, you know, I make that commitment because that's going to be, what, like five—four, five grand, right?

Five grand there, if I buy them for every listing. Like, if I make that commitment, like, you bet your—you bet your tail I'm—I'm making that work. So it's pretty, pretty sticky.

Arthur: Yeah, I'd say. You know, most of the churn we see, like I mentioned before, it's like for UNC—like, "I don't want to do short-term rentals," or, like…

Jeremy: "I'm giving up my listing." Because they already have the listing, so they're like…

Arthur: Yeah, or they're converting it to, like, a medium-term rental, or they're just changing their, like, bu—or they sell it, and they don't own it anymore, which is pretty common. I've seen that also. We had some property managers get acquired by, like, Vacasa that, again, you know, unfortunately, they just kind of do their own thing, and they don't continue using it. But for, you know, 99% of our customers, they're very happy with the system.

And, you know, our number one job is to make sure they use it successfully from, like, a marketing standpoint or whatever their objectives are. Some people just want to monitor Wi-Fi; they don't care that much about marketing. Everybody's a little different in what, you know, what their specific needs are.

Yeah. So for this coming year, it's really—we're really doubling down on creating more value for the customer, not just through re-bookings. Because I want to be able to show you, right—if you purchased 200 devices or 50 devices, you know, sure, we're going to drive—you know, you're going to go from 2% book direct to 10% book direct over the course of 12 months.

But let's, you know, increase your incremental revenue per stay, like $50 on average or whatever it is, right? So we can show you more money up front.

I'd say with property management companies, they typically pass some of the cost to owners—like the hardware at a minimum—because most of the benefit goes to the owner. When they get a rebooking, right, because you're getting your management fee, but the owner is getting, you know, 70-ish percent of that value. And obviously, they're going to get more money if they have more bookings, more direct bookings especially.

So that's definitely common in the property management space, where companies pass that cost onto owners when they purchase the hardware.

Jeremy: Gotcha. So—so I guess you have two verticals, which is, like, the individual owners as well as the property managers, which for you, from a scaling perspective, it's definitely easier to go through the wholesale customers, which is the property managers, right?

Do you have a breakdown of, like, the percentage of users on your platform who are, you know, co-host companies, property management companies, uh, as compared to just individual owners?

Arthur: No, the number of customers is pretty 50/50, but in terms of listings, it's like 90% property managers, obviously, because most people own less than five. Although we do have customers that own an incredibly large portfolio of homes—like 13, 15—as an individual, which is super impressive how they have built their business over time.

Jeremy: Yeah. I don't even know because I'm—I'm partial property manager, partial I-own-slash, you know, I've raised money to own, so I don't even know what I would classify. I'm having an identity crisis.

Arthur: And a lot of people are mixed like you, because a lot of people that are property managers started with their own properties, and then all their neighbors were like, "Looks like you could do a way better job than whoever we're using today."

And that's—when I talk to a lot of property managers, that's how they got into the business. They did it for themselves and then for their neighbors, and then they quit their job and did it full-time.

Jeremy: Yeah, so I think it's cool—you have a lot of—so this, want to kind of get back, like—you have a lot of exposure into hosts, you know. Like, what are you—like, who's—who's being successful nowadays? You know, like, I know you talked about, "Oh, you're seeing more people take their short-term listings and convert them into long-term or sell them."

But who are the people who are growing, you know? Who are the people who are crushing it? Like, what are they doing?

Arthur: Yeah, that's a great question. Yeah, I—I—yeah. Now I'm just trying to think about where—obviously, I don't have a lot of insight into their financials, right?

I think, like, a lot of places—there were, like, certain markets that are—there's too much supply for short-term rentals. Um, but markets—like, overall in the US, like, we're pretty much, like, from an ADR standpoint, back to, like, 2019.

So this, like, cataclysmic view that we, like, fell off a cliff—I don't think that's really borne out. Obviously, the operators that are going to be successful today are the people that have—especially if they're in an area where there's a lot of supply, you know—or people that have differentiated properties.

I definitely think that's, like, number one, especially in very competitive markets. If we look at, like, who do we have that's successful in Orlando, which is, like, property—like, so many—it's people that have differentiated themed, special, like, amenities.

That's definitely still a way to stand out. Or if you're in an area where most properties are this size, and you have, like, the only nine-bedroom home, you know. When I talk to people, the ones that have, like, differentiated properties I see generally seem to be indicating that they're still very successful.

Because they have a niche audience or competitive advantage. And then, obviously, I think a lot of short-term rental success comes down to operational excellence, right? From, like, cleaning and managing employees or contractors, right? So, you know, people that are super well organized and are very savvy in how to set those things up in an efficient way are going to be the winners.

Right. So I think a lot of people probably entered short-term rentals not quite knowing what they—you know, they were biting off more than they could chew. And I think, you know, as things have softened or gone back to normal, we're going to see more exits from people who maybe, you know, weren't totally—you know, didn't quite know what they were getting into.

Which I don't think will be necessarily a bad thing because, you know, the best operating people will continue to thrive, and we'll see kind of a little—little more calming of a bunch of new entrants coming into the space at such a high rate.

Jeremy: Yeah, and I think a lot of this goes to, like, why I personally believe now is a great time to do a co-host business. Because, like, you did get a lot of people who just kind of came in 2020, 2021—you know, that time period. Things were just booming, you know, especially if you think, like, rural areas. But even probably the Orlando—just many places.

Demand for international travel, like, completely evaporated. So, you know, Americans love going to Europe and spending a lot of money, and instead of doing that, they were going to Kissimmee, Florida, and spending a lot of money. They were going to Gatlinburg, Tennessee.

So folks were making crazy amounts of money. They weren't really working very hard. You know, they're taking iPhone pictures, their properties were not being maintained all that well. But just demand was so much higher than supply that you could put a porta-potty on Airbnb, and you'd probably make money.

However, then the times change. You know, uh, still folks who are good at the game and are continually trying to get better and level up and talk to Arthur, you know, figure out, "What's, like, what's going on? How's this whole direct booking thing? How's that work? What do we got to do there?"

You know, folks who are trying to figure out what they can be doing to, you know, increase a property's revenue. Maybe the market goes down 2%, but if your property is able to go up 3% because you implemented a direct booking strategy, then you're setting yourself up.

You know, when people quit, they go, "Oh my gosh, my property went down. I did nothing different than I did last year. Like, I don't know—it must have just been oversaturation. That must have been it. Like, I didn't change anything I did. It just went down."

And, you know, the property got—you know, people stayed in it, and—and it wasn't well maintained. So I think, like, I'm kind of—we'll see how the next few years play out. But, you know, I'm kind of—I get excited, you know, the more chatter I hear online about people, like, talking about this, like, supposed apocalypse. And, you know, I—I control what I can control.

So, like, you know, Arthur was talking about differentiated properties. I could not agree more. I mean, the property I'm under contract for right now—I'm gonna add a movie theater, I'm gonna add a ping-pong table, a game room, uh, a gym. Like, just adding unique amenities, you know, fire pit.

It has a pool. And it's not—you know, it's not a $5 million property. It's buying for 640 grand. But it's going to be seven bedrooms, 4,000 square feet. It's close to, you know, growing major metro areas.

There might not be a lot of data that's going to tell me exactly how it's going to do, but I just know from experience: if you create it, you know, and there's enough data, you build it—they will come. You know, people are looking for these unique experiences.

And I think Arthur used the word "differentiated," but really, it's unique. That's—that's—that's—the folk doing well today are the folk leaning into being unique.

So I want to ask you—I know you didn't explicitly say this—but yeah, what is—what is your pro tip? I know you've given a lot of tangible tips and, you know, takeaways and insights. But, like, for those listening, what is, like, one specific pro tip that can help them succeed?

Arthur: Yeah, I mean, that's so dependent on where they are, like, in terms of the life cycle of their business. Could be very different.

Jeremy: Let's just say starting out from the beginning. They have nothing. They're all—they're looking up online, and they're—they're seeing fear-mongering, but they want to get going. Like, what—what would you tell them?

Arthur: Yeah, I mean, I really—block and tackling all those basics that you mentioned. I'd say definitely, like, pick a simple PMS, like OwnerRez or Hospitable. Obviously, listing on multiple—the main channels in the US, which are Airbnb and Vrbo. It's going to open yourself up to as much demand as you're going to get.

And then start with some idea of how you want to brand your property. Especially if you're—like, even just small ways to differentiate—like, the home has a name. You put it in the property. You label things with it.

You make sure you take that kind of branded approach in the beginning because the faster you can start getting that in front of your guests, the sooner—and make it easy for them to contact you to book again.

Right. Just even that organic exchange of, like, emailing the guest yourself and being like, "Hey, thanks for staying. If you ever want to come back, just email me." That's just a great way to start building those relationships, right?

So it's definitely, you know, great photos, list on major OTAs, you know, build up that, like, automated responses you need to be successful in one of those tools. You know, and that's, like, probably the most important thing to do at the beginning.

Jeremy: Yeah, definitely.

Arthur: What do you tell people to do at the beginning?

Jeremy: Yeah, well, I would say at the beginning—and kind of the points Arthur—people bought houses, they don't want them. You know, they don't want to deal with it anymore. They didn't know it was hard.

Great time for co-hosting, like picking up—especially because Vacasa ran through and bought up all these little boutique managers and just are not serving their customers. So it's a great time for co-hosting. That's, like, my advice.

If you're looking to get started, it's zero risk, you know. Pick up some clients that Vacasa is underserving, and I'm—you know, folk I work with every day are doing—like, honestly, pretty much every day, people in my program are literally doing that.

There's obviously specific steps and things you can do to, you know, make that more likely of an outcome, but it's a great time for that. So, you know, timing is everything—startups, business, whatever it might be.

Right now is an opportune time to grow a co-hosting, small boutique, grow hosting portfolio. I don't know if you agree with that or…

Arthur: Yeah, and that's totally a, um, relationship business, especially at smaller scale. It's all about your owner relationship and retention and communication, right?

So, you know, that's why Vacasa has such high owner churn, right? It's just so impersonal, and you're dealing with people's—potentially their most valuable asset that they own—that they're entrusting it to you, right?

So from that perspective, you know, that's why, you know, in my view, it's like real estate in that, you know, the reason why real estate is so localized with brokers is just because it's someone you want to have a relationship with. It's totally a relationship business.

So I think thinking locally is the best way because it's very, very—I would say zero companies have ever successfully scaled a true national property management business yet.

Jeremy: Awesome. And to those listening—maybe one of you guys will. But either way, start small and start by building relationships.

Arthur, how can folk, you know, who are listening today, how can they learn more about StayFi and learn more about you?

Arthur: Yeah, so if you go to stayfi.com, we have a demo page where you can watch a demo of the product as well as book either a webinar or a one-on-one demo to answer any questions and get a tour of the product.

The product is self-service. There are no contracts, minimums—one property, a thousand properties—you don't need to talk to us to use it. So you can go to StayFi, create an account, and just get started.

So, you know, whatever path you're most comfortable with, or you can get started and then book a demo if you run into any barriers. So that—that's the best way to take a look at StayFi and learn more about it.

Jeremy: Awesome. Well, Arthur, thank you so much for coming today. And yeah, everybody, thank you all for listening. Stay tuned to the next episode of the Short-Term Rental Pros podcast.