First there is crazy money going into national players:
There are a few things in common. None of them can be profitable in the short term and it will be years before they become profitable, meaning those that invest in them have a different game plan-- either to be bought out by someone bigger or to somehow go public and hope that there uniqueness and the shared economy concept will catch investors hearts. I say hearts because minds are logical. The shared economy is compelling but what these players are offering has already been generated by earlier companies like VRBO, AirBnB, so the only possibility is to be very different than them. The purchase may come from the hotel industry as they all provide a better lodging choice that a hotel room.
When asked about this they all say what will make them different is that their clients love their services. Which is typically automation and cleaning. The automation makes sense to a point when everything works perfectly, but will they have the resources on the ground to deal with issues that technology is unable to address. Cleaning, I think we all agree makes sense, but is nothing the local agencies don’t do well and when there is a failure can be adjusted quickly because we are local. Locals should look to duplicate automation when possible. There is some talk of concierge, but it is small and understandably maybe a struggle.
Several them have gone to urban markets and are trying to move toward “master leases”. This is an interesting concept, but I suggest they are just acting like many hotel chains. Some of the biggest chains are not really hotel chains but marketing brands. Marriott and Choice Hotels for example do not own many of their units. The concept of Brand is compelling and if you look at history, when Expedia decimated the hotel brand model, it took years for them to recapture their freedom. Jay Roberts of Domio suggested the 72% of hotels are now brand-centric. Generating a brand as the industry productizes is important. But that Brand especially if you are dealing with individual homes must include your location, that you are local and be focus on one’s niche. The question is can you align with national brands and retain your own brand as well.
I look forward to your thoughts and questions about the Skiff show or other industry trends.
--Ed