What’s in a Name, and the Inevitability of Risks, Hazards, and Failure
During these troubled times, it’s hard to stop and think, but it’s important we do. A great deal is going on in our collective industry, but it is also really important to stop and think about the risks and potential hazards ahead. Particularly when we are faced with such uncertain and challenging times globally.
Learning, Planning and the Inevitability of Failure
In Abode Worldwide’s latest board meeting, we did a PESTLE analysis. We attempted a review of the political, economic, sociological, technological, legal, and environmental factors that could impact businesses in the multifamily, hotel, living, and short-term rental sectors—our clients.
It was almost a depressing exercise with so many possible impacts (more war, more risk of recession, more failure to handle inflation, more regulation). But ultimately, it was a worthwhile one. As Benjamin Franklin once said, “By failing to prepare, you are preparing to fail.”
Back at the beginning of the summer, Casai founder and CEO Nico Barawid thought long and hard about what he could have done better in the time leading up to the company’s failure. Bravely, Nico shared his learnings and regrets openly, acknowledging that, despite a belief the brand could not fail, mistakes and missteps were made.
I imagine many startup founders eagerly read and internalized the lessons from Casai. Watching others tread a path before us often means we can take different steps to avoid the crevices.
What’s in a Name?
In our industry, we regularly find ourselves discussing and debating our “name.” Are we short-term rentals, vacation rentals, or could we just be plain lodging now? Most people reading this would identify with the moniker of vacation rental property manager or vendor—but not everyone.
Does it even matter what we are called, and why is there so often heated (just check out posts on LinkedIn) about what we are called? Naming is, of course, fundamental. Naming is a way of placing order on our world by helping us differentiate between things. It also helps others know what we are referring to when having a conversation. During this period with legislation looming, it’s really important we agree here.
This is my understanding of what we call the sector. The term “short-term rentals” is used as an umbrella term and applies to any “short-stay” lodging that is not a hotel. So it includes urban, leisure, corporate housing, apart-hotels, serviced apartments, masterlease, flex rentals, “tech-enabled,” hosts, and “homespun hospitality.” It covers all types of trips and guest, so business, leisure, and the “bleisure” hybrid.
Vacation rentals, on the other hand, are a specific segment of short-term rentals and cover predominantly second homes in leisure destinations supplied for guests going on “vacation.”
That’s it. Simple, really.
Addicted to External Distribution
Max Starkov is an interesting man to follow. He recently posted on LinkedIn a question about how much the hotel industry would spend on the “middlemen” of the online travel agencies, bed banks, and other distributors this year. He estimated about $50 billion.
Skift ran with the story, getting the might of its research team behind the theme. They came up with $75 billion. Whichever is accurate, both are a lot of money. To be a shareholder of an OTA would be a desirable place to be.
Max went on to explain the problem with this reliance on distributors. He told Skift, “Back in 1995, 75 percent of room nights came from the direct channel, making hoteliers one of the best direct sellers in the economy!” That’s a heady proposition today, so what happened?
Starkov believes that independent hoteliers (and I’d add most of the short-term rental sector) have been brainwashed by the OTA propaganda and have given up on their own direct channel efforts, believing they cannot compete with the marketing and tech investment.
A full-on brand and direct strategy is still likely unrealistic, but he goes on to say: “But they [independent hotels] can significantly lower their over-dependency on the OTAs by investing adequately in CRM technology and marketing.”