Leslie Preston, founder and managing director of Bachcare Holiday Homes in New Zealand, took time to chat with VRMA at the end of last year. Enjoy her interview published in Issue 1 2019 Arrival Magazine. Then be sure to read the follow-up article regarding Bachcare’s recent news!
Jessica Gillingham: Leslie, it was great to see you on the property manager panel at VRMA’s International Conference in Las Vegas alongside Eric Breon (Vacasa), Graham Donoghue (Sykes Cottages) and John Banczak (Turnkey). The panel definitely left me, and a lot of other attendees, wanting to hear more about Bachcare and your property manager journey. But first, it’s such an unusual name. Why Bachcare? What does the name mean and what is the significance in New Zealand?
Leslie Preston: Bachcare is a play on the colloquial New Zealand word bach, which is what we call holiday homes in New Zealand. It is thought that bach was short for bachelor pad. We are a country of baches, it’s a favorite kiwi pastime to spend the weekend and holidays at the bach.
Bachcare is a full-service holiday home property management company so the words ‘bach’ and ‘care’ resonate well with our New Zealand holiday home owners and guests, although we do have to do a little explaining to our international market.
Jessica: I understand that you currently enjoy a 35 percent revenue growth year-on-year but that wasn’t always the case. Tell me about the early days of Bachcare. How many properties did you start out with and what do you believe have been the foundations of your journey to profit?
Leslie: I started Bachcare 15 years ago with my mother-in-law managing five properties in a small beachside holiday destination called Hahei on the Coromandel Peninsula (it’s a beautiful place). However, our sights have always been set on being fully national – all things holiday homes throughout New Zealand.
In the early years, the business did lose money. To help reach critical mass and break even, we purchased a few businesses along the way. Then, we leveraged these foundations to scale and to reach profitability. I’ve always been focused on ensuring we grew a sustainable operating business. Now, we operate in over 140 locations and have nearly 100 local teams of our community-based Bachcare holiday managers.
We’ve never lost sight of our vision, and have been on a very clear path since inception. The business was designed for scale; we just had to be patient to grow into our vision. Patience and focus has been key!
Jessica: Today you provide a full end-to-end service to almost 2,000 properties across New Zealand. This growth has been slow and steady with a mix of organic growth and acquisitions. Can you sustain this growth, or will there be a point where both supply and demand are saturated?
Leslie: We absolutely can sustain the growth for quite a number of years to come, and that’s just in New Zealand!
Our business is currently an 80/20 split between domestic and international guests booking our holiday homes. We host nearly 4 million visitors (our population is 4.5 million) and international tourism is predicted to continue growing at 5 percent per annum for the next several years. There are a lot of visitors needing somewhere to stay.
Our national tourism organization, Tourism New Zealand, has a strategy to promote lesser known tourism regions to international visitors in an effort to spread people around the country more. This means visitors are ending up in parts of the country that have limited commercial accommodation but some fantastic holiday home offerings. We see great opportunity for growth here.
As far as growth in the number of holiday homes goes, we are expanding our portfolio of properties mainly through organic growth. We are a nation of holiday homes, so there is no shortage of supply. And, as the only national full-service holiday home rental company with a growing demand for high quality holiday accommodation to meet the guest needs, more owners are turning to Bachcare.
We also have started to grow supply through acquisitions, particularly in new locations. We see a lot of opportunity for acquisitions going forward.
Jessica: Do you see a future for Bachcare outside of New Zealand or are you very much location dependent?
Leslie: We are proudly New Zealand owned and operated and have a very good spread of properties through the country. This make us the largest full-service holiday home management company in the country, and in fact, Australasia. We know our offering is unique and meets a market need, not just in New Zealand but other locations as well. We are always exploring opportunities where we can deliver value to our guests, our owners, our shareholders and our communities.
Jessica: During the panel discussion in Vegas, Eric Breon suggested that a key reason that both Bachcare and Sykes Cottages enjoy such a high direct booking ratio (70 to 75 percent for Bachcare), is because you are both on islands that you have been able to dominate for the last couple of decades. Do you think this is a fair assessment or are their other factors and strategies at play that have meant that you don’t rely so heavily on OTAs compared to your U.S. counterparts?
Leslie: I didn’t agree with that comment at the time, and still don’t. New Zealand, like any country, grapples with the power of the OTAs, their global reach and their seemingly bottomless pit of R&D and marketing money to attract business to their sites. Our direct bookings are strong due to the hard work, commitment, focus and investment we have put in over the last 15 years.
Jessica: Can you share what your distribution strategy is? Do you see this changing over the next few years? What would you improve on if you could?
Leslie: We see our direct booking channel as incredibly important. However, we acknowledge the role that the OTAs and distribution partners have in a well thought through distribution strategy. OTAs are not the enemy – they have an important role to play. Our industry, however, does fuel the strength of the OTAs, as many organizations have chosen, whether implicitly or explicitly, to outsource distribution.
Jessica: It often seems to me that building a consumer facing brand is something that has been of far more importance for property management companies operating outside of the U.S., and this has been key to lessening OTA dependence. For an established property management company that already has a brand, they may be in a fortunate position. For the property manager just starting out – is it realistic or even worthwhile for them to build a brand, or should they just ‘give in’ to relying on OTAs for their sales leads?
Leslie: There is no denying OTAs are powerful particularly with regard to their ability to market to the guest. But property management is a two-sided business and equally, if not more important, are the owners. Without property owners, you don’t have a product and they don’t really care which OTAs you work with or where the bookings come from. Your brand needs to resonate with holiday homeowners, so they choose to put their properties with you.
If you want to maintain a direct booking channel, you need to invest in your brand. It really comes down to the investment strategy and objectives of each company. For Bachcare, we will continue to invest heavily in our brand and ensure we deliver a fantastic highly-branded experience to both our owners and our guests.
Jessica: With the growth in instant book and our general move toward higher standards, how have you seen both guest and owner expectations of your services change over the years that you have been operating? How have you adapted to meet these changes?
Leslie: Holiday homes are no longer considered alternative accommodations and more and more often are looked at alongside other commercial accommodation options when people are planning their holiday. This shift in thinking has been great for business, but it does come with a need for the holiday home sector to act more professionally.
With the growing diversity of guests using holiday homes, guest expectations have changed and it all comes down to both managing those expectations as well as evolving your business to meet these higher standards.
As an example, Americans are often used to certain conveniences that aren’t the norm in New Zealand. We have had guests check in and ask where the air conditioning is, to which we walk around the house opening windows. They ask where the clothes dryer is, so we show them the clothesline out in the backyard. There are some elements of our offering that are quintessentially NZ, and we don’t see that changing.
On the owner side, property owners expect that their homes will be well looked after by us. It’s a big decision to let their ‘happy places’ out to complete strangers and they want to be safe in the knowledge that it is being cared for as well as (if not better than) they would.
Bachcare is constantly adapting to these changes in expectations. At the same time, we are mindful that holiday homes are not hotels; each is unique and we do not want to homogenize the product with too much standardization so as not to lose the ethos of what a holiday home is all about.
Jessica: There is starting to be quite a bit of debate in the vacation rental / holiday let industry about the need for a universal rating system beyond peer review which would enable the industry to both raise standards and to better communicate those standards to guests and owners. Where do you sit on the fence here? Are standard ratings something you would get behind as a necessity, or is this something that you already do within your own properties?
Leslie: I don’t believe a universal rating system is necessary. If you use the example of the demise in star rating systems within the hotel sector in recent years, there probably isn’t a need for a formal system for holiday homes. We never hear the need for such a universal rating system from our owners, our guests or our distribution partners.
Word of mouth referrals and user-based reviews are the most used methods for deciding if something is good and this is no different for holiday homes. Formal star-rating systems are expensive to establish and run and are generally expensive for owners or operators to implement; often they are seen as yet another compliance cost. There is no need to fix that which isn’t broken.
Jessica: Ensuring that Bachcare directly benefits the communities where you acquire homes is a value of yours. You have stated that you use local suppliers, tradespeople and cleaners wherever possible. You also mentioned in Vegas that you have tried outsourcing cleaning and it has never worked. How do you ensure you get the right balance between buying local and owning the entire process?
Leslie: We have over 100 Bachcare holiday home managers located throughout New Zealand, living in our various holiday communities. We firmly believe that living local, using local tradespeople and suppliers as well as supporting local community (through fundraisers or events) is critical to holiday homes and their guests being considered a valuable contributor to communities.
We generate significant economic benefit to these local holiday communities. We’ll source as much local as we can. Our local holiday managers are a key part of our communities, and have deep networks to ensure our owners’ and guests’ needs are met, while also helping our communities remain vibrant and sustainable.
Jessica: How do both the guest and owners directly benefit from this strategy?
Leslie: We see our local strategy as a win win.
For guests, it means there is a Bachcare holiday home manager there to greet them on arrival and share their local knowledge. We can provide the hard to find tips and tricks to the local magical hidden spots and provide recommendations to help our guests get the most from their Bachcare holiday. And, if something goes wrong, it’s a quick phone call to our local Bachcare manager, who then coordinates with their local electrician, plumber, etc. In the case of an emergency, the guest has a local point of contact as well. We are like a hotel concierge, available on the spot to help our guests.
For the owners, it’s a great sense of security and peace of mind knowing there is a local Bachcare representative on the ground keeping a watchful eye on their home when they can’t be there, supported by the resources and strength of a national organization. We deliver the best of both worlds!
Jessica: What’s next for Bachcare Holiday Homes?
Leslie: Keep doing what we do best! In more locations, across more holiday homes, for more domestic and international guests, with increasing yields. More happy owners and more happy guests is our objective!
We will continue to grow organically as well as through acquisition. We’ll continue to invest for our future. And, we will continue to seize opportunities as they become available.