An epic week of events with some great takeaways, new tech, awesome presentations and glimmers of the future in short-term rentals. This is our take and feedback from many conversations at the conference and late into the night, and apologies we can't mention all!
Firstly, hats off to Damian and Gianpaolo and their whole team, and thank you for a fantastic event that was always on point. Very well attended with a raft of experienced managers and industry suppliers. No doubt the Scale Rentals team will follow up with a summary, visual and written, and so will many others from the event. Still, we are particularly interested as an information site on market changes, challenges, tech innovation, M&A and finance. These links show the content produced for the stage; without exception, all were well worth the attendance.
Many people are mentioned below; please use this link to see their profiles and contact details.
A FEW TAKEAWAYS OF NOTE
Our observations and industry notes show opportunities and trends, challenges and dangers, and we like to pick out the interesting.
DATA
The show started with Kristina Sprindyte and Jamie Lane from AirDNA, proving that what you read in newspapers, especially the headlines, is not always true, as evidenced by the data, so check the data, not the paper! This was a masterclass of economics in the STR industry based on real data, not speculative and headline-grabbing narratives. We exist in an incredibly fragmented travel industry with changing demographics and destinations, experience and accommodation decisions. Remember the newspaper motto: "If it bleeds, it leads".
The off-stage conversations: Clearly showed the industry is still blossoming, and bookings are simply dependent on the region or even town/cities legislation, marketing power and travel corridors based on budgets. Some feelings of a market settling compared to the glory post-Covid year. No one statistic fits all, but in Europe, there is concern about overarching legislation and financial changes (see below). Mid-Term stays - A lot of conversation about mixing STR with mid-term to iron out seasons, defend against legislative changes etc. It makes sense; it means a whole new marketing strategy!
Legislation & Obligation
This is the elephant in the room; all EU countries and the UK face new and uncertain times. We were extremely pleased to see coverage at Scale Rentals on some of the topics: e.g.
The new DAC7 directive became effective on January 1st, 2023, introducing revolutionary and heavy tax reporting obligations for all EU digital platform operators, hosts, and property managers operating in the EU, including non-EU foreign platform operators performing commercial activities. (Sergio Lombardi, founder of Taxbnb, President of the Italian Chartered Accountants Tourism Commission)
Regulation Beckons: Changes to the regulation of short-term rentals can be viewed as a threat or opportunity. Hear from our panel about how pending European legislation will affect our businesses now and in the future. A session moderated by Viktorjia Molnar and including Marco Celani, Andy Fenner, Enrique Alcantara
Last year, the European Commission published a proposal for the “VAT in the Digital Age”(ViDA), which aims to simplify taxation rules adapted to the digital age, fight tax fraud and benefit businesses (Viktorija Molnar, Interim Secretary General of the European Holiday Home Association,)
The off-stage conversations: On the VAT proposal, the room should have been packed, and although well attended, all in the EU STR industry should see this as a major challenge. The Commission in charge appears to have poor knowledge of the industry. It has a single OTA focus on VAT application to bookings, unaware of the other 700 operating platforms. In a nutshell, if passed into law across all 27 EU countries (and none are willing to veto it, apparently), then each guest will pay up to 25% more. This also has knock-on effects on owner and business status. Spain is a powerful advocate of this (presumably, the hotel lobby is keen to see this happen and as evidenced by this: Carmen Muñiz Sánchez, the responsible Head of Sector in TAXUD’s VAT Policy Unit, and they take the Presidency of the EU, this year, so there is more pressure to fight a rearguard action that could cripple small businesses overnight and tput OTAs, at a disadvantage, but they seemed absent from these discussions. The Commission has also taken it into its head to define STRs, any length of stay under 45 days. No consultation! We heard the licensing pressures locally in Spain and Portugal are restricting growth, and this, combined with VAT, EU reporting etc., is pushing managers to look at longer-term occupancy or consider selling or remodelling.
One slide from this presentation illustrated that hotels charge VAT at varying levels across the EU, from 3% in Luxembourg to 25% in Denmark! Again the decision-making processes appear to be badly thought out.
Although the commission may see this as a way of taxing large e-comm, and offshore businesses, it will strangle the industry, reduce tourism income for those who depend on it, and create a wave of on and offline business challenges that cannot be administrated easily.
AI (Artificial Intelligence) & Data
There was much coverage and discussion about AI and its role in STRs, inseparable from data, as this is the source of information to allow digital manipulation.
On the first day, we had: "ChatGPT 101: Mastering the Art of Hospitality with Artificial Intelligence" with Francois Gouelo.
Going on the offensive with AI with Evan Dolgow, Embracing the predictive hospitality revolution, Evan explored the worlds of AI, ML, and NLP specific to VRMs. He decoded the OTA’s digital strategy to paint the AI roadmap to 2025. He recovered, performing due diligence on AI vendors and deploying data-backed decisions at scale.
Data underpins AI and the "(Vacation) Data Revolution." by Maria Flores and "Let the Data Inform Your Strategy" panel with Jamie Lane, Sally Henry, and Andrew Kitchell moderated by John An which has to be one of the smartest panels and moderators of the event!
In Ezio Albernese and "Not just intelligence! Business Intelligence is Art, Science, Engineering, and Design!" you can see that the trends are for increased data use and interpretation, evaluation and critical analysis.
The off-stage conversations:
AI is the latest, massive disruptor of many industries and has many predictors of use, from the human replacement of mundane hospitality jobs to legal automation, the smart determination of travellers' needs (whether they know it or not) in the online booking processes. It's already baked into content delivery and chatbots. Even in its most infant stages, the capacity to search, compile, interpret, suggest, and refine is incredible, from designing new culinary dishes to coding at high speed to passing the bar exam.
Speaking to Evan, Francois, and Rudy Abrahami, it's evident that short-term rentals will see rapid assimilation to increase efficiencies. All have products that use AI to revolutionise elements of this industry. Everyone knows the growth potential and knows multiple LLM tools to play with, connect to and be amazed by. Searching for one video source to explain ChatGPT/OpenAi, we found this May 2023 Youtube video. It gets fascinating at about minute 8, and we can see why many think we should slow the development down, consider all options and regulate the industry. The cat is out of the bag, however, and in play.
The Changing Face of Accommodation & Booking Duration
Titled "Unleashing the Potential of the Business Travel Industry", this panel discussion highlighted the subliminal theme mentioned earlier of mid-term stays. As the panel summary suggests, "This is a highly profitable world of business travel and corporate housing accommodation industry". Moderated by Robertin Nunez and with
Phil Stapleton and Boris Pavlov as panellists here is a masterclass on the growing sector of travellers, be they bleisure, digital nomads of the increasing number of temporary corporate relocations (think tech or ecological projects, for example) to insurance housing from the increasing numbers of climate challenges (fire, floods) where people need rehoming temporarily. There is only a wafer-thin mint between serviced accommodation and short-term rentals and this means a merging of tech and processes.
The off-stage conversations: It would be fair to say that there is a realisation that with up to 10m places to stay outside of hotels and serviced accommodation, the business suppliers can see an opportunity. The desire of STR managers to adopt flexi-stay occupancy periods due to increased challenges on operational staff and pending legislation means a match made in heaven that will rely on tech to make it fluid and efficient. One to watch!
Editor Contributions to the Show
Three topics over three days, and what an interesting audience.
1. Is Franchising the Way Forward?
The show allowed us to talk about franchising on stage with some big players, how they structure their business, their challenges, the software approach, contract control branding and cost structures. Thoroughly enjoyable and very revealing!
Richard Vaughton (Smarthosts.org Editor) with Marco Celani, Cristiana Carpini, Chema González and Roberto Redaelli
The off-stage conversations: It was obvious that no franchise works the same way, no two have the same commercials, and hence each is evolving in slightly different ways in relation to owner contracts, and commission splits in particular. Technology is extremely important as the foundation of booking management, distribution and operational control, and commercial software is not designed for this. Certainly, many managers have considered this expansion approach to realise the value of multi-user in-house software development and avoid employment challenges. One of the most attractive elements of being a franchisee was to adopt tech, processes and scale advantages.
2. Perfectly Mediocre Software: Because management shouldn't be easy!
One of our favourite topics, with somewhere between 500 and 1000 software systems that could be considered a booking tool worldwide, there is no single winner. Massive fragmentation, languages, different tax management, data use and financial rules, required specialist connections to insurance businesses, dynamic pricing, guest service apps, hardware, and upsells of experiences or products, all confusing the whole process.
This talk revolved around the "gatekeepers" of bookings (the PMS) and those best-in-class tools that need to connect and their frustrations, the costs, the API refusal based on commercial politics and fees etc. Connected systems are also often substituted after a period as the PMS develops its replacement products and analyses the successes of its partners to stremline development and leverage their previous partners successes and investments.
The end of the presentation included a QR code to download a PMS advisory selection document, and we received over 50 more downloads taking the number to over 500.
Get a free copy yourself. This is the actual URL link.
The off-stage conversations: Consolidation will continue and is currently geo-centric, but investments are being made into the larger PMS businesses to cross borders. Price is a continual issue; no standards are set, with prices ranging from EU3 pp/pm to EU25+pp/pm. The argument rages over the booking and property/price access points and hence the capacity to offer specialist tools to managers. Some PMS systems follow an open-source API access policy; for others, it's a one-stop shop approach. The biggest complaints still revolve around financial management, reporting, support and the lack of enthusiasm to develop a great book direct website within the monthly price. There is a growing belief we may see a free PMS, with open source modular addons and the winners will be payments, the vertical comms connections but AI will facilitate this opportunity further.
3. The Exit Door
This room was full of managers who may or may not wish to sell or are just there to understand the practical elements of a sale, the value aspects and several companies seeking targets to acquire. An introduction by AirDNA on where the best locations for income, occupancy and purchase and AJL Consultancy finish up the event on important preparation elements pre-sale, with a middle section on the cultural elements of a sale relationship and stages of the sale process by ourselves.
Included in this mid-section was a pre-launch product snapshot of VRMX.io, an M&A marketplace where buyers meet sellers and connect but deal direct offline—the first in the market.
At least half the room signed up for a free subscription also linked here or use the QR code below:
The off-stage conversations: There were buyers and sellers in the room and others seeking growth advice, investment strategy and more. With over 50% signing up for VRMX.io, its a good sign of things to come. Private conversations throughout the show with established businesses seeking inventory growth also showed great interest in the marketplace proposition. They realised that a more open approach to direct contact and establishing initial interest is a game changer. There were companies seeking sale, acquisition and investment in the room.
EARLY ACCESS
Sign up here or use the QR code for free early access.
The video
BEST PRESENTATION (voted by people I spoke to)
Goes to Louis Andrews of OVO Network, the French Chalet powerhouse, with their unreal direct booking and highest review ratings! The subject: A study by AirDNA in September showed that OVO Network was the second highest-rated European VRM on Airbnb. On top of this, in early 2023, we implemented some new features to our Guest questionnaire which saw a 113% increase in response rate from Guests. We have since implemented Chat GPT in our back office and how we deal with reviews to handle this increase and improve our efficiency.
WORTH READING TOO
There are also many great posts on Linkedin Pros Forum, plus a great summary by Thibault Masson in the news section.