Aaron Norris: Hi everybody,
welcome to the Data Driven Real
Estate Podcast, the podcast for
real estate professionals
dedicated to driving business
success using data. I'm your
cohost, Aaron Norris with us,
we've got Sean O'Toole up in our
Truckee office and with us Scott
Shatford with air DNA. I'm very
excited for this interview.
Scott is the CEO of AirDNA. And
he's an author, vocal advocate
and industry expert in short
term rentals. And he utilizes
his 15 plus years in the data
data analyst space to empower
entrepreneur entrepreneurs to
make the most out of short term
rental market. I've used your
tool for years, helping
investors stay out of trouble.
So welcome to the show.
Scott Shatford: Thanks for
having me here. Thanks, Sean.
Sean O'Toole: Yeah, no, I
appreciate you making the time.
Aaron Norris: Your background
data analysts. Tell me what
happened after high school.
Where'd you go?
Scott Shatford: To high school?
Yeah, whenever the University of
Arizona uh, you know, it was a
choice. More out of I went to
They're in the middle of the
winter and the pool parties look
really good. So it was a, it was
a choice made out of. Yeah, I
don't know if it's academics
driving my decisions there, but
it ended up being great school
got a degree in economics over
in Arizona, and five and a half
years. And then yeah, trying to
figure out what I was gonna do
next my life. But yeah, it was
it was a Yeah, so I went to
Arizona, and then, you know,
like a lot of college kids
didn't know what I wanted to do.
Had this degree, I had some. You
know, I did work at some hedge
funds out in New York City
during the summertime and I was
lucky enough to have an uncle
that was a hedge fund manager.
And so that sort of exposed me
to a bit of sort of, you know,
how to use data, how to sort of
think about it. They were much
more complicated quants, guys
than I would ever be. But you
know, sort of got me interested
on the data side of things. But
yeah, I'm after college and
landed in, you know, at a
consulting company. I mean,
their recruiting company really
called the Korn Ferry
International. for nine years
there, my formative years, you
know, just stuck in Excel as a
monkey for about five of those
years. And that's sort of where
I just hone the craft of how to
you know, create stories, you
know, how to articulate things
through visualizations how to be
able to communicate to
executives, through data. So,
you know, I definitely, yeah,
whatever you want to call it,
right. I mean, it was it was a
long, five years, but very
formative in terms of like, just
how to think about massive
amounts of data and how to
create stories from it.
Aaron Norris: So how did you...
Go ahead, Sean.
Sean O'Toole: I was gonna say,
you were the first guy I met
that started kind of hacking,
Airbnbs, if I remember
correctly, we met back in 2015.
Yeah. And you were renting
places as long-term rentals and
doing short-term rentals. Is
that right? Do I remember
correctly?
Scott Shatford: That's, that's
absolutely right. Yeah. Yeah, I
wouldn't say I mean, I started
mean, I started the model, but I
was definitely one of the first
ones that that really realized
that there was this new what we
call now as arbitrage
opportunity is that you could go
rent these properties, even as a
corporate rental just being
straight up, like I'm gonna have
different tenants in here all
the time. Maybe pay a 10 to 20%
premium on that on that long
term, rental, but then
furnishing it for $5,000 bucks
turning it on Airbnb within a
week, and then, you know, making
100 to 300% more than you could
as a long-term rental per month.
Right. So the real numbers like
in Santa Monica was I could rent
a nice property right by the
Third Street promenade, main
tourist district for about
$3,000 bucks a month, I would
make at least $7,000 every
single month on that on that
property with pretty minimal
operating expenses. And so it
was the early days it was the
Wild West see now that these
there wasn't enough supply out
there and although towels and
Santa Monica were call it $400
bucks a night and so there was
just this huge opportunity for a
bigger place with amenities and
the washer and dryer for people
staying For a couple weeks
willing to pay 250 or $300 a
night. Yeah. And so it was it
was the good days, the golden
days, as I call them, when you
could pretty much just get
anything thrown on Airbnb and it
would just destroy it, you just
have 90% occupancy, you couldn't
mess it up. But obviously, the
world's change is much more
competitive and expectations
from customers are a lot
different than they were back in
2012 to 15.
Sean O'Toole: I remember after
meeting you, right, like it was
a big epiphany for me. And I was
on the speaking circuit. And I
did a whole set of slides
basically saying he was
everybody's like, Oh, you know,
prices have gone up so much.
We're at a peak. And basically,
I did the math to show how
prices would likely go up at
least 10 to 20% more, at least
in areas where the Airbnb you
know, model works where there is
demand for that short term
rental. And boy, that was So it
was it was a good. It was a good
day when I met you. It made me
look pretty smart.
Scott Shatford: Yeah, it's nice.
You know, we have a lot of
predictions on where the future
is gonna go and at least half of
them right as well as what I
always say. At least half. But
yeah, I mean short term
rentals...
Sean O'Toole: I just got the
word likely. And you're always
right.
Scott Shatford: Right. Um, yeah,
it's been a wild ride, you know,
we wouldn't get to a more but,
you know, at that time, there
just wasn't enough. There wasn't
enough data, there wasn't
enough, you know, predictability
and like what these properties
would do, and so people weren't
willing to take, you know, half
million million dollar swings at
the plate to sort of hope for
the best as a short term rental.
But, you know, you know, now,
five years later, you know, with
1.5 million properties and the
short term rental market in the
US, you know, you can just sort
of look at a lot of comps,
there's a lot of full time
rental investment property. It's
just a lot easier. to
triangulate in on like, what is
the performer look like what is
going to be the revenue in June
versus January and so that's a
lot of what we're doing here is
giving people a lot more
comfortable about what what
those projections look like as
properties a short term rental.
So yeah, huge proliferation and
in these COVID times, you know,
there's there's a whole lot of
there this whole nother demand
driver, which is, you know, I
don't know people wanting to buy
that second home anyways, and
you now's the time to do it. And
whenever they want to get out of
that second home and return to
that Metropolitan market, you
know, they have that investment
property to fall back on. So we
just see a lot of activity in
the space right now the more
than we ever have on, you know,
buying these sort of second
homes and traditional vacation
rental markets.
Aaron Norris: When did the, what
year did you open AirDNA?
Scott Shatford: We opened in
2015.
Aaron Norris: So it's only five
years old?
Scott Shatford: Yeah, we're just
over five years old. Yeah, I
think Sean when he stopped by
the garage, and we met, maybe I
was too embarrassed to show him
the garage five years ago.
Sean O'Toole: I didn't see the
garage.
Scott Shatford: The local
waterhole, yeah, did you? Yeah.
Sean O'Toole: Oh, well, yeah.
Local watering hole. It was a
yeah, Some favorite spotty years
down in Santa Monica was pretty
cool. Yeah. I remember that.
Yeah. This is nice hanging
outside. I, you know, it feels a
little bit like Truckee, you
know, in the perfect day in the
summer. It seems like it's like
bad down there all the time.
Scott Shatford: Yeah, it's not a
bad spot, not a bad spot.
Sean O'Toole: You still there?
Scott Shatford: No, we went to
Denver, so we relocated here,
four years ago now. So, you
know, right when we're thinking
about scaling this thing and
getting out of that garage.
Yeah, and we're just looking for
a lot of, you know, talented
developers in LA was a very hard
place to find. Surprisingly, you
know, you think it was good, but
back in the day, not even snap
was, you know, there and that
was sort of one of the companies
that really brought tech to LA.
But it's hard to find people,
reliable people, affordable
people. And so that was one of
the big reasons moved to Denver
just pulled town out here was
better. worked out well. worked
out great so far. Yeah, no, it's
been great. I mean, we're sort
of, we opened up office in
Barcelona. We're sort of split,
you know, about 3030 people in
Barcelona, but 25 people here in
Denver. We've got all that the
techies, the nerds, I say, you
know, adoringly to them here and
all the salespeople in
Barcelona. But yeah, so it's
worked out great, and that
Denver's been a great place to
live.
Sean O'Toole: Not Barcelona,
Spain?
Scott Shatford: Barcelona,
Spain. Yeah, that's where the
other half the business is.
Sean O'Toole: You're kidding.
Scott Shatford: Yeah.
Sean O'Toole: Wow. That's an
interesting choice. That must
have been a lifestyle decision
or personal interest decision.
Scott Shatford: Yeah, there's
definitely there's definitely a
part of that. Yeah. I'm one of
my co founders here early
employees as well. He wasn't a
US citizen. So I said, yeah,
well go find a place you want to
live in that. Make sure they
have some vacation rental
activity there. And Barcelona
nice choice.
Aaron Norris: It's a great city.
Sean O'Toole: That's awesome.
Aaron Norris: Talk a little bit
about the genesis of AirDNA and
how you willed that to be.
Scott Shatford: Yeah, so we've
sort of covered the basics. You
know, it is one of those kind of
classic founder stories is that
I was stealing this rental
arbitrage business going around
Santa Monica convincing
landlords to rent me their
apartment to put it on Airbnb.
You know, I think there was some
regulation, you know, some signs
that that was gonna happen in
Santa Monica. So I started
looking, you know, across
California, down south and San
Diego, maybe up in Napa Sonoma
is trying to just think about,
you know, I have all this Where
should I go next, right, where
do I diversify my portfolio? You
know, and I was doing great in
Santa Monica, but maybe it's
better Newport Beach, right?
Just trying to really understand
where I want to go next. You
know, I had the secret weapon.
My father who was a data
engineer, you know, who was an
engineer and he you know, we
talked about sort of some things
I heard about scraping Airbnb.
What can we do with the
calendars really understand
availability often see how rates
are changing? So I could sort of
put that data, get some, you
know, free Zillow data and just
see, like, you know, where was
the biggest mismatch? You know,
where were properties, earning
$100,000 a year where you could
buy it for three or $400,000.
Right? And like, just where'd
that cap rate make the most
sense? And so that's where I
sort of started as my own
purpose. And then, you know,
just being the, you know, data
dweeb, I am just really nerded
out on, you know, how do I price
more effectively? How how far in
advance are people booking, you
know, what could what's my price
on my weekend versus my Tuesdays
and Wednesdays? How much should
that really be changing? Just
none of that data was really
available at the time. So, you
know, when, when Santa Monica
finally made short term rentals
illegal. You know, that's sort
of when I had that lightbulb
moment. It's like, hey, I've got
a lot of friends asked me about
this information. I've got a lot
of people wondering, you know,
how the hell I'm doing so well.
With these properties. At one
point time I had to top five one
bedroom properties in all of our
Angeles and they were in Santa
Monica. They were doing like
$80,000 a year in revenue. And
the people are like, how are you
doing that? I was like, Yeah,
well, the data, the data is
helpful to help me do it right.
And so that was that was sort of
the idea is like, how do you
sell, you know, this, the
shovels to the Gold Rush instead
of mining for it yourself is the
analogy A lot of people say so
just giving people the tools to
sort of create their own short
term rental businesses. You
know, there were a lot then but
you know, now there's three and
a half million hosts on Airbnb,
you know, we think about three
quarters of a million people
doing this professionally as a
full time living. So there's a
lot of people out there and sort
of support in their day to day
decisions and investment
decisions as well.
Sean O'Toole: Yeah, I mean, I
always think that's the best.
You know, in Silicon Valley,
we're always trying to solve
other people's problems. And
it's so great when you're, you
know, build a product that
solving your own problem, which
is what happened with me with
PropertyRadar, what happened
with you with AirDNA, right? And
because you have that kind of
real world experience and you
know, it works and you know, you
know? Yeah, I think that's,
that's a really, you know, cool,
cool thing. I think most of the
best businesses come out of
that. So...
Scott Shatford: That's great
too, isn't it? It's just such a
luxury because you know, you
don't have to do customer
surveys, you don't have to go
call 100 people, you're just
like, I know exactly what my
pain point is, and I'm gonna go
solve, it actually gets way
harder as you're thinking about,
like, what new bells and
whistles do I need to add and
like, as you get further away
from your, you know, your
problems of past, just sort of
make sure you're building the
right stuff and solving the
right problems. So, you know, it
is, you know, it's a luxury to
because you can spend years this
sort of building the product
that you wish was on the market
when you when you have this
problem?
Sean O'Toole: Totally, you know,
when we met back in 2015, like
one of my big, you know,
concerns we were looking at, you
know, we're working with you to
incorporate your data in our
product. And, you know, I just
couldn't get around the fact
that I just thought you'd get a,
you know, cease and desist
letter or somehow, you know,
Airbnb would come after you to
shut you down, or that kind of
thing, right? And was just like,
wow, do I make an investment in
this? And obviously, you decided
to go ahead and make the
investment. And that was a very
good decision on your part bad
decision on my part. But, you
know, how is that? How has that
been? Is that still a risk for
you? Or is that, you know,
pretty much you kind of worked
work beyond that you're
important part of the ecosystem
now,
Scott Shatford: I think is a key
part of it, right? Is, is being
a key part of the ecosystem and
making sure Airbnb and VRBO and
everybody knows, knows that, you
know, you know, you don't have a
whole lot to lose early on,
right? And so you're willing to
just throw it out there and sort
of see what happens but you
know, as you mature, and as you
hire your folks and you got a
real team in place, you got to
sort of shore up some of those
risks. And so, you know, we do
that through having good
partnerships with them through
having good dialogue with
Airbnb, you know, making sure
we're better building stuff
that's valuable to their end
user and is getting people to
buy properties and put them on
their platforms, you know,
they're not going to shut you
down. If you're, you know,
adding another hundred thousand
properties that are platform on
annual basis, right, there's a
lot of value to that a lot of
value to like making people
think like professional
hospitality, individuals, right
thinking about improving the
quality of their properties,
pricing them more effectively
having better like customer
care. And so yeah, as long as as
long as you can show that value
to them, you sort of become an
indispensable part of the
industry. And so, you know,
we're thoughtful not to poke the
bears as much as we can. But
yeah, at the end of the day, you
know, if you're adding value to
them, then you know that they
need you. They want you and
don't want to shut you down. You
know, is is people get public
and they get big and they're
going IPO you need to be even
more cautious about that. Just
because this sort of the risk
you present to them as a company
becomes a lot greater. So yeah,
It's just, you know, it's a
delicate balance that we have to
ride is giving enough
information to our users, you
know, without giving too much to
regulators or law enforcement
people or people trying to shut
down and sue people, right? And
so we're just very thoughtful
about, you know, not, you know,
providing our selling our data
to people that aren't within our
mission and values that sort of
grow in the short term rental
space and a motivating
entrepreneurs around the world
to dive into this market.
Sean O'Toole: Now, last points
really interesting because like
some other people have built
some good sized businesses off
of things like host compliance
and that kind of thing. And I
would imagine that would be a
lot more you know, combative
with for somebody like an Airbnb
versus somebody trying to help
them grow their business.
Scott Shatford: Absolutely.
Yeah. We feel like we'd be
pretty low on the totem pole, if
they went through that that
process if we really want to
shut down. I mean, there's a lot
of people ahead of us now that
we feel pretty good about that
risk, but you know, it's great.
Always is risky and you never
know if you know there's just a
new CFO or a new CTO that comes
into town it's like, nah, don't
like it and like this make it
difficult on people, we don't
see lawsuits as being it, but we
think that, you know, there are
ways that they can make tech
look
Sean O'Toole: Make it a little
harder.
Scott Shatford: Just more more.
More just costly, really to do
it at this point in time, but
anyways. Don't give them any any
good ideas.
Aaron Norris: I'm familiar with
the product. Can we just, can
you give us an overview quickly,
cuz I know we're going to cover
a lot more complicated stuff,
but just in case they don't know
who AirDNA is. Can we cover it
real quick?
Scott Shatford: Sure. Sure, we
see we see ourselves as you
know, the short-term rental
market intelligence tool, and
what does that really mean?
Let's dive into it. I mean, so
what we do is we cover over
100,000 cities markets around
the world. And you know, for an
average price of $50 bucks a
month, you can see all the
details every short term rental
in that market, all the
aggregated stats on how much
they're earning, how often
they're occupied. What does the
seasonality in the marketplace
look like? How to price those
properties. So you can actually
onboard it, you upload a
property and then get
recommendations on how to price
it on a regular basis. There's
also investing tools. So you can
sort of look at what are the top
performing properties in
particular market, I always like
to just tell people stop
thinking so hard, find the best
performing properties and buy
the one next door and decorated
exactly the same, and you're
going to be in good shape,
right? And so yeah, so like
mark, you know, market
comparison tools, if you're
going to go to Denver, like
should you buy this zip code or
that zip code? How are two
bedrooms performing versus three
bedrooms, like just a lot of
data on how to price how to
think about investing, how to
think about market research on
short term rental properties. So
I think that's the sort of a
general gist of what it is. It
was up and running. There's all
these benchmarking tools like
are you performing well or not?
And that's really hard to tell
in this space is, you know, I'm
making $50,000 a year I'm doing
great, like the guy next door to
us doing $90k you're doing
terrible and people didn't know
that before. We were around
right. And so there's a lot of
that sort of benchmarking
components as well.
Sean O'Toole: One of the things
I've got a friend who's got
quite a few units and he started
kind of trying to build his own
brand around it so he's adding
like specific amenities like
every unit has a Peloton every
unit has like you know, some of
these other amenities are you
guys tracking things at that
level to say like, folks with a
peloton get X dollars more a
year or folks with you know,
some other amenity or, you know,
bunk beds or bunk rooms, you
know, whatever.
Scott Shatford: Sure. Yeah,
there's sort of a standard list
of amenities on Airbnb and on
VRBO. There's probably about
like 40 different amenities that
you can track a Peloton is not
going to be one of them. But you
know, jacuzzi would be a good
example and like Tahoe, right?
Like, should I spend $5,000 a a
jacuzzi? What's the return on
investment? Are they really
making that much more money in
the winter time? So you can do
that analysis, not really in our
Market Minder tool but like you
know, people buy our raw data to
do their own analysis a lot of
times so they can dive deeper
into concepts and think about
amenities and think about you
know, building out much more
exact estimates and predictions
on how much properties would
earn so yeah, we have that in
the dataset Yeah, for sure.
Yeah, I mean, we know we know
that lots of people we found
that like you know, hey, there's
there's some basic stuff a pool,
a jacuzzi in location are really
important, right, like having a
lake view or ski in ski out are
really important. But at the
end, you know, at the end of the
day too I think people want to
be doing stuff there. They want
to have activities and maybe we
don't really track a pool table
or foosball table or you know
ping pong table or whatever,
like but those things so those
things work but I wouldn't say
we have like the perfect stats
on you know how much your game
room is gonna earn you but it is
definitely people are upping
their game now you can't just
have you know beds and pillows
and a bathroom like you got to
be having a fire pit and a
jacuzzi and like bags out in the
back and like that's really
where how people with small
investment can get really nice
returns on those little
investments on properties.
Aaron Norris: I was thinking
about why Airbnb would would
love you to be there because it
helps a lot of amateurs from
entering into the ecosystem and
getting into properties that
they're going to get buried in.
So I love the feature on the
website where you can see the
top performing properties just
for that seeing the kind of
features that they installed.
Why recreate the wheel if you
notice what's working in the
market, my it's had some
investors in Florida very
interested in air, Airbnb being
properties or VRBO. And I was
showing them, well, if you're
going to do that you better
build it with a pool. There's
definitely a set of criteria
that if you didn't meet, you're
gonna make so much less money.
Scott Shatford: Right? Yeah,
there has to be super compelling
property. You know, it's not
like how I used to do it just
like no art on the wall, just
you know, throw it there, IKEA
that up, then you're in the
money, right? It's just so much
more competitive now. So all the
good people, it's, it's free
now. It's really curated in
terms of all your color schemes
and your How do you get cheap a
good looking artwork, but how do
you create sort of that
experience and these properties
and that sort of just the name
of the game is, you know, not
just having a place to sleep but
having something to do while
you're there. And that's, you
know, that's that's how people
are making the big big bucks
these days is, you know, group
travel is huge, getting 12
people into a spot now or
getting a big family. It's you
know, that's, that's critical
right now. That's why short term
rentals have been so much better
than than hotels and hotels just
can't compete with the short
term rental environment with the
amenities with theto To cook
your own meals, not go out to
restaurants to be able to get
your whole extended family into
one place for a vacation. mean
vacations have a super bright
future. I mean, especially in
the sort of COVID era where
everybody's scared of strangers.
You know, there's no check in,
there's no elevators, there's no
common space, there's none of
that. That stuff, which is sort
of, you know, scary to people
these days. And so, that's why
you're seeing this, you know,
crazy numbers and these
traditional vacation rental
markets, so like tacos or Myrtle
Beach or, you know, panhandle
of, you know, sort of Florida
area, and then they're putting
up numbers they'd never put up
before even in this day where
people are scared to get in the
airplane or really go anywhere
too far away. You know, vacation
rentals are holding up really,
really well. You know, the
city's different story. You
know, nobody wants to own a
vacation, right all in San
Francisco right now. Even that's
not really illegal market. Yeah,
the urban markets are pretty
decimated at the moment, as
people are sort of fling fleeing
the urban center. But, you know,
it looks like it's coming back a
little bit. Now. It's not as
terrible as it was, you know,
the last couple months, but it's
definitely not the place you
want to be right now.
Sean O'Toole: Are you guys doing
or working with reporters or
doing any reporting on that kind
of stuff are you pretty much
just stay focused on helping the
investors and stuff? Because you
got a lot of really interesting
data, but like, kinda like you
were saying early, right, it
could be used in ways that are
kind of anti short term rental
too.
Scott Shatford: Yeah.
Scott Shatford: Yeah, we do tons
of research into blog posts, and
Sean O'Toole: So...
we're in a ton of newspapers.
And that was one of our initial
strategies was like, how do we
get in as many newspapers and
you know, publications as
possible? Because, you know, we
knew Airbnb was a big part of
the conversation, whether it was
disruption to hotels or how it
was, you know, reducing
affordable housing or whatever
the conversation was and how
much merit it had. There was a
lot of conversation about it. So
we've Yeah, but we've been in
every major publication. Like
literally in the world, like you
know, even the Wall Street
Journal, New York Times,
Financial Times all in the last
week. And so like that was a big
part of our strategy was how do
we become the the data provider
of record? Where anybody writing
a story on what was happening in
the short term rental space came
to us. And now that you know now
as you know, a lot of research
reports, you know, we work with
hotel data companies sort of
merge it all together, compare
what's happening across hotels
versus vacation rentals. We work
with CBRE, we work with just a
bunch of people yeah, trying to
figure out what's what's the new
and interesting trends. So yeah,
come to our blog. We've heard a
lot of content there.
Sean O'Toole: Awesome. Are you
guys tracking the corporate use
separate from the vacation use
at all? You know, there's some
new companies popping up there
like Zeus living and others that
are trying to really go after
you know, more of the corporate
Airbnb and I think vo both have
corporate departments too.
Scott Shatford: Yep.
Sean O'Toole: Are you able to
track that separately? Any
insights on that?
Scott Shatford: I think it's a
good market. I think it's an
interesting market. It's not a
market that we we track
particularly well. It is
complicated in this space where
nobody really knows how to
define a, an apartment a
corporate rental. I love the
term apart-hotel because I get
very confused and apartment or
hotel like I tracked it or
shouldn't attract that. And so a
there's so much gray area.
Anyone today it's like we try
not to think about too much as
30 day plus rental, which we
call a sort of mid term rental,
which is what most of these Zeus
living it's pretty much all 30
day plus as far as I'm aware.
And so I think it's a big
market. There's a lot of people
raising a lot of money around
that. And now in that space, I
think right now that it's
digital nomad movement, this
sort of 30 to 90 day rental is
probably the fastest growing
segment in lodging right now.
But to be honest, it's not
really the space where my data,
my algorithms, my partnership,
sort of releasing the track that
are really kind of understand
that As much as I do like the
three day, 14 day booking sort
of marketplace.
Sean O'Toole: Yeah, I didn't
even know until very recently,
like Airbnb and I don't know
about VRBO had gotten into that,
like 30 day minimum, you know,
kind of rentals. And you know, I
have said it's kind of tempting,
right? Go check out a new area
before if you're thinking about
moving and go do that long term.
Stay. So it's definitely an
interesting space.
Scott Shatford: Yeah, a lot that
was out of necessity. Like, you
know, nobody was booking one
night stays or two night weekend
getaways with their spouse,
right. And all they saw was
demand for people getting out of
San Francisco and going booking
something for three months out
in Napa or something. And so
they knew they had to sort of
facilitate like bigger
discounts. They had to figure
out like how to motivate their
host to be like, here's the
demand, go over there and like
figure out how to price your
place appropriately for the
only, you know, demand that's
out in the marketplace right
now. The market opportunity is
huge. All right, like how many
people don't want to go through
the hassle of signing a six
month lease you know or working
for it you're doing it for work
or even an annual lease I think
there's going to be there's
going to be a big migration to
using these these tools so like
just reduce all the headaches of
like, the credit checks and the
application process isn't
everything to sort of get into a
property. And so yeah, I
think...
Sean O'Toole: There's furnished
right because the only furnished
offerings have been like these
long-term stay hotels and it's
just just a dreary you know
thing to go do you know when you
want to go check out a new area
or something and so the Airbnb
is get really nicely furnished,
especially in a competitive
market. So that's where those
long term furnished, you know,
nicely furnished units become
pretty interesting. Anyways. I
just thought that that was an
interesting thing. I was
wondering what your guys's take
on it was. Aaron, I'm sure
you've got a lot I'll let you
get one in here.
Aaron Norris: Okay, yeah, I got
a ton before COVID-19. Were you
seeing any specific trends as
far as the professionalization
of the space or COVID-19 has
definitely changed some things,
but anything in particular, sort
of three years run up to COVID
some things that were happening.
Scott Shatford: Yeah, lots of
things. I'm sort of thinking
about what's most relevant for
your listeners here. I mean, I
think you sort of hit on it,
right sort of consolidation,
professionalization, there's
always this sort of thought
there's going to be the brands
and short term rentals that
there had to be a brand that
emerges. And so you saw a lot of
money, money being thrown into
companies like Sonder, Lyric,
Domio, Stay Alfred, these are
companies that raised $100
million dollars plus, and they
thought that this would be like
the new brand and emerges as a
short term rental option of a
cos as another sort of unicorn
in the space. I think COVID is
put those business models to
test and sort of seeing that
like, really, you know,
consolidation is hard in this
day. Having 10,000 disparate
units in disparate locations
with, you know, different
cleaning crews, and different
furniture and different pool
types, and like, it just became
like, too hard to figure out how
to do this at scale, and like
the most efficient way to run
these businesses is with, you
know, a guy with three
properties that can go and sort
of give them the love and
attention they need. And, you
know, be somebody that they're
that had asked in the phone
calls from people that they
check in or check out. And so I
think, you know, it's, it's
interesting, and I think Airbnb
is changing their business model
to really focus on this small
host, individual operator
instead of like, you know, the
behemoths that were sort of
emerging running up into the
COVID era. So that was
definitely one thing that's, you
know, it's being tried, I think
three out of the five of those
companies I mentioned are now
out of business or close to
being out of business. So that's
pretty interesting. What else,
what else?
Sean O'Toole: I just I think
it's a good, better story for
Airbnb, too. Like, if it's small
local hosts, you know, making a
living in the community, it's a
lot harder to go attack them
then, you know, national
companies that have raised a ton
of money, right?
Scott Shatford: Totally, they
were being villainized out
there, as you know, just taking
up all the housing stock and
increasing the home prices and,
you know, really, you know,
turning multifamily buildings
into hotels that really weren't
in need for hotels. But somehow
they're sort of able to gain the
zoning and permitting and turn
into the de facto hotels, and
there was a lot of bad press
about it, for better or worse,
whether it was really having any
meaningful impact on the city
with a population of 10 million
to half, you know, 1000 short
term rentals. I think there's,
you know, not a whole lot of
credence to that mathematically.
But yeah, it wasn't it wasn't a
great press coverage for them
for sure.
Aaron Norris: Did the hotel
lobby eventually come around? Or
are they investing in the
vacation rental space, and they
change their tune?
Scott Shatford: It's a good
question. Yeah, I think there's
definitely that love hate
relationship with short term
rentals, they are there, they
can't deny that there is this
big future where short term
rentals call 8 or 20% of housing
supply in the US that's a
pretty, pretty good number that
it's growing four times faster
than hotels and eventually
you'll be 50% of the of the
lodging supply unless it gets
regulated out of existence. But
you know, consumers love
product. They love it right now.
Sean O'Toole: And maybe there'll
be stockholders of it too and
Airbnb goes public, that it'd be
pretty hard to sort of rip away
that income potential from
people in markets like Lake
Tahoe, even though they try
their hardest in South Lake
Tahoe in other markets to make
it a real pain in your butt to
do it. Got it going on here in
North Lake Tahoe again, right
now, there's a real push for
saying you know, you can't do
short term rentals more than x
days per year. And you know,
the, the starting number there
is a pretty small number and and
you know, it's like, changing
these rules after the fact, and
let's talk a little bit about
exempt. I mean, that's one of
the biggest controversy areas,
right is like how this is
impacting affordable housing in
the rest. And you know, I do
have big picture thoughts there
like on his short term rentals,
are they really the core
problem? I have my own answer.
So,
Scott Shatford: You know,
housing economics is is very
complicated. And so it's really
hard to sort of have that sort
of two sentences. I'm like, you
know, what is housing economics?
What I can say is in a market
like Lake Tahoe, having a bunch
of second homes that nobody's at
is impacting your housing
economics a lot more than people
coming in and check into a short
term rental. The only people
people don't like the short term
rentals, the nuisance, the
parking, the partying and like,
just really like the NIMBY
population that's like, I don't
want this in my backyard. I miss
my gray-haired neighbor. But
that's not really that's not
really impacting, you know, home
values. If you think about like,
I think they just think about
though like how many second
homes are there in the US,
there's 7 million. How many of
those are occupied for less than
30 days out of the year and sit
vacant, like a lot? A lot. And
so you're not going to build
more, you're not going to let us
build higher, you're not going
to let us fill those properties,
then something has to give, we
have to build more build, hire,
or let us populate our empty
spaces. Right. I think that's
the conversation that has to be
had with local planners or local
city councils is you got to give
us something here because people
want to come there's nowhere to
go.
Sean O'Toole: Yeah, I mean, I
think these local, they're all
looking for somebody to blame.
And for somebody who passed the
bill to, you know, buck to on
affordable housing, but at the
end of the day, it's it's
usually you know, it's usually a
problem they brought on
themselves and it would exist
with or without short term
rentals. Right. affordable
housing, especially in
California has a lot more to do
with regulation and lack of
building and everybody wanted to
close the door behind them. So,
you know,
Scott Shatford: Exactly.
Sean O'Toole: Vacation rentals
are the punching bag of the day.
Scott Shatford: Right? There's
just so many things are going
into, like, why are home prices
going up so much? You know, this
is foreign investment, it's our,
our tax policy is is a lot of
things. It's definitely not
short term rentals, but every
likes to sort of scapegoat to to
wring their neck, and it's easy
to wring the neck with big tech
company these days. It seems
like the trend to do, obviously,
but, you know, I think when you
when you look at all the
different things going on like
that, you know, just new asset
classes, single family homes,
right people buying these up and
a million homes is owned by
these, you know, large
companies, you know, nobody
talks about that there's
probably more homes owned by
this sort of, you know, I don't
even know even what uh, what's
the right term, but people just
buying up 150,000 single family
homes and then renting them long
term and nobody talks about
that. That's it. The market
which is controlling a lot of
this hundred thousand at
$300,000 home value, right and
that's a lot more than this
affordable home you know
affordable housing supply stock
that it is a million dollar Lake
Tahoe property.
Sean O'Toole: Aaron's Dad and I
went back to Washington during
the crisis and you know, tried
to get them to free up some of
this bank owned inventory to the
small local investors. And, you
know, Fannie, Freddie, etc. And
it was just incredible when we
were in those meetings like they
had no interest in the small
local investors even though they
would pay more like they just
wanted to do big deals with big
funds, you know, likely so they
could go get a job with that
funds later and pad their resume
or, you know, I don't even know
what the the driver was, but it
is it was, you know, really
disappointing. I know we came
back from that trip pretty
disappointed in the in that
result. And of course, we saw
hundreds of times thousands of
homes get bought by big
institutional players.
Scott Shatford: Right, exactly.
Yeah, you know, and back to my
economics degree in college, you
know, I feel like these things
all worked themselves out in a
natural market environment,
right, like, you'll build more
homes, you know, like, there's
only so many people that want to
stay in a short term rental
property and pay a premium on a
daily basis. So, you know, when
that happens, that hotels will
build more and take some of that
supply and like, it's all gonna
work itself out in a free market
environment. And whenever the
government steps in and says,
like, oh, we're the smartest guy
in the room, and we're gonna
sort of you know, manipulate
everything control housing
stock, it always just goes the
wrong way. And then like, Denver
is a great example. They came in
sort of put a limit on, you can
only rent to your primary
residence on Airbnb. And so what
he did is he kicked out every
like, you know, local guy with
one property and when it is a
brought in saunder brought in
dolmio. And they were then like,
oh, there's this massive lack of
supply in Denver. Yeah, just
kicked out all the average guys
out of the market. Now they
started, you know, buying, you
know, hundreds, more than 1000
properties here. But these big
institutional investors that
could get the right permit, get
their rights own convert the
right asset into accommodate
that sort of rental supply. So,
you know, by trying to, I don't
know, you know, sort of has all
of these unintended consequences
you start to go in there and
check in with the system because
the smart connected guys always
going to figure out the way
around your your new rules and
regulations.
Sean O'Toole: Yeah, hundred
percent agree with that. The
whole unintended consequences
thing, right. Like, and I think
I would add is that we haven't
had a free market and housing as
long as I have looked at it,
Scott Shatford: Yeah, I hear ya.
And that's why I just my very
altruistic, naive self. It's
like, why can't you just like
let us figure it out. And the
short term rental market it was
the Wild West when I started and
maybe I just I still dream and
those good days when there was
no oversight, no regulations, no
permits.
Sean O'Toole: What advice do you
give an investor who's looking
at jumping into short term
rentals? Right? So hey, I'm
looking at a taco or whatever.
And I'm trying to figure out
which market to go into. Is
there advice you'd give them to
give them a better chance of
avoiding having the rug pulled
out from under them?
Scott Shatford: Yeah, that's
good question. I mean, I think,
you know, there's a few ways to
think about it. And Lake Tahoe
is it's a sort of a in between
exam because Lake Tahoe seems
like it would be a great example
of a history of being a tourist
destination, both winter and
summer. Great. Yeah. And like,
it's a lifeblood of a lot of the
businesses and the restaurants
and their everything that's
going on in that market, all the
tour operators and you know, all
that stuff. And so that's one of
the things that people are
typically looking for, like, how
much is this really the
lifeblood of our local economy?
Like how much is this really
impacting all the businesses the
local Chamber of Commerce, and
like typically, people aren't
going to pull the rug completely
out of that industry, because
there's such a backlash from
every business owner, every
mainstream, you know, operator,
that, you know, they're going to
go out of business if you pull
that away from them. And so you
know, it used to be in the
cities, that was the best
opportunity, but talking about
regulation is just keep it
there. That's typically how we
thought about it. But we've
continually been surprised, to
be honest with you. Like, it's
gotten to a point now, they
haven't done anything draconian
at this point in time, it's
probably not going to get too
terrible. It might put a few
more limitations on here to
increase your permit fees or
increase your tax or something
like that, but it's not going to
go to an outright ban. And we
feel more confident in going
into the next year that these
cities are trying to shut down
economic activity, right.
They're trying to get more
people to visit. They're trying
to put some more money in the
pockets of their local
residents. And so there's a much
louder voice or let's stimulate
the economy and let's not pull
the rug out from our local
residents. So I do feel like
it's a more Positive regulatory
outcome, you know, in the next
12 months is that a, you know,
affordable housing conversation
is pretty moot at the moment.
Sean O'Toole: Right, gotta get
the economy going gotta get
Yeah, businesses
Scott Shatford: There's is not
really a good public resource
for me. I know a lot of these
companies have internal sources
that like are all tracking on
the city council notes. And a
lot of people are getting pretty
sophisticated about like, really
understanding, you know, which
way the winds blowing on
regulation and every in every
city. It's not something we
specialize in. But there's no
doubt in my decision, you know,
when you're looking at
investment is really
understanding where they've
been, what the conversation that
been locally, where they landed,
and if you're in a market, you
should get involved, talking to
your city council people,
donating funds, getting people
organized around it, because if
you don't hotels come in and do
it for you. It will kill your
Sean O'Toole: I think it's
probably time for I mean, I've
way.
thought this for a long time.
Just for the small real estate
investors that it's probably
time to, like, organize, you
know, an association lobbyist
group like the I'm a pilot, the
ALPA for pilots, right has a
really strong lobbyist arm and
we all pay dues every year and
they're always asking for more
money, but that's okay. Right.
Like, it really helped make sure
that airports stay open, but I'm
really seeing that for real
estate investors and for short
term rental folks and that that
feels like that's an
opportunity. I know, I would
certainly give generously to
something like that. And have
you ever had those conversations
or talk to anybody who's thought
about that?
Scott Shatford: Yeah, I talked
to I talked to a fair amount of
them, you know, and it's, it's a
tricky one. It's sort of this
like, I don't know, chicken in
the egg conversation. And it's
just like, you know, how
effective Can you be right? And
this isn't like an industry full
of a bunch of multi
gazillionaires where you can
just go and sell Say, Hey, you
know, we're gonna take a nice
little fee from you on the basis
like it is it's a it's 200,000
individuals that are sort of
making a little bit of side cash
on it. So it's really hard for
the individual person to see
that they can sort of make a
difference. So from a lobbying
lobbyists perspective, yeah,
there's a couple that VRBO and
Airbnb have hired to sort of
like, you know, take the brunt
of that effort on themselves,
they have the most to lose. And
so, you know, they're willing to
spend the most. Well, I think
what they've tried to do is
motivated at a very local level,
because what they found to be
impactful is maybe not spending
in Washington, but hearing
voices and local cleaners, local
residents, local business
owners, you know, telling their
story about you know, how this
is going to impact their their
lives. And so, it's more about
sort of rallying the local
residents into getting and just
being present and being a part
of the conversation. And that's
typically what's even more
successful. And it's almost
always in the city level, if we
can talk about for a while, but
you know, there we go. There's
been a lot of work and trying to
get this done the state level,
right, you know, like so Arizona
has state policy, you can't Oh,
you can't regulate short term
rentals any any further than you
are a long term rental in terms
of like, what residents can be
there or you know how long you
could rent it out as one or the
other. And so that's the most
effective way to do this.
Because the problem with City
Council's they they swap out
very often they always have
different reviews, and they
don't have a lot to do
apparently. So. Yeah, they just
sort of waffle back and forth
between yes and no, depending on
each seat. So state state
legislation, legislation is the
way to go. Yeah, there's a
couple organizations that
actually slipped my mind right
now. So maybe get back on some
notes on who's out there doing
this in the moment.
Aaron Norris: A couple years
ago, I was doing a lot of
research and I stumbled upon a
report that said the number one
fastest growing trend in the
experience category was
treehouse Airbnbs. Is...
Scott Shatford: Yeah I love it
honestly anything funky but it
tent up put it in like a
shipping container in your
backyard like people love weird
thing. And I that is like the
key I've got guys putting up
yurts in Joshua Tree and just
making a killing and like, it is
really about how creative you
can get the unique supply. I got
a guy dragging old airplanes
to sleep in it's in differe
t locations and yeah, there's
a bunch of like people lo
e created unique, funky. They lo
e to tell a good story. Take
a good Instagram photo. And li
e that's really what what's o
t it's just different and uniqu
Aaron Norris: Interesting.
Sean O'Toole: Twig, inner leaf
twig nests. Yeah, crazy stuff.
Aaron Norris: I knew somebody in
Mexico doing that he was
creating mud huts for airbnbs I
don't know how it went. But that
was his goal. The mud hut
experience sounds wonderful. Now
COVID-19 It seems like a lot
more people are staying local.
Has any of the metrics changed
as far as how long people are
wanting to stay Is it just
they're getting away for a week
because they're tired of being
in LA?
Scott Shatford: Yeah. So your
length of stay is gone up
dramatically. So it used to be
just shy of four days was sort
of the average like this day
across the US. I went up to
about nine days depth of COVID
back down to about a week now
but that's a pretty seismic
shift for you know, that's,
that's pretty big. So, with that
is a lot of people staying 30
days or longer, a lot of these
people are, you know, 30 day
Plus, it's a relocation thing if
they're packing their bags or
getting out of Dodge, so you
know, like, and so people are
much more in this nomadic
lifestyle now, right now, just
getting out of the major
metropolitan hubs. So that's a
big trend. The other trends
people have no confidence in the
future so people aren't booking
Christmas anymore. People are
booking Thanksgiving, people are
gonna wait until two to four
weeks out to book that just
because they don't know what's
happening, what's going to be
shut down, what's going on. So
we that's the hard part is
starting to predict where things
are going to be trying to lik
 do revenue management right now
it's just it's really dif
icult because it's a lot of peo
le booking for tomorrow and not
booking for six to 12 mon
hs. That's just pretty unh
ard of at the moment, which, you
know, makes sense. Obviously
Sean O'Toole: It makes, but it's
a huge insight that it's gotten
that short term I mean that you
know, tomorrow right I already
kind of doing last minute.
Scott Shatford: Data is showing
that over 50% of their stays
there for today or tomorrow. And
so that's not like a planned
vacation. That's like, I'm on
the I'm in the car and I'm going
to go here or I just need to get
out of my house because my I
don't know my dad's in it or
something right?
Aaron Norris: I'm out.
Sean O'Toole: Well, I've had
days I'm ready to go right then.
Aaron Norris: With that being
the case is it impacting the the
per night rate, since it is so
last minute, are you seeing the
average stay amount per night
change much?
Scott Shatford: Surprisingly,
not actually. Average daily rate
is up year over year and we sort
of keep like making sure that
Numbers rikes it doesn't make a
whole lot of sense but it is
larger properties getting booked
gets higher and properties
getting booked some of that's
just like sort of the the makeup
or distribution of bookings is
not going to studios in Tulsa,
Oklahoma, that's going to the
four bedroom properties and the
nicer spots more in the suburbs.
So that's sort of driving a
little bit, you know, EDRs
obviously down in major
metropolitan markets, but, I
mean, in Lake Tahoe I didn't
look at it, but I would be out
it's up towards probably up
20-25% year over year would be
my guess. You know, everybody's
calendars were empty, coming out
of COVID. Demand sorry, came up
out of nowhere, as soon as
lockdowns are removed and and
people yeah, I've just seen you
know, unheard of demand in these
markets. So people are pricing
accordingly. But it's all you
know, everything right now is
market by market by market.
There's not like one it's hard
to find threads these DC
Besides, every market is
different in So, so go buy your
market minor. I don't even think
about that. It's perfect plug
for your day. Perfect. Yeah.
Sean O'Toole: Are you seeing?
Are you able to track or see? Or
do you have any insights on like
ADUs is becoming a really hot
topic I can assess? Are they
delivering units, you know,
these these things that you put
in the backyard that are one
bedroom, you know, whatever. Is
that? Is that a thing that's
popping up for you at all, or...
Scott Shatford: it's only thing
I hear about in California. I've
got two startups that I know
about friends, friends of
friends starting that it's cool,
it's cool business obviously,
solves a lot of problems. You
know, affordable housing is one
of them and just getting more
housing supply without having to
deal with, you know, the
government and the planning,
folks. So I think it's an
interesting, I just, I've only
heard about it in California. So
I'm sure it's a it's a it's a
thing there, but I just don't
hear about it elsewhere.
Sean O'Toole: Oh, interesting.
Because we hear about a lot
here. Yeah. So yeah, no
question. No, that's great that
you're not..
Scott Shatford: Cool business
models, lots of purpose built
building like a lot of people
are trying to figure out how to
get around regulation at the end
of the day when it comes to
short term rentals. So a lot of
people are building multifamily
units with like an attached like
think about like adjoining hotel
rooms, but that sort of door
that sort of connects. And that
sort of then qualifies as being
a, you know, attached via unit
so that like you can get through
all of your Denver regulations
like it has to be attached
dwelling unit or whatever. And
so people are building a purpose
built that meets the regulatory
letter of the law. And but he's
really just built to Airbnb, the
property. And so we see lots of
people getting creative, to try
to figure out how to sort of get
around, you know, the silly
regulations of all these
markets.
Aaron Norris: Just a funny story
really quick. Last time I was in
Denver, I stayed an Airbnb. I
went to dinner with Josh Dorkin
oddly enough of BiggerPockets
And I lost my key and I ended up
having to stay at a hotel as I
was in an apartment building
that had a doorman and she was
asleep. Do you see any
opportunity because of COVID-19
the conversation about
commercial and different
property types really struggling
as small businesses go under you
see the interesting opportunity
there to go after maybe small
hotels or anything like that?
Scott Shatford: Interesting. you
know, I don't know the hotel
market entirely well, but I was
talking to my my banker friends
ever, you know, Bank of America
who saw this pretty well and I
was like, when are they gonna go
to business? Where are they
gonna like you know, start
boarding up their windows and
like, yes, that's not gonna
happen for a while like there's
still there's this is gonna come
back and kill that too much
invest in these properties to
run away from them or think
about converting it. What are
you going to convert it to right
now? You know, office space, are
we retail space and so like
there's just not really a whole
lot of optionality on it. So I
all I really know is the the
hospitality logic space. Yeah,
nothing really like clevers
coming to mind at the moment
about what's going to be the new
usage of commercial real estate.
I've seen scared a lot of people
away from Master lease models,
and, you know, nobody's really
going to take on that risk
anymore. And, you know, doing
what I was doing, but times 1000
you can nobody can predict a
black swan event, right. And
that's really what it is for
lodging. You know, no matter how
good your, your, your business
strategy was, you know, it was
just random luck with your
exposure to what COVID sort of
presented. But, you know, with
hotel occupancy being so bad
with so many hotels being built,
and when you know, nobody really
wants to get into the, you know,
studio apartment and whatever,
call it downtown Chicago.
There's enough of that right and
the beauty about the long term
Yeah, the short term rental
market is you can convert that
to long term, you can get a
tenant in there, it might be
under market value, but if not
sitting there vacant, you can't
convert hotels too much like it
is expensive to convert a hotel
room. And so they're sort of
stuck with that, for better or
worse, unless they're just going
to demolish it and start from
from ground zero. So...
Sean O'Toole: How about
conversion of RV parks where you
take the empty spaces and you
put a tiny home on it, and or a
park model is what they're
called. Right? And are you are
you guys seeing, seeing some of
that or any other, you know,
interesting conversions of
property and do it into the, you
know, short term rental space.
Scott Shatford: There's lots of
creative stuff out there. I
don't know. It's nothing that is
really coming to mind right now.
I think we talked about a little
bit earlier, but I'm not really
seeing this conversion of space
really. I just made me seem to
listen a little bit harder, you
know more intently to that. But,
uh, trying to think? No, not not
really, I think yeah, it's just
not, there's like there's just
not enough short term rentals,
especially in urban environments
where that's where conversion
happens. I guess there's nothing
exciting about having a, you
know, a smaller short term
rental in an urban environment
right now. So maybe some of that
creativity will come like once
it's sort of known, like, Where,
where are prices for retail for
office or whatever, and, like,
you know, how does the short
term rental concept work, but I
think it's just too early in the
cycle to figure what's going to
make sense move forward.
Sean O'Toole: This is going to
be stuff on sale, right as a
result of COVID there's gonna be
some commercial there's gonna be
some types of properties that
are gonna be on sale and if you
can get those cheap and convert
them like for our you know, our
audience, right, that's, that's
the, the million dollar
question. Where is the
opportunity in this market, to
buy something that's out of
favor and turn it into something
that's in favor?
Scott Shatford: Yep, no, I mean,
I think I spend most of my time
on the rice resin residential
side. And this is one of the
biggest shifts that we've seen
as well, there's a couple of
things, which is, you know, what
was very seasonal markets are
becoming less seasonal. And then
maybe Palm Springs is a good
example. They're putting up the
most ridiculous numbers I've
ever seen in August, August,
July are the best months of the
last 12 months for for that
market. And if you ever been to
Palm Springs in August, it's
like just walking.
Aaron Norris: I live very close
by it's like 120 degrees right
Scott Shatford: Right? And so
it's doing some of these things
now.
like just extending sort of
seasonality. It's extending
where people are living and
working from and so a lot of the
metrics that may didn't allow
the market maybe didn't make
sense a while ago is because
there are two seasonal or you
know, Hamptons, you know, they
they were up 800% in April and
May in the Hamptons, because
everybody was just getting out
of New York and it's like all
they knew the Hamptons
apparently. It's the only place
they want to go.
Aaron Norris: So New Jersey is
off the table?
Scott Shatford: Right? Yeah, I
don't know. So there's a lot of
these kind of cool up and coming
markets that are sort of just
outside of the city center that
are smaller markets like less
than like 50 Vacation Rentals
that are all these sort of like
new thriving, interesting
opportunities. So I think there
are a lot of like fundamental
changes in like, what's earning
money, what's not earning money,
right now. So what how can I be
more specific about that
opportunity? It's about you
know, buying the properties. You
know, the thing is, most real
estate agents don't know any of
this stuff. Like if you ask a
real estate agent in any of them
like how much these property
Kickers, a short term mentor,
like how do you think the market
sort of moving here they know
nothing, right. So if you just
know a little bit that like the
short term rental market is, is
making 20% more here over the
last, you know, 12 months, you
know, you can sort of figure out
what property prices are going
to move because I do believe
they move In these markets,
because I have a lot of friends
buying properties using my data,
a lot of people getting into
certain markets like Galveston,
Texas is a good example or
Pigeon Forge, Tennessee or
Destin, Florida. A lot of these
markets I'd never really heard
of before, that are probably
20-30% investor owned at this
point in time, just because that
is the returns on short term
rentals are so great.
Sean O'Toole: You have a lot of
Realtor customers who just I'll
just take a second to say, if
you didn't understand what he
just said, it's go sign up for
AirDNA. Get an understanding of
what's happening with short term
rentals in your market
understand what they rent for
and, and what the trends are and
all there so that you can be
smarter than your competitor and
close those deals.
Scott Shatford: So thank you.
Appreciate that. Yeah, it's
like, yeah, I think it's all
about differentiation in this
market. Right. There's a lot of
investors a lot of second home
owners coming out. I try to
teach these teach these agents I
have not really but I go to
Inman in the special events say,
hey differentiations, but it's
all about how are you going to
become the expert on short term
rentals in your market? Did you
know that there's, you know,
4800 properties in your backyard
that are Vacation Rentals? You
know, how do you upsell people
that are looking to spend
$300,000 were like, Hey, this is
a profit center property. If you
buy Lakeside spend $700,000, you
can qualify for it and you're
not going to pay $1 for this
property, you might make money
on that property. So you know,
how do you just sort of
facilitate more transactions get
a higher value transactions with
knowing this data? I just it's
always fascinating to me, but
maybe I've just been at it for
so long. I'm like, yeah, how
come you aren't doing this? It's
like, it's just still this is
still new takes time. Like it's,
it's been 11 years since Airbnb
started. I can't wait another 11
years.
Aaron Norris: What some of the
technology you've been excited
about in the space that helps
with things like noise control
or whatnot. Is there anything
you're about?
Scott Shatford: Now all that
home automation stuff is
awesome. I just I mean, I just
picked up my Tesla yesterday
I've never driven way until
yesterday and I'm like, this is
how like the home experience
should be right? You get in it
like knows your name it says hi
unlocks things it gets your
refrigerator all ready to go.
Like, you know, it was the
thermostat, the right place that
heats up your pool, like all
that sort of home automation
stuff is is super cool. Like
just having your entertainment
system ready to go. I just that
whole experience I think has
become easier. Do you ever walk
into a vacation rental with like
seven remotes and you're just
like, I'm not even gonna attempt
that experience. I'm not even
gonna try that. So just like
some of those basics, just
making it really flawless. You
know, Amazon echoes and that
sort of just whole ease of
walking into a home knowing the
technology i think is always
interesting to me. But, you
know, sort of just a techie
techie nerd.
Sean O'Toole: Three to four
times I get to use Netflix on
the previous stayers.
Oh I don't know what's wrong
with that. You know that I mean,
I had my Netflix account on all
10 of my properties. I think
they may be limited at some
point in time, but like, yeah,
who cares make it easy on people
who even remembers their Netflix
password? It's always such a
pain in the ass. It's so
stressful. And the kids are
yelling at you like, Where's my
show? You're like, I don't know
my password. I can't do it. So
yeah, just making things easy in
the home. Automation is good.
What else exciting. I guess it
Noiseaware stuff is cool. I
mean, I know those guys really
well. I mean, I think that's
interesting.
Yeah, I'm not actually monitors
sound levels, or is it I know
there's I met a gal who has a Wi
Fi and she looks for how many Wi
Fi connections like to see if
it's above the occupancy limit.
And I'm gonna forget the name of
her company and I feel bad for
not plugging her But yeah,
Scott Shatford: I know you're
talking about I should know it
too. I'm sorry.
Aaron Norris: Maybe on the show
notes.
Sean O'Toole: Is the NoiseAware
where one has sound? It's
listening?
Scott Shatford: Yeah, so it's
sort of a you plug it into, you
know, an outlet and it's sort of
just measuring decibel levels.
And so if you get above sort of
a sustained, sustained decibel
level, it will send you like a
text alert or notify you in some
way, shape or form, you know,
then it's then it's like then
what right then you've got to
like yell at your guests at 1:30
in the morning, and yeah, that's
a whole nother down day, but at
least it's good to know.
Sean O'Toole: Oh, Wow.
Scott Shatford: I think the
technology is cool. And I think
it's even more powerful, I think
at the regulatory level to just
talk about all the
sophistication you have how you
have your, your party squasher
is it called Party Squasher? It
might be that yeah. Yeah, and
are NoiseAware. So it's like,
Hey, we have ways to monitor we
have ways to sort of make sure
this is not bothering neighbors.
And that's really their sort of
strategy is just giving a, you
know, local city some more
comfort, you have some, some
technology to control that
component. I don't know ya know,
there's there's not a whole lot
you can do for getting a home
like once you get in the home,
you know that that's sort of the
biggest problem was just
automation of getting in homes
you know locks, you know keys
and the most awaited thing on
the planet and so anything you
do to get away from keys and get
into digital locks I mean that's
the first step you got to take
the short term rental space.
Sean O'Toole: Have a favorite
digital lock now
Scott Shatford: Don't ask me
I'll get in trouble because they
are. They are they are like,
like to try to talk me into
promotion. There's one here
Remote Lock is a local one, but
they're more of a big property
managers at scale. There's so
many of them. I don't really I
can't really tell you that
there's August Locks, Schlage
locks, are all good. I don't
know I don't know. Really
whatever taps into your PMS. So
like look at like gas tea or
whatever you're using and just
sort of see what integrates
because you want that all to be
connected custom codes going out
to each new gasps Without you
thinking about it, all that
things sort of interconnected.
Sean O'Toole: Now in the revenue
optimization side are you
integrating with some of these
platforms? Is that a business
for you guys where you're giving
them the, you know, these the
guest or the PMS system? They
PMS is the right word, right?
Scott Shatford: It is. Yep.
Sean O'Toole: Yeah. Are you you
supplying them data so that they
can like automatically set rates
and that kind of thing?
Scott Shatford: We are, yeah. We
have a couple of partnerships
like that, where we'll provide
all the pricing for the
properties on our platform. One
of the bigger ones is with
BookingSync. They're out of LA
and they use our pricing
algorithm to like you know,
display rates, change rates and
push those out. accordingly.
We're, you know, it's a big part
of our strategy is thinking
through how we want to approach
it. It's just sort of a, you
know, there's there's 70 players
that are like PMS is with
properties at scale. They're all
different places and
sophistication and ways of
pushing and it's sort of just a
rat's nest of connectivity in
the vacation rental space. So
we've been sort of like waiting
for the dust to settle on some
real sort of clear standards and
like, you know, what is a rate?
And do you push pricing? And
what about the minimum stay?
And, you know, I didn't really
want to lead that whole charge.
But yeah, we have some
partnerships and revenue
management. Pricing is the
single biggest decision people
should be making on a not a
daily basis, maybe, but on a
weekly basis, you should be
really thinking about, what's it
looking like, what's your
occupancy over the next couple
weeks? couple months? What's the
competition doing? And that's
sort of a headache, right? Like
a lot of people don't want to do
that across 10 properties. And
so we have enough data, we have
enough information to be able to
do that automatically for
people. I definitely see that as
a big place. We're investing
time we already have it and
market minder, you can see
recommended rates are but you
can't go into autopilot mode and
just sort of like push it
wherever. So that's definitely a
big thing we're working on,
Aaron Norris: Especially now
with everybody waiting till the
very last minute to book, it's a
lot of stress.
Scott Shatford: It is a lot of
stress. Right? And the hotels
have a really good because
they've got it, you know, 100
rooms to get it wrong on. They
don't have to get it right. You
know with a vacation rental.
It's like, either you're booked
or not you screwed it up or you
got it perfect, right? There's
only one opportunity to get it
right. And so it is pretty
stressful and you want to not be
too big of a weenie. I remember
being very concerned. You know,
we gotta got to get booked. I'm
going to go to $99 night, and
then I got booked in like five
minutes. I'm like, No, I
underpriced it. I should have
felt strong. Like, why why am I
such a weakling? Just no
confidence. So yeah, it's super
hard because you can't Yeah, you
can't really? I don't know. It's
just it's binary. It's either
booked or not. You don't have a
chance to adjust. You know.
Sean O'Toole: I got one more. I
don't know where we are...
Aaron Norris: We are at that
mark. So go for it. And I've got
one last one too. If it if it's
not you that's asking it so go
ahead.
Sean O'Toole: Okay, so um, No
big one everybody's talking
about right now is Airbnb filed
their S1 to go public you know
as these companies go public
there typically tends to be even
more opportunity even more stuff
that happens any you know
anything there that you're
seeing Did you get friends and
family shares you know
Scott Shatford: I wish.
Sean O'Toole: Any any comment on
that event and what you think
and what you think their
prospects are should we all go
out and buy stock?
Scott Shatford: I mean, I like
it but you know, I'm Airbnb's
biggest poster boy right. I
started there I made money there
I created a business off the
backs of their business and, you
know, so maybe you should find
somebody with like a more like
tempered view or a more like,
you know, unbiased view of them,
but I mean, I love it. I mean,
obviously, Airbnb was crushed in
this in this COVID environment,
they had to go raise a bunch of
money $2 billion at terrible
terms, which I do think is
forcing their hands in some ways
to go public maybe before it's
perfect. But yeah, have you
looked at the NASDAQ it's not a
bad time to go public I mean the
numbers are pretty ridiculous at
the moment. So I don't you know,
I think they were trying to go
in March unfortunate there, you
know, a couple months too late
to do that. I see big things for
Airbnb The brand is, is
phenomenal around the world,
going public, you know, gets a
lot more of your host as
shareholders as people are more
invested in your business. I
think it's such a good consumer
brand right now. People are
loving the consumer brands like
you looked at like the Tesla
stock lately. Like it doesn't
make any sense. And like, Airbnb
is any one of these things. And
people with millennials with
stock portfolios now is through
the roof. They got no football
to gamble on I can't gamble on
the NBA Finals or whatever. And
so they go, they're all getting
stock portfolios now. And when
are they going to go invest in
the one thing that they know is
Airbnb. So I really do feel like
there's going to be you know,
it's a great consumer brands, a
lot of young people are gonna be
investing in it, you're gonna
have all these stakeholders that
feel like they're, they're
responsible for the bottom line
these hosts that are gonna come
in and pile into the IPO or, you
know, post IPO price. So I think
I think I'm pretty bullish, but
you know, take it with a grain
of salt.
Sean O'Toole: And, you know,
just on the opportunity pieces
there. I mean, ecosystems been
around for a while now, is there
any spot in the ecosystem
obviously, that, you know, there
may be something you're working
on that you want to keep to
yourself, but something that you
think, God, I wish somebody
would come in and do this
because there's an opportunity
here?
Scott Shatford: Good question.
Good question. I think you know,
with all of these companies, you
know, Airbnb, really, what is it
at the end of the day, it's just
a brand. It's just, it's just a
place to go book, a vacation
rental, and you don't have to go
into Airbnb. It's just all about
our distribution network.
There's always room for
disruption, right? Like you look
Get Expedia, booking.com is you
know 10s of billions of dollars
a company's basically just
because they're smarter paying
for ads and like getting on the
first page of Google search
results so there's always a huge
opportunity and being able to
disintermediate that stuff
consolidate supply across three
platforms create a new place to
see and view and book properties
that are offered these main
brands and so and you can always
charge really good commission's
on that if you can get it done
right. So that's, that's what
the big opportunities are is
there's no reason this is a
three horse race. It's just
because why why is Airbnb
unique? This supply is not
exclusive to them. It's not that
you can't go find that same
property and verbo or book it
directly to go to the kasa.com
and so I'll leave it there but
like yeah, marketing
distribution, everybody's trying
to get away from having to be
reliant on Airbnb or be reliant
on VRBO every is looking for
independence just like the
hotels. Don't want to pay 20% of
booking.com for a booking, there
always be opportunities if you
can sell distribute properties
at cheaper price...
Sean O'Toole: Any niches to like
waterfront properties or, you
know, mountain properties or
stream properties or ski in ski
out does that
Aaron Norris: Mud huts
Sean O'Toole: Mut huts.
Scott Shatford: I sort of like
the whole connected trip thing
that's something that Airbnb
coined is you know, for, it's
called for the, you know,
executive like, you know, what's
your private plane to your Aston
Villa and your experience and
your chauffeur and your butler
and all that then I think
there's still a lot of
opportunity maybe not at that
like extreme of like, find your
private island level but a sort
of the whole thing booked for
you, right your experience. Now,
everything is sort of a package
deal without the travel agent
both.
Aaron Norris: It's interesting
said that the lady that I stayed
with at Denver, she moonlighted
on the side doing marijuana
experiences. With an Airbnb and
she also had 50 jeeps that she
rented out as part of the
experience with some of her
properties. So she had sort of
expanded on that concept. So I
could see that.
Sean O'Toole: get them high and
put them in a Jeep sounds like a
great plan.
Aaron Norris: Not the same
vacation package. But what's a
last question? What's next for
AirDNA? What are you guys
working on?
Scott Shatford: We're looking at
crawling out of this COVID hole
that we found ourselves in as a
lot of us are. We got a lot
going on. I think it's all about
getting data from people. It's
all boring stuff, to be honest
with you, it's gonna bore the
hell out of your listeners. But
you know, there's there's 11
million properties, we only have
access to less than a million of
them in terms of source data. So
for us, it's all about data is
king and environment. Accuracy
is the name of the game. And so
just continue to think about how
we compel people to give us
data. So we can sort of always
be that record, like data. Yeah.
Source of record from the
industry. You know, beyond that,
I'm going to be looking at you
know, there's good tech
challenges, pricing is always
going to be one of them. And
really real estate real estate,
real estate is where we think
that the final frontier is for
us is, is, you know, why isn't
every piece of property even
thought about or valued in terms
like what the short term rental
value is? So we talked about
with residential real estate,
you know, properties, values
never traded on like a cap rater
would be with commercial real
estate. But why not? Why isn't
this sort of the way that
vacation rentals are changing
hands? Because that's what it
should be. It's a business. It's
predictable revenue, like you'd
have five years of rent roll.
And so like, why isn't that sort
of a clear or like, why isn't
that part of the buying process,
especially for vacation rental
properties? I can sort of go on
and on and on. But would you
think that when people are
building real estate purpose
built with short term rentals in
mind or converting or whatever
it is, there should always be
this component of, you know,
what is the one floor ,two
floors of short term rentals, we
should be building on terms you
know, below the condos but above
the retail and like that, that
will be a conversation that's
happening with sort of every new
piece of you know, high rise
real estate is like you know,
what is actually detrimental
component.Anyways
Sean O'Toole: I'll bring this
back to our our listeners, right
so real estate investors
hopefully took away from this
that you should be paying
attention to the short term
rental market, right? If you're
not looking at that as one
avenue of exit on a flip, right,
you may be leaving dollars on
the table. Realtors, same thing
like understand what's going on
in your market, you'll be able
to better serve customers coming
in and market help them make
better decisions. And I would
say for our home services
companies to you right, like,
think about the value ads you
can bring. You just heard Scott
talked about the fact that you
know, pools, spas, firepits,
outdoor barbecues, right, all
those things out value, those
are pretty nice sales for you in
the Home Services space, right?
So to be going and finding these
folks on the short term rental
side and reaching out to them
and explaining it to them in
terms of what it will do for
their income, right, so you can
look at Scott site, look at the
difference in income that adding
that thing will be and you can
then you can now say, Hey, I'm
gonna sell you an outdoor
barbecue, it's gonna cost x, but
you're gonna make why that's a
whole different pitch, then
gonna buy barbecue. So anyways,
lots of good stuff. Definitely.
Good. Pretty good service and
very cool. Very cool business.
So thanks, Scott, for being with
us.
Scott Shatford: Thanks for
having me. Good to see you
again, Sean That's another five
years into Alexa.
Aaron Norris: Thank you for
listening to the Data Driven
Real Estate Podcast. You can
find show notes and links to
some of the resources mentioned
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datadrivenrealestate.com. Click
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