Former CEO at Vacasa Europe and Board Member at HomeAway
Simon has over 15 years of experience in the vacation rental industry and is one of Europe’s leading figures in property management. He is the Former CEO of Vacasa Europe, the leading professional property management company globally, where he launched Europe in 2016. From 2005 to 2014, Simon was the CEO of Interhome, a vacation rental property company with over 35,00 properties available in Europe. Simon was on the board of HomeAway for two years pre-IPO and was President of Phocuswright, the leading authority in travel research and events. Read more
Can you start by sharing a bit about your experience in the vacation rental business?
My experience in the vacation rental business is quite wide, long and profound. I’ve been in the industry for 15 years; I started as a CEO of one of the largest property management companies in the world, which was actually single branded with 25,000 units when we started. I stayed there for 10 years and then I had the great opportunity to be also part of the board of HomeAway, before it was sold to Expedia and taken from the stock market, which was obviously a very interesting time. At the same time, I have a number of angel investments in different start-ups, across the value chain of vacation rental.
I have been in the industry now for 15 years and for two and a half years I’ve been running my own consulting firm called AJL Atelier. We’re now a team of seven people, focusing on strategic growth consulting for any stakeholder within the industry, from private equity all the way to property managers. We’re helping on M&As, especially sell side mandates, and we are also producing our own pricing algorithm; I’m talking about AJL Pricing Solutions.
Let’s split the different types of vacation rental inventory in the market. How would you define those?
That’s always a great discussion because I speak to a lot of financial analysts of the industry and I want to quickly start with a small anecdote. It’s always interesting to see, when Booking.com announces its unit counts, within 24 hours, Brian Chesky tweets how many Airbnb has and for people who are not in the industry, they’re comparing potatoes with carrots. It has absolutely nothing to do with each other and the financial industry is always comparing unit counts, but that’s irrelevant. Unit counts on an OTA are irrelevant.
First of all, what are we looking at? We need to start at what is the vacation rental/short term rental industry doing? We are connecting guests with owners; that’s all we do, so it’s not very complex. Number two, the vast amount of the supply in this industry is individually privately owned. So we assume, according to the numbers we have, that more than 98% of total supply is privately owned and only about 2% of these assets are institutionally owned. With what happened to these operators during COVID, I think institutional ownership of short-term rental has even declined further, because nobody owns 500 hotel and vacation villas and rents them out. These are individually, privately owned, so this is something we need to be very clear about; our industry is not based on assets. Our industry is based on trust; owners who trust a property manager.
Total market that we’re tracking online, right now, on all the largest OTA platforms is around 27 million units in the world, that are currently tracked and digitally bookable, on the large OTAs. Roughly 50% of that is professionally managed and the rest is individually managed, like RBOs – rent by owners – which are mainly on Airbnb but you can also do it on other platforms. If you are rent by owner and you want to do distribution and manage the unit yourself, that’s how we differentiate the market.
We clearly differentiate between the managed – professional property manager who managers the unit, cleaning and maintenance – and then we separate the RBOs which are individual owners who manage it themselves and use the platforms as demand generators.
When we look at the property management side of it, then we have different categories as well. On the property management side, we have people who do full service. That means they exclusively manage the unit on behalf of an individual owner which includes cleaning, check-in, check out, maintenance – the whole works – so the owner has nothing to do apart from banking his monthly rental check. That’s exclusive.
Then you have an agency model which means the PM takes units from individual owners, but also from property managers and just redistributes them. They do not have exclusivity on the inventory but is a channel, is a redistributor and we call them agencies. They have inventory where some of that is exclusive and some of that is not exclusive; it’s a hybrid.
Then you have the third model, which is distribution only, which means you actually do nothing; you don’t even do the cleaning, you don’t even do the maintenance. In a lot of cases, owners living close by to the property, they don’t want the property manager cleaning it and checking in and checking out people; they can do that themselves. They want somebody to take care of the booking, the payment, guest enquiries and all that. The best example in the UK is Sykes Cottages. If you look at Sykes Cottages, as a property manager, they do not manage their entire inventory. They only manage about 10% of the inventory which, predominantly, is in the Cotswolds where people have houses from London and they are not there, so they let somebody else manage it. All the other 90%, in the different regions of the UK, the owner lives close by so they need distribution services, but they don’t need cleaning and maintenance and property management services.