Skift Travel Podcast: Short-Term Rental Pendulum Swings Back Toward Homeowners

Kopit: Hello, everybody. Good afternoon. Good morning. Good evening. I’m Sarah Kopit, Skift’s editor-in-chief, with Seth Borko, Skift’s head of research. We are here with the Weekly Travel Podcast. It has been a back-to-back couple of days for the two of us. Seth, we are tired.

Borko: We are very tired, Sarah. We are exhausted in fact.

Kopit: So we had two big events for Skift in these last couple of days. We had our Data + AI Summit and a Short-Term Rental Summit. They both were great. And Seth and I are here today to talk about what happened, what we heard, what we learned, and to kind of dissect it. Seth, what were your big highlights? What made you the most excited?

Building a Property Management Brand

Borko: So there was a lot. Let’s start with Short-Term Rental Summit. We have got two summits, so why don’t we start with that — short-term rentals, a sector that myself and my team and Skift in general have been following for a very long time. I was really excited. It seemed like a very much more maybe realistic conference than in the past.

Like some of the shine has come off. But that’s also a good thing. I felt the people in the room and and in the audience were far more serious — far more mature — about the future of the sector.

And far more focused on profitability, which is a great thing. There was a lot of great sessions. I’ll pick one that I moderated. We had this great session with Evolve Vacation Rentals. That’s Brian Egan and Portoro — Dustin and Portoro — and they’re both branded professional property managers.

So these are the boots on the ground folks. And to me, a really, really interesting debate in this sector has been like, “Can you build a property management brand?” All the branding seems to go through Vrbo. All the branding seems to go through Airbnb. Can you build a brand like Evolve like Vacase, like Sonder? Some of them have struggled, and the hard part has been getting homeowners and building that consumer presence.

Borko: And I asked Brian Egan — Evolve is a top five property manager in the world. I asked him about this — and Dustin. But they both had some really great answers. He really focused on the homeowner. This was a big focus of debate of how do you attract homeowners because homeowners have been such the key to growth. That’s one of the things that was overlooked in past iterations of the short-term rental conference.

Brian Egan, co-founder and CEO of Evolve: The thing that I mentioned I agreed with Carl on something. One thing I disagree with him on is that these companies can’t scale above 25,000. I heard the line. I wasn’t in the session, but I heard the line.

Carl Shepherd, Investor and Co-Founder, HomeAway (Vrbo): The thing that I think we all have to look at is historically Dennis, I can’t think of any property manager who has been able to continue growing after about 25,000 properties.

I just haven’t seen it. But you know, the key here — and I say that kiddingly — the key is you can’t think about 35,000. If n equals 35,000 in your operation, you’re lost. It has to be n equals one. That’s how the owner is thinking about it. It has to be the fact that this is the second-largest asset in their life.

It is largely likely the second-largest expense structure in their life. And that is a tremendous amount of responsibility as a partner to make sure that they have the rental income necessary to cover those bills.

Kopit: One of the things that struck me pretty much across the board with all of the guests that came on to speak was they talked about the individual homeowner quite a bit. There was a real focus on who these people are, what they want, what they need as opposed to kind of your point about bringing it down to earth and their reality.

I think maybe we’ve gotten past the point where we’ve proven that this is a business that can work. Like how long has Airbnb been around? For like almost 20 years, right. And so, yes, it works. Yes, it can make money. Yes, it can do all of these things. But at the end of the day, you still need human beings with this massive asset to kind of turn it over in a certain way to you as a company.

And there’s a lot of trust there. And so how are these companies doing that? How are they communicating with, leveraging, making a profit from and together with these homeowners? So that was that was really interesting to me. I really wasn’t expecting to hear that as much as I did.

Borko: And if I can, I’m sure I’ll upset some people by saying it feels to me like part of what’s happened was you had a bunch of people come into this space like, “Oh, this is an interesting product, an interesting market. The way to grow it is we need to get people to use it.” People don’t know enough about it. Airbnb is still kind of niche.

Let’s build this whole consumer thing. And it’s all about being consumer-friendly. This is old history now, but there was a long time when you couldn’t book instantly on HomeAway. When Expedia bought HomeAway, you had to do everything over like requests and stuff — like Expedia took a lot of time to do instant booking on HomeAway. So it’s all about what’s good for the consumer, what’s good for the consumer, how seamless if possible the consumer.

And then we’ve heard on earnings calls for Vacasa, which is one of the largest. They’re struggling with homeowner churn. And so maybe the pendulum swung too far in the direction of the traveler. And I was like, “Wait a second. This is an ecosystem. There’s multiple parts and pieces of this. May we swing all of it back towards the homeowner?”

I think I would agree with you there. That’s a theme that I heard throughout this conference. What sessions did you like? What was your favorite?

Impact of New York City Regulations

Kopit: I think my favorite one — the one that I just simply enjoyed listening to most was it was our second-to-last set of speakers of the day. And it was the panel about the impact that New York’s short- term rental regulation has had on these homeowners. And basically, we’ve talked about it a lot here at Skift about how the New York City law has essentially banned short-term rentals.

You can’t do it. I mean there are some loopholes. But essentially, it’s 30 days or more. And so just listening to some advocacy groups and listening to them talk about what the impact of these laws have been like very personally on Jose from Queens and John from Bay Ridge because that is what happened, right?

And I think that back to this, the individual and the homeowner — that’s really like the crux of the short-term rental game. Without these homes, you have no business.

Margenett Moore-Roberts, member of RHOAR (Restore HomeOwners Autonomy & Rights): I’ll tell you, I spent 15 years saving to buy my house. One of our co-founders of RHOAR grew up in section eight housing and moved to New York and was able to save finally and through the luck of timing and thank God, I was able to save the money, etc.

We have a home. And our goal is not … God bless the people who want to build tech stacks. I have a healthy respect for it. But there’s room in this market for people who just want to use the home they live in, leverage the asset that they have in order to make sure they can take care of their family and take care of themselves.

And as people who are doing this work, you can play a role in advocating with us for what ultimately is the supply that your business depends on. It doesn’t service anyone if everyone wins except for the individual homeowners. And in New York City, in our case, we feel like one in two family homeowners, we’re losing this battle and in some cases, people are losing their homes. And, we just need help advocating for that nuance, that carve out.

No Consistency in Regulations

Borko: So yeah, I absolutely love that clip. Sarah, we were both discussing this a little bit in pre-production, how that single line stood out to us in the short term rental summit as like one of the most powerful lines of the night. So absolutely, in the homeowner category. But there’s a really … it’s not just New York. There’s a much broader conversation to be had about regulation.

And I think you were moderating that panel — right, Sarah?

Kopit: So I talked to the mayor of Columbia, South Carolina, and we were talking a little bit about how how regulation has basically fanned out throughout the United States and I suppose the world. We are most concentrating on the good old United States of America. But the interesting thing for me about that was that it’s so uniform, like there are as many different ways to regulate short-term rentals as there are cities like there’s probably 50 different ways that they’ve done it.

And so there is no consistency. You talk about the homeowner, right? If you are going to buy and start … let’s say you’re going to go buy a second home, and you think to yourself, “Well, we’ll go up and we’ll use it for a couple months a year.”

And then the rest of the time, I’ll Airbnb it unless you have like some settled law where you are. It’s like the wild, wild west. You won’t necessarily know if in a year, you’re still going to be able to operate that business. That’s how varied the … because it’s done city by city, town by town, county by county, and some places let it in altogether.

Some people, like New York, say no. Some people say if you did it for a while when we passed the law, we’ll grandfather you in. Some people say you just have to register. You have to pay a certain amount of taxes. Some have it as a percent of the available housing.

Borko: What’s even scarier is it can like change midway through. Imagine if there’s the law on the books and you buy. “Oh, I’m fine.” And then you invest hundreds of thousands if not millions of dollars. And you got a debt loan and a debt to do it. And then new city council or new town council comes in and whoops, sorry about that.

It’s a huge challenge. It’s interesting — the final session of the night was Jay Carney … the final session of the day was Jay Carney. And it was fascinating because he got asked the question is there something to do on the federal level about short-term rental regulations?

And he was Obama’s press secretary. He worked for Amazon. He’s used to working at the federal level. And I mean, we can talk about his answer was no.

Jay Carney, global head of policy and communications at Airbnb: We do engage with federal lawmakers on state- specific issues. Sometimes, there are state regulations. So many governors, state houses, but sometimes senators, and there are certain things we have in front of the federal government. But really not much. It’s very it’s one of the things that’s been the learning for me in this role is unlike my past roles both at Amazon and government and even as a journalist, which are very nationally focused and even internationally.

Like this is all local — like city by city, around the world, by town, around the world.

Borko: There’s no one at the federal level to go to in many cases — not even at the state level. They’re playing Whac-a-mole with cities, counties …

Kopit: City council is generally … I worked on a piece for Skift about a month ago about neighbors and short-term rentals like neighborhoods and how they were … some places were regulating. It’s a lot of these noise complaints, parking complaints, garbage complaints — this is the type of minutia that’s driving the regulation. But of course, if you’re the neighbor or if you’re the person down the street listening to the loud party or have somebody parking in your parking space or the trash piled up, it’s not minutia to you, right?

It’s just that’s a big deal for you as well. So, city council, that’s where all the action is. A lot of spicy city council meetings, when the …

Borko: All politics is local. That’s how the saying goes. I have a very New York City story of one of my first apartments when I moved to the city was being run partially as a landlord and partially as an illegal hotel, as an Airbnb. And that was like my start in the city, “What is going on?”

So it’s definitely it definitely happens.

Kopit: It’s so funny. That’s such a New York City story. It’s very typical. But we talked a little bit about New York City as well and about how what New York City did with their short-term rental regulation essentially just drove it into the black market, which New Yorkers love a good black market.

It’s not like we don’t know how to navigate that. We have a clip where the mayor talked about that, too.

Daniel J. Rickenmann, mayor of Columbia, South Columbia: Can New York create regulations that can be achieved and achieve those local goals? I think they can. And they can do it for a reasonable level like some other communities did. Like North Myrtle Beach or Glynn County.

Kopit: You have any thoughts on New York? I love talking about about this in New York because it’s my backyard.

Rickenmann: It’s funny, my oldest daughter lives here and we kind of laugh about the black market here and in New York especially because you look at when they went to regulate marijuana shops, there are more illegal marijuana shops than there are legal and they can’t keep up with … I think it’s going to be the same thing. It’s just driving it under and it’s going to exist.

So why not sit down with folks and figure out a way to make this work?

Borko: All right, so you heard it there. When my uncle comes to visit, I’m sending him a Craigslist link. And that’s how he’s going to afford to stay in New York City. I mean, there’s a lot of challenges, right? We’ve talked about a lot of challenges with this sector. We’ve talked about building property management, about the importance of homeowners, about building those brands in the space.

The one thing we haven’t really touched on was the big platforms themselves, the Airbnbs, Expedias and Booking.com of the world. I had a chance to speak with Booking.com, with Eric Bergaglia, their VP of Homes and Growth. And I said, “Look, our consumers tired of short-term rentals?” And well, the good news that he gave us was no. And we also have a clip of that one. I like this clip.

Are you still seeing consumer interest in the short-term rental sector?

Eric Bergaglia, vice president of homes and growth segments at Booking.com: Yes, definitely. I think one example of this from the Booking.com alliance is 5 or 6 years ago, it was about 25% of the total company room nights, and Q1 is 36% every quarter. And it keeps growing globally and in every region. It keeps growing as well. So we are seeing more of our Booking.com customers starting to book vacation rentals with us.

And that’s good. So I think there’s … definitely no fatigue.

Borko: No fatigue. We’re still seeing growth. And everyone in this room is very happy to hear that from a very big player, too.

So no consumer fatigue, continued growth. Maybe it’s bad news for Airbnb because it means more competition, but it’s certainly good news for the sector. And so, I’m excited to see what comes next.

The Explosion of Data in Travel

Kopit: Next, we are going to talk about the other event Skift had this week. It’s the Data + AI Summit, where we talked about we talked about the future. We talked about what has been in the last couple of years and even more. So what is coming? And it was really fascinating to kind of juxtapose the two days where we were talking about how for short-term rentals, which was kind of like the bright, shiny new kid on the block for a while. They’re the mature people now.

You know, they’re like the young adults — the new kid now is data. Data has been around for a while, but it’s really AI and how data feeds the AI machine. So same question, Seth, what was your big takeaway and what was your favorite conversation?

Borko: Well, I know that Rafat and many of us were very intentional with the data and AI. It wasn’t just an AI Summit — it was a Data + AI Summit. Because exactly what you said — that the data is what feeds the AI. And one of the big themes that came through to me was good data equals good AI and how hard it is to get good data internally with a single business, it’s hard to get good data, let alone to get good data from peers in the same industry, let alone to get good data from other industries or other parts of the travel industry.

That was a big learn for me, and that was a lot of talk about it. I will admit, I was surprised to see and excited to see how far and advanced some of these projects had gotten. I was admittedly was kind of expecting some loosey-goosey, vague things. “Oh yeah, we’re really excited.” But people came with really incredible projects — concrete, tangible.

Here’s what we have — not are building — but have built and are launching with AI, which was super, super exciting to me. We saw things around airlines, around waste management, around travel agents and booking and lots of very, very cool case studies. Was there anything exciting to you, Sarah?

Kopit: Yeah. So I talked to the CIO of United Airlines, and he’s been doing this for a while. And he said United is probably farther along than most airlines in this space. But I think my favorite part of our conversation, it was really the part that kind of we all can imagine in our heads.

It was when he was talking about how they use AI to decide when they hold the planes for connections and they do. So they have a model built around you take all, who’s on the plane, how long it takes for them to get to their next gate, where the plane is going — if it’s even there. All of these different factors.

Jason Birnbaum, chief information officer at United Airlines: We have a product and we call it connection saver. And you know, the insight we started with was that customers were saying, “I’m walking up to the plane, I’m rushing, I’m connecting, and the door gets shut.”

And they sit there, and they’re like, “Well, can you open the door? “And the flight in the gate is just like, “We can’t open the door.” But then the plane sits there since they’re for 5 or 10 minutes and they’re very it’s a very terrible customer experience.

And so that was the start of what we now call a connection server, which is a lot of algorithms and some AI that basically looks at all the passengers that are coming in and then calculates based on when we think they’re going to arrive, how long it’s going to take to walk to their gate. Then we figure out how much time do we have for that?

Well, how much slack is in the schedule of the plane that’s departing along with who’s connecting on the plane? Like the last thing we want to do is have a customer go hold the plane for one person and make five people miss their flight. so that so we’ve built this algorithm called Connection Saver. And so that been very successful.

Two things we’ve added to it that are really exciting. You know, one, we started communicating to the customers. We had a lot of debate — like should you tell people that you’re holding the plane? Like would that make it worse or better? And so we let people know that we’re trying to get you to the plane so they don’t stop at Starbucks and they move along.

But the other one that’s been really interesting is we actually let the passengers know on the plane why we’re holding. And I don’t know if anyone’s experienced this, but it’s an amazing sort of moment of humans coming together because everyone who gets a text usually knows what this is about. And when the customers finally get on and they’re sort of disheveled and discombobulated and breathing hard and then the whole plane cheers, everyone claps. And it’s a really great moment.

Kopit: I would probably burst out into tears because …

Birnbaum: They’re like, “You made it.” It’s a really great moment.

The Impact of AI on Humans and Business

Kopit: And I was just thinking, “Oh, my God!” If I had like been running through the airport, like with my kids and my luggage, trying to get somewhere I really needed to be. And I walked down to that plane and everybody cheered, I’d probably burst into tears. It would just be too much. It would be too much for me.

So, it was kind of nice — how much a lot of our guests and our speakers really brought. I mean, it is the hospitality industry. It is travel. So I guess maybe it shouldn’t be that surprising. They really brought, “This is the AI. This is the really technical and computer science-based stuff and this is how it affects human beings.”

I would say that was one of the things that I really noticed is that people were really good. Our speakers were really good about linking back to that and never forgetting why we’re doing all of this in the first place.

Borko: I thought that was an amazing example too because that’s one of those great scenarios where you would think intuitively that if your flight is late, that’s going to hurt United’s reputation. So if I’m a customer on a United flight and my flight is 10 minutes late, that’s a ding against United. But when they say, actually you were ten minutes too late because we were trying to help a passenger, technology makes that connection.

But that’s a very human connection and I suspect — yeah, like people love that stuff, right? Oh my god, United held a plane. Even if you’re a little bit late, United held a plane for someone. That’s so cool. So that’s an amazing Aha! moment. If I can give an example and you got to cut me some slack, a little nerdy or a little more operational, but we heard we hear two sides, right?

One is like the surprise and delight guess moments. The other was there’s a real impact that AI can have on business operations, which is admittedly like the less sexy part of it, but also just as important. And I had a panel with Amex GBT, and they’ve got these amazing travel agents. And admittedly, they’ve had a lot of turnover since the pandemic.

Some of them are new in the job — even the ones that have been on the job for a while. It can be very confusing. I don’t know if you’ve ever tried to read the fare codes — like the actual fare basis, terms and conditions for a bit of their codes. But it turns out it’s not just like the little button.

You’re like, “Book, flight, go!” The flight will take you from Newark to London. It’s not how it works. It’s pages and pages and pages and pages and pages and pages of conditions.

Marilyn Markham, vice president of AI strategy and automation: What you’re seeing here is a global distribution system display of a fare room. I chose KLM because right next to me and I took Amsterdam, New York, because that’s what he flew. And I said, if you were to speak to an agent and ask them, can I cancel this later if my trip doesn’t happen, or what are the limitations of this fare?

They will be doing this. They are actually doing move down, move down, move down. There are 19 pages of this and it’s not a KLM thing. This is every airline out there has fair rules attached to their fares. And they are super long, unstructured. There’s no standard to them. They’re usually in English. So if you’re a non-English speaking agent, if you’re on the phone in a high-pressure situation, it’s crazy to expect you to read this and then come up with a synopsis of what the answer is.

But if you take this as it is, just take the display, do nothing to it. Give it to an LLM and say, “Summarize it for me.” It does it really well. The prompt doesn’t even need to be complicated. You just say, “Summarize it for me, you know, get some caps, make it into functional categories.” How much vaguer could I have been?

And you say, “OK, go do it.” This is what you get. And it contains every, I would say, significant item that is on that very long display. And from there, if you keep the context of the conversation, you can actually have a conversation. Say, tell me if you go to the next slide, tell me, can I cancel this ticket?

And it will tell you exactly and give you the reference of where it found it. And this is not using any kind of bleeding edge, you know, training of the AI model. Nothing. It’s literally take the text, dump it, say, “I’m going to ask you questions about this and then go for it.”

Borko: And what Marilyn was saying is that they’re using generative AI to effectively translate. So you can translate from Spanish to English, you can also translate from travel agentese, from airlinese into travel agencies, so to speak, into consumerese using AI — artificial intelligence. And that’s a really cool use case as well.

And again, they stood that project up very quickly and launched it. And it’s being used by their agents today. So incredible to see where these use cases are making real on the ground practical impacts.

Kopit: So we before we get too excited about everything that may happen or is happening, one of the other panels that I thought was great with Gilad and Shane was about not getting too wrapped up in the hype. AI as of today is the crypto of yesterday. And I don’t know what was before crypto, but …

Borko: There was no mystery before crypto. There was before crypto and after crypto.

Kopit: Yeah, exactly. There you go. And so, they just talked really kind of simply and plainly about some of the limitations to this and really remembering what AI actually is and what it isn’t.

Borko: Yes. And what it is is a tool, right? It’s a tool to be used. It’s something we’ve heard a couple of times people say about how Microsoft Excel … some people did probably lose manual data entry jobs, but it’s not like we no longer crunch numbers because we have Excel.

Well, actually more people than ever before crunch numbers. I mean, these things have come before. There are tools that will be used. And he was making the point actually, as we go, kind of like you’re saying, “Like what came before crypto?” Gilad was comparing back to the mobile revolution.

Gilad Berenstein, founder of Brook Bay Capital: So to me, it seems that to say that we have revolutionized the way we do trip planning or things in our industry is kind of a silly thing to say. You wouldn’t say that if you got a brand new hammer in your shop, and it was just a better hammer than the one you had before.

What the revolution will be — and this I think ties back to what Shane’s point made — is as we learn to use these new tools over a period of time. So the advice that I often have for leaders of both startups and big companies, I say the people who won the mobile revolution were not the first companies of the mobile app, right? It was the companies who committed to a decade of testing and learning and iterating as they learned how to use this new set of tools and mobile technology.

And AI will be the same. So have we revolutionized anything yet? I think the answer is clearly no. 10 years from now, might we look back and say revolutionized? I hope so, but I think it’s too early to tell.

You know, it’s not necessarily that like mobile phones changed everything. It didn’t fundamentally change how you take a trip, but it does change how you book shops and do this. And the winners weren’t necessarily the first movers because mobile technology was still experimental. It wasn’t as final form yet. There’s all sorts of upgrades to bandwidth, things that have to come.

And his point was that it was the people who really iterated on mobile technology year, month in, month out, year in, year out, who really built these amazing app and mobile ecosystems that are paying dividends today. It’s not necessarily the very first Flappy Bird app, which is even not that early. But like, it wasn’t those sort of ads that necessarily had the staying power and that transformed businesses.

And so sticking with this session, which again I really enjoyed — a great personal listen. He had this one line, so I’m paraphrasing a lot. He was paraphrasing someone else. So it’s a double paraphrase. But the line was something along the lines of …

Berenstein: I like the Bill Gates line of “I think we’re all overestimating what we can accomplish in a year, and underestimating what we can accomplish in a decade.” So I think that is probably the right answer here.

Photo Credit: Editor-in-Chief Sarah Kopit and Head of Research Seth Borko are the hosts of the Skift Travel Podcast.