Will 2024 be another 2023? (Ep 605)

In today's episode of “Get Paid for Your Pad,” I, Jasper Ribbers, delve into my recent experiences and learnings from the Data and Revenue Management (Darm) Conference in Nashville. This episode is packed with insights, especially for those of us in the short-term rental industry, focusing on data, revenue management, and enhancing guest experiences.

One of the highlights from the conference was Will Godera's keynote speech. His concept of “unreasonable hospitality,” which he exemplified through his New York restaurant's journey to becoming the world's number one, deeply resonated with me. It emphasized the importance of going beyond the conventional to create memorable guest experiences. This approach doesn't necessarily require significant investment but rather a focus on understanding and catering to the unique needs of each guest. As an example, Will’s story about serving a New York hot dog in a high-end restaurant setting to please a group of European guests underscored the power of personalized service.

The market data and forecasts presented by AirDNA and KeyData were particularly enlightening. The industry saw an increase in demand in 2023, but an oversupply led to decreased occupancy rates. For 2024, we're looking at a balanced growth in supply and demand, with slight increases in average daily rates and revenue per available room. This data is crucial as we plan our strategies for the coming year.

An important takeaway from the conference was the necessity of understanding detailed booking data for effective revenue management. Knowing the booking lead times and trends – whether guests book in advance or closer to their stay – is critical for setting optimal pricing strategies. This approach becomes increasingly important in a market that isn't experiencing the rapid growth of previous years.

Seeing the growing interest in revenue management among hosts, I'm excited to announce a free, detailed training session on this topic, scheduled for Tuesday at 1 PM PST. This session, which you can join at getpaidforyourpad.com/webinar, will be highly actionable, showcasing the strategies used in my business. It's designed to provide valuable insights that hosts can implement in their operations.

To conclude, I share a bit about my upcoming personal travels, including a visit to the Netherlands, a skiing trip in Austria, and a romantic getaway to Paris with my wife. I'm looking forward to these personal experiences and equally excited to share more industry insights in the upcoming episodes. Thanks for listening, and I hope to see many of you in the upcoming webinar.

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Jasper Ribbers (00:00.786)
What's up, everybody? Welcome back to Get Paid for Your Pad. Well, I just got back from Nashville. I was there the whole of last week for the annual Darm conference, the Data and Revenue Management Conference that is held once a year. It was actually my first time that I went to this conference. I figured that now that I'm really focusing more and more on the revenue management side, I figured that makes sense for…

for me to be there. And I want to share on this podcast, I want to share some takeaways, some highlights. You know, it's not the biggest conference. I mean, VRMA is a lot bigger, which took place last year in October. But this conference still, I think there was about 500 people and, you know, kind of all the usual suspects, the companies, the vendors that typically show up at all these conferences were there. So, you know, it was fun to see everybody.

again after meeting everybody at VRMA. But yeah, the Darm is really focused on data and revenue management, right? So this is a conference that's organized by Amy, Amy Hynote. She did a great job at that, so shout out to her. And yeah, I wanna share some takeaways. Well, first of all, AirDNA and KeyData were both at this conference and they both did a presentation on

What's happening in our industry? Right? What's the outlook? Uh, how was the, how did the industry go in 2023? Uh, so I want to go through some of the most interesting data points, uh, that I learned, um, and then I'm gonna share some, uh, some of our takeaways as well from the conference. So. Actually, let me share the highlights of the conference first. I would say the biggest highlight by far was, uh, the keynote speech.

by Will Godera and he is the author of Unreasonable Hospitality, which is a book that you may have heard about if you listen to this podcast, because Eric, my business partner, is a huge fan of this book. He read it. I'm currently reading another book called Setting the Table and then next I'm going to read Unreasonable Hospitality. But I was…

Jasper Ribbers (02:21.798)
I was so impressed with Will's speech. So unreasonable hospitality. If you don't have the book, like highly recommend go pick it up or listen to the audio book. Cause his speech was extremely inspiring. He talked about how he ran a restaurant in New York. I think it was 110 Medicine something. I don't remember the exact name of the restaurant but it basically, it became the number one restaurant in the world. They…

They got a four star rating of the New York Times. They got a three stars on Michelin, Michelin stars. Yeah, the restaurant became the number one restaurant in the world. There's an organization that basically gives out these awards. And Will kind of shared his vision and the process of how that restaurant became the number one restaurant in the world. And it was basically like a hyper focus

a guest experience, right? How do we go above and beyond to really create the best hospitality ever? And that's what he calls unreasonable hospitality. It's essentially like you're going so far that it's not really reasonable anymore. So anyway, it was a super, super inspiring speech. A lot more for me to go through on this podcast, but I wanted to give a couple of examples that I thought were really interesting.

You know, one story that he told was that he, you know, he would always like help. He was the one of the founders of the restaurant, right? One of the owners of the restaurants, but he would, he would, from time to time, he would still serve the guests, right? Really be in the, in the trenches. And he would always ask himself like, you know, what can we do to really like go the extra mile here? And I thought a funny example was, you know, there was, there was a

There's a group of people from Europe that had come to New York to eat at some of the best restaurants in New York, right? That was the whole focus of the trip. And so they were sharing that, um, you know, they went to all these fancy restaurants and then one person at the table said, well, you know, the only thing that we didn't do, we didn't get like one of those famous, uh, New York hot dogs from on the street. Right. That was the only thing that, uh, that they didn't do. And so will he, you know, he, uh, he heard the, the guests say that.

Jasper Ribbers (04:49.61)
And so he went to the back of the restaurant and he got one of his staff members to actually go out and buy a hot dog on the street, bring it back to the restaurant. And then the chef chopped it up into four pieces, put some dressing and made the plate look a little pretty. And then as part of a seven or eight course meal or something that these guests were consuming,

I think as a last dish, they served that hot dog. And the guests were so shocked that this fancy restaurant went above and beyond to get that hot dog for them. As Will was describing it, there's no dish or there's nothing that you can do that would surpass the appreciation. And

you know, the faces of the guests when, you know, when they brought in a hot arc for them, it was pretty funny. And so he had a lot of stories like that. Like he actually had a budget in his restaurant and every single person that worked on the team in the restaurant had the permission to spend X amount of dollars on creating a better experience for the guests and whatever that might be. Right. So anyway, there's a lot of, a lot of cool examples in that.

that he walked us through. So yeah, definitely recommend, check out that book on reasonable hospitality. Because I think, especially now that the market is slowing down somewhat, and we'll get into the numbers and the outlook for 2024. But I think it's really the people that are really focusing on the hospitality side of the business, and the people who are not in the mindset of like, hey, we're just providing a space, but we're providing hospitality and asking yourself,

through the entire customer journey, and this is something that Will did in his restaurant as well, is like look at every single little touch point from when the customer finds your restaurant, or in our case our properties, all the way through to communication, through to stay, and even after the stay, every single touch point, every single time we are in contact with the guest, how do we up-level that experience?

Jasper Ribbers (07:13.074)
I really like going deep into all those different touchpoints to see how we can elevate them. I think that's a great focus for all of us going into 2024, I think. But let me get into some of the data. So RDNA did a pretty cool presentation at the start of the conference where they went over some numbers from 2023, but also they made predictions for 2024. And it spiked my interest because they also

what they were predicting for 2023, and how it actually panned out. And I have to say, it was pretty close. So apparently, RDNA is pretty good at predicting what's going to happen in our industry. So for 2023, they provided some data up until the end of October. So November and December is not included in the data. But up to October for 2023,

We saw a demand increase of 6.6%. Supply, however, increased by 12.8%. And this is data for the United States only, by the way. So overall supply increased by 12.8%. Occupancy was down 5.3%. The ADR was slightly up. So ADR stands for average daily rate. It was slightly up, 0.5%.

And RefBar was down 4.9%. So 2023 overall was not a great year. RefBar revenue per available room was really the best KPI, the best measure to understand performance. And I think the reason it went down about 5% is mostly just because of the supply just outpaced demand in 2023. Almost 13% more listings in just one year.

That's a lot of new listings. And obviously, if the demand only grew at 6.6%, then that's good. That hurt the performance of the industry. But their forecast was actually pretty spot on. The forecast that Eddie and Nate did a year ago, they were only off by a couple of percentage points on most of these KPIs. So that's why I paid close attention when they were talking about 2024. Now obviously, everybody is very

Jasper Ribbers (09:37.43)
Very curious to see what's going to happen, right? I mean, in 2020, after COVID, the market, especially drive-to-markets, recovered very, very quickly. And even like, you know, a lot of markets had record-breaking years in 2020. 2021 and 2022 were also really, really good years. And so 2023 is really the first year since quite a long time where we're not seeing like growth in our industry in terms of like revenue, right?

So it's very interesting to think about, is this going to continue into 2024, or are we going to return to a more higher growth environment? So here's what AirDNA thinks that's going to happen. Well, first of all, they talked about the economy. And they mentioned a report by Oxford Economics, a very reputable source in the world of economics.

They are expecting a mild slowdown, but they are not expecting a recession. So basically, sometimes you hear this term called soft landing. So basically, they think that we're going to have a softish landing, which basically means that there's a slowdown, but we're not going to see a recession. So GDP will continue to grow, albeit very slowly, in 2024.

Now, they also presented some scenarios, because obviously, we can't predict the future. And there could be shocks to the economy as well. So they presented some scenarios, but this is essentially what they think is the most likely scenario for us. Now, let's go into some of the predictions when it comes to travel, and in particular, short-term rental, the short-term rental industry.

One thing that's really interesting, I thought that in 2023, the demand for hotels actually grew at a much slower pace than short-term rentals, only 1.4%. Air travel demand grew by 12.5% and cruises by 77%. Well, that's because in the last few years, a lot of people have not been going on cruises as a post pandemic. People didn't really want to be on those cruise ships. But so it makes sense that has grown a lot.

Jasper Ribbers (12:02.878)
Air travel 12.5% is a pretty strong growth too. And I think actually like this year on Thanksgiving, I think we saw the busiest travel date in the year. I think it was something like 2.9 million people here in the US traveled by airplane, which was a record. Also, what was very notable is to see that more and more Americans are traveling abroad, especially to Europe.

but we're not getting as many Europeans to come to the US. So that's another factor that's kind of hurting the short-term rental industry or the accommodations industry in the US, I guess, is that more and more people here are starting to travel internationally, but we're not getting the same amount of international travelers to come to the States.

Jasper Ribbers (12:54.422)
All right, I keep saying I'm going into 2024, but then I keep noticing more interesting stuff from 2023. But let's move on to 2023 now. I'm just going to try to find the right slide here.

Jasper Ribbers (13:46.858)
All right, so US industry outlook 2024. Available listings are expected to go up by 10.9%. So AirDNA is expecting still a strong supply growth, just not as strong as in 2022 and 2023. 2022 is almost 24%. Last year of this year, it was 12.8. And they're expecting 10.9%.

Jasper Ribbers (14:15.518)
a change in the number of nights listed. So that's how they define the supply. They think that the demand will increase by 10.7%. So that's a bit higher than 2023. So pretty much supply and demand are both going up by just over 10% is their prediction, which means that performance is not gonna change a lot. They expect the currency to be down

0.1%. So that's pretty much stable. They expect ADR to change by about 2%, up 2%. And they expect refbar to go up by 2% as well. So very, very stable. So they're pretty much expecting the same performance in 2024 as in 2023, which, you know, good thing that they're not seeing a decline.

And then I think after 2024, they expect in 2025 and 2026 that growth will return. Now they also did some predictions in terms of the locations, right? So they have six categories that they defined. They have coastal, mountains, lake, suburban, urban, midsize cities, and small city, rural. In 2023, all those categories saw…

a decline in performance, but the markets that did best this year was really urban and mid-sized cities. And they think that mid-sized cities are going to be the winner for next year. So they actually expect mid-sized cities to do 5% better than this year. And then suburban and small city rural, they expect.

a slightly better scenario for this in 2024. And urban and coastal will see a small decline in performance according to AirDNA. But the differences aren't huge. It's all between like minus a percent to plus 4%. So we don't really see any massive shifts when you look at the different location types as opposed to…

Jasper Ribbers (16:42.242)
2020, 2021, there was huge shifts, right? There was a huge decline in urban 2020, huge uplift in mountains and lake and coastal, smaller cities and rural. And then in 2021, urban recovered a lot, but all those other markets grew all by like, between like 15 and 40%. So 2021 saw a huge…

Huge growth, as we all know, of course. Okay, so the next thing that they presented was pacing outlook. So if you don't know what pacing is, basically, you can look at the amount of bookings that are on the books right now versus a year ago on this date. And then you can kind of predict like what's, you know, what the next like 90 days are looking like, right?

They only did a prediction for the first quarter. Actually, no, the first quarter and the second quarter of 2024. Demand pacing is up 6% in the first quarter and then 7.5% in the second quarter. And ADR, pacing for ADR is also up about 5%, 6% for the first and the second quarter. But supply is also pacing at 9% higher for.

further is quarter. So again, similar, kind of similar to what we were discussing before, supply and demand are both increasing. But supply is increasing a little bit faster than demand. And that's why it looks like we're going to see either flat or a slight decline in market performance. One thing that's pretty interesting to see is that the booking lead times, by the way, this is something that was.

talked about a lot at the revenue management conference, the importance of understanding booking lead times. So that basically means when are people booking, right? Are they booking, you know, how many people are booking 30 days out or 45 days out, 60 days out, et cetera? That's what's called booking lead times. And if you put all those booking lead times together, you get what's called a booking curve. And then you can use that to kind of estimate, like, when are people going to book for certain dates?

Jasper Ribbers (19:09.182)
And that will kind of dictate how you should adjust your prices based on how far away you are from the check-in date. But median booking lead times have shortened by a week in 2023. And the expectation is that booking lead times are going to continue to go down. Guests are looking more last minute. And guests are also looking for deals.

There's some uncertainty about the economic forecast in 2024. And so it seems that especially the consumers who don't have a lot of disposable income, so the people who really have to make a choice of where are we going to stay, how many vacations are we taking. People that are really well off are usually not as affected by…

by slowing down of the economy because people will have enough money anyway. But it's really the people that, the middle class, the people that have to be price conscious are either booking shorter stays or they are trying to look for deals. So they're looking for discounts, they're looking for good deals, they're looking for value and they're also looking for experience. So people are more and more focused on…

something unique, right? Something that's gonna drive an experience versus just a random mediocre space. So that's kind of like what the outlook is for the guests. So I guess, I've been thinking about what does that mean for us and how do we adjust based on this information? And I would say a couple of things is, I would definitely focus in your marketing. So on your Airbnb listings and on your.

direct booking website, and if you're sending out emails to your past guests, I would definitely highlight the uniqueness of your properties, like really highlight like the, what are the two or three best things about your property? Like you can look at the reviews, you know, see what people are really raving about and really push that in your marketing because that's what people look for right now. They're more price conscious and also they want to get value for their money. So they're not just going to book.

Jasper Ribbers (21:34.31)
some random place, they're really, they're going to be probably spend a little bit more time on like really finding the place where they feel they get the most, the best experience for their money, right? So definitely have to continue to hone in the customer journey. What we talked about before, you know, when it comes to the book and reasonable hospitality, I think that's really, really important going forward in this year is that we…

we have to really like drive that customer experience. And it doesn't necessarily have to cost a lot of money, right? Because a lot of times when we talk about improving the guest experience, like a lot of hosts will say, well, I don't have money to invest into that. But it's not necessarily like, buying a new hotsop or something like that. I mean, think about that hot dog that they served in that restaurant. I mean, how much does a hot dog cost, right? And that was probably like the,

most value that they could have delivered in that moment, right? Because it was so specific to the guest, right? It was so specific to the guest. And in the end of the day, it's like, how do you make your guests feel, right? In the end of the day, it's our emotions that really define like, how much fulfillment we get out of life, right? So like making somebody feel really special goes a lot longer way than, you know, spending a lot of money on some type of amenity. So…

I think that has to be our focus. Like, how do we get away from just sending out endless automated messages? And how do we really understand, like, who are our guests? You know, what are their needs in the moment? And how can we make their stay a little bit more special? How can we really show that we're doing something extra that's specific to our guests? So getting some information from them, like where are they traveling from? Who's in their group? What are their interests?

And then if you can just, for every guest that you host, if you can add a little bit of, of going to extra mile without, you know, without spending a ton of money, but just, just by like thinking through the process and just by being very aware of, um, you know, of what your guests needs are and trying to be creative and think out of the box to make their experience, uh, unique, right. Cause I think that's.

Jasper Ribbers (23:57.458)
That's going to be really important. And then secondly is, the reality is that we can't just chart whatever we want in 2024. I don't think that's really going to work. So we have to be very much on top of our revenue management. That's another thing that everyone was talking about at the conference of like, hey, back in 2021 or 2022,

You could just, you know, you could just put something on Airbnb and it's going to get booked at a pretty good price. Right. And you don't really have to pay too much attention to all the things that we talk about on the revenue management conference, like the booking Lee times and like, you know, looking at like pacing and all that stuff, you know, those years you put, you probably get away with just, you know, you turn on your pricing app, you put a base price in there and then just kind of let it roll. Um, that's

that's not really going to work so well anymore. So now what we have to do is we have to be very, very conscious and we have to be aware of what's happening in the market. We have to be aware of how are those booking times, booking lead time shifting. We have to be aware of, hey, what type of prices are people booking at? And how do we create an optimal pricing strategy for us? And I think the only way to really understand that is to be.

focusing on your revenue management every single day. So looking at the data every single day, looking at your bookings and going to your pricing app. And when you do add discounts, you wanna make sure you market that to your guests, right? So make sure they know that they are getting a deal if you're offering them a deal, right? So you could do that in your title, you could do that in your description.

You know, you want to make sure that your guests are aware that if you're giving them a deal, that it's a deal and it's not just a standard price, because people are very conscious nowadays, they're looking for deals, they want to get that discount. Um, so, you know, there's a couple of ways to do that, right? Airbnb actually has some functionality for that. Uh, we have, for example, we have a length of stay discounts. Um, they're very small, but like, you know, for like a free day, we do like a 5% four days, we do like a 7%.

Jasper Ribbers (26:20.546)
But still, if somebody books a free day, stay with us. On the Airbnb price breakdown, you still see the discount, right? So people, even though it's a small discount, people will still see, hey, we're getting a deal here, right? So that's what I mean by make sure that we communicate and leverage your marketing to communicate when you're giving out discounts so that your guests are aware of it because that's what they're gonna be looking for.

All right, so let me see. We went through quite a bit already. Let me see. Oh, it's already almost half an hour already. Let me grab my notes here real quick. A couple of other things I wanted to mention is, oh yeah. On Tuesday, I'm doing another revenue management webinar. Now, this is going to be a different webinar than we did about two months ago. On this webinar, instead of giving

Last time we did a webinar, we went into a lot of different, it was called the seven secrets of revenue management. We went into a lot of different aspects of the revenue management. But what I learned from working with the students in our new course, Cashflow Mastery, is the biggest challenge that I see that hosts have when it comes to revenue management right now is understanding how to maximize revenue versus maximizing occupancy.

So there's a lot of hosts that are so focused on driving that occupancy that they almost forget to look at, well, how much revenue am I actually generating? And I think that's really important to shift that focus to maximizing revenue. Because if 2024, if we're going to see either a continuation of the current trends,

We, what we don't want to do is just, just a race to the bottom, right? Just lower your prices, keep lowering your prices to keep that, you know, whatever our competency you're looking for. So if your strategy is like, Hey, I want to be occupied 80%. You don't really want to do that. If that means that you have to drive prices down so much that it's going to hurt your revenue, right? You might be better off keeping your price a little higher and then, um, having a, you know, being like 50, 60% occupied. So.

Jasper Ribbers (28:45.202)
What I'm going to do on Tuesday on the webinar is I'm actually going to show you guys our exact system. So we've built a revenue management system for FreeWild where basically what we do is we download booking window data because that's really important. We need to know when are people booking so that we can adjust our prices to get our occupancy, the target for our occupancy, right?

So what we do is we download that booking window data, we export it into an Excel sheet, and then we have a sheet that will tell us exactly when people for different units, when people are booking, and so what our Cupid's Sea targets should be based on those booking lead times. And I noticed that a lot of, there's not a lot of hosts that I speak to that really understand this booking lead time.

concept, even at the conference, like I thought this is something that we talked a lot about. And most people, they get the median booking window. So they get that like, you know, if the median booking window is 40 days, that means 50% of people book more than 40 days out and 50% book between zero and 40 days out, right? But that's only one data point. Like you can get a lot more data in your pricing tool or your DNA key data.

All these sources have very detailed booking data, not just the median. Because yeah, it's one thing to know that on average, 50% of people book 40 days out or more and 50% less. But then within those 40 days, are people starting to book 80 days out or 60 days out? I mean, and when do people that 50% that book zero to 40 days out, are most of those people in the 30 to 40 day range?

or on the zero to 10 day range last minute, right? I mean, that's really important, right? Because, you know, if you know that like 50% of people book like 15 days out or less, which in some markets, that's not, that sounds kind of crazy, but in some markets that's actually kind of accurate. But if you know that many people are still booking in the last 15 days, then you wouldn't lower your prices so quickly, right? You wouldn't be lowering your prices at 30 days out.

Jasper Ribbers (31:07.858)
or 45 days out versus if most people are done booking 30 days out, then you have to adjust your prices much earlier. So this is really important now, especially now going into 2024 that we're not seeing the growth that we have seen in 2021, 2022. I think it's really important to understand and utilize this data because that's going to…

that's going to determine maybe whether you're outperforming the competition or not. And I think more and more hosts are aware of this, and more and more hosts are starting to focus on this revenue management and learn more about it. I mean, I can just tell from since that we started talking more about revenue management, there's a lot more people reaching out to us. A lot of people are interested in our cash flow mastery course.

So it's pretty obvious to me that there's a lot of interest. The little hosts are focusing on revenue management. And I think it's really important. So Tuesday, we do a free training. It's going to be very actionable. It's not going to be high level. It's going to be very detailed. I'm actually going to show you guys exactly how we do it. So you can just replicate that and implement that in your own business if you think it's a good strategy. I mean, you might think it's not a good strategy.

But yeah, Tuesday, 1 PM PST. If you want to join us, it's going to be on Zoom. It's going to be live. You can go to getpaidforyourpad.com slash webinar. If you're on our email list, you'll receive some emails as well with a button that you can click on. Webinar is free. It'll take about one hour, maybe hour and a half. At the end of the webinar, we'll introduce

But the webinar is going to be very valuable. And you're going to be able to really just replicate that system that we have and implement that in your own business. So with that said, that is it for today. So I hope you enjoyed this podcast. Again, if you want to join us on the webinar Tuesday at 1 PM PST, 4 PM Eastern time, go to getpaytoryourpet.com slash webinar. You can sign up.

Jasper Ribbers (33:30.818)
and hopefully see you on Tuesday. So enjoy the last few weeks of the year. I'm actually traveling back to the Netherlands this week. So I'll be there for a month, see family. I'm gonna go skiing in Austria. We're gonna go to Paris, because my wife's never been to Paris and it's a very romantic place. So on our bucket list to go there, I mean, I was…

I've been there 10 times probably, so it's not that special for me. But it's always good to eat that French cheese anyway. So anyway, well, thanks for listening. We'll see you next time.