All Forum Posts by: Alex Scattareggia

This question gets asked a lot and there is no 100% right answer.

As a lot of people have already stated try to get as many data points as possible which is correct.  Depending on how far back you are going I would actually just throw out 2020 and 2021 as reliable indicators because of how they will positively (and innacurately) skew the data.  Those years are probably closer to anomolies than predictive of the future. 

Take all your data points, shave 5% off the top and create an average and you will have a pretty safe estimate. 

Quote from @Terri B.:

My STR is in the Midwest in a small beach town and near a golf course. We opened in Aug and was booked every weekend until after labor day. What are you all doing to increase bookings for the slow period?

 If you are gathering info on past guests, reaching out to them and offering a discount is a nice way to generate bookings in slow times.  They already know and like your place and will see the discount as value.  A side benefit is that even though you are charging less, you will gain some of that back by not paying the OTA´s taxes and fees. 

@Brooklyn McCarty  I just dove a little deeper into some of the functionality of Stayfi and it is really impressive.  I don´t know if this is your secret sauce or not, but if you don´t mind sharing: how are you using the their tools, and what are you actually paying on the monthly sub cost?  It seems like a sliding scale based on how many contacts you have but just curious about your total all in cost vs. what value you are getting from it.  Thanks in advance and if you don´t want to share in a public forum I get that too! Gotta save some of the secrets :)

Quote from @Brooklyn McCarty:

Stayfi

Anyone who wants to use the WiFi has to put in their email just like if you stayed at a hotel. 

 So glad someone revisited this post.  

I don´t know how I have never heard of this product. This is exactly what I need.   Out of curiosity Brooklyn, have you used the text feature that they advertise on the website or only the email? 

August/September are my slowest months in our markets (Baja California Sur, Vallarta, Oaxaca (Mexico).  Seeing a bit of a pickup for October and already booked in the majority of properties for Xmas and New Year but very little for Nov/Dec outside of the holidays.

The trend continues to be that even in our high season months we are getting significantly shorter lead times on bookings.  This does create a bit of stress and has probably led to some pricing mistakes.  I looked through some numbers for comparison and in 2019 our average reservation was made 49 days in advance across the portfolio.  This year we are at an average of 26 days in advance, and it has felt like less. 

Quote from @John Underwood:

21. Stay in your place occasionally. You will find problems and repairs that no one is telling you about and your guests notice and think you just don't care. It might not turn into a bad review immediately

Solid list, but this one I never see and is so good.  Sometimes I´ll just spend the day and work from one of our places (use the kitchen, bathroom, living room, TV, stereo etc.) Without fail I notice something that we need to fix, repair, or improve upon, that I never would without spending a few hours actually living in the space.

I agree with every bullet point you posted except for this...

1. Refer to STR as an "Airbnb" You have a STR listed on Airbnb.

I have noticed in this forum that the most outspoken posters always harp on this issue.  Why?  It is the equivalent of telling someone ¨its not a Kleenex, it's a facial tissue and when you say Kleenex, I know you must not know much about blowing your nose¨  

People use Airbnb as a stand in word for STR. The name of this forum is ¨Short Term Rental and Airbnb Discussion Forum¨

Anyway really solid list. Thanks for posting. 

Quote from @Mike Lambert:

@Alex Scattareggia

Don't forget that you'd be the one making the investment so your opinion is way more important than mine. I'm just doing what you asked us to do, help you think and see what you might not see, that's all.

No, it's exactly what I wanted.  Having to defend positions or ideas sometimes makes me see holes in my logic or at least look at it from another angle.  Let me read through this again and put some more thought into certain parts of it.  I genuinely appreciate your time and response.  

Quote from @Mike Lambert:

@Alex Scattareggia

"Cheap" tourism might be the collateral victim and they don't mind about it, quite the opposite. And it makes sense. I'm not the splurging kind of guy but if I pay the ever more expansive airfare to get there, I rather pay $300 to stay in a nice place than $60 to stay in an area like that. I want a nice holiday for my money. Not everyone thinks like me but I wonder who wants to travel all the way to Cabo to stay in a place like that. Mind you, some people clearly still do, given that they're still getting 59% occupancy.

Thanks for the thoughtful response Mike.  How cool that you actually have seen the property and know the area.  Where did you stay in the spring? 

There's a lot to unpack there so I´ll try to break it down item by item. 

As for as the market prioritizing luxury over value. That is absolutely true in the hotel space and anything oceanfront. But your logic about ¨cheap¨ travel being the collateral damage doesn´t really make sense. The fact that there is a prioritization towards luxury simply means that there is less competition in the mid-tier value category, not less demand. Just because the destination has gotten more expensive doesn´t mean there's not still a huge market for more affordable accommodations. We are two hours from California, Arizona, Texas (enormous travel markets with very diverse types of travelers). What we have found in the STR space is that it has actually elevated the low-middle price tier. We had 2 studio units, in good locations net over 60k each last year because the hotels have basically priced out the $100-300/ night options in decent locations. We raised our prices 15-20% over 2021 and ran higher occupancies because of how out of wack hotel pricing has gotten. The segment we are trying to hit is people who would normally be staying in a hotel, looking for comparable accommodations without having to spend $300+ per night. The reality is that in the winter months it is very difficult to find anything near the Marina/Beach for under $500/night unless it is an absolute dive.

Oversaturation in certain segments and underserved segments of the market: 
There is no question to me that the 2br/2bath STR market is incredibly oversaturated here. A lot of the people getting hit the hardest right now are in developments like what you mentioned above (Cardinal), new construction, marketed as great STR investments (in ok but not great locations). I would actually not buy any new construction condo right now for this very reason. Looking at the total revenue numbers on that tier is shocking, when you factor in HOA dues + 20-30% PM fees very few people are making money. I think there might actually be some purchase opportunity in that segment in the coming years. What I am seeing is that a good location ST/1 BR has significantly more earning potential and/or COC than a potentially nicer/newer 2 bd/2bath further from downtown/beach/Marina.

Location:  This is my only real pushback on everything you said.  That is by no means a bad area. While that area may not be super high end, it's not unsafe or ugly and has a much more authentic feel than even 2 blocks closer to the Marina. You call it gentrification, but the reality is that push further into downtown started in 2015/6 as tourists started wandering further into town looking for experiences different that the traditional Mexican tourist trap. You are still walking distance to pretty much every tourist draw in the area and also can appeal to people who are not looking for the big touristy resort experience. Not trying to come off as defensive at all but that area has been ¨gentrified¨ for a long time.  

One of the most successful STR/boutique properties is about 2 miles further in, in an actually rougher part of downtown and they are killing it at $200/night by really selling the authenticity piece and keeping it high end feeling. PM me if you´d like and I can share.

Value Add: You are right that the entire place needs some upgrades.  But these are mostly cosmetic and amenities based + a ton of potential in the rooftop area.  The real value add I see is on the systems, marketing and operations side of the business which I think you can see as well.  The only way they got to their occupancy number was by using numerous suites as month-to-month rentals with discounted rates, way below market. 

I really appreciate the time and thoughtful response. Send me a PM if you have any other thoughts.  Cheers. 

Had a guest say that the photos made the place look more ¨down to earth¨ online.  They requested to check out when they arrived because it was too fancy lol.  Can´t make em all happy 

One helpful data point that you can actually show clients is from AirDNA.  If they (VACASA) manage a lot of properties in your market, there is a tool in AirDNA that shows the top PM´s with the most listings in that market and then aggregates their review score across all the listings.  

In my home markets there was one big PM company that had an average of 4.05 score across 50ish listings, and we hammered that point home with clients of theirs. Bigger isn´t always better because their attention is scattered... and here is the proof etc.