Good Morning Hospitality Episode 6: Data, Regulation & Recovery!
Wil Slickers: Good morning, gentlemen. We're back.
Michael Ros: Morning.
Michael Goldin: Good morning.
Wil: What is up? How's everyone's week?
Michael G.: It’s going to be a short one, Thanksgiving this week.
Wil: Yes. I was just going to say I'm looking forward to like a three‑day workweek.
Michael G.: Mike, what are you--
Michael R.: [crosstalk] here but I should do now as well because I feel jealous. So, I'm here just five days. Well, seven days sometimes but here's a normal week.
Michael G.: Normal week for you?
Michael R.: Always! The new normal.
Wil: Well, I'll have an extra like turkey and stuffing for you. And I'll send you a text and make sure that you're feeling included.
Michael R.: Sounds good.
Wil: Well, welcome back to Good Morning Hospitality. You know, we're excited for this new amped up version of the show. We've added some new segments. I'm excited to jump in. But before we do that, we have to play our lovely intro song. So, enjoy.
Wil: Gosh, that's so, so good. I love it. It’s so much better.
Michael R.: I knew you were moving with your head, for sure, during the music, or not.
Wil: Yeah. Oh, yeah, that was just me, just kidding. You know, I've got to warm up.
Michael R.: Yeah.
Wil: Perfect. So, I'm excited. This is fun. We, like I said, just we amped up the show a little bit we've added to some new segments. But the quick topics of the week, we're talking about a little bit of data, a little bit of regulation, and a little bit of recovery, and how they all kind of play together. So, I'll let the mic go to one of you two. Who wants to take it off?
Michael G.: I'll jump in. I think basically the new structure’s we all pick an article that we found interesting from the week before and outline it. My article comes from a new media platform called HRE (Hospitality Real Estate). It covers "if Airbnb's regulation risk is overblown". And there's a couple stats in there that kind of blow my mind. And I don't know if either of y'all read it but, if you were to guess Airbnb’s largest market, what percentage of revenue comes from their largest market?
Michael G.: 2.5% is the largest market. So, is Airbnb’s regulation or fear of regulation overblown? If their single largest city only accounts for 2.5% of revenue and they lose that city, it's not a game changer to the business. That being said, some of their largest cities are already regulated - San Francisco, New York, London, Paris. And what I think is going to happen, eventually, is a lot of these operators are going to get hotel licenses and they'll be fully legal and not be restricted to the 90 days or 120 days that you can rent in these regulated markets.
Going public is certainly going to add a lot of scrutiny to regulations. I mean, Uber is continuously under fire and still under fire in a lot of cities. So, I don't think regulations goes away just because they go public. I think it'd be actually quite the opposite.
But there's a little bit of a shot in the arm from the CDC this week saying short‑term rentals are safer than hotels. Hotels are the fourth largest site of transmission of COVID. So, short‑term rentals are the better alternative if you are going to travel. So that could be a sign of a potential shift in lawmakers’ thinking. But there's always the COVID house parties that have continued to plague the industry.
The number one reason people regulate rentals. First is taxes. Second is noise. Third is parking. And fourth is trash. And most cities, I think, have worked out the tax standpoint. And then, it comes down to noise. And that's where-- shameless plug, where NoiseAware comes in, and can really help change the argument at City Hall.
But, back to the original topic, is there a regulatory risk for Airbnb? Absolutely. You know, 2.5% across their top five markets is a pretty significant amount of revenue. And it's cities like to copy other cities. Nobody likes to come up with their own regulations. They're in a copycat mode. So, I think it's something to keep an eye out for and be cautious of and just know why people regulate and find potential solutions to those.
Michael R.: Well, I'm curious if they all tried to find gaps, right, in the in the regulations. You can see now, when there's-- even during this whole COVID period, when restaurants has to be closed, for example, only during the-- only hotels can be open. Hotels, focusing on guests, want the full experience or dinner plus stay.
So, I'm just curious, you saw it in airports, you see that illegal parking wasn't allowed. So, what they're doing, they're renting a virtual desk plus a parking, nobody’s using the virtual desk, they only just want to have the parking. So, I'm just curious if they would just come up with some gaps or some creativity, still, to get the people-- instead of regulation.
Michael G.: I was in Austin, Texas last week. And we went to this cocktail bar. And you can't be a cocktail bar open past like 9:00 or 10:00, so every food item you ordered came with a cocktail, so you get like four pieces of popcorn. But it came with a cocktail. So, you could be open late and it was officially a restaurant.
So, to your point, Michael, 100% and this has been happening for a long, long time. One of those largest markets of Airbnb’s is New York City. Well, Airbnb is banned in New York City. So, I think there's certainly a lot of different ways around it. And one thing you can do up to maybe 90 days or 120 days of short‑term rentals. But what people do is, essentially, do 90 days on Airbnb, 90 days on VRBO, 90 days on booking.com and there's your occupancy for the year, right? So, there's a lack of, I guess, transparent data for cities from the platforms but I don't think it's necessarily the platforms to hand over either. And the more onerous the regulations, the more it drives the activity into the black market and then they start losing out on the tax revenue, you know, so.
Michael R.: It is going to happen, right. There will be like listing apps or classified ads. So, apartments try to be visible somewhere else. So, it doesn't go to the platforms, they just go directly, quite invisible marketplaces, classified ads, or whatever, craigslist just to avoid the regulations, so. For sure, you guys see like apartment but they’re going to be creative. And that's--
Michael G.: Absolutely--
Michael R.: --that’s one of the characteristics of being an entrepreneur, try to be creative constantly, right. And if you're owning several properties, you do everything to have as much booked as possible.
Michael G.: Yeah. And the other side of that is to take it legal - make it legal inventory and get a hotel license and--
Michael G.: --a number of our clients at NoiseAware are urban operators. But, you know, in Miami, for example, hotels were allowed to be open during COVID but short‑term rentals were not. So, they went out and got hotel licenses for all of their buildings. And now they're the only legal short‑term rental operator in Miami. So, there are legal loopholes to go exploit as well.
Wil: I was just going to say I was thinking of that same company, the property manager that was doing that. I was like, you know, that's-- like Ros said, it's what needs to be done and, you know, we're entrepreneurs in this industry. And so, they’re always going to be constantly fighting to stay open and stay innovative. And it's-- yeah, it's going to be a constant--
Michael R.: Well, you see, they’re coming with different solutions, right? It is going to be like an office but you can stay there as well, if you would like or whatever. They're coming with different ideas just to keep selling--
Michael G.: Exactly.
Michael R.: --the regulations, if it's regulated on the platform, that's-- as if, right, the more platform there will be, they are just using different distribution platforms and that's pretty it.
Michael G.: The platforms aren’t incentivized to self‑regulate because that kills their revenue. So, it's going to have to come from the government. And it has to be done responsibly because the short term‑rental world is not going away. You can ban it but it's just going to go underground. And it's always going to happen. And so, cities need to embrace it, not try and come up with bans for it.
Wil: Yeah, proper regulation. I agree.
So, what about you, Ros? What do you got going?
Michael R.: Well, actually, when I look at this week, what was actually interesting is just something completely different because it was pretty serious. And we talked about creativity of entrepreneurs. And, actually, I did a guest college, actually, for the Berlin School of Business Innovation. So those guys, they’re the students learning actually to become an entrepreneur. And that was really nice. And I actually did a beautiful story about the entrepreneur, and the characteristic, and everything. But then I started about the company culture, actually, how we're dealing with this. And then, I saw that really-- they’re interested. And I was actually surprised that the typical story about the entrepreneur, and the challenges, and the road you’re following. They liked it but as soon as I started talking about the company culture, how we're dealing with employees, how to engage them. I saw-- I get like, I think, seven or eight personal messages on my LinkedIn. It’s like, “Wow, that was so great, how you talked about the company culture.”
I think it's also, when I look at the period we're in now, right, I think it's more than ever so important to keep your culture. And one year ago, we took the whole team to the mountains. We went to Zakopane, just organizing nice things together. And this is, of course, is changing completely. So, we still have to make sure that your employees staying loyal, you're creating a culture.
Even now. Last week, we did like a virtual cinema, for example. So, everybody was watching a movie together online and had some popcorn or pizza. And that's-- it's still-- we try to keep this culture. It's super difficult, of course, but I think you have to keep trying.
And I think, as a company, to come out stronger after this period, I think the culture - as soon as it comes back and you’re sitting normally back in the office, if still offices are there, like how they were before. But still, when you come back to the office, the culture is, at the end, which makes the company, right? It’s also creating the success.
So, I think what I really liked in there, while talking to those young guys, actually, when I started talking about company culture, what we're doing for the employees, and they said, “You treat them as a family.” I think that was a nice compliment, actually. And I expected the feedback, I got after, made me really, really think like how important it is to take care of your employees, even in hard times like this. So, I want to share this one. If we talk about the creativity of entrepreneurs, it's, I think, one of the most important characteristics. But I think by being able to share this with your team and take them into your journey, I think it’s even more important.
Wil: Yeah, I agree. I'm a big brand person, too. So, I feel like branding culture kind of like leak in together because like your brand represents the-- I guess, like the brand is like the out-ternal and the culture is the internal, and how those reflect on each other. I'm a big fan of like both. I think they're both very important.
And some-- like, you'll see a lot of business owners that are like, “We don't care about brand. We're just going to operate our business.” And it's like, “Well, like it does but like-- I don't know. This is like you’ve got to like give it, you know, crap a little bit about brand, and how that plays into your culture and how that makes you operate as a business, and with your team and all the other like little stuff. So, I'm glad that’s-- I like it as culture --
Michael R.: Finding a great balance between people, culture, diversity and everything. And then, I think you're also-- you're able to actually accelerate to be flexible and things which are movements in the industry, if you have people from all over the world.
And I think we are now in the stage right now where we're still hiring and not firing like, I think, most of the companies in the industry because we are strong as a team. We want to come out strong. And everybody has the same thoughts now like, “Okay, we're going to beat this. And as soon-- yeah, as it's safe to travel, we are there to-- you support us but we're going to support you and the end the rest of the team.
So, I think company culture is so important when you see a lack of company culture in some OTAs, now recently. I'm not going to mention names but make sure that the bad guys knows who I'm talking about.
Wil: No. I think that plays also into like recovery too because like culture and like you were saying, people, you know, companies are still firing in some places, you know, furloughs and all the other stuff. And I'm interested to see because two exciting things just from like the Slick Talk side of things was did a two‑part series with Oracle Hospitality and they highlighted their data‑driven recovery report that they did in partnership with Skift. And just the overall trends of travel stuff, that we've already talked about here on Good Morning, Hospitality! just like, you know, driven-- drive‑to markets being a super high like trend that a trend that will continue.
But I'm curious to see what like the recovery will look like when it comes to, you know, ADR RevPAR, profitability in the sense of when staff-- you know, occupancy rises, we're going to need more staff. And a lot of hotels, especially right now, are running pretty skeleton crews -- crews, yeah, crews like a crew. And so, it's just interesting to see.
And we had a data analyst from STR on the podcast last week. And we were highlighting the RevPAR recovery quarter three analysis. And looking at like the 2019 numbers, you can see there's a -34% in RevPAR. And so, seeing what that looks like into the trends of 2021‑2022. You know, we had Jeremiah Gall from Breezeway on the show recently, too. And his episode’s coming out in December. But we're talking about like, what these trends and how they play a role in recovery. And it's pretty interesting to see just all of these things that we've talked about here on this podcast, and just how that will affect-- you know, we’ve only got 40 days left to 2020 so interesting to see everything come to light.
Michael R.: Well, I had a discussion-- a pre‑discussion for a webinar I have tomorrow, it was a bit rates, rate parity, the new normal, etc. And I think what you see actually-- and we might go into discussion tomorrow. But we had a pre‑discussion how I can see it. And I think there will be a lot of experimenting, right? You see kind of the property rates goes down. But a lot of hotels will experiment. You can see the numbers of hotels who joined Bidroom is enormous.
They want to experiment new distribution platforms, close user groups, maybe auction, flash deals. They're going to experiment. They just want to fill the hotel. They might use-- they use-- they're going to go to long stays. They're going to experiment a lot in 2021 to see at the end to focus on profitability revenue. So, I think there will be a lot of experimenting at the end. But yes, because of experimenting, the RevPAR might go down, but I think it’s the only way to accelerate the recovery as well - by experimenting.
Michael G.: Michael, who benefits, I guess, better? No one benefits but who's hurt worse, big global brands or single boutique hotels?
Michael R.: Yeah. Well, I think, strong brands they come out stronger now. And I mentioned this in a different session of I Meet Hotel. I think the strong ones, they’re now able to still maintain a relationship. They're able to create some kind of loyalty. You see they're adopting innovation a bit more than others.
And I think you see even the larger chain hotels said, a year or two years ago, I'm not sure if I should work with Bidroom because I sell 60%, 70%, 30% maybe directly, the rest I will sell to OTAs and it's always the same, too. But now, they said like, actually we really want to change this industry. We want to work with new distribution partners. So, you can see also that the hotel chains actually they're more willing than ever to use different distribution platforms and go into close user groups like we do or maybe into flash deals.
I think this whole rate parity part. Now, nobody's filling their hotel and they will just do everything to recover. So, I think the smaller ones do not have the resources to come back stronger with marketing, with visibility. So, I think it takes longer before the small or independent hotels will recover. I think the chain hotels also want to have the image, and cleaning, and good communication, and PR, they are able to recover quicker.
Wil: I agree. Well, I think it's a good a good way to segue into one of our new segments, we call it the Bidruption Report. So, I will make Goldin and myself disappear.
The Bidruption Report:
Michael R.: The intro is so cool. Now, in the in the weekly Bidruption Report, I want to discuss-- I want to pick, actually, every week a startup which actually get my attention. So, it could be regarding fundraising. It could be because of a different way of attention.
This week, this week, I want to mention Trip Loop. Trip loop is a startup from Austin, founded by Diego and his wife. Actually, I met them a few years ago during the World Tourism Forum. And, actually, they built a solution for group travel.
But actually, of course, group travel is that I spoke with him a few months ago, and I said, “Diego, how does it go? Probably, it’s a very difficult period for you. How are you doing?” And he said, “Actually, we just built actually something new. What we did when we saw this is coming, we actually went to virtual group travel.”
So, I really like what they're doing. So, my compliments for them. By moving actually from really from group travel into virtual group travels. So, actually, they could use almost everything from the current technology, they could use it to actually move into virtually. So, people can create an account, still like before. They can see which other people join the group travel, but they meet online and they’re visiting together, completely virtually Japan.
By doing this, actually, they get a huge, huge project actually from the Japanese Tourism Board. And actually, they are able now to survive this whole difficult period and did a great deal with them. So great what they did. And I think this shows actually entrepreneurship. So, creativity, as I mentioned before.
So, yeah. As I mentioned, I will do every week, one startup. I think, for me, the startup of the week is Trip Loop. And let's check this week, which start I’d choose for next week. But it's one of my favorite topics to address so it's nice to have this part of the Bidruption Report.
Second thing I want to do every week is I'll also mentioned some events. As you all know, we have our own event. As Bidroom, we have the I Meet Hotel Conference. So, this week, on Friday, we have a special edition. So, we do together with SHMS, which is the Swiss Management Hotel School. We're going to do the Swiss Alps edition. So, this is actually co‑organized by students and we talk about the hospitality. So, this Friday, tune in. It will be great. We'll organize together with students.
As I mentioned, tomorrow, I discuss the new normal and travel agencies about rate parity and more.
And the last thing, I want to just include this week to the Bidruption Report is the World Tourism Forum in Lucerne. In 2017, Bidroom won the award and we celebrated really well after. And it was great. We also won a nice, nice award plus price.
And, actually, I started the applications open again. So, if you're a startup in travel and tourism, go to the website of the World Tourism Forum and apply now because it's a great journey. And I want to recommend them. We learned a lot from it. We won in 2017, as I mentioned, and I will be a jury member this year. So yeah, I might pick you as the winner. So, don't forget to apply.
And, of course, as I mentioned, tune in Friday for the I Meet Hotel special Swiss Alps edition. Thank you.
Thank you, Michael.
And now we'll introduce Mr. Ros-- or not Mr. Ros, Mr. Goldin. Man, too many Michaels in this place. Get Mr. Goldin on What's with All the Noise? segment, so.
What's With All The Noise!?
Michael G.: It's so cool to have my grandmother on the on the show.
So, with What's With All The Noise?, I'll cover each week what I'm hearing the most from customers, clients, people in the industry - what's going on. And one of the key topics-- and a lot of people were talking about last week was [inaudible 00:23:47] and their meteoric rise and equally as meteoric fall. Mixed results as if they're totally gone or if they're selling off whatever assets they have. But it's another multifamily master leasing company that has not been able to weather the storm.
Now, on our first episode, on Good Morning, Hospitality!, we talked about is there a viable path to having an important hotel brand exist? And I, 100%, believe that there still is that path and there will be a massive aparthotel brand, or two, or three. But the news this week is that it's not going to be.
Back to you, Wil.
Wil: We're back.
Well, I like the new segments. I think they're fun. We've had a little fun creating, you know, the video intros and whatnot. Love that your grandma was able to do that for us, you know, in the middle of COVID and just really just taking the embracement of Good Morning, Hospitality!
No. I think this is great. We've covered a lot in this, you know, 30 minutes or so episode. But, I guess, I'll leave this to you guys on is there anything coming up? Obviously, we have holidays coming here in the US, Thanksgiving. And then, of course, leading into December, we'll have Christmas not too far along.
So, anything, I guess, coming up with specific Bidroom or NoiseAware stuff?
I know. I'm excited for the Slick Talk Newsletter that comes out every week and how much cool content’s in there so people should-- you know, shameless plug, go check that out. It's coming out today. But that has a lot of news and updates as well from my end. But I'm just curious on you guys'?
Michael G.: Well, it's the epic Black Friday week. I don't think there's a Black Friday Day anymore in America, but we've managed to pull it out into week. And it's always a really, really good sales week for us at NoiseAware - people getting ready for the holidays and New Year's parties that are right around the corner. So, it's going to be a busy week but been trying to unplug a little bit and have a nice day or two off.
Wil: I agree. I agree. I'm trying the same.
How about you, Ros, anything?
Michael R.: Yeah. It's going to be challenging week because I have to work five days, at least, this week, so lucky you.
We’re moving forward. We're making so many steps. And if you see the energy within the team. And new things, we're building now, preparing actually, as I mentioned before, for recovery. And hopefully, when things come back, we are stronger than ever. So, I'm really looking forward still. And every day I'm hoping for it to come, the sooner the better. Still, I think, if you see how the team is doing, what we're developing now, the speed they do, it's great.
This week, some conference. It’s nice always to share my insights and I'm looking forward to next week, actually, when I pick a new startup and see you guys again.
Wil: Yes, me too. I'm looking forward for the Bidruption Report and What's with The Noise? It's my favorite part of the week now.
Awesome, guys. Well, thank you so much for the people who've been watching us live. Check us out at goodmorninghospitality.com. You can find out more information. We'll be turning more blogs, and more videos, and podcast stuff. So, I'm excited for us on the ramping up of the show.
And, if you're watching on the replay, go ahead and comment on your favorite part. What segment was your favorite? And, of course, give us a little bit of competition for What's with the Noise? or Bidruption. I'm kind of curious to see who's fighting for what team over here. But thank you guys for tuning in--
Michael R.: So, if they've got any topics they want to address or you have a favorite startup, feel free to share it so we might pick that one.
Wil: Yes, don't forget that, too.
Awesome. Well, thank you guys for joining me this lovely Monday morning. And we'll see you guys next week.