Haus Notes 001: Q4 2023

Q4 2024 Market ADR, Occupancy, RevPAN

Hudson Valley Short Term Rental Newsletter

Market Update: Rates were stronger later than usual this fall, perhaps due to extended warmer weather. Lower-than-expected demand has been the theme this winter, continuing through January. With a smaller guest pool, our pricing strategy is to maximize available occupancy and capture as much of the market as possible as booking lead times continue to shorten. We’re still in the slow season in all but ski markets. Early March should see us start to climb to warmer weather rates. We’re starting to see summer bookings at the larger properties coming in at high rates (80th percentile) and just accepted a month-long stay at 10% above last year's rates on a smaller property. We’ll look at rates carefully this spring to be well-positioned before the start of high season to ensure we’re price-setting, not taking— a distinct shift from winter strategy. Make hay while the sun shines.

Haus Update:

Honing Operations: Our field team is growing with coverage in most markets. We implemented new booking & task management software that increases accountability and reporting, added Google vacation rentals as a sales channel, debuted a new owner report, trained an AI assistant for guest communications, & much more!

Maintaining high occupancy at better rates than the market.

Despite reduced demand this winter, we’re outperforming competitors through listing optimization, pricing, & delivering exceptional guest experiences. What does improving performance look like?

- Value Add Management Transition

Haus started hosting a property on Jan 1 from an in-place luxury manager. The owners were looking to reduce expenses, increase revenue, and be less involved in the day-to-day. We got to work on listing optimization & pricing. After just 4 weeks, results are in. The added revenue more than offset management fees for the entire month. Each part of the booking funnel improved leading to more revenue.

Airbnb ranking position: #134 → #3 (Page 7 to Page 1)

Click Through Rate: 20% to 30%

Conversion Rate: 0.11% to 0.54%

Generated 15% more revenue than peers

5-Star Reviews: +4

- Stabilized Management

The table below is an export from our pricing software. Haus manages the green highlighted property among a group of similar properties within 5 miles in Kerhonkson. We’re generating 10-30% more revenue with higher guest satisfaction than more luxurious properties renting at higher rates.

Permitting: Towns are increasingly passing licensing laws on short-term rentals. While regulation can be reasonable, the permitting process can be onerous to navigate. We’re reducing risk and generating revenue faster by preparing application materials, developing relationships with town building departments, and meeting inspectors on-site as an owner’s representative to ensure we pass the first time, every time.

What I’ve been thinking about or you should know:

• Corporate Transparency Act - As of Jan 1, most private corporate entities need to file a statement of beneficial ownership with the Financial Crimes Enforcement Network. If you hold your property in an LLC or other entity, this may be you. Check with your tax or legal advisor.

• Pricing: Pricing is the most challenging aspect of short-term rental management and is vital to getting attention to your listing & securing high-value bookings. Managing prices to follow the demand in the market requires a property-specific strategy and continuous monitoring. Often, once a trend in demand is identified, it is too late to recover the revenue as stays are booked weeks in advance. Proactivity is often rewarded as the rest of the market is asleep at the wheel or debating whether the signals are valid. The best approach I’ve come up with is to be flexible, listen to the market, & ensure seasonal changes are made well ahead of the change in demand.

• Guest Screening: A truth that should be told more often is that Airbnb provides little identifying information to the host before a guest books. Guests with a positive track record on the platform are confirmed instantly, guests with a negative or no track record on the platform are held for manual review. What can we do to create risk controls around the requests requiring manual review & establish the identity of the guest? 

  • Guest needs to have a verified ID, profile picture, confirm an email address, and phone number.

  • They need to have stayed previously with a 4 star rating or higher. We also review previous ratings & reviews of the guest from prior hosts.

  • We try to learn the reason for their travel.

  • We ask guests to sign a guest agreement to protect the owner's interests and serve as an additional touch point.

  • While we can decline requests based on prior reviews, we must do so sparingly. Airbnb actively punishes hosts who decline booking requests frequently (more than once in 6 months).

  • Once a guest books, Airbnb discloses their name, profile picture, & phone number.

  • Google the guest.

  • How effective is this approach? Most major incidents occur on fraudulant reservations. If you were going to commit a crime, you aren't going to use your own name and surely aren't opposed to using a stolen credit card. Airbnb does a very good job at reducing fraud. Other channels not so much.

  • So while we don't have much control over who gets to book, a tough pill to swallow, it's likely for the better.

STR Around the Web:

• Ulster County Legislature Approves Hotel, Motel, & Short-Term Rental Occupancy Tax Increase (Hotel Tax 2% → 4% as of Feb 1)

• Airbnb Defacto Ban in NYC Spurs 'Staggering' Gains in New Jersey

• Another Hudson Valley village halts short-term rentals

Books I’m reading:

• Unreasonable Hospitality: The Remarkable Power of Giving People More Than They Expect by Will Guidara

  • The story of a young restauranteur who transformed the famed Eleven Madison Park from a struggling brassiere to the best restaurant in the world by reinventing hospitality. We’ve redesigned our welcome gift strategy to incorporate some “unreasonable hospitality.”

• Optimize YOUR Bnb: The Definitive Guide to Ranking #1 in Airbnb Search by a Prior Employee by Daniel Rusteen

• Published in 2018, and despite showing its age & a title that caused me to avoid reading it for years, Optimize Your Bnb is still the best book I've read on short-term rentals. Much of the content is still relevant and is a great primer on STR management. Rusteen’s second book, Profitable Properties, is also superb and more advanced. I reread both at least once a year and come away with a few action items each time.

Reviews:

• “Justin was extremely accommodating and easy to communicate from booking through check-out. The house was immaculate and exactly like the pictures. It was also stocked with all the necessities which made our stay even more enjoyable. I would definitely recommend staying here to friends and family and personally would love to come back again!”

• “Justin was an awesome host with an ever better place to stay. He has crafted an online brochure for you and your guests that makes it nearly impossible to have a difficult time with anything. He was always there to communicate any further questions or issues we had (there was none). It’s perfect for a few days of peaceful quiet with some friends. All amenities listed were present and we loved it”

• “Thanks so much for providing a beautiful stay! We loved the house functionally and aesthetically. Especially enjoyed grilling outdoors and even made our way to Vernooy falls in the temperate weather. The house was well equipped with everything we needed, and we are already planning on hopefully returning in the summer to experience the area in a different light. 5 stars!”

• “Justin’s place was lovely. Home was clean and comfortable. We had everything we needed. Had a girls trip ski weekend and we especially loved the fire pit and hot tub. We would stay there again.”