BiggerPockets Real Estate Podcast - 712: Has the Short-Term Rental Goldmine Run Dry? w/AirDNA’s Jamie Lane

Episode Date: January 10, 2023

Short-term rentals can be categorized, at least at a surface level, as the “easiest” investments of 2021 and 2022. With low interest rates and a surge of post-pandemic tourism, new hosts were buying homes for cheap monthly payments, throwing some furniture in them, and making a six-figure return within a year of owning just one property. Naturally, this led more and more hosts to start building bigger vacation rental empires, buying as many properties as possible and inflating prices as a result. But, the boom in BnBs caught on quickly, and more investors began tackling the same strategy. Before long, there were more short-term rentals than ever, but the same number of guests occupied them. Now, short-term rental hosts are facing lower occupancy as they struggle to compete over which properties will get which guests. So, is this the end of the short-term rental industry, or is the data showing something completely different? We brought on Jamie Lane, Vice President of Research at AirDNA, to give us a glimmer of hope. Jamie knows short-term rental data better than anyone else. He knows which markets are growing, which are declining, which amenities get you the highest ROI, and why last-minute bookings aren’t a bad thing. He gives us a deep dive into what’s affecting the short-term rental market as a whole, whether it’s on a decline, and what hosts can do to beat out the competition when trying to fill their listings. In This Episode We Cover: The “BnBust” and why so many short-term rental hosts are facing low occupancy  2023 short-term rental predictions and the effect a recession could have on the industry The best short-term rental markets and which tourist cities will remain strong Short-term rental regulations and how they may be a good thing for existing hosts Last-minute bookings and using dynamic pricing to make these stays more profitable The top amenities guests want in their vacation rental in 2023 Superhost status and the massive boost in bookings it can lead to And So Much More! Links from the Show Find an Investor-Friendly Real Estate Agent BiggerPockets Youtube Channel BiggerPockets Forums BiggerPockets Pro Membership BiggerPockets Bookstore BiggerPockets Bootcamps BiggerPockets Podcast BiggerPockets Merch Listen to All Your Favorite BiggerPockets Podcasts in One Place Learn About Real Estate, The Housing Market, and Money Management with The BiggerPockets Podcasts Get More Deals Done with The BiggerPockets Investing Tools Find a BiggerPockets Real Estate Meetup in Your Area Hear More from Tony on the “Real Estate Rookie Podcast” Use the BiggerPockets Airbnb Calculator Try AirDNA Today Rob's BiggerPockets Profile Rob's YouTube Rob's Instagram Rob's TikTok Rob's Twitter Tony's BiggerPockets Profile AirDNA 2023 Outlook Report AirDNA November 2022 Data Connect with Jamie: Jamie's LinkedIn Jamie's Twitter Jamie's Podcast   Click here to check the full show notes: https://www.biggerpockets.com/blog/real-estate-712 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Check out our sponsor page! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show. 7-1-2. Where we see more supply coming in is people that have existing homes, maybe a second home, maybe their primary residence. They're not looking to use that home in the same way. Maybe they're moving. And they don't want to sell. They've got that 3% interest rate that is very attractive to keep.

So now they're looking to rent it out, find another use. and we've seen actually a big uptick in recent months from people just looking to find other uses for their homes. And a lot of that is coming into the short terminal sector. I hope I made David Green proud. Today I am interviewing Jamie Lane, the vice president of research for AirDNA with my good friend and who I have dubbed my Airbnb bestie Tony Robinson. How you doing, man? Dude, I'm pumped, man.

This is like our first official podcast episode together, feels like way overdue. So tis tis to the producers for waiting so long to get this together, man. I know, man. Come on. Come on. Eric, what are you doing? I think honestly what I was really proud of is we didn't, you know, considering we don't share the mic all that often, we didn't really interrupt each other that much. And I think that's a win. Dude, we played nice as like two kids in the sandbox and they just get along from the jump, man. But dude, that's like me and you from the beginning, right? I feel like the first time we met, which was actually, for those of you, this person might be listening.

The first time me and Rob met in person, we had lunch at this place called the local goat in Pigeon Forge. And I remember when I walked out, someone messaged me. It was like, oh, my God, I just saw you sitting with Rob Bill, but I was too nervous to go talk to you guys. So if that person is listening, next time you see us, just please say something. Say hello. You know, what's really crazy about that particular instance is I was still working a job. I still had a nine to five at that point. And I was sitting with you and your wife, Sarah, and y'all were like, why do you still have a job, bro?

And I was like, I don't know. I'm scared of losing my health care. Yeah. Dude, and I had just lost my job, I think, like a month before we sat down because I lost it right before Christmas. So, dude, how things have changed over the last couple years, right? So crazy, man. Do you have any purchases coming up, by the way, in the Airbnb front as we get into today's episode that talks all about the short-term rental market? Dude, I do. And it's actually kind of a crazy story. So we have a property that was supposed to close this week, but closing got delayed because the appraisal came back. And this was a new construction that we bought. And,

the appraisal came back and turns out we're missing a bedroom. Oh. So it was supposed to be a four bedroom property. The appraiser went out and said, hey, there's only three bedrooms here. Wow. So luckily the floor plan is right, but instead of making it a bedroom, they just made it like a loft. So now they've got to go back and finish building the house that we bought from them. So is that that bad?

It's not terrible. But we're going to literally, we're going to close like, I don't know, on the 28th. So we got to fight to get our first guest in between the 29th, the 31st, that way we can get our tax benefits and all that good stuff. So, oh yeah. First time this ever happened to me before is buying the wrong house. Yeah, man, they just have to frame up a wall. It'll be all right. Honestly, I market lofts as a separate bedroom on Airbnb anyway. So even if you didn't do that, you'd probably be fine. But if you paid for it, then it's time to get litigious. So I actually am closing, I hope,

on the 29th on a property in Galveston. And it was a sub two deal. It's like a 800 and $43,000 new construction, six bedroom three bath in Crystal Beach, all in, fully furnished, all in, turnkey. It's ready. It's set up. $53,000. No way, dude. So wait, we got to do a whole another episode on that. Like, just give me the 30 second. How did you find this, this sub two deal? Well, it found me. Someone sent me a, uh, someone's sent me on it on Instagram. They're like, hey, man, I'm a wholesaler. The, the seller wants to sell seller finance. Do you want it? He'll finance like $200,000 and then you'll take over the existing loan. So I'm taking over a loan of $678,000 at like $6%, not ideal, but the other like $200,000 or no, the other $150,000, they are,

they are seller financing at 2% interest only for the next 10 years. It's crazy. Dude. What a good deal, man. I'm happy for you, man. I'm happy for you, but I'm also going to be as equally pissed if that dude also messaged me and I just didn't see that message. might be in there. Ryan Emerson, let us know. I got to look it up. Well, what are we talking about today, man? Dude, we got Jamie Lane, VP of research for AirDNA, and this guy is like an encyclopedia of short-term rental data and information.

And honestly, probably one of the most, like my most favorite conversations I've had about short-term rentals in quite a while. But the reason we brought Jamie on and what we spend the majority of the episode talking about is, is all this fear around the Airbnb bust, as it's called? Yeah. Is it legitimate? Should we be concerned? And Jamie has some data to kind of support what his position is.

Yeah, you know, I was really impressed because I kept thinking of all these questions and I was like, well, what about this? And then he was like, oh, yeah, the answer to that is this. And I'm like, what about this? And then he's like, yeah, the answer's this. So I was like, that was pretty good. Yeah. We dive into other things like how to maintain revenue goals in 2023.

And more importantly, how you can stay one. step ahead of your competition in an ever-changing market. So we really do get into it. And I'm really excited for people that are like reading all the headlines and getting all nervous and all scared about it. I think today's episode will hopefully make you feel a little bit better. And before we get into today's episode, we're going to do a quick tip. Brought to you by Tony Robinson of the Real Estate Rookie podcast. Have you ever lost a DSCR deal because the financing just took too long? Red flags popped up late. The lender needed more The deal fell apart.

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and even loss of rental income. Now is the perfect time to review your rates and coverage. Get a quote in minutes at biggerpockets.com slash landlord insurance. Steadily, landlord insurance designed for the modern investor. All right. So today's today's quick time, And thank you for the honor of letting me do the quick tip. Today's quick tip is to go to BiggerPockets.com slash tools. And under the section that says other calculators, there's a section that allows you to analyze properties to short-term rental. So it's an Airbnb property calculator, which ties in perfectly with everything we've been talking about today. And that calculator is actually powered by AirDNA. So you get to hear all the data that goes into it.

Then once you finish the episode, jump into the calculator, start analyzing some deals and find the one that makes the most sense. Guys, use this tool. It's literally the rentalizer tool, and you can use it as many times as you want over at Bigger Pocket. So with that, let's get into today's episode. Today we are interviewing Jamie Lane, Vice President of Research for AirDNA. Jamie has a decade of experience as an economist, which actually means we have something in common because I've read the magazine The Economist, so we could swap some ideas there. And Jamie was a senior economist at CBRE, where his team analysis helped prominent hotel and lodging business. He's got two kids and a fun fact about Jamie. He plays in a dart league. Jamie Lane, welcome to the Bigger Pockets podcast. How you doing today, man? I'm doing great. Thanks for having me. Very excited to dive into the short-term rental market. Yeah, I'm excited, man. So I think today's episode, we really want to kind of gauge what's happening in the market, right? And I think my first question just diving right into this is, can you give us the general pulse for short-term rentals in

23. Can you help us just cut through a lot of the stuff that we've been seeing in headlines and articles all over the internet? Yeah. And overall, we expect demand for short terminals. So the number of people staying in units on a given night to continue to grow, continue to hit records. We've seen no weakness in demand. And overall, the health of the industry is strong. because of that health, we've seen a lot of new units come online. And a general trend has been and his occupancy's been coming down. So there is some weakness on the average bookings per listing. So the average host is getting a bit fewer bookings than they were getting in 2021,

which was really the peak of the industry. And so we do expect some weakness that's going to play. out in different markets more than others, primarily based on where supply growth has been the strongest. But overall, it's a great time to be in and hosting in the short-term rental industry. Yeah, Jamie, so, you know, there's this big idea around the Airbnb bus that Airbnbs are no longer profitable. Short-term rentals are no longer profitable as an investment vehicle. And I think it's because everyone's looking at 2021 where so many hosts got into this space as the baseline, not understanding the historical data pre-pandemic.

So what are your thoughts on that? Do you think that this is still a profitable asset class? Is 2021 the only year that this made sense? Like, should we continue to buy moving forward? What's the data saying? And the data saying, and yes, 2021 was a banner year. Occupancy for the industry reached over 60%. A typical year pre-COVID, like 2018, 2019, it was 53%.

And to this day, we're still running well over 55% and we expect the industry to be there going forward. So we are not going to get down to 2018, 2019 levels as far out as we forecast. But if you underwrote expecting 2021 levels of occupancy forever out into the future or even that growing further, you're probably going to be disappointed going forward. Yeah, that makes sense. I mean, it's tough because a lot of people did start in 2020. And in real estate in general, there are times when you feel like a genius and there are times where you feel like you're dumb, right? Like, it just depends on how much time you're in a market,

right? So everyone that got into 2021, we, you know, a lot of houses that we purchase, we're like, oh my God, we're so smart. We're making all these returns. But if you look at it, you know, I've been doing Airbnb now for probably the last like five, six years. And it's definitely like, you know, some years are better than others. Obviously 2020, 2021 were better. But 2022 is really to me just a very normalized version of what I was seeing in 2018, 2019. What was it like for you, Tony? I mean, I know you've kind of had yours for a couple years now, too. Did you come in right at the peak or did you have a little bit of the bookings come in pre-peak? We came in right at COVID, right? So like there was all this pent up demand. So as soon as we took our

listings live, like everyone was just like, you know, fighting to get inside of our listing. So I think we came in during that banner year. However, I think, I think, we knew going into it that this wasn't normal, right? And most of our properties outperformed our projections because we were using 2019 data when we projected what 2020 was going to look like. So I think we had a good sense. Now, Jamie, I guess one follow of questions of that, right? When you look at like across the map, are you seeing maybe some markets getting hit harder than others or some markets that are maybe, you know, weather in the storm a little bit better? How is that being dispersed across the country.

Yeah, it really varies throughout the country. Sort of mountain coastal destination markets have seen really strong growth in supply in the past year. Urban areas, sort of some of the largest cities, that's where we saw the most supply come out. As people, and demand wasn't there, people took their short-term rentals and they converted them in a long-term. I think that was a lot of people's sort of backup plan during the pandemic, and it played out. And supply in urban areas is still 20% below 2019 levels. So supply hasn't come back in those areas. And demand is just about there.

Occupancies are back. So there's still some great opportunities of some of these urban cities. And then the big surprise over the past really three years has been all the great. growth we've seen in sort of small city or rural areas where there's essentially double the supply now than there was pre-pandemic. And it still continues to be some of the fastest growing areas of the country and where in the most part demands keeping up with that supply. Yeah. So do you feel like the, you know, because we're talking about the urban markets, right? And a lot of supply came out. And then a lot of people sort of, they converted it back to long-term rental, the backup plan, right? So what are your

thoughts on the overall supply growth? Do you think that we're still going to see like a crazy amount of supply being pushed into certain markets? Or do you think now with everything going on, especially interest rates and just the economy in general, do you think supply will actually start going down at all? Yeah. We don't expect supply to drop. We do expect the rate of supply increases too slow. So we're at about 25% supply growth right now. What kind of scares me is that it hasn't peaked yet. So we look at it each month, year over year, and it's still accelerating. We do expect that to start to slow in 2023. And a lot of that is from higher interest rates. We've sort of plateaued on revenue growth. And with interest rates and at where there are, the cost of acquiring those

homes has gone up substantially. So that in my mind means that investment should slow. So that piece of supply growth, we expect to come down. And anecdotally, I hear that from a lot of investors that they're pausing their investment activity or they're at least looking to slow that investment activity over the next year. Where we see more supply coming in is people that have existing homes, maybe a second home, maybe their primary residence. They're not looking to use that home in the same way. Maybe they're moving.

And they don't want to sell. They've got that 3% interest rate that is very attractive to keep. So now they're looking to rent it out, find another use. and we've seen actually a big uptick in recent months from people just looking to find other uses for their homes. And a lot of that is coming into the short terminal sector. Now, can you clarify really fast? You mentioned that supply hasn't peaked yet, so it's going up. But you said that revenue growth hasn't really changed a lot.

So does that mean that more supplies coming in, the same amount of money is being made, thus the average take home for hosts is basically less because of the amount of support? entering the market? Yeah, so supply demand dynamics mean that occupancy is falling. So in November occupancy was down about 5% year over year. But ADR growth, so the average rate that a guest is paying has actually been outpacing the declines in occupancy. So we've been seeing five, six percent increases in ADRs, which have outpaced the occupancy decline. So, average revenue per listing is still positive. People are still making more money than they were last year. So that is sort of held up overall revenues. Dang, that's interesting.

That's like a lot of people don't even talk about like, you know, we talk about being 100% occupied and everything like that. The less occupied you are, sometimes that is better because that's less people in your property using your furniture, turning on your water, turning on your electricity. So it's kind of funny that, yeah, exactly. Like less wear and tear overall and less utility. So it's kind of crazy that's like the ADR has actually gone up and that still seems like a net positive for the overall short-term rental industry. Yeah. And that needs to be a really clear thought for people looking forward.

So if you're, let's say you can decrease your rate by 5% and maintain similar occupancy. And yeah. that you're only losing 5% of revenue. But at the same time, if you could maintain your rates or even increase those rates and maybe only lose 2 or 3% of occupancy, that's going to put you in an overall better place in terms of rep park growth and more than likely profitability too. Yeah. I mean, there's so many factors at play here.

And I just want to go back to what you said, Jamie, about like the supply hopefully starting to taper off a little bit. And I think you spoke to it so well that over the last couple of years, we saw record low interest rates. So it was super inexpensive to buy properties. We hadn't yet seen this massive run-up and home prices yet. So you had a relatively stable home pricing with super low interest rates, which created this really kind of perfect storm for people to enter into the short-term rental space. But I also think what happened is there are a lot of people who saw this Airbnb gold rush. and jumped in not with the intentions of becoming professional host, but with the intentions of

just trying to make a quick buck. And Rob, I think you and I are in a unique situation where we probably talk to maybe more short-term rental host than almost anybody else on the planet. Have you seen maybe some folks that jumped in not treating this like a business, but more so like a hobby? It depends. It depends on kind of which audience we're talking about. But I mean, it's hard, right? Because I genuinely come, I come at an angle from like, it's possible for anybody. Real estate isn't hard. It's hard work. Right. And so on my channel, I try to detail that, hey, the money can be good if you put a lot of time and a lot of effort into it and you like, you put good design into it, quality furniture, good photos. But I do talk about some of the crazy stories that happen too, right? And the way I talk about is usually a little bit funnier. Right. I talk about bears breaking into my, cabin or how the cops went on a manhunt in the forest by my house like a couple months ago. You know, I talk about that stuff and I feel like people think that I'm kidding or whatever.

And then when that kind of stuff happens to them, they just aren't ready for it because they aren't professional level hosts. So I'd say it's a pretty good spectrum. But I definitely try not to cater too much to people that are just trying to like, yeah, I want to make an extra $500. Like, I want people who get into Airbnb to take it as a serious investment. that will take time. And if you put that time into it and you water that seed, it will grow into like a very beautiful portfolio that will sustain your retirement one day. What about you? Yeah, I mean, same exact thing, man. I feel like I have heard a lot of stories from, you know, I wouldn't even call them hosts. I would just call them investors who bought a short-term rental

because I think it's two totally different types of people. But I've heard a lot of stories from folks saying, man, I bought this property and it wasn't what I thought it was going to be. And it's way more work and it's this and it's that. And I think what separates me and you, Rob, is that we really focus on building out like this hospitality business and making sure that we're giving guests the design, the amenities, the experience, and we're really are taking good care of our guests when they get into our property. So Jamie, and the reason I bring this up is because I, and this is my thought, and I'm just curious to see if you think the same and if there is any data to support this, but I think that a lot of people who have entered in over the last two years, that as they start

to realize that this short term rental thing isn't for them, that those units are going to start shifting to other hosts that are more professional that are doing this for like a living. Is there anything in your data to support that or am I just like a crazy guy with the with a jury? Hey man. That's a conspiracy right there. Yes, there's data to support it. And maybe a finer point on one of the things we're seeing though is and one of the biggest

risk to the industry going forward right now is new regulation. And when you look at the type of investor that's looking to invest long term in a market, long-term in their properties, really invest in those, and really choosing their markets carefully, as opposed to hosts looking to make a quick buck, not really investigating the regulations and the markets they're going into. That can create a lot of pushback in those areas for those, for maybe larger property managers or for hosts that have been there long term, or even hosts that are just making large investments being involved in the community, and that can cause some pushback.

So we're all about I'm finding hosts that are wanting to make long-term investments, want to understand the regulations of the areas that they're investing in, and doing everything we can to support that. On the individual investor, maybe short-term host, we are seeing some churn right now from investors in the U.S. So people coming out of the market. All the while we are seeing a big uptick in professional managers. So the largest number of hosts are percent increases in hosts

is coming from those hosts with more than 20 units. So those either having their own portfolios and expanding them or for those larger property managers that are bringing on more individual owners into their portfolios. And we're seeing a really significant growth from some of those larger operators, especially in the U.S. That makes sense. I mean, that's kind of where I'm shifting one of my business plans is I'm becoming, I've just launched a property management company, really, Tony, for what you're talking about, where there's a lot of people I get into this. And they realize maybe it is a lot harder than they thought it was. And so I think there will be

a lot of people shifting their portfolios to property management companies for that specific reason, Jamie. So I wanted to back up a little bit because we sort of talked about how some of the tourism markets were faring. But I wanted to see, is there any data on what the best tourism markets are? Like, are there any specific markets that are faring better than others that people can be watching out for? Yeah. So we do best places to invest report every year. We track quite a few different markets, or we track every market around the world, specifically in the U.S. There's some different trends sort of driving investment opportunities in some of the torrents of markets. Some of the ones that are sort of highlighting to me are ones where revenue

gains have really outpaced the housing price gains. And the sort of COVID trends, so the expanded seasonality in these markets. So historically, they had been maybe only a market that had a peak season of two or three months. And that's expanded to five or six months. So it's really expanded the months where you can really drive profits. And markets like that, it's like Panama City. It's the sort of northern Michigan coast on the Great Lakes.

The coast in Maine, sort of near Acadia National Park. even a market like Virginia Beach where it still has some sort of urban drive from being near the DC area. Those have seen a decent opportunity. And then maybe some prize ones out there are markets where revenue has, growth has been really strong in the past year. And housing prices are now coming down. So these had been some of the sort of peak of move to markets during the pandemic and seen a really strong run-up in housing prices. And recently we've seen short-term rental demand continue to grow and where occupancy is staying really strong. And those are markets like Aspen, Vail, Park City, Telluride, Sawtooth Mountain, Steamboat.

still tough to get into on a sort of a yield basis. But long term, I think they're very strong demand markets with strong revenue opportunity. Yeah. What about, I mean, I think that the big, the sweetheart of the short-term rental markets is like the smoky mountains, right? Like Gatlinburg is one that's been talked about on this podcast many, many, many, many times, which I think had something to do with the astronomical pricing. increases in that market. How do you, is there any data to support markets like that?

Because I think there are two really break out national parks that have really just, they soared and now I'm not really sure how to take some of the movement on like Joshua Tree and the Smoky Mountains. Do you know any of that data off the top of your head on some of these like national park type of markets? Yeah. Those are types of markets that I sort of group in where supply growth has been really, strong. Yes, demand is up. We haven't seen demand go down in Joshua Tree. We haven't seen demand go down

in Gatlinburg, Pigeon Forge area, but occupancy is down 10, 15% year of year. Keep in mind that in Gatlinburg, occupancy is still 30% higher than 2019. So it's all based on where you're benchmarking from. So I think long term, it's still a great market. But that's one of those areas. And you can put in North Georgia Mountains, the Poconos, the Berkshires, Lower Hudson Valley, broken bow, all markets that have been really popular to invest in are seeing really significant supply growth, but where the revenues, RevPars, occupancies have been down pretty significantly in the past year. Yeah, Jamie, I think it's super interesting. Obviously, Rob and I both invests in Josha Trian and Tennessee, so I think we're seeing some of the same things.

But you mentioned earlier the kind of role that regulations play. And that's almost the reason why I'm starting to target markets that have slightly stricter regulations because it almost puts a cap on supply. And if there's a cap on supply, but demand continues to increase, now the hosts that are in that market, they're in a really good position. So for example, we have three properties in the city of 29 Palms, which is the city. adjacent to Joshua Tree, and 29 Palms has a hard cap on the number of listings that they are going to allow at any point in time. And our three properties made it in under that hard cap. So now supply is fixed at, I think, 500 listings, but as demand continues to go up, we're in a really good position. So I wonder, Jamie, do you see maybe better returns in markets that are more heavily regulated

because there is that cap on supply? Yeah. And a lot of those scheme markets are seeing the same thing. Supply growth in those markets has been essentially flat. It's really hard to add new supply in those cities because of the regulations that are in place. Typically, they grandfather and existing properties. So if you're going out and making investment and regulation is the number one thing I advise people to look at outside of the sort of investment returns and finding areas that maybe a regulation isn't in place now, but it's is likely to be coming in soon, where you can get in before that is in place. Or at least in the markets you're in being involved in what regulation is coming and making sure that it is a fair regulation

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And listeners of the show will get a $75-sponsored job credit to get your jobs more visibility at Indeed.com slash rookie. Just go to Indeed.com slash rookie right now and support our show by saying you heard about Indeed on this podcast. That's Indeed.com. slash rookie. Terms and conditions apply. Hiring indeed is all you need. Yeah, I will say, I mean, Joshua Tree is the same thing, Tony. I mean, they just started enforcing, not enforcing, but putting into play a lot more, a lot more regulations and sort of like if you had your permit, your grandfathered

in, but I think it's going to be a lot tougher. It's one of those weird things where I saw overall revenue decrease in the Smoky Mountains for my cabin. My chalet is like very old. so it's not really that surprising. There's a lot of new development out there. But it's really funny because yeah, I mean, it's not ideal to have like less revenue, but the return on that property was like, it was like a 90% cash on cash return. Yeah, it was really good. So it's like, yeah, if I make like 60 versus like 78 or something like that, obviously I want to make the extra 18,000, but my cash on cash was still like, the investment is paid back. It doesn't really matter. Same thing with Joshua Tree. Overall, the,

one trend that I've noticed, and I don't know about you, Tony, but on my end, bookings come in a lot, like a lot more last minute. So before I was like booked 30 to 60, sometimes 90 days out for certain dates, not something that's like the case anymore. I'm now getting booked the night before. And so like if you look at my calendar, it always looks empty. But then if you look at the past calendars, you see that they actually always end up filling out. Is that, um, is that something that's like more common, Jamie? Or does, that market to market? Because I feel like I've heard a lot of people sort of not necessarily complaining, but sort of venting about the fact that, oh, my bookings have dried up, but really what it is

is bookings are just coming in last second. Yeah, it really depends on the market in the season of the market. So if you're in high season, and people are typically getting booked out in, what, three to four months in advance. If you go into shoulder seasons, like smoking, Mountains now. It's typically people are making more last minute reservations, mostly because they can. And you don't have to book three months in advance to book the Smokies in the winter. That said, and different revenue management strategies and using dynamic pricing software is going to push you to different strategies to maximize revenue during different periods and based on what the supply dynamics are. And if you're really, I'm really looking to maximize,

revenue, a lot of times waiting for last minute bookers. So people booking sort of a week in advance, and you can get a significant premium on those bookings based on the time of the year. Rob, I want to ask you because my approach is actually the opposite where we start to discount our prices as we get closer to an opening in the calendar. And it's just for me because I, I I want to be able to sleep at night knowing that we're going to drop the price to hopefully find the right person. But Jamie, what you're saying is that maybe the opposite should be true where you almost jack up prices for those last minute stays because those are the travelers that are maybe most in need of your stay. Yeah. Yeah, go ahead.

Go ahead, Jamie. I'm curious. Yeah, it really depends on how many listings are still available. So we help people track that in our platform. and then what is sort of booking activity? If you've got like really great reviews, really highly rated, you might be able to do that. If you're maybe on the lesser side,

that's probably not something you could do. So it really depends on the type of property. And then what are the sort of total number available listings, how many you expect to get booked? And if you know last minute, typically and in your comp, that are in your market, 10 or 15 properties are going to get booked last minute. And there's only five left. Like, you should push that rate because you're going to get booked. But it really depends on the time in the market. Yeah, I'm with you, Tony. I discount. That's a scary thought.

I don't know. I guess it sort of thinks, I discount last minute. I just want to fill it if I can. But yeah, I guess it takes a little bit of faith to drive up those prices. Yeah. I think. I think I've played around with that in some of the holiday seasons, right? Like if we have a last minute opening for like Thanksgiving or Christmas, then I'll typically try to kind of bump those prices up. But yeah, I get a little nervous out. Maybe I've got to spend some more time digging into the day to Jamie. Hey, I'll do it if you do it.

If we can get everybody to do it, then it works, right? But if I'm, oh, my God. We've done it. I think that's called, I think that's called price collusion. Okay. All right, never mind. We didn't say that. So, Jamie, we talked a lot about, obviously, Rob and I are in mostly true vacation destinations,

but what about the metro markets, like the large urban cities, you know, like Rob lives near Houston. I live near Los Angeles. Like, these are big cities. What is the revival been like in those major metros? Yeah, revival has been slow. And there were the markets that were hit most by the pandemic. people were really avoiding cities and it really held that the less than you were, the quicker

your demand came back. But we really are now seeing the revival of demand to the cities. And in reality, 2022 would have been a much better year except for the strength of the dollar. So if you've been paying attention to that, and it sort of raised the cost. for foreign travelers coming to the U.S. by about 20%. It made it much cheaper to go to Europe. So a general trend this past summer was go to Europe for how great a value it is. But that really kept people back.

And why I mentioned that is because in a lot of these large cities, prior to the pandemic, international demand was as much as 50% of overall stays. So in cities like New York, San Francisco, Oahu, Miami, L.A., Boston, 30 to 50 percent of guests were coming from overseas. That now is only about 20 percent, maybe 15 percent. So we're still have a long way to go. In 2023, we expect there to be a big increase in international demand coming back. So that, and especially if China opens back up to try. travel. So you think in past three years, Chinese travelers have been sort of cooped up, not

allowed to travel outside of their city, much less internationally. And back in 2019, China was the number two country for international visitors coming to the U.S. So I could see really an unleashing of those Chinese travelers coming back to the states. Yes. Yeah. That's anecdotal for me as well. Like 2018, 2019. that the China was a big the by far the biggest international audience that was staying at my at my different Airbnb's one of the things that I was also I have a couple of questions and then and then we'll move I'll move us along here but and I feel like I'm just throwing like you know you're the king of darts here I feel like I'm just throwing things at you I'm like I hope he knows the answer to this

because I'm genuinely curious so one one thing that I was wondering about is you know during the pandemic a lot of people were unable to to go international right and so once some of that dust settled and people could travel internationally again, people started going. But now we're heading into a recession. And so my logic or my thought here is, well, flying internationally is very expensive. So it makes me wonder if in the next 12 months, there will be a lot less international travel and a lot more domestic travel within the United States. Is there any kind of data on that front? Yeah, it's some. So you think about travelers that are traveling overseas, though. It's generally higher-end travelers, so people staying in more luxury properties.

And those are actually the ones that have performed the best over the past three years. So people that would have traditionally traveled overseas, stayed domestically. And we saw luxury properties. And overall, they used to have the lowest occupancy. They actually had the highest occupancy during the pandemic, or highest growth in occupancy during the pandemic. They are now, and in 2022, where we saw some weakness. So you think some of those mountain destinations where people were staying domestic,

all of a sudden started going overseas again. And we saw luxury rates in the Colorado mountains and drop anywhere from 15 to 20%. And they decided they want to maintain their occupancy. So they started cutting rate. And that in a lot of markets that were sort of appeal to luxury travelers, that's been an area of weakness over the past six to eight months. You know, Rob makes me think of a good question, Jamie, about the recession and kind of how does the travel hospitality industry typically fare?

So Airbnb started during the last recession. So there's probably not a whole heck of a lot of data around Airbnb specifically. But just like anecdotally, do you have any sense of how maybe the larger hospitality industry fair during 2008 and maybe even if there were previous recessions how they typically did because I think there's this massive fear for a lot of people moving into this space when they hear the word recession that their properties are going to sit empty for months on end and I just wonder if there's any data to maybe you know soften that fear a little bit yeah so I'm in my prior life I was an economist for the hotel industry so looking at sort of decades of data we actually had data

going back to the 1930s on hotel performance. So I've done actually a lot of work and looking at prior recessions and its impact on our industry. And what I can say is the past three recessions are not representative of what we expect to happen during this recession. So you think back, we had COVID,

we had the great financial crisis, we had 9-11. So all recessions that impacted the hospitality industry way more so than the rest of the economy. And this upcoming recession, if we do go into one, we expect it to be much more of a goods recession than a travel and hospitality recession. We actually have forecasts from Oxford economics.

They actually don't expect, even in their downside scenario, where they have GDP going down 2.5% leisure and hospitality demand to go down at all. And that really aligns with our forecast where we do have a recession baked into our forecast for next year, and we still have demand going up 5.5% our friends at STR in the hotel industry, their forecast for hotel demand is up 3% with the recession baked in.

So overall, even if we do go into recession, we expect just the tailwinds. and people are prioritizing travel over other forms of spending right now. The surveys that we've seen is that they're going to continue to do that. And that's our expectations for the year ahead. Yeah, yeah, for sure. This is like, really, Tony, this gets into the people who are like sort of dabbling into Airbnb, right? I don't think 20, 23, I think it's the best opportunity really to get into Airbnb in the last two years because we're going to see a lot of price cuts. I don't think it's a good opportunity for people that are just wanting to dabble because,

this is going to be a hard year for a lot of people to stomach if they if they're just reading the headlines and like things are slow right but for me i've been doing this for five years i'm excited for price cuts and i'm excited to jump in at a pretty decent rate you know what i mean so it's like 2023 for me i'm genuinely excited to get some to actually get offers accepted for like the first time in like a year and a half right so uh j me sort of talked about your forecast and you've all honestly put out an impressive amount of answers to my dad's question here. So can you tell us a little bit about where you even get your data? How does AirDNA compile so much data? Like what are the sources of it? You know, like how is it to,

I don't know, I guess I already asked. How is it compiled? That's what I mean. Yeah. So I'm, we're a global company. So we're tracking every listing on Airbnb, Verbo, and booking.com. And we look at every listing every day, and the movements in the calendar. So which listings are available on a given night? We see when they go unavailable. We then model whether that was a booked or blocked night. We take the last rate that night was available as the revenue and then amortized the cleaning fee, so spread that over the length of the reservation.

And we've been doing that as a company since 2014. So we have a really long time series of data. So we can understand sort of trends over time, how markets have moved over time. And sort of our goal as a company is to collect data on 95% of the short-term rentals out there in the world and have 95% accuracy. So we're not going to get to the long tail of every single sort of niche booking site. We're not going to get perfect accuracy. We can't do that with how we click. collect our data.

But we're going to get really close, and that's like our number one focus at our company is accuracy of the data. And how we sort of augment that is we get data from individual hosts that connect their properties through our site at AirDNA. So if you're a host, you can connect your ICAL. We're going to get your actual data. We're going to allow you to benchmark your property versus competitors. Understand, am I getting, is it just a job?

just me that's not getting bookings and how are my competitors, how are the properties around me getting booked out. And then we also get partner data. So some of the large channel managers, vacation rental management companies give us their data directly and we're able to augment the scrape data with that data as well. Yeah, Jimmy, I'm so happy that companies like Erdina exists to pull that massive amount of data because in order to make the right decisions as a host, you need the right inputs. And the right inputs is everything you talked about. And I had no idea with such a complex process to track so many millions of listings across the globe. So I'm glad you guys are doing that. So I want to keep the conversation moving, Jamie. And I want to talk a little bit

about how investors can kind of start setting themselves up to remain competitive, given all the forecast and everything we talked about so far. So with this increase in supply, what, what are you seeing or what advice would you have for someone that says, okay, how can I, how can I, how can be competitive? How can I protect my return? How can I make sure that my listing is one of those listings that does well? A couple of different things. There's different aspects of the industry that are growing faster than others. So unique stays is one where I'm very bullish on. I think you guys might be as well. The other is the type of amenities. So if you look at a market like Joshua Tree, an overall occupancy is going down. But if you look at occupancy for properties that have pools,

is actually going up. So being focused on what people are going to your market for, what amenities do they want when they're there, and how can you make your listing stand out from the others? And then the third thing is sort of status in reviews. So a property or a host that has super host status is getting a 24% higher occupancy than a host without super host status. Wow.

Really? Period. Yeah. Dang, that's crazy. Last year they had 21% sort of higher rev-par controlling for everything. So there is a massive increase in performance and sort of propensity for people to book for higher reviews for super host status and sort of giving people and sort of the comfort in booking. we have so many people trying Airbnb for the first time. So last year of all the bookings that happened on Airbnb in the U.S., 40% were first-time bookers.

So if you're trying a platform, trying a product for a first time, are you going to book with someone that's a super host or not? Like, yeah, it's, it really makes a difference. Dang. That is honestly astounding. I have actually been, I remember I was at an Airbnb party, I guess. It was a lot of hosts and they were all standing around. And we do cool things.

And so we were all standing around. And I remember being like, yeah, so how long have you all been super hosts? Or how many times have you been super hosts? Because it's just like a little badge that they tell you like, Tony Robinson. and it has been super host X amount of times. And then they were like, oh, four, seven. They're like, what about you? And I was like, oh, I think I'm on like 16 now.

And they're like everybody's jaw dropped. They're like, what? You've been a super host 16 times. And it's something that I've been like very, I don't know, like very proud of for no reason. But now I guess I have a good reason to be proud of it because I've gotten 24% more bookings from it. So that's pretty crazy.

Also keep in mind that, only like 15% of hosts are super hosts. So it is a small crowd. And so if you, you're thinking about, even maybe plays into the Airbnb bus thing of, and people that are not seeing the bookings that they expect. And if they're not getting reviews, if they're not sort of meeting guest satisfaction,

and that could be a big piece of it as well. Dang. Now, I know there's a, do you have a fun, fact here about super host names. Like what is the most common super host name? This is something that we kind of chatted off off air about the other day. We chatted off air and then I never actually looked it up. Okay. Now that you mentioned that, I remember I did look it up at some point. What is it? Do you have it? Yeah, Jimmy, I mean, there's so many good things we've talked about.

And I love the idea of hosts having something tangible to focus on to help their listings do better. So you talked about pools and Joshua Tree, which I'm super glad you mentioned because I actually just got my first pool property under contract right now. So I'm excited for that rehab project. But what other amenities are you seeing kind of across these different markets that maybe host should focus on including in their properties? Yeah. So when I get asked out on the press all the time, it's a super popular one right now is pickleball courts. The other is themed units. So running with a theme that's sort of popular in your market.

Orlando has a lot of them around the parks. But really any city has history and you could create a theme that goes along with it. Some ones that I'm really focused on right now align with the Airbnb categories. Is there sort of new ways to get Gus booking your properties? And you run through those and it's, and some is, I'm, simple stuff like play. Do you have games? Do you have a game room? Do you have a creative space? Do you have a chef kitchen, a piano? So there's just new ways that Airbnb is pushing for people to search. That if you could sort of align into one of those categories, you could see a significant uptick in

bookings there. I just want to say, David, good. If you're listening to this, listen to Jamie. He said pickleball courts. We have a tattered pickleball court at our Scottsdale mansion. And it's like, get it cost $25,000 to get up and running. But I was like, we should do it. He's like, let's make some money first. I was like, fine. But I was like really ready because I want to pickleball court. Sorry, Tony, what are you going to say?

Have you seen our newest game room in Joshua Tree? We just renovated one of the garages into this really cool Mario themed game room. So we have like a Mario like picture like mural that we painted along the wall. All these really could these really cool wood decals that like little tubes of Mario jumps in and out of. We have the Nintendo Switch, like the basketball hoop, the air hockey table. And we actually pulled that inspiration, Jamie, from Orlando. Because we saw Orlando does, like, that's one of the best markets to go at, to look for inspiration on how people are getting really creative with themes.

And we said, man, there's no really cool themes in Jocetri like that at all. So we literally just took that. I don't know. You know, but like, dude, like the Orlando ones are like super over the top. So it's our first kind of foray with the super, super theme like that. So I'm curious to see how it does that market as well. I thought, see, I thought you were going to Super Mario because it's Joshua Tree and Super Mario gets powered up by mushrooms and stars.

That's the connection there. That's what we're going for. In some areas, amenities can be table stakes. Like you talk about a market like Gatlinburg. It's like over 70% of properties up there have a hot tub. And you look at the ADRs from hot tubs, you're going to get $40 a night. extra, a 70% increase in rate. So if you are making an investment,

and you got to know, what do people just expect when they're booking that market? And then my favorite way to sort of figure out some of the ways to maybe go over the top or figure out, and what could you replicate that's doing well in other markets? On our site, we have top properties. So which markets are earning the most revenue in every market?

And that for me, it's like what, and I just go through that, run through different cities and find that like, oh, this is killing it in this market. I'm going to copy it in this other market. Yeah, you mentioned the, you know, looking at what's important to your city. Gatlinburg is effectively synonymous with the word hot tub. It's like very, very, very important. It's annoyingly important because I hate hot tubs and the maintenance that comes along with them. But my property, one of my properties, it's like a five-bedroom four bath. It's kind of out there. You know, it's a bit of a destination, maybe, like 30 minutes outside of Pigeon Forge. It grossed about $60,000 this year. The mortgage on it was like,

I don't know, $2,200. I think it'll end up being like a 25% cash on cash return. I was actually expecting it to break even. I bought that house, not even for Airbnb. It's actually nice that it made some money. But I know, like I've been wanting to build this epic hot tub that basically candle levers off the cliff and you can look at mountains. And it's been really hard for me to find a, because that requires intense engineering and finding a contractor that can do cliff decks and all that kind of stuff. But I've just been like over the past year trying to find somebody to do that job because I know that if I do that, it will basically double my overall revenue probably for the vision that I'm trying to execute. But one of the things I was going to ask you was you said it's

important to look at what amenities are important to your market. Is there any way someone can research that? or is it really just a matter of going through your Airbnb competition and just going through listings and seeing which ones are the most booked and maybe trying to like cross-examine all the different listings out there? Yeah. And for the main amenities, it's actually something we put on our website at AirDNA.com. And it's, um, I think it's not even behind the paywall. So you can go and see for all those top amenities, what percent, uh, by city and any city in the world, uh, properties have, uh, that amenity or not. So you can get a sense of, and for ones like pool, hot tub, Wi-Fi, TV, cable, things like that,

see what percent of properties have those amenities. I mean, even if it is behind the paywall, you can use promo code raw built for, no, I'm just kidding. Okay, well, awesome, man. Thank you very much. I appreciate that. Tony, is anything else you wanted to ask before we let Jamie go here? I mean, I feel like I have at least 18 more questions.

Yeah, man, I feel like we could keep. talking forever. We definitely got to bring you back on, Jamie. Maybe we can make this like a regular thing because Rob and I selfishly get so much value from having these conversations. But if there's anything I want the listeners to take away from this episode and Jamie does such a masterful job of explaining this is that we can make decisions based on emotion and headlines and, you know, what pundits are spouting or we can make our decisions based on the data and what the facts are saying and use that to inform our decision. So I don't think any of the questions from me, Jim, I just want to thank you for hopefully, you know, doing away with some of the fears that people have had around the short-term

rental industry because this Airbnb bust idea, I think, is like permeated so deep in so many of these communities. But what you're sharing is definitely, I think, fought that in a good way. Yeah, man. Thank you so much. Before we let you go, is there, where can people find out more about you or more about AirDNA if they want to reach out or learn more information? Yeah. And AirDNA.coms or website. You can follow me. on Twitter and LinkedIn. And if you want to hear more about the data, we do have our own podcast, the SCR Data Lab,

where we talk data every week. So I'm happy to have people come in and listen. Okay. And if people want to follow you on Instagram or Twitter, what are your handles? Jamie Lane on, Jamie underscore Lane on Twitter. And I think it's just Jamie Lane on Instagram.

All right. What about you, Tony? can people find out more about you if they want to connect or see your golden knowledge bombs on the internet. First and foremost, come listen to the Real Estate Rookie podcast. We drop episodes every Wednesday and Saturday. Outside of that, on Instagram at Tony J. Robinson. And then my wife and I run the Real Estate Robinson's YouTube channel as well. Awesome. Well, you can find me over on YouTube at Rob Built. If you like this episode, if it made you feel better, if it inspired you to get into the short-term rental game, please consider leaving us a five-star review on the Apple Podcast

platform or wherever else you download your episodes. That's it for today's episode of Bigger Pockets. Thank you so much, Jamie. And we'll catch everybody on the next episode of Bigger Pockets. And seen. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian Kemp. Copywriting is by Calicoe Content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter,

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