Heads In Beds Show - What Are The ACTUAL Benefits Of Building A Direct Booking Website & Brand?

Episode Date: February 21, 2024

In this episode Conrad and Paul talk about what the real and actual benefits are of building a book-direct vacation rental business. Enjoy!⭐️ Links & Show NotesPaul Manzey Conrad O'ConnellConrad's Book: Mastering Vacation Rental Marketing🔗 Connect With BuildUp BookingsWebsiteFacebook PageInstagramTwitter🚀 About BuildUp BookingsBuildUp Bookings is a team of creative, problem solvers made to drive you more traffic, direct bookings and results for your accommodations brand. Reach out to us for help on search, social and email marketing for your vacation rental brand.

Welcome to the Heads and Beds show where we teach you how to get more properties, earn more revenue per property, and increase your occupancy. I'm your co-host Conrad. And I'm your co-host Paul. All right, hit there, Paul. How's it going? I'm coming back from a little vacation here, so I'm hoping that I can deliver the value

that we've been working so hard to deliver to our eager fans here. Yeah, absolutely. You look tanner. Were you actually out in the sun as well? If I took my hat off, it would look real red on top, so we're just going to leave that on, and you can see the red in the cabin.

We'll just go with that there. But yeah, I got some sun. Not crazy. It was 50 in Minnesota and it was 70 in Bonita Springs where we were. So not quite the gap we usually see in February. Last year it was 19 inches of snow during that time. I don't know. It was good.

It was an upgrade, but it wasn't like a massive. It wasn't, right. It wasn't the massive upgrade. Kids got to enjoy the pool. That was really the most important thing. So everything else, we just enjoyed the sun and yeah, and enjoyed time with the family. So that was good.

How are you doing, sir? Yeah, pretty good. No, no fun trips that we made over the past week or so, but planning a trip obviously for a month or two from now. So that'll be fun and exciting, but no, all good. We'll do a quick Superbowl commercial reaction take. I think we did an episode last year by the Superbowl you see the duncan ads the dunking's ad was that something that crossed your eyeballs i i did so here's the other thing i was watching yeah because the kids

were so excited about the spongebob super bowl which was nickelodeon yeah which was awesome because i would watch the play on this somehow Somehow Nickelodeon was a play ahead, like 45 seconds ahead on the telecast. So I would watch the play Nickelodeon and then go out and watch it on CBS. But I did catch the Dunkin, the Dunk, not Dunkin Donuts, the Dunkin commercials. I won't lie. I looked at the $60 jackets and pants for about half a second. That would look pretty good on an episode. But Drifty. I looked at the $60 jackets and pants for about half a second. That would look pretty good on an episode,

but they're all sold out. Now, if you go to shop, Duncan.com, you're, you're too late. Yeah. But I think that's a lesson. Maybe that's a lesson to be had in branding is like often star power.

Like a lot of ads that didn't hit for me were ones where it was like, you didn't really have like much draw to it. Also, I don't understand the idea. Like you have nine months to market a film or a movie why does what does the super bowl ad do that like you're gonna have nine more months to get people excited like no movie promo i saw last night was like oh gosh i'm gonna there's nothing you can do you just wait nine more months or eight more months for the movie to come out and that was streaming as

do you even care like you just wait till stuff comes out so i'll say i don't get the movie trailer seven million dollar budget thing at all and with dunking's i guess it's just people talking about it's more brand-level thing that's not really our world. But that was the only one that really stuck out to me. A lot of my thought were pretty mediocre. It is I this was, I would say it was not not exactly the year of wow factor of everything is going to make headlines. Everybody was too concerned with the 56 seconds that Taylor Swift was on the screen. So we all got to worry about the, that was the commercial. That was the, that was the $700 million of airtime was given to Taylor Swift,

which whatever I'm not like anti-Taylor Swift by any stretch, but boy, she knows how to get attention. That's for sure. Wow. It was. Yeah. For 7 million,

I would say half got their money's worth. The third got theirs money, their money's worth. I don't know. Yeah. I saw a tweet today and it was like to the effect of. I don't know. Yeah, I saw a tweet today and it was like to the effect of, you don't know what they're optimizing for, right?

And the hardcore direct response person will go, no matter what happens, there's basically no way that you can recoup $7 million of this brand awareness because it's like, are you more or less aware of Dunkin' Donuts today than you were yesterday based on that? It's like, it made you laugh.

There was some brand association there, but certainly I don't think we're going to see some massive, obviously we're joking. They sold out of these shirts and cups and things like that. But I doubt that was, they didn't recoup their $7 million. I'm sure they had to pay Ben Affleck

and Tom Brady and all the other people that were in the commercial as well. That could have been a 15, $20 million commercial for 30 seconds. But it's people talking about it. There's brand recall lift there. There's other things they're measuring. You got to know what you're optimizing for.

Maybe that's the actual topic of today's episode, which is optimizing for direct bookings. And what are you actually optimizing for? What are the benefits of getting more direct bookings in your vacation rental website? So that's my best segue I can do. I'm trying to tie in Duck and Jones to vacation rentals. Yeah, we got a quick outline. I think we'll go through some of these things. Maybe it's just restating a little bit of what people may already assume, but I'll add in some extra context and information. I think you will as well. Obviously, we could talk guest side and homeowner side as we get going. I feel like people understate this one a little bit. So the first one we have on here is like

increased revenue potential on a per booking basis. And I think people sometimes don't understand like the actual approach that they should be taking here. So let's go through a scenario. We'll make it simple. You're booking a vacation rental through three nights at $333.33 per night. So your total will be $1,000. We'll round up the penny for simplicity's sake. And that's your rent. Now on top of that, there may be fees like taxes. Obviously those are just going to the local government. There may be cleaning fee. That's probably just getting passed through mostly to the cleaner. Maybe you make a tiny margin on that, but it's probably not that different. And there might be other fees associated in there. Any client that we work with that I think that has the best optimal setup

as far as their direct booking website, doesn't take the idea of Airbnb would charge on that reservation, potentially $120 reservation fee, 12%, or they would take in that fee themselves as lost revenue and say, okay, I'm going to go now, set my rates identically. So that will be $120 cheaper on my website versus Airbnb. That doesn't make any sense to me. What you should be doing is saying the guest is willing to pay that fee, obviously, and we've talked about this before, because the guest has no problem paying the fee because they're paying the fee to Airbnb at billions of dollars every single quarter, every single year.

That is obvious. What are my opportunities to take a portion of that fee? I can still offer a cheaper rate on my website if I want to, but I would argue you don't have to offer it that much cheaper. Take that fee and then allocate that to actually build my marketing engine. So when I think of increased revenue potential, I don't think of a direct booking is more profitable because of these reasons. I think a direct booking is going to put more money in my side of the ledger, even if the guest pays roughly the same amount, maybe a small difference. And I'm going to be

able to have more ammo, more like tools in my tool chest to actually be able to spend marketing and do more promotions from there. So that's my philosophy. I don't know what your philosophy is. I guess this applies more on the guest side, but what's your approach on that? It is. I think there's the easy answer is, yeah, you're taking money that Airbnb or verbal might take typically. And that I think it's a mindset. It's a fine mindset. That's if that's all you need to make you feel good about it. Hey, I'm not paying money to the OTA. Cool. That's fine. But I do. I like the way you're looking at that is you don't have to lower that rate. Yeah, you might visually want to do it if you have a lot of people who do go back and

forth and it's hard to measure that. It's hard to track that. But I do, I think that's something that the idea that someone is willing to pay $300, then don't let them pay $250 for that room. Don't let them pay $275 for that room. Keep the going back to the owner side of things. Usually you've got to pay out that owner at some point, that commission is going to come around there. So keeping those owners happy and not having to reduce that rate, certainly that's going to make them happy on the back end of it as well. Yeah.

I think the ability to control your rates is just so important to feel like you're in control, to feel like you're not being run around by a third party. Even if you're using some type of revenue management software, which is helping you to dictate some of those rates, I still think that whatever you're paying there, whether that's a monthly fixed or whether that's something you're giving a little cut there or a commission on that, but still that control that you can make the adjustments. You're not basing it off of, I'm absolutely going to give 12%. I'm absolutely going to give this. I have to account for that in my budget, in my trust accounting, in whatever I'm doing there. So I do. I think that having control and not having to deal with the potential of, hey, we've talked about it.

Hey, what if Airbnb decides to just mass refund huge amounts of bookings from you? That control is gone there at that point. So I think that you don't have to go to that end of the spectrum and say, oh, it's the disaster of we have to control everything that's happening here. But you always want to have more control over your business than does someone else. So I think- Than less. Yeah. It's like in an equal scenario, that is obviously the optimal outcome.

But going back to the owner piece really quickly, in my mind, this does tie to owners because how are you going to build the revenue stack on your side of the business if all the revenue that's going out the door is going to an OTA? You know what I mean? So let's go through a scenario. Let's say you have 50 properties and you only book 10 weeks per year directly on those properties. So 500 total reservations of your total reservation stack were in fact these three $333 per night properties. That's 500 reservations times $80 would be like your 8% fee. Let's say you charge 8% instead of 12, 13% on Airbnb. That's $40,000 that you just manufactured by actually offering a cheaper rate than the OTA. So the guest is still getting a good deal, but you don't have $40,000 of marketing

expense, or maybe that's your profit, or maybe that's where you're going to put your fees into doing direct mail postcards for, to get new owners. Maybe that's your fee to pay for Google ads. Maybe we're helping you run Google ads. Whatever, you get my point, which is that you can take that money and do something with it. And you're still getting your 20% commission, 15, 25, depending on what we negotiated. You may still have other fees.

There's still upsell opportunities. But if the guest is willing to pay the 12% fee on Airbnb, make it a 7% or 8% fee on your website. You're still offering them a cheaper rate. Allocate that to your bottom line, marketing, growth, whatever the case may be. And you're going to be in a lot more stable position to your point. And it's not what we're after with

small business. We're after stability, right? If you heard someone and they were like, you have a restaurant, I get all my orders from Uber Eats. And at any moment in time, Uber Eats can kick me off their platform and I won't be able to sell an Uber Eats. You'd call that guy an idiot. And yet that's what a lot of clients do. We talked to with Airbnb, they seem to be okay with their relationship. And I worry about it more than they do, which seems not optimal necessarily, but that's how it goes. We beat that course a little bit there.

Let's go over to the next one that I had on my outline here. Enhanced guest experience, or just like how do we improve the guest experience through direct bookings? Nothing is more obvious to me on this side of things than when you go book a hotel and the Wi-Fi is free. If you're a rewards member of whatever hotel Wi-Fi program or hotel loyalty rewards program they want you to be a part of, or the Wi-Fi is 10 bucks a day if you book through Booking.com or some other OTA. Now, if you did that on a vacation rental, that seems like a really fast

way to get a one-star review on Airbnb, for example. Yeah, I booked an Airbnb and they wouldn't give me the Wi-Fi code. That's just a quick way to catapult yourself to the bottom of the floor. So I'm not suggesting you do that tactic, by the way. But it does go to show you that in the world of rate parity, and rate parity is enforced on the hotel and resort side a lot more on the OTA platforms than it is in the vacation rental world today, they're trying to think of every edge they can to make a direct booking more pleasant. So what is your version of that? Why is it more pleasant to book directly on your website than it is to book on the OTA? I don't know if people often have a good answer to that. I guess communication could be a part of it, sending

a guidebook a little bit more easier. There's things to explore there, but I feel like people aren't spending any time to think about it, but they should be if they want not just direct booking to come, but someone actually look forward to making a direct booking because they get something better out of it.

So I don't know if you have any ideas on those topics, but. It is. I think this goes back to pre the pre Airbnb and verbal taking control. Secure messaging. I always go back to that. That was the big release when all the property management systems

had to get on board because that was the way you were going to start to communicate with guests. You couldn't go outside the platform. How many of these property managers or individual hosts, once they got that booking through

or some type of inquiry through one of these third parties or reaching out directly to them saying, here, come talk to me here. We'll do it this way. We'll settle it down. I don't want you taking the booking. I don't want to give Airbnb any money. I do. I think it's so important to be able to communicate with those guests. And initially, when secure messaging rolled out, it was a pretty big shift for some of these property managers. I remember just not being able to get phone numbers, not being able to get some of these email addresses until after the booking was taken, after Airbnb had taken a

little bit of their cut there. So I do, I think that guest communication prior to, up to, and throughout the stay is important. And when you're not getting all the information from Airbnb, or you're getting partial information, or you're missing out on something, maybe you're missing out on a contact information of some kind, or just the ability to kind of market to them outside of what Verbo or Airbnb are going to do. Because that even if they take the booking, if you take the booking through that third party, they're going to keep marketing to them too. So not only are you having to over-market to say, hey, it's not Airbnb you stayed with, it's property manager X, Y, and Z. I think that that is, it comes over to our core next topic there,

control over that branding and marketing. Just making sure that it's not Airbnb marketing to you. It is property manager. One, two, three, X, Y, Z, whatever that is, because you're competing with that third party. Maybe not directly per se, but they've got the same information. They know when you stayed, they know where you went, they know all of these things, and they know your search history as well. That's something that we as property managers don't always know. So they can really educate that traveler right down the road again to book through their platform as opposed to booking through direct. So it is any control you can have there, I think is immensely important because it is, it's, it is, it's those long-term costs that are going to build up over time. And that three, $300 dedicated to marketing

for that booking or $400, it turns into five, $600 because, and hopefully it's not that much, but you never know. That's something that if you're competing with limitless amounts of money in marketing dollars, yeah, you're probably going to be facing a bit of an uphill battle there. But I'll toss it back over to you a little more for the branding and marketing side as well. But no, I think you nailed it there. I think the one thing, obviously,

the problem that I see with Airbnb just from a positioning standpoint is that they have a box that you have to fit in. Your title can only be this many characters. Your description can only be this many characters. And I know this because we have a service that writes descriptions for folks. Those are not suggestions. Those are hard limits, right? The title will be this many characters and it's not really allowed

to say other things. And it's really problematic just in the sense of what is your identity as a company? Maybe you want to have a video tour three quarters of the way down the page and you want to have a what's nearby section and you want to have, but you can't control any of that stuff in Airbnb, right? You're fitting into their box or Vrbo. This is supposed to just Airbnb. So you really have very little control over your branding and marketing and everything has to be put into this sort of homogenized white box and spit out to the Airbnb algorithm. And it's, yeah, what do you stand for as a company? What are you doing to market and photo and video your listings to make them more appealing? And when you're in the world

of Airbnb, you're doing what is optimal for them, maybe not always what's optimal for you or to the user to that point or to the guest who's on that website making that booking. So maintaining control over branding elements and messaging, I feel like some people just don't care. And they're just like, whatever Airbnb says is fine. But the companies who work there really care about the way that their companies presented tend to present a better overall image to the guest. And they're willing to pay more because they see something that's that was premium, that feels more high end. And they're attracting a different profile of guest.

If there's, again, a distribution of bell curve of people, what they're willing to pay, you never want to be on that third of the bell curve. That's always looking for value, always look for the cheapest day, doesn't care that much about the amenities, will gladly argue with you over one little hair in the shower if they catch it and try to come to Airbnb, right? Like you want to be dealing with the top third of people who pay a premium who, yeah, they expect good service, but they're willing to pay for it. Your actual, your business isn't actually that much harder marketing to that top third, that top 10% than it is marketing to the bottom 30%, but you actually make 10 times more money

doing it, right? As far as profit goes and you just need more things there. So yeah, creating the branding and marketing that represents you and the properties that you're marketing is always going to be, I think, where you get a lot of benefits there. We've touched on this already, but we have flexibility to independence in the outline. And again, I think you nailed it earlier when you were talking about cancellation policies or the fact that Airbnb holds your money and then you only get it later on. Again, if you can control the cashflow in business, if you can control when you get paid, invoices, all that kind of stuff. I don't even know how this works inside of large companies today, but interest rates are really high.

I bet there's people with trust accounting accounts that they have in these high interest savings accounts. And I bet they're throwing off two, three, four or five grand a month in just interest that they can keep, right? It's not, it's their money.

And then they of course distribute the payments to the owners when it's appropriate, but Airbnb is not going to do that for Airbnb probably has billions of dollars in this trust account that they owe to you, but they're just making money off the interest. So that must be wild. But anyways, flexibility, independence, freedom to innovate. You can change whatever you want to change. You want to do a pop-up on your website. That's something we suggest and often put in place for clients. You can't go to Airbnb. Yeah. Can I get the email address so people go to my listing? They're going to, they're just laugh at you. They wouldn't do anything with that. So

my whole thesis here on flexibility and independence is if you're trying to build a business, that's not a barnacle, a barnacle attaches itself to a boat. And then wherever the boat goes, the barnacle goes. That's what owning is like people who say they own an Airbnb business, your barnacle attached to a boat. Now that boat is doing well. And I'm not disputing that. And I'm not saying that you're not going to be able to get bookings from it. And if I can distribute my barnacles, I might put a barnacle on the Airbnb boat. I'm not opposed to that philosophy, but I would never put all my barnacles on the Airbnb boat. I would never want to ever be in a business where a hundred percent or 80% or 90% of my success came down to one relationship, came down to one API connection,

came down to one caseworker somewhere in the Philippines. And I don't mean that in a bad way. It's just true. A lot of people are over there and who may go, oh yeah, safety issue. We're going to shut you down. That makes no sense at all. So this idea that people are okay with this relationship and that they find that's going to be the right way to build a business. They're not really building a business they own and control. They're building a barnacle that they're attaching to another boat. And that just, I don't think it makes a lot of sense. I think the term Airbnb co-host versus a property manager is it's that divide is that some people just consider themselves. They, in, they run on Airbnb,

that's it. And I think some people grow from a Airbnb co-host to a property manager. And we've seen that. We've seen those companies grow and they found the niche to get in and then they grew it into a profitable business. I'm not saying that's not doable, but you do. And for going that early on, you are going to have to, if you want to become that professional property manager with standards that we're hoping we're adhering to, you're going to have to get that back at some point. You're going to have to build that brand equity, not just be an Airbnb machine, but to be a professional short-term rental manager, property manager, vacation rental manager, whatever you're calling. I think there is a difference. And we've talked about that on and

off, but I do always go back to that. When I do searches for Airbnb co-host, because that's something that on the owner side, that's a search term that we go after because you don't know exactly what people have heard or know about that or what they're doing, what their interpretation of that is. They may be a quote unquote professional property manager, but they're relying on Airbnb as a co-host. So I do. I think that is something that lingers with me that if you are considering yourself an Airbnb co-host, there aren't really verbal co-hosts, or I haven't heard that term nearly as much, booking.com, if anybody's going through there. But that is, I think that's a mindset shift of you are a purveyor of the third party booking system, or you're running your own business, separate standard, you own it all. It's under your control. You have the freedom to be you.

Yeah, I think you're right that the term term has popped up obviously a little bit more recently because there is, I mean, there's a service to be had there where like you have a property, you're looking for more of a collaborator, like, Hey, respond to my messages and things like that. And someone is a single property host. And to be fair, a lot of these things we're talking about are really hard to do as single property hosts. They're also really hard to do with commodity properties. Like building your own direct book and website is harder when you have the same condo as 95 other people in the building. Like it's pretty much impossible to get the kind of results you need in that scenario. It's really more about, it is about scale to some degree, right? You need to have some level of

scale and some level of density for all this stuff to make sense. And it won't make sense for sure. If you have one condo in Orlando amongst 25 other thousand other condos, that makes it hard. There's no argument about that. But ultimately it's, what do you want to achieve with the business? Are you just riding this wave and you're okay if the wave goes off track? Or are you actually trying to build something that's sustaining and long lasting? So yeah, maybe last thing is you alluded to it earlier with messages, but like data ownership, analytics, having, again, the ability to change and adapt your business with Airbnb. I would say this too. The only thing you can adjust, I'm assuming, is your rates on Airbnb. There's no,

you could change your photos, you could change your description. Other than that, I'm tweaking my listing a little bit, but otherwise it's just, well, okay, I guess I'll keep lowering the rates while I get a booking. Otherwise it's a lethal listing, start over and do a new one. On your own website, you could do a million things. You can drive Facebook traffic to your website. You can drive Google ads. You can collect emails from past guests, see my book, for example, in the show notes, and we'll give you a bunch of ideas, but maybe you could talk a little bit about like data ownership, analytics, and measurement, which is ultimately how you can do better marketing in my mind.

Absolutely. Absolutely. This has been admittedly a very big focus for us. And I think it should be for most marketers moving forward that as cookies are going away, as that third party data is going away, you need to own as much of that information as possible. And however you can get that information, you can't get it from Airbnb. You're never going to get the full picture. You get to your direct booking website. There are some tools out there if you put them on your website right now that we are definitely exploring and experimenting with that you can scrape some of that personal information coming from the website.

They don't have to necessarily be opting into some of that data sharing that's coming through. Now you want to make sure that they can remove that data if they want to have that, but being able to secure device IDs, being able to secure email address, being able to secure physical locations, that's important to be able to understand what your guest profile, and not only only to own that to be able to market it, but to understand what your guest profile is too. You have an idea of who's booking on your web or who's booking on Airbnb age range or maybe location, but to really go granular with it and to be able to put together stronger marketing campaigns,

more effective, more, I would say, why can't I would say, again, I think the word is specific, customized, very unique to each individual user. You want to give them that custom experience as much as possible. You're never going to be able to give a custom experience to a user on Airbnb. That's just the reality. So the more you can own that data down the road, the more you can market to those people. Yeah. And that's the thing. They go to your listing on Airbnb. They don't book. You lost it. You're not going to get that person back. You go to their website. They come to your website. Okay. Maybe you do. You put the pop-up on there and you get that email address. Or they take the booking and you're going to get all that information as well. So I do. I think first party data is going to be so critical moving forward and any way that you can

house that data, hold that data, make sure that you are the owner of that data. Ultimately it is, it's going to make your reporting better. It's going to make your marketing strategies and campaigns more effective, I think. And I think it ultimately will lead to more direct bookings for you as you are rolling out those strategies. Yeah, ultimately, it makes you a brand. And when you're a brand, going back to our joke at the beginning about Duncan and people talking about it, it's like people are going to think of you first when they think of vacationing into destination or when they think, oh, I'm going to Destin. Who am I going to stay with? There's going to be something that comes top of mind. And then I check Airbnb too, and that's fine. It's hard to stop the guests from checking OTA as well.

But it's your job to show why you're the best value for money. And it's not just price. It's not just rate. There's a lot of other things that could be into that. So awesome. We had about 30 today. So Paul, thanks for your time today. I think this was our version of kind of going out into the streets and like

waving our kind of philosophy out there. Here's some of the benefits. Maybe we haven't like explicitly said them before. So I think this was useful. So hopefully the listener got some value out of this. And they like the idea of doing direct bookings. If you're listening, you might like that idea. And we've got more episodes coming in this respect. So anyways, I hope you appreciated this one. If you could leave a review on your podcast app of choice,

that would help us a ton. And we will catch you on the next episode. Thanks so much.