One of the most common questions I get asked is what is the best way to manage a vacation rental. Aside from working out how and where to find an eligible property, this is probably the biggest decision for anyone looking to purchase a vacation rental. There is definitely no right and wrong answer because it depends on your circumstances and how active you want to be in managing your property. Until I met the CEO of AvantStay recently, I was never an advocate of using a larger company. Let me explain why.
If anyone tells you that owning a vacation rental is a shortcut to passive income, then think again. Running a profitable vacation rental, as I outlined in this blog post, is anything but passive. However, there are a few different options you might consider when it comes to managing it, which range from doing it all yourself to being totally hands-off and putting the management entirely into a third party’s hands. The other option is to use a hybrid model whereby you use a local property manager to look after the property and then you focus on managing the listing, doing the communication with clients, and marketing the property.
Syrah, Sonoma: 4 Beds, 4 Baths
Until recently, I have always been an advocate of either working with a freelance property manager to physically look after the property, manage turnovers, and restock supplies, or working with a small local company. If you do decide to do it yourself, while it is a significant time commitment to manage all guest communication, marketing, and pricing, it can save you a fortune in management fees. The question is whether you can get the revenues. A low percentage of a small revenue number doesn’t make for a profitable rental.
While there are some good local vacation rental management companies, they charge 20% to 25% for their services and I have never really found one that is doing anything out of the ordinary.
At the other end of the scale, you have the big national operators, although I have never heard good things about Vacasa, which is by far the biggest operator in Sonoma County, especially after it purchased another good local operator, Turnkey. It just feels they have got too big to offer any sort of personal touch or service with any of the required attention to detail.
So why have I changed my view of the best option for managing a vacation rental?
I recently met the founder and CEO of AvantStay, Sean Breuner, and it was refreshing to meet someone in the vacation rental property management business who had a different take. Prior to founding AvantStay, his background was in investment banking with Morgan Stanley, investing in tech-enabled real estate businesses and most recently founding and then selling a SaaS business to LinkedIn.
Marigold, Sonoma: 4 Beds, 2 Baths
If you have watched any of my YouTube videos, you will have seen me talking about the importance of creating an experience for guests as part of setting up a profitable vacation rental business. This is at the core of AvantStay’s business which it describes as a leading next-generation hospitality company revolutionizing the travel experience. So what does this really mean, I asked Sean, “Our business is at the intersection of hospitality, arts and creativity and technology. Our entire proposition is based on bringing a hotel experience into the home. A vacation rental has to be a lot more than a roof over your head. It’s about providing guests with everything they need to have an amazing experience during their stay.”
In AvantStay’s world, that experience extends much further than just providing a stocked fridge and a welcome basket. AvantStay will provide a whole range of services from setting up private chef services to wine tours to in-home massages and babysitting services. It will even go as far as providing niche services such as IV Vitamin Therapy services. But the experience doesn’t stop at the property itself. AvantStay has created partnerships to enable guests to book car rentals and other ancillary services directly from the platform.
“The homes that we take on are designed for hospitality. It is very different from setting up a home for hospitality versus setting up a home to live in, full-time. We combine the digital experience, enabling people to book services online in advance of their trip, with the physical, or analogue, experience of creating an environment that has all the amenities of a hotel,” continued Sean.
Blue Steel, Santa Rosa
To me this makes total sense. One of the worst things about Airbnb’s is not having access to some of those hotel concierge style services. I’ve always thought of it as a price I am prepared to pay because I would rather stay in a really nice vacation rental and have my own living space. AvantStay is helping give people the best of both worlds.
While creating a better product for homeowners, sits at the heart of the service, the real proof of the pudding is about attracting guests to stay there and driving up the revenue for any given property. To me this is where the real value in working with an operator such as AvantStay comes into its own.
It’s easy to think that the way to market a vacation rental is to put it onto Airbnb and VRBO (now owned by Expedia) and watch the bookings roll in. AvantStay is different. “We work with 60 different operators to get our properties in front of consumers. Imagine if consumers could use their Marriott Bonvoy points or Capital One loyalty points to book your home? With AvantStay that is possible because we have built partnerships with these online travel agents to make sure our properties get the maximum distribution. But our partnerships aren’t just with the huge companies like Expedia, they are also with small luxury operators of vacation rental properties,” explains Sean.
When it comes to maximizing income for the homeowner, achieving market visibility at scale through 60 OTA’s makes a big difference. But it also makes a difference which OTA’s secure the bookings because while Airbnb charges 12% as a booking fee some OTAs will charge as much as 18% which is why AvantStay also invests heavily in marketing its properties to get direct bookings.
Via del Sur, Temecula: 7 Beds, 5 Baths
AvantStay has embraced the use of influencer marketing to market its properties. It has a dedicated marketing team whose job it is to achieve visibility for its properties. For example, it might offer a free night stay to a high profile YouTube or Instagram celebrity in return for a mention and getting eyeballs onto a property. As someone who set up and ran a marketing agency, I can’t help but be impressed.
For example, Love Is Blind, the Netflix show, featured an AvantStay property. It’s obviously working because 35-40 percent of bookings for its properties are direct which has the added benefit in that it increases the income for homeowners by reducing the booking fees associated with some of the OTAs. This percentage of direct bookings is 2.5 times the number of direct booking for a typical local operator and four times the number of direct bookings for a Vacasa property.
“While we are still relatively new, AvantStay is fast becoming a recognizable brand to the consumer, known for only representing high-quality properties. We are very proud of the fact that we have over 64,000 4.8 star reviews for our properties. This is key to us driving loyalty to our brand and our properties,” added Sean.
So I asked Sean if he would take on any property or if they are selective. “One of the drivers of this business for me has always been about creating a place where friends and family can go and stay in a great environment and enable guests to create memories in a place where the experience is second to none. For that reason, many of our properties are larger four, five and six-bedroom properties. We are looking to create an elevated group experience so that it reduces the social risk for the organizer as well as the time risk. For example, if you are organizing a weekend getaway for 14 people, we want to make it as easy as possible for the organizer to make it a great experience without it being an undue burden.
Gable, Santa Rosa
“We do small things, like make it possible for people to choose their room in the property prior to arrival. It just eliminates the worry about who is going to sleep in which room. We also do things like make it easy to split payments so everyone can pay their portion up front.”
I know for one, as an organizer of numerous group trips, I’d love the option to make sure I get a nice room for putting all the hard work in!! Thank you AvantStay!
However, they do take on smaller properties because a client of mine just purchased a two-bedroom property in Healdsburg that AvantStay is going to be managing. While it is smaller, it fulfilled a lot of the criteria: it was well designed, it would photograph well, it was well kept, and had some great amenities.
That being said, a two-bedroom property is probably the exception rather than the rule. You only need to look at the properties on the AvantStay website to see that they only take on quality properties, but given their business model is based on taking a share of revenue, and creating a premium hospitality brand, I would be concerned if the properties weren’t of a certain quality.
So the big question is whether AvantStay can make more money for its homeowners. The answer appears to be yes. “Our properties will typically earn between 20 to 50 percent more than properties managed by other operators.”
This stands to reason because they are getting more direct bookings with a lower booking fee, have better distribution, and are layering on services which also bring in extra revenue for the homeowner. While they do charge between 18-30 percent for properties in Sonoma County, I would rather pay 30% on 50% more revenue than pay 20% on half the revenue!
Belleza, Glen Ellen
I recently sent a few properties to AvantStay to ask if their underwriters could give me an estimate for the annual income to enable me to compare it against the data I got from other forecasting tools such as Airdna and Mashvisor. They were all properties that I thought would be a good fit and the AvantStay forecast model forecast incomes considerably higher than the revenue forecast from Airdna. This was not a surprise because Airdna is media income data and so if AvantStay is focusing on above-average properties then they should perform better. The game changer for me though is how it adds a service layer to the property as well as marketing the property through partnerships and marketing activations.
At present, AvantStay has just over twenty properties in Sonoma County but I expect it to grow pretty quickly given my experience so far. I know I have referred a few clients to AvantStay and their experience has been excellent. It is refreshing to hear of a property management company that is looking at property management through a different lens.
I asked Sean about his future plans for the company. "Our goal is to be a premium brand on Airbnb in the same way that the Four Seasons is a premium brand on Expedia." I must confess, I have never seen a property on Airbnb that is branded, AvantStay, but it makes perfect sense. I know for one, if I was looking to book a property on Airbnb, I would definitely keep an eye out for an AvantStay one.