April 27, 2022

The Early Days of Travel Disruption with The OG of Channel Management, Ed St.Onge


This is Part 1 of a special 2 part series with Ed St. Onge, President of Flip.to  (and the OG of Channel Management). Why are there 2 episodes? Because 1 just wasn't enough! Ed takes us on a journey that is nothing short of astounding, starting from his early days as the President of EZ Yield, the very first ever channel manager for hotels that he sold to Travel Click (then later acquired by Amadeus). The technology EZ Yield built in the early 2000's laid the bricks for future channel and rate management software that is utilized today for both hotels and vacation rentals, and in this unprecedented interview, Ed shares behind-the-scenes stories of the challenges and triumphs of pioneering a business where there was no roadmap to follow. 

SPOILER ALERT!
On next week's episode, Ed tells us about Flip.to, a guest experience platform that Alex & the Condo-World team have used since 2017. In just the past year, this program has enabled Alex to grow her email database by 150,000 qualified email leads. Yes, you read that right! As Vrbo and Airbnb have continued to dominate market share of vacation rental bookings, Condo-World has been able to maintain their 95% direct booking / 5% OTA ratio. Flip.to has been a major component of this success and Alex is excited to share her story on next week's episode!

HINT: This is a video you want to at least start watching on YouTube! Ed brought a very special guest! Meet Ed (and Todd) here:  https://youtu.be/DCYPJmQUwhc

CONTACT ED ST. ONGE
https://flip.to

estonge@flip.to
LinkedIn

CONTACT ALEX & ANNIE
AlexandAnniePodcast.com
LinkedIn | Instagram | Facebook

Podcast Sponsored by Condo-World and Lexicon Travel

Transcript
Alex Husner:

Welcome to Alex and Annie, the real women of vacation rentals. I'm Alex. And I'm Annie. And we are joined today with Ed St. Onge, president of flip to a dear friend of mine and a friend of the podcast. Ed, welcome to the show.

Ed St. Onge:

Thanks for having me. I'm super excited to be here.

Alex Husner:

And we're very excited you have a guest with you that if you're not, if you're not watching, you really should go over to YouTube right now and look this up because you'll want to see this.

Ed St. Onge:

So this is Todd.

Annie Holcombe:

Hi Todd

Ed St. Onge:

and Todd is our Sphynx kitten

Annie Holcombe:

He looks like he could care less to be here.

Alex Husner:

He looks like he's like 100,000 years old. So Ed has a sphinx cat that they just got from Canada of all places. But he looks quite warm and cozy in that bed that you've got him in. But he's quite remarkable looking. I would say

Ed St. Onge:

he's a he's an interesting cat. He's super wrinkly. But they're very lovey. They're, they're more like a dog. So as soon as you walk in there, they're right up on you and want to cuddle because they're always cold. That

Alex Husner:

makes any sense. Oh, my gosh, no, he's absolutely adorable. I remember when you posted on Facebook that you had gotten another cat and I saw the picture. I thought, oh my gosh, that is the craziest thing I've ever seen. But as we've had our pre calls and chatting with you offline, just seeing the pictures of him. He's he really is cute. He's got beautiful blue eyes. And you can just tell he just super soft. But congratulations on Todd. So

Ed St. Onge:

thanks. Yeah, so yeah, I'm working from my wife's office right now. So that way, I could have Todd near me. So

Alex Husner:

we appreciate it because he was a special request for us today. So head over to YouTube to check them out or on our LinkedIn page, we're gonna take a picture to post them. But before we get started, can you give our audience a little bit of background on who you are and what your involvement has been in the hospitality space?

Ed St. Onge:

Yeah, so I've, I've been in the hospitality space for most of my career, I have been building technology for the hospitality space for over 20 years now. I actually, in the early 2000s, I built the first channel management platform for the industry, which was a company called Vizio build, that I had started after my first job in travel, which was actually working for a small mom and pop online travel company in Orlando. And my job was to call our lodging partners and ask why they were giving better rates to everyone else. And I was just tired of hearing the same answer, which was, I didn't do it on purpose. I got to Expedia, I got to host hotels.com. And then the phone rang. So I'll go in and fix it, you know, this is kind of a hassle. And back in those days, connectivity was not an easy thing. There were no API's. So actually had to figure out how to, to make it to where a lodging provider could come to our platform, set rates and inventory and then distribute them across. You know, at the, at our peak, we had 900 connections. Wow. And so that was that was my first foray into technology. Fun fact, the first thing I had to do when I started that company was buy a computer. I didn't, I didn't know him on at the time.

Annie Holcombe:

Wow, analogy from the ground.

Ed St. Onge:

Exactly. But it was an amazing experience. So I had eased yield, over 10 years, grew it into a very large company. We actually had an office in Sydney, Australia, and office in Barcelona, and then here in Orlando, and had about 110 employees. At the time that we sold it, we ended up selling it to a company called travelclick. It's now their distribution platform. And that was about 10 years ago, now. So after selling that I thought it was done. I was like, All right, the thing, now I'm gonna go do whatever I want. And I realized I missed having problems to fix. It only took me about a month to get bored. And so I did what anyone does, who doesn't have a job in this industry, I started a consulting group to start looking at startups that were in the space and I happen to run into the founders of flip to. And they were about seven months into their journey. And I loved their vision. And this was over 10 years ago. They had a vision that Google and Facebook were going to be a problem for our industry. You know, they collect a tax on every single traveler, no matter how you sourced it, they're getting their cut, and the more control that they get, the more expensive acquiring travelers are going to get. And so their vision was to We'll help solve some of the challenges that cause our industry to be addicted to customer acquisition. And so I invested in the company became part owner, and the President and the rest is history on that part.

Alex Husner:

Wow, unbelievable history. That's incredible. You know, just just seeing both sides of it. I mean, on the channel management side, 10 years ago, that's really not that long ago when you think about it. But think about how much or how far the industry has come since that point. But even still, before that point, what you developed was groundbreaking, right? I mean, that to think that they had no way of being able to connect to these channels at that point, just unbelievable where we are now. But now seeing the next generation of where your life has gone with flip two, and you guys have definitely, as you know, sought to solve a problem. And just that they had that foresight back then, as well to know that Facebook, and Google was going to have these issues that were coming for all of us, it's amazing to think because back then were just talking about this, excuse me the other day, you know, there were no ads on Facebook. At that point, I mean, that that hadn't even come yet. So charging company to work with them and help them with their Facebook page. Our joke always was, it's like charging somebody for a library card. We didn't obviously have that foresight that that your founders did, and you did to really look into what that was going to turn into in the future. But really exciting stuff.

Ed St. Onge:

Yeah. And it's, it's, it's interesting when you when you really think about it, because Facebook, Google and Amazon, which are commonly referred to as the tri opoli, they all took very different angles to taking ownership of consumers. I mean, because if you really think about what they are, they are your access to consumers, they charge you for that access. And they did that in different ways. But all the same idea, which is they have so much interaction with so much of the world, that they understand what the consumers of all types want. And they have the means to spend time with those consumers. That makes for a pretty interesting control on digital advertising. And when you look at the statistics of the world's revenue in digital marketing, actually, it's all marketing now. Those three companies get 94% of all dollars spent. That's on marketers.

Annie Holcombe:

That's crazy. That is absolutely crazy. Yeah. Oh, gosh, I wanted to ask you. So having come from the hotel side of the business, and this, I think I was coming up in it. Well, moving into vacation rentals about the time that you were starting easy yield. And I remember, Expedia started there, I think it was called condo Sabre was through the hotels.com brand. And that's how I met a lot of Expedia for excitement. And I remember them coming, you know, saying, We want to get your best rates, and there were so many extra nights to manage. And, you know, I'm guessing that for you to sell this to people, it was probably a very easy sell. But thinking back on it now I think like, gosh, if we hadn't gotten to channel management, and we had just managed extra nets, yes, we wouldn't be distributing as much. But then we wouldn't have this whole conversation of rate parity, you know, we could do whatever we wanted to because we could justify it based on the fact that nothing was syncing up together. So looking back on it, how do you like do you think that this was an Well, I'd say do you think was it an easy sell? When you started? It was easy. Yeldon easy sell?

Ed St. Onge:

No, it wasn't actually it's really funny. So I spent probably the first five years of that company having the same conversation over and over and over again, if God explained what it even was, well, no, not even that it was having to explain back then. So rate parity, we were one of the early lead voices in the concept of rate parity, and it was something I personally believed in from being at an OTA Yeah, you know, I pushed back on my bosses when they had suggested that when I have to call our partners and ask them why they gave someone a better price that I need to use that to leverage them into giving us a better price than that partner and I just thought that was the stupidest thing because you can't in one hand, give someone a hard time for a business practice that then you want them to do for you. Right and so even back then I would say to them listen, could you just keep us in line and you know, maybe we could develop special things that Expedia couldn't do So fun fact stay X nights get y nights free stay X nights get a percentage off that came from me. And that little OTA was amazing. And and so the first customer we had done that with was a company called vistana which then became Sheridan and yeah. And we became their number one OTA because Expedia, it took them two years to develop the the ability to do it and And so I always looked for ways to have a fair edge. And that's really when I started also kind of preaching this concept that I had heard others talk about. So I did not invent rate parity, but I was early in supporting it and the concept was back then you would find different consumer rates across every single website. And if you think about what that does the consumer psychology, in the trade sell gone, yeah, creates complete erosion of trust. And what it does is it also forces them to go look for the best deal, right, they never believe that they found it. And it's a really bad practice. So I actually spent the first five years of easy yield, having the first half of the conversation being this is possible, you can do this look, you can just come to our dashboard, and we'll do them all. But then also explaining why they shouldn't just give the same net rate to every OTA and just let them fight it out. Because that was the common mentality was just all the same note, right? Let them fight it out. Yeah. So yeah, so one thing I've learned in this industry, and it's actually the thing I liked the most is, it's a really hard industry to bring new ideas to, but it's worth it. Because if you stick to it, and you educate the industry, the industry will then embrace it, and they'll iterate on it. But there, it isn't often that really, truly new ideas come into this space. And it takes a very long time to get the industry on board with a truly new idea.

Annie Holcombe:

Now, and that's true, I haven't worked at Experian, just watching when they would come up with something, and they would announce it internally, and then we'd have this big rollout to partners. And you would think like, Okay, well, you know, the adoption is going to be six weeks, or you know, three months, whatever. And it was like you find it 18 months later is like, well, we gave it a good shot. Let's go try something else. So going to your point, I think people are are reticent for change. But I think within vacation rentals, we've been having a lot of conversations about parenting and about how you handle that, just because of the markups and the channels being at different commissions. And, and to your point about the, you know, asking someone to do something that another one can't do, or vice versa. And they get stuck in this position of not being able to manage their rights effectively. You know, we look at that with partners a lot and I was at is actually at the Women's Conference in December in the high notes conference. And someone commented actually at a session that Alex and I hosted that, you know, parody is a thing of the past, nobody worries about parody anymore. And I think that that's why I think people were trying to dance around the subject is still there and consumers are still going to look they're still going to their mind is still of the of the sense that they're going to go and try to find the best rate, even though they're looking at a medicine and there's 27 different rates that are out there, but they might be off by a penny. And then at the end of the day, when you get through taxes and fees and all that you're still paying around the same rate. So it's amazing to me what people will do to save two cents, but they'll do it.

Ed St. Onge:

So anyone who says that poverty is a thing of the past doesn't know what was happening before parody was an accepted practice and what was happening. And we need to remember these parts of our history because our industry tends to promote very aggressively so the people who remember this are senior executives in our industry. Now they're not in the line level decisions. But when there wasn't parity as a practice, and when that wasn't built into contractual agreements, you were beholden to whoever in your market decided to sell themselves out to one of the OTAs by giving them an exclusive rate. And that would then force you to keep position you would be forced to pick an OTA that you gave the best rate to. And that actually starts a really difficult cycle. That once you do that, that OTA becomes your most dominant OTA, once they know that they have you, that's when the margins start increasing. Yeah, and we've seen this cycle over and over and over again, of of the OTAs swinging in and out of leveraging their control. And to be fair, this isn't an evil practice. They're doing what businesses do, because they're scared. You gave me runway,

Annie Holcombe:

as well, they're publicly traded companies for the most part. So they have

Ed St. Onge:

but parody and the industry accepting parody as a practice is actually a way to not be in that game, to not have to play that game at all, to not have a desperate, you know, partner in your market actually make doing business difficult for the whole market. And it was, you know, anyone who was in the early days of revenue management, you know, I think back to those times, it was these were like insane negotiations that you ended up having to have and As stuff you ended up having to give to compensate for not being willing to give, you know, the best price to a specific OTA still ended up hurting and parity pushes back on that. And I just challenge everyone to look at, you know, with the EU ruling about OTAs not being able to require parody in their contract, go look at who put the money behind that. It was the OTAs. They wanted that the they wanted the EU to put that clause into play. Because they don't want parody. They don't want it at all. It's not there, they will make more money if our industry does not practice rate parity.

Alex Husner:

Yeah, that's really interesting. I hadn't even thought about it that way. But it makes sense. But, you know, revenue management, as far as vacation rentals is concerned, is really kind of more of a new thing within the last probably five years or so. And you compare that to the hotels that have been doing this for a minimum of 10 years, probably, what 1520 years, I don't know how it started to

Ed St. Onge:

become a really respected and educated aspect of the hotel industry in the mid 2000s, like 2004 2005 is when you started seeing real degree programs developed previously, it was head of reservations got promoted up to new position of thinking about the revenue strategy and things like that. But it's, it's relatively new. The interesting concept with vacation rentals is you know, all the variables that you have as a vacation rental operator in differences and units types and differences of FF and E inside of your units. That creates challenge from a pricing perspective, it also does create a bit of opportunity, because you don't have a standardized offering, it actually gives you the ability to be less susceptible to other competitors affecting your ability to get your price in your market.

Alex Husner:

Right. Yeah, I mean, our revenue management is much more looking at our own past data, which for newer companies, obviously, they don't have that, you know, to to price on. But for us being in business for 35 years, we've got a lot of prices to look at. But that's it's a challenge to there, because you've got new owners and new companies coming into the market that their prices sometimes are wildly high and wildly low. And for the consumer looking at it, if you're on VRBO, or Airbnb, one, it's hard to hard to find the same property across platforms. But two, you could find a similar property that is priced is crazy different than the one that you're looking at. So from a strategy standpoint, I think that's where it's challenging for property managers nowadays, but we were, our revenue management has been brought up on a different basis that most of what our industry is doing now is technology based. So you have the wheelhouse is of the world and beyond pricing and these different tools that they've kind of taken it into their own to say, Okay, we're going to automate all this. And you can sit back and you can pull the levers as needed. But that's probably the way that they had to do it. Because, you know, back five to 10, not even 10 years, maybe five, eight years ago, max that this was coming on the scene for vacation rentals, there definitely wasn't anybody within a vacation rental company that had any experience in revenue management. And I remember when we first told our homeowners, it was our first of the year newsletter that we were going to be doing this new practice. I mean, they went ballistic, they did not understand why they wouldn't know how much the unit was going to be for that week in July. And there are still companies within our market and Myrtle in North Myrtle Beach that are still that same way that they don't open up for the following year bookings until the homeowners have approved that years rates at the end of the year. It's just crazy.

Annie Holcombe:

And more, there's some that set their prices once a year, and they don't, they don't change that. And they would rather go empty than discounted on any level, you know, the practices just aren't accepted and vacation rentals yet.

Ed St. Onge:

And it's you know, it's one of those things, you're blessed that you have the technology. So one of the biggest growth moments for easy yield was when I found out about this company called ideas that was making these really advanced revenue decisions. And they were incredibly complex. And I had a hotel taking me through it, and I'm like, wow, how do you execute all this? And they're like, we kind of don't, they were paying all this money. But the revenue decisions were so complex that they couldn't possibly do it. So I went and met with the team at ideas and I was like, listen, is this a thing? Like, are people not doing your revenue strategy? Because they can't distribute it? And they were like, Yeah, and I was like, why don't we hook your system to mine? Right? And then we'll publish the rates and inventory. And that's when we really exploded as a company because we were, we were that complimentary piece that allowed the vision of H truly complex revenue strategy to happen in real time. And it required a massive amount of reengineering of our platform, because they were really heavy in Vegas. And they were really heavy with some brands. And they were re optimizing 90 Day Windows three times a day. And so we actually had to build intelligence that if the final rate change resulted in a consumer rate change difference of less than five cents, we would not make the change for at least 24 hours. And so that actually fix some of it. But it actually put us in a position where our biggest the things that kept me up the most at night at that point, were whether or not hard drives would get faster, or whether or not RAM would get faster, because we were pushing the envelope of what you could do with server side processing, because we would take the rate strategy, and then we would turn it into net rates. So you know, the big thing about easy yield was you could just set your consumer rate, you could say, I want to sell for this much. Yeah. And we would take that input and calculate to the highest possible net rate that you can get taking into consideration the rounding strategies, the different approaches versus gross margin and margin, value added tax, whether it's inclusive or exclusive. It's a ton of computation. And so when you get massive dumps from the revenue management systems, we would suck up entire bandwidth, entire racks of servers. Yeah, it was a, it was really interesting. But revenue management actually made channel management more valuable, and vice versa. It was, you know, a really interesting concept together.

Annie Holcombe:

So I have a question on that. So I sit in general manager, now I work for lexicon and we're one of the kind of leading channel managers within vacation rentals that operates kind of both sides of this space. So we operate kind of in the hotel sphere, we work with cluster representative listings. And we also work with key level listings. And there's been a lot of talk on our side that you know, management has kind of go in the way of the dodo bird that they're, you know, that there's people can do it through their PMS is or that the channels have so much technology that they can just absorb the rates and handle it based on either rate rules or promotions, or those types of things. From your perspective. I mean, you're not sitting in general management as it is now, what do you see or you think, is the future.

Ed St. Onge:

So So it's interesting, when I started easy yield, I had in the business plan that at best, it would be a five year opportunity, because the CRS is would have caught on that that was a thing. If you actually look at channel management, it shouldn't exist. The CRS is very much should have taken distribution as part of their focus, but they didn't. And let's be honest, CRS is shouldn't exist. If the PMS is had built their architecture correctly, to do everything it takes to engage with the consumer you wouldn't have had CRS is so you know, I've always thought that channel management was disrupt double by the systems that actually should be doing that waking up and realizing, oh, man, we should be doing that. And I'm not gonna lie, like easy yield was white labeled by a lot of the biggest CRS is to be their distribution platform, which I always chuckled at, because I'm like, I'm only doing this because you fell asleep at the wheel. And now you're, now you're paying me and inviting me further in. So the other thing that's problematic for channel management right now is all the channel consolidation. And so this was something else we saw coming in, it was part of the reason why we timed our exit when we did was channel consolidation makes the case for channel management a bit harder. The other thing that makes it difficult is almost all the major channels have created fully public API's. So anyone can build a channel manager, right? And you know, all of those things put together really makes it a hard Outlook to say that this is going to continue as is and so and I think you can look at some of the other early entrants into channel management. You know, so not long after us rate Tiger was in you know, channel management, they were rate shopper at the time. They now do completely different things with the rep max and all of that. You look at rate gain, who were who was maybe four years, five years after us and look at their their entire business mix. It's completely changed. So the the old stalwarts of the industry, the US granddad's and grandmas of the industry of channel management, all saw the need to diversify, even SiteMinder and you'll look at like what they're doing. They have completely diversified as a company. They started as the cheapest most basic channel manager that was lit really their competitive edge was we were 20, they were $25 a month for channel management. And, you know, now you look at it, they're really taking like the Intuit approach for they want to be the Intuit for hotels for small hotels, where they're your site, your booking engine, your connectivity, your distribution, all of that all under one kind of umbrella. And I think you're just going to see that standalone channel manager as a business is going to become a very rare thing to see.

Annie Holcombe:

don't disagree with you, him and again, sitting on the side of it and seeing there's consolidation within like the verticals of vacation rentals every day. And so it's an interesting, I'll be curious to see where we are a year from now and have a lot of conversations with people. So all of that said, You, you, you, you alluded to the fact that you knew that there was time to get out. So did you have an exit strategy? And you went to travelclick? Or was it something? How did that how did that occur?

Ed St. Onge:

So a good friend of mine, who I always look to, for advice, has something he always says to me, which is, it's better to be lucky than good. But luck comes from preparation. So we had seen the writing on the wall that channel management was going to go the way of commodity. So at the time, we were the premium product in the market. And in order to win a deal against us in a new sale, you'd have to be at least 75% less expensive than us because we were enterprise, we were PCI, we had all the major brands and all the big impressive things going for us and we still we had the most channels. But we saw that the most channels thing was going to start going away, we saw that the middleware that we developed for pricing for taking, you know, consumer side rate and creating optimal net rates off of it was something that hotels were starting to kind of question if they needed to continue paying for. And we started seeing that there would come a time where we'd have to start going down in price. And so a secret, a secret in anything that I've ever done is I don't look at what others are doing to decide what my business is going to do, I actually go based off of what I believe our industry should move to. And so I had no interest in commoditizing easy yield and simplifying it because that's not what I thought the industry needed. So I engaged an m&a banker to have them come in, show me what was wrong with the business. And they did and took a little bit of time fixed those fundamental flaws. And then we actually went out and did a, like a series to try and get someone to buy us and we had a goal set and everything. And we put it out. And we had 48 private equity groups respond wanting it. And so we then did a round of interviews, and you know, kind of set some some standards and things like that. And we were able to whittle it down to 45. So then we did straight up meetings with all of them.

Alex Husner:

Little it down, you only got rid of the three.

Ed St. Onge:

Yeah, we were at the time we were. So we never borrowed, I never borrowed money with yield. So we had no investors. We invested every free cent of the business every year back into the business, our r&d budget was bigger than travel clicks was as a company, we were and we were only one product. So went through this round, met with some of the coolest private equity people you could ever imagine. And if you ever want a really fun story, I can tell you about how, you know, I got all these phone calls throughout the years and like emails from people who are like saying, I'm interested in buying you and I always thought they were scams. Some of them were some of the most powerful people in private equity personally emailing me have ignored that. I just figured there's no way that's real. There's no way that's real. Yeah. And so I went through this round with the ones we selected. And they were some really interesting companies like some of the biggest names in private equity. And through meeting with them, I could tell by what they were asking what they would do with the company to maximize its potential. And so we got exactly what we asked for. But I actually went to my partners and I said, Hey, guys, I think this is what the playbook is of what everyone's going to do with our company. I think we should take a year and try and accomplish all of this. And so I convinced him to walk away from some very large deals. And we started executing on that strategy and right as I just kind of finished installing that strategy travelclick had called again, they had called me every year Since I've been in business, trying to find some way to buy us, and I always said no. So they came calling and at the time, I just installed the CEO. And he's like, hey, they want you to come up. And I was like, you know, they're not interested in a partnership, they're just gonna want to buy us. And you know, we're not gonna do that. And so he didn't believe me. And he took the meeting and went up. And of course, the meeting went five minutes before they said, We want to buy him. And we weren't interested in that. So to tell them to go away, we put together what at the time was a slightly difficult to justify set of terms. And they accepted it.

Alex Husner:

And if they said, No, you had 44 others to choose? Well,

Ed St. Onge:

even at that point, too. I mean, at that point, we also hit a point where we couldn't spend all the money that the company was spinning off. So like we were sitting on hoards of cash to so like, we weren't bothered, like if it took time or anything like that. So they ended up buying us 90 days later, all cash. And every employee kept their job. Actually, there were still people who work for that organization today. Who were employees of mine. Wow, great. Yeah. And it was it was really good. And it went really well for them. And it was a nice exit for us. Like we we got to do whatever we wanted to from that point forward. Yeah. And that's kind of that was kind of actually was never the goal. And so that's actually funny. Yield was never about the money. It was about fixing problems.

Alex Husner:

Yeah, yeah. Yeah. You definitely fixed a lot of them over the years. But so that was that was 2012.

Ed St. Onge:

Yeah, so that was? No, that was two November 2011. Because I close the deal on my first child's first birthday. Wow.

Alex Husner:

Happy birthday. Yeah, I'm just I'm curious if there was any part of the decision or at that time, if you saw what was coming down the line for vacation rental channel manners are not channel management, but at least vacation rental distribution sites and what that was going to do to the space because 2010 11 And that's when verbo was starting to come on the scene, it was still very much in its infancy. I don't think anybody knew of Airbnb at that point. But, you know, as we've gone further down the line, yes. I mean, that that has caused extreme disruption and issues for both properties that are more hotel based, but operate as vacation rentals and vice versa. But did you see any of that as a reason? Because if you did, I wouldn't be surprised if that was your part of your red flag to say I'm out here.

Ed St. Onge:

Actually, I think it's what gave channel management a bit of runway. Yeah, the complexity and the disruption was good for the channel management piece of things, because you have to look at what happened on the major distribution platform. So Orbitz went away, Travelocity went away, book, it went away. Priceline booking became one entity, you had all this consolidation in the massive channels, and then that started putting pressure to put the small channels because back then it wasn't unusual to work with 10 or 15 Truly small businesses that were selling travel, just for one market, right there were OTAs that specialized in one market. And that's all they ever did. And you know, that there was a nice little small business with like, three employees type thing. And those are all gone. And so if you think about channel management, you need channels to manage. Right? You know, it's a fun concept. And so with, with verbo, with Airbnb, with, you know, other platforms that have come and gone in the vacation rental space, that bought time, I think for some of these platforms to facilitate their full pivots. And And honestly, the I wouldn't have dared say that I saw coming that vacation rental from a property management standpoint would like leap the hotel industry, but VR property management systems are far superior. Yeah, exactly. hotel property management systems. And some of that they have the benefit of they were all brand new, so that they didn't do what the old companies were wrestling with where you have to remember the biggest Property Management System companies are based on organizations that their original business model was to get a massive license fee up front. And then they all struggled going to a SaaS model. And so you know, that was slowing down even more because there's very little progress in the PMs world. But that was slowing it down even more and then you look at vacation rentals come out of nowhere and you know the you have PMS is that our PMS booking engine CRM, accounting, task management, you know the things that when you say property management system that should be everything it takes to manage a property that novel concept is still a rare thing for a hotel to have. It is. So you know, so that also then creates that challenge of a lot of them have also included distribution in that. And the one thing that I think in the VR world that creates an interesting dynamic two is there's no GDS in the VR world. Right? In the hotel world, it's still a thing. You know, and so, I think that's a but I think that's freeing for the platforms, you know, like sixes and, you know, all these big CRS is they still have to wrestle with the GDS. The GDS is still a major part of their architecture, and the GDS is a nightmare to manage, right? Because it's not just about the technological connection to it. It's super complicated. And, and let's not forget the GDS was not built for lodging is lightly modified. Yeah, it was slightly modified to be able to do lodging, but its focus has always been airlines. And that hasn't been a weight on the tech stack for vacation rental.

Annie Holcombe:

Well, you know, there was an article out I want to say was like an article maybe announcement maybe two weeks ago, that Marriott was finally going to do away with Marsha.

Ed St. Onge:

Yes. And no time.

Annie Holcombe:

I worked at Marriott back in the 90s. I mean, Marsha was like, even at that time, it was like, I can't believe that. It was so archaic. And it was it was very much like the GDS, the greenery in this. Yeah. And it was just it was just an awful system. And they had all the properties had to buy all these systems to go like I hotel, your or all they could link in to do the convention services and all of the things and again, to the point of adding OTAs. And, and just they never wanted to leave that system because it was, you know, to your point that it was based on them building out franchises, and they had so many people that were dependent upon that, that if they made one change, it messed up literally 1000s and 1000s of properties. And it just it's just it's mind boggling to me it's still out because we talked to anybody that's meritless they're like, oh, yeah, we're still using it you know, so that's crazy. Well, what

Ed St. Onge:

really blows my mind is so easy old was heavily involved in helping Starwood get their stack off the ground Valhalla was a really good architecture. And when Marriott bought Starwood, there was a substantial amount of money in that valuation dedicated to the technology stack. And I thought it was absolute insanity, that they removed it and put all those hotels on the Marsha and I actually I said at the time, I'm like, whatever executive is making this decision, somebody that doesn't matter. Better, better change jobs. Yeah. Well, Marriott inevitably has to get off of Marsha and goes to a third party system. Because how do you defend to all the Starwood owners? Because they charged those owners to move off of a holla on to Marsha, and, you know, the fact that they're going with Amadeus, I mean, that's it's great for Amadeus. Marriott will become a much more tech nimble company like, like, I think it's brilliant. Yeah. But the person who pulled the plug on Valhalla. I can't imagine they feel great. If they're still there. Yeah. You know, defending that decision.

Annie Holcombe:

Yeah. People that I know that works for Starwood, when that happened. They were just dumbfounded because a lot of them had been previous Marriott people, you know, from Marsa to Valhalla, and they had this great system that again, it wasn't perfect, but then all of a sudden, no system is Yeah, they were going backwards, literally, you know, 10 years. They

Ed St. Onge:

were just going backwards. It went backwards. 47 years. So yeah.

Annie Holcombe:

I was trying to be diplomatic enough. Gosh, yeah. Yeah. Yeah. So this the industry is really, it's interesting, like, to your point that, you know, we talk about this all the time, the vacation rental site has been much quicker to adopt technology, but it's again, you know, vacations have been around for ever, I mean, longer than hotels, if you really think about it, but they didn't adopt and didn't become tech savvy until the last few years. And I think COVID just exacerbated that need to be integrated with with different systems and how things work out.

Ed St. Onge:

Even though is I'm sorry, Alex, I just wanna I just want to hop in on that is most of the sophisticated vacation rental operators have pretty sophisticated real estate practices, and the real estate industry for selling homes and you know, commercial properties and things like that was very early to content marketing, marketing, automation, and a lot of those concepts so it doesn't actually surprise me that as those companies started seeing the benefit of this, you know, business unit that probably just started as an experiment for most of them, to see them turn that into a pretty sophisticated practice of property management, the marketing All of that, because they're coming from a place where, you know, marketing automation for real estate is is eons ahead of hospitality marketing stack. It's it's so far ahead. And you know, I think I think the vacation rental industry having so many real estate people like not not real estate investors, not things like that I'm talking like people who were realtors or were brokers, they have seen the benefit of technology to their business, their ability to sell so many deals a year now, because of the automation and their marketing and their sales practice and CRM and all of that. It doesn't surprise me that that audience is breeding massive innovation in their property management businesses.

Alex Husner:

Yeah, I remember in 2010, the very first vrma that I went to was in Myrtle Beach, actually. And that was the time when we were talking about the switch, which and we talked about that with Steve trover. He was president of vrma at the time, and really what that was addressed a lot of the things we've just talked about with there was no there was no GDS for vacation rentals, but it was essentially going to be a GDS for vacation rentals. But it was also going to set parameters for how we wanted the channels to be able to consume our inventory. So with without really knowing how far ahead of the time they were in concept, they really were because it's still a lot of those same issues now that we battle channels with on whether or not they show our brand or they let us communicate directly with the guests. vrma was actually trying to address that where they knew it was a problem. But it never worked out because the technology was definitely not there to support it. But I believe it was

Ed St. Onge:

actually you want to know why I never worked out why it's actually really funny. So when I was starting yield, I had done a lot of research on why standardized connectivity wasn't already a thing. And I created a rulebook for myself to kind of follow with easy yield. And what I found was any time a standard approach has been created to connect things are a standard way of doing business. Anytime it started to hit any level of scale, people realized there was more money to be made working against the standard. So why the GDS wasn't the answer for OTAs was because the GDS forced the OTAs to all work the same way. And they realized that that was detrimental to their ability to grow. And so these standards, this pipe dream of creating standard connectivity are a standard way of business practice. Our industry on the supplier side, you know, hotels, vacation rentals, you can all dream about it all you want. But I just want you to understand, right as you feel like that's getting to the finish line, you will see a movement, right business disruption that is designed to work outside of that standard. And so one of the rules of yield is we had to standardize the ability to work with everyone easily without forcing any of the end channels to have to comply to any type of business standard,

Alex Husner:

which is near impossible for vacation rentals. Because I mean, you think about even just from hotels, at least some of the things are done fairly consistently, as far as how rates are done on a nightly basis, and minimums and fees. But when you look at vacation rentals, they have all those things, but the myriad of different combinations is just unbelievable. And I think that's been the complexity for the BMS companies within our space and the channels is to, and the channel managers like Andy and even kinda world when we distribute our properties out to, you know, put put that together in a way that can be consumed on the other side properly, without a bunch of errors. Yeah, but yeah,

Annie Holcombe:

technology is a really great thing when it works. And when people can manage through it. Well, and we're really enjoying this conversation? And I think that it, we want to carry it on. And we want to talk about your next chapter your flipped to chapter. So I think what we'll do is we'll wrap it up here. We'll call it a day and we'll do a part two.

Alex Husner:

Yeah, this is so much information, it's so hard to talk to stop talking about because your history is just so interesting. And I don't we don't want to sell short any the information that you've already given us. We don't want to edit any of that out. But we also want to dive into the next phase because the flip two part which I can speak directly with our experience that condo world and working with you and I've been promoting flip two at every conference just organically because it's worked so well for our business. I don't want our audience to not hear about that. So we will call this part one. And we if anybody wants to continue the conversation and listen more, please stay on next week for part two. But in the meantime, Edie if they want to get in touch with you what's the best way to contact you?

Ed St. Onge:

So you can find me on pretty much any social media platform Edward St. Onge, you can check out flip two by going to? And yeah, you'll see me at any of the major industry events. I'm always around.

Alex Husner:

Awesome. Thank you, everybody. And if you want to contact me and I can go to Alex and Annie podcast.com. And if you're enjoying listening to the show, we'd love to hear from you. If you can write a review on our website or Apple podcasts or wherever you listen, and we see Todd one more time for everybody watching on YouTube. Or if you're not, please go over and see him. There he is. Oh my god. He's so cute. Bye talk. Bye, everybody.

Ed St. Onge:

Bye, everyone.

Ed St. Onge Profile Photo

Ed St. Onge

President-Flip.to

Edward St.Onge is most known for being the Co founder and public face of EZ Yield.com Inc. the Hotel Industry’s first fully scaled global Channel Management Solution. Starting in 2002 at the age of 22 years old, with only $1,000 in funding, Edward and his business partner grew EZ Yield to a global leader in Connectivity solutions for over 5,000 hotels in 96 countries. Edward successfully positioned EZ Yield to sell to Travelclick in November 2011.
In 2012 Edward completed an investment to become a partner in Flip.to. As President of Flip.to, Edward overseas all Enterprise relationships across DMO, Lodging, and technology partnerships.
Edward has held many advisory roles inside and outside the industry including board positions for Socialtables (Event and Convention planning) and Recromax (Construction)