Steve Milo: We've Got Questions, He's Got Answers - Q&A with VTrips CEO

Welcome to Alex and Annie, the real women of vacation rentals. I'm Alex. And I'm Annie. And we're joined today with Mr. Steve Milo, who is the president and founder of the trips. Steve, welcome to the show. Thank you. Pleasure to be on. Yeah, we're so excited to have you here. Now, I know everybody in our industry, certainly you must be living under a rock if they don't know who, who you are and who V trips is. But we do have a good amount of people that listen to the show that are outside of short term rentals, vacation rentals that are more within hospitality, hotels, other sectors, and just not in hospitality at all. But can you give that part of the audience just a brief history of who you are and what your involvement has been in the space?

Sure, thanks. Well, I started in the industry in 2006, with one vacation rental property. And today V trips is company of 7000, vacation rentals, in leisure and resort markets. So we're in lakes and beaches and mountains spread throughout 10 states throughout the United States, mostly in the southeast region, basically, from Texas, all the way up to Maryland. And, you know, we do traditional vacation rental management, full service, with an emphasis on keeping the regional brands in each market, which is a little different than some of the companies that have done a larger kind of roll up strategy. And as that would indicate, we've done a lot of growth through mergers and acquisition. That's what's brought us to the current count of 7000, property center management.

That's really, really impressive. Steve and I've kind of watched your progression. I think Alex and I both watched you grow from that small and you know, the small, located off the coast of Florida, located on the coast of Florida company to now just all over the place in the southeast. And so I kind of wanted to start there. You had a vision at some point. And so one of the things that we like to focus on for the podcast is kind of what was that aha moment for you? What was the moment that you decided that your operational efficiencies and strengths in the way that you were managing your inventory was something that you could take to other markets and replicate and grow into this, obviously, powerhouse that you have today?

I would not tell anyone that this was planned, I would say it was opportunistic, so fair. You know, when I first started, one of the key things I did, because I had a technology background, it was really spend a lot of time researching property management system. And at that time, I came across a company called escapia, which had not yet been purchased by HomeAway software. And they were a hosted system. And I was able to really leverage that hosted system escapia. And really scale in a way that companies that were located around me, were not able to scale. So you know, Scapy, at that time, was a full service hosted system to manage all of these properties. And it made, you know, a so much more efficient. And that really served us well, particularly during the recession, because I started in 2006. And the first thing we encountered shortly was a recession, which was really terrible for this industry, and caused a lot of companies to get into financial trouble. And so opportunistically sellers came to me. And they were all in our region. And we bought for companies from 2009 to 2013, which grew the size of our company to about 600 properties under management, which was a really decent size in 2013 2014. And we were able to run this all on this escapia system. And so that was really phase one of kind of the company's evolution, we were making a decent amount of money at that point. And we were running on hosted systems. And yet, this was really an inefficient industry. And you know, the advertising was almost all done by email or phone calls. You know, VRBO was still a subscription advertising venue, and Airbnb was a flip. The second biggest company actually was FlipKey. And then in 2014, you know, I think we started to enter a new phase in this industry when VRBO in response to Airbnb, went transactional. And we were one of the early adapters. We had a good relation with verbo at that time, and they made us one of the first beta customers to do pure transactional. And also I was offered the opportunity to kind of expand through m&a outside of our area, which the first big region we went to was Fort Myers Beach and subsequently purchased a couple of other companies in the state of Florida. And that's when I was presented an opportunity to borrow money from a commercial bank and go outside of the state of Florida. And I did that with a company called townebank. And we went into Hiltunen. We went into Gatlinburg. And that was really a pretty intense m&a period, which also resulted in us getting additional bank debt. That allowed us to scale into well, even bigger into Gatlinburg and Mexico, Hawaii and places like that. So that was the second evolution of the company was really from 2014, to 2000. And I'd say 2019. And then the third evolution has really been what a lot of people I've seen, because there's been a lot of press about us, which was essentially, you know, post COVID, how we handled COVID, we really did extremely well, post COVID. And we were extremely profitable, we were able to recapitalize all of our debt, and ultimately made the decision, because we had really record producing EBITA, which would be your your earnings before debt and taxes and amortization, we were able to get a minority investment. And we were able to tie that into a round of private capital, which allowed us to really get a huge amount of capital, it was reported $250 million. And that's allowed us to go on the current expansion wave, which, you know, we bought, tailor made up and Deep Creek southern vacation rentals along the panhandle, tidy vacation rentals, Carolina retreat. And a couple companies in Galveston, and in Texas, silver sands and Ms. Kitty and then a couple other smaller companies. We bought 10 companies really in the last six months. So it's been a phenomenal amount of growth. And so that's really, a lot of the recent publicity has been

think we lost you? Sorry, there we go.

Oh, no, that's that's kind of where we we? Yeah, yeah.

Yeah. That's yeah, that's exciting. And you you have been on tear the last six months. So just to kind of touch on you and said that it wasn't methodical was more opportunistic. Do you feel like the last six months since you've gotten that capital investment? That $250 million? I'm assuming that it's been more methodical since then, than it was previous?

Yeah, I mean, you know, was opportunistic to take around a minority capital, when we did, we just thought this was the chance to do it, and to do it, right. And we can kind of talk about the difference of our capital round versus others who've done this industry. But we, you know, we tied it in with corporate debt. And then, you know, we were very calculated where, where we went with our m&a purchases, we really focused in on the southeast area of the country, we avoided going too far, kind of learned some lessons from the, you know, the last round of expansion, where we went into July and some other places that were much more difficult to manage just due to, you know, proximity. Yep. I understand that. I know, You've spoken at length about the decision to use commercial debt, instead of having just investment within the company. Can you tell us a little bit more about that. And I guess, just compare that to other companies in the space that are going the opposite route, that they might get investment, but now they are also beholden to someone making a lot of those decisions, I can only imagine that a lot of your decision to stay on the route that you've gone and so that you could remain in control of the strategy. Yes, that's been the big one. I've been steadfast of wanting to have control the company and be able to steer the company. And so that has meant you know, I've been much more disciplined and running a company that was profitable. And by running a company that's profitable, you are able to borrow debt. And typically you can borrow debt anywhere from three to five times your profit, particularly once you get to a certain size. And so, you know, we did that. And we built a track record of managing debt as well over the last seven years. And, you know, that's allowed us to have not have to give up equity. So, you know, that was really, really important to me, and to the employees of the company and the shareholders was limiting our dilution. Other companies have not been profitable, and so they're totally dependent on, you know, bringing in equity. And that means a lot of dilution. And in the case of both turnkey and Bokassa, you know, basically, you know, the founders there eventually lost control of the company, you know, the board of directors were controlled by PE, or venture capitalist. And, you know, I think some of the things that we've saw over the past couple years with those companies, as a result of the founder owners, not really having control them being controlled by venture capitalists who, you know, have their own agenda.

Right. You also talked about, you know, when you were expanding the company that was during the recession, what do you think now, heading into 2023, that we, you know, are essentially going to be going into another recession? What do you think that is going to? How will that play out for companies like Bokassa when, when they're already not profitable, but to now go into a time when it's going to be much more hard for them to operate that way? What does the future say for them?

Well, almost every company that's public, particularly companies that are in the area of discretionary spending, which vacation rentals are part of our going to see some form of reduction, whether it's occupancy or ADR, you know, that's our, you know, our rates, and that's gonna affect the revenue. So unless the CASA is also making corrections on their expenses, they're going to start to miss their numbers. And those numbers were forecasted in their public filings. And as a public company, once you start to miss your your forecast, you've got real problems with your shareholders and potential shareholders that are looking to invest. So, you know, it's not a good time to be in the public markets, or most companies, because a lot of them are going to have to re forecast downward. Do what you know, I also believe is a recession, it's probably worse than a recession, because it's really stagflation, which is a combination of, of an economy that's in a recession, but prices that are continuing to go up. So it's going to be a very, very difficult time, particularly over the next 1218 months for companies, particularly companies that are public.

Separate question, and it's come up a lot. And there's been a lot of chatter on LinkedIn, obviously, for for all of us that are engaged there, in that some companies and I've just seen it just through Vacasa, in general, just their, you know, buying some of the companies that they bought, the valuations at which they're buying these companies are somewhat to me inflated to where they would be normal, you know, the would have been in 2019, where they are now and that they're the people are buying real estate at high value. So they're expecting a higher return on their rentals, and therefore, you know, just again, driving driving the rate up for everybody. What do you think going into a recession means for the rental market as a whole when, again, companies have like,Vacas they have so much inventory in the market, and they may have purchased it at a higher rate than they should have, and they can't return the rental investment to the down to the owner, owners pull off their plan, or again, an owner just decides, hey, I don't even want to rent my unit anymore. I may want to put it back on the market and sell it like what do you think that cycle because of the recession is how do you think that's going to affect rentals as a whole?

Well, there's a couple of layers to the question you asked the first part is it because I was looking to potentially buy companies you know, Prakash has been for my understanding using pro forma valuation, which means they're looking at valuation based on what they think they can extract profit out of the company. And the you know, anytime you enter a recession and you have occupancy and ATR is going down, you're you're going to be able you're going to be willing to pay less at that point. So my expectation is, you know, for resellers prices are going to go down. Certainly for V trips you know, we buy companies based on their EBIDTA multiple and even t 12. is we're starting to see drops particularly as we head into the fall 2022 however, that will be seen there because actually is going have enough cash to do any purchasing and I think because of they're so unprofitable and because I think they're going to have to, you know, hoard that cash to try to work their way through what's going to definitely be some significant financial downturn. I don't expect them to be an active buyer for the foreseeable future. The second part of your question, though, was really managing the expectations of your owners. And, you know, that's something that every property management company is going to have to do, right. So you're going to have to manage your expectations of your owners, particularly the owners that have purchased at a premium in the last year. And the fact that rental income may be going down At Vtrips, what we're doing in 2023, is we're going to forecast every property at the unit level on a month by month basis. So that if we are off, we'll know, you know, because we're running various reports every month, we'll know right away. And we'll be able to, you know, push those properties with additional marketing resources. And Annie, I know, you obviously work at lexicon and you know, that there are certain things you can do to, you know, get additional exposure for a property that's struggling. But you can't wait till it's too late. Right? Oh, absolutely. Yeah, right away. And yeah, you know, Alex, you, you do the same thing, right? I mean, you can feature a property and email, you can feature in social media, I mean, there are levers you can pull, if you're paying attention. on a month by month basis, the problem is, if companies aren't, you know, this disciplined in their forecasting, and then they wait until the owners upset. Right? That's, that's when things get bad, right? Yeah, that's gonna get ugly, right? It's one thing, if you're managing, and you're doing, you're running a variance report. And I would encourage everybody who is a property manager to do this, right, you know, forecast for 2023 your properties and forecasts on a month to month basis, and then run a variance report every month to see how, you know, if you're on track or not, and the properties are not on track, you've got to start to pay attention to those properties right away. You know, that's how you're going to manage through this downturn and recession. And the companies that aren't doing this, and where the owner is, quote, unquote, surprised by the results, you know, they're gonna get into trouble. And you're going to have owners that are going to start to look for other companies to manage their properties. So you know, I expect there to be quite a bit of churn in 2023, primarily, because those companies who are not good at communicating with their owners, and not proactive, are going to see owners head out the door. Yeah, especially.

I mean, this this year, 2022, this has been the highest ADR that we've ever had. And we've been working so hard for so many years to try and raise our rates, and a lot of these destinations. And finally, we've been able to do that. But this is if this is going to be an anomaly, it's going to be tough to be what our owners are getting at this point. But just managing those expectations, I think is really important. And obviously, you know that as an enterprise manager, you've got to stay in touch with your owners, you have to keep them, you know, as much abreast of what's going on as possible. Because like you said, if they come to you, it's too late at that too late. So managing and staying ahead of it's important. One other thing I wanted to ask about, too, on the technology side, there's a discussion just recently on LinkedIn, between Matt Renner from track and talking about the costs and how they've spent, you know, 40 to $50 million a year on their tech and how, you know, that's really just driving their their profits to the ground. But, you know, you made the decision, and took a very thoughtful process to make that decision to go with track and to not build your own system to really make sure that you bought the system that was going to work for the long term of the trips. Tell us a little bit about that. I mean, how how has that been so far, and I know nothing's perfect, but to be able to acquire companies that are on multiple different systems, that that's kind of been a challenge. Getting everybody integrated?

Well, you know, our decision together track has been a great decision. We've been very, very satisfied with track previously to track we were on HomeAway software starting with escapia, which was purchased by HomeAway software in 2009, I believe. And then ultimately we outgrew escapia and went to B 12. And and that was a strong system, Wyndham vacation rentals was on there and then some other really large companies was on B 12. But you know, HomeAway made the decision to sunset that and at that point we evaluated a number of systems we and we landed on track And we did the migration in 2021. And, you know, it was a good migration, and we've been pleased. But the other question you asked is really, you know, the cost of hosted system versus software development. And, you know, it is our cost of technology as a fraction to what a cost says reporting, because it's reporting 6% of their revenue, and they're at about a billion dollars revenue. So $60 million, is I believe, where they're at, yeah, is going to where their software development. Meanwhile, they're losing up to $50 million a quarter. So, you know, this just doesn't seem to be a very sustainable business model, if they're spending that kind of money. And the reason why, you know, they've done this is they're claiming that they're a technology company, and they're building all this technology. But when you really look at Akasa, I don't believe they're a technology company, I believe they're a hospitality company. And so they're just wasting so much money on the software development. The other area where they're wasting a lot of money is sales and marketing, which I believe in the rest for they report that 18% of their cost, or their GNA was, was with sales and marketing, and they had up to 200 people and their acquisition organic team, and that just doesn't seem sustainable as well, looking, and you're going to have to figure out how to become profitable, much faster. With a billion dollars of revenue, there's no reason they shouldn't be profitable right now. And I think that's one of the reasons why their stock has just been hammered. I mean, they've lost 70% of their value since their IPO. And if they have to, you know, come back with a re forecast of revise earnings, lower, their stock is going to get hammered even even more. So, you know, they're they're in a very, very bad position right now. And the match, right, there are certain things they could do. hosted system will be one of those things.

Yeah, and sales and marketing for them has primarily been based on just business development to get more owners and to purchase properties and companies. So different than you know, what the percentage of what we spend on that side of things versus our regular brand. Marketing is minimal. But you know, that's that's always been something that's just stood out to me, too, is that they've never really promoted, they've gotten more into it, I think this year than they ever have. There's been some TV commercials, and I've actually seen a couple local billboards here. But you know, it's not to the extent that many of us have been doing for years. And I think that that's catching up with them that the general public does not know, Bokassa. I mean, I think they would know. Yes, 10 people, they probably know v trips or condo world as much Vacasa.

Yeah.

Well, you know, I mean, that's part of the problem with Vacasa is, it's just a bad business model. And now, most of the senior leadership team isn't even from the industry, you know, there's OpenTable, or Angie's List. And they're trying to say they're a technology company. And that business model doesn't work. Right. So, you know, they've got so many issues. And personally, I have come out pretty strongly on places like LinkedIn. And I've talked to people at skift. That, you know, this isn't does they do not represent the industry, even though I know, they get a lot of media, and they go to conferences, and they are supposedly introduced, as you know, the number one company in the space, they are not a good representative of the industry, actually, I think they give the industry a bad. They're bad example for the industry. So and that's going to be, you know, that'll be worn, you know, that's going to be borne out over the next 12 months by their stock performance. I mean, they can, they can get upset at comments from people like me. But the fact is, you know, at the end of the day, you know, stock market is a capital market, shareholders are going to make decisions based on what they think the business model is and what they have what they feel about the strength of the leadership team. And when you lose 70% of your stock valuation from your IPO, that's a that's an F, and that's a failure. And you know, there's a chance they could run out of cash and potentially go bankrupt if they don't figure out how to turn their company around. And, you know, we've seen I'm old enough to have seen resortquest and resort OS got into this exact cycle. resortquest was a publicly traded company back in the late 90s, through the 2000s. And, you know, their technology expense was way over what they should have, they couldn't manage their turn. They had a lot of leadership churn. And you know, ultimately, they got into such a financial straits that they ended up selling the gala. or Gaylord ended up selling the Wyndham you know, and it would look to me like, that's the direction because it's gonna go because it's going to end up having to sell to somebody, because they're not going to end up being a viable trading company.

I wanted to touch on something you said and we've been talking about a lot with other guests in the you know, what Vtrips is doing is when you buy a company you buy and you buy a lot of some legacy brands and some of these markets are well established, and that you retain the staffing you retain the brand. And that's one of the things that has been, I think, a worry for some of us in the industry and watching what, again, of Vacasa or Turnrkey or any of these have done, where they've gone in and they're they're managing from 30,000 feet, and they don't have the local footprint or they're not engaged in a local market. And I think that that's eroded their value proposition in terms of being able to grow organically their, their rental pool, you know, their rental portfolio, because again, to Alex's point, people don't know who they are, but to come to Panama City Beach, you know, you purchase the resort collection, they're a well established, you know, property management group in this market, and they have some of the marquee, you know, resorts. So if somebody comes in the market, they already know that that's a management company that they want to work with. So what do you feel, you know, for you? Why did you put such a value on? Did you understand that going in? And and, you know, do you feel like that that's the way that the industry is going is that from larger companies like had Vacasa taken that stance, they might not have the turn rate that they are having? Or you know, what are your What are your thoughts on overall maintaining kind of the local flavor of a company when you purchase?

That's an excellent question. So we kind of did this by trial and error. In our last round of expansion, where in some markets, we kind of just rolled in our into everything into V trips and in other markets like Gatlinburg, we worked really hard to keep the local brands, Jackson Mountain Homes. Riodosa, we kept the local brand near Santa Fe the same thing. And, you know, we looked at the results, and it was clear that keeping the local brand doing everything possible to keep the key employees was clearly what led to having healthy and, and growing divisions. And it was just very, very clear. I mean, it was clear taking a look at where we had done well, and where we had not done as well as we had anticipated. And so this this go around, we were very, very careful about making sure every company we bought at any size, we kept a local brand, we kept all the key employees, and we did everything possible, to make sure that the goodwill we were purchasing we were keeping, and I think that's also represented in our direct traffic, you know, for all the money Vacasa is spending, you know, they indicate only 35% of their bookings come direct. With the trips were up to 60%. Which, you know, a couple of years ago, we were at 50%. So, you know, our direct traffic has grown. And that's with us doing a tremendous amount of distribution. Right? So, Annie and Alex, you know, because we've talked about all the distribution and the wood, we're on as many distribution channels as possible, because I'm a big believer in doing everything right, do direct well, but also do OTA distribution well, right. And, you know, we do Expedia, we do booking.com We do, you know, obviously Burbo Airbnb, but we're also working on these niche sites out there, like Hometogo Whimstay, Smoky Mountains. I mean, there's a number of Google meta, or on all those little niche sites. So we've taken, you know, a strategy of distribution of yes, we want to have a really strong direct site, but we also want to make sure that we're doing as much external distribution as possible. So but, you know, again, I mean, keeping those local brands, some of those local companies that we've purchased, you know, had 85% direct bookings, right. It's pretty incredible.

Yeah, yeah. I mean, our industry really just, I mean, the flavor of what the product is, is not a commercialized thing. I mean, there are curated experiences that began way beyond or before Airbnb that were made from it not being mom and pop but just having that local flair and the people that you know, when you come to check in and I mean, being a business that's been here for 37 years, we've we have some people that have stayed with us all 37 years. That's just crazy, but I think you're doing it the right way. And it's been exciting to see over the past year the success that that has brought because I know it just it seemed like everybody was going to go the path of being like a Wyndham prior to when they were Bokassa, and we've seen in our local market, I mean, when Wyndham purchase companies, they're losing their attrition rate is was not good. And it's kind of unsurprising that Vacas continued to still do that same path. But it just, it just shows the difference in the strategy and what they're trying to make the outcomes be versus what hospitality driven operators, like yourself know, is important. And, you know, beyond beyond just the vacationer side of things, the destination level is so important. And that was one thing that I wanted to ask you was, you know, the local companies that you keep with most of the stakeholders that are still in place, are they still able to participate with their CVB? And DMO? I would imagine you're still a proponent of that.

Oh, yeah. I mean, every place we're in, if they have a strong tie in to the Chamber of Commerce, or the equivalent, you know, we're basically saying we'll continue that, yeah, the only thing we're doing is adding more, right? So we're in destinations, where they're having some issues with advocacy. And, you know, we just have so many more resources, you know, we can hire lobbyists, we can have a concerted effort to build a state chapter. But you know, we're a big believer in local destination marketing, which I know, Alex, you're, you're very heavily involved in, in your Myrtle market. So, you know, if you're gonna keep the local staff, the one thing you have to do is continue to do all the local advertising they do. What the one exception, I'm not a huge fan of print. So anytime I hear print. We like this magazine. I'm always like, Okay, are you kidding me? What happened? Tell me what the ROI is. Right. Yeah. And

that varies by market, I imagine too. And I think that actually kind of gives us a nice opportunity to go over into something I know you're very passionate about is the advocacy within markets. And that's obviously a very huge topic across all markets, regardless of whether they're urban or destination, resort destination, you've been you've taken a very good lead position and lending your voice to it. So what do you see? You know, again, I think my concern with some of the things that are going on right now with, again, people buying at high ends, and looking at how many units have been thrust on markets in Panama City as an example, there's over 5000 new units in the market. And a lot of those have been thrown in into areas that are not traditionally where vacation rentals are staying. So they're putting them on Airbnb, they might be putting them on some of these, you know, VRBO sites that are not traditional rental sites. And so it's causing friction within within market. So how do you feel like your position with the trips and being a larger player can help go into these markets and help frame advocacy and frame the the conversation around sensible regulation or lack of more regulation, less regulation, whichever it may be?

Yeah, that's a great question. And, you know, that's where I spend a lot of my time right now is putting resources into the industry for advocacy. And I'm really frustrated with some of the companies who have come in some being purchased by, you know, private equity companies who are spending no money on advocacy. So, you know, there was a podcaster in Colorado who was purchased by a company and they have not spent a dime on advocacy. You know, and that's just a bad look. And, you know, there's a handful of other companies who talk a good game, and I know who they are, because I raise money for the Advocacy Fund. And they have, they don't show up at events, they don't put any money. And, and, you know, this is the worst thing possible for our industry is companies coming in from the outside, and not even being willing to put money into advocacy. And that to me signals that they're in here for a short term flip. Because if they're not willing to invest in advocacy, then that tells me they're not serious, long term about our industry. So Vtrips is committed to half a million dollars this year on advocacy. And the way we've done it is really kind of a two fold. Two fold strategy. The first is being very, very active and involved in vrma, vacation rental manager Association. And you know, Tiffany Edwards and I started the Advocacy Fund a couple of years ago. And this year, Miller Hawkins, the president of VRMA is now the chairman. And we've already met our goal of half a million dollars and this is something that in 2019, we started with $150,000 goal so we've tripled our goal in just four years and that's what the pandemic in the middle of this and that you know, the VRMA has been really great about handling things like white papers, economic impact studies. fair amount fair market Housing Studies, you know, and assisting target areas with resources. And that is something that a national organization can do. And I know both Annie and Alex, you guys have been involved in advocacy, and you understand how critical it is at the national level. But you also have to do it on the local level, right. And so that's the boots on the ground, right. And so the, the way I've done this is with Vtrips, is I've used our size. And, you know, the respect I have within the industry, and quite a number of people know me to form state chapters, and to hire lobbyists, and not just to hire him for one year, but to hire them continuously, and to set up a political action committee where we can raise money. And we've done that in the state of Florida. And we've done this in Texas, and we're starting one in Georgia. And, you know, this is, to me, goes hand in hand with the national organization. And in the state of Florida. We're talking to politicians as property managers, not OTAs. Because OTAs have their own agenda. And sometimes their agenda is at odds with what a professional property managers want. And we are willing to do compromise. I mean, we don't like these bad apples that are operating in neighborhoods that are really not meant for vacation rentals. And, you know, we've been more than willing to have discussions of look, we're, we're here for the long run, let's work together. And I think some of the stuff that's happening recently in the media about Airbnb is showing a bit of a tipping point. That can, people are really frustrated with how Airbnb has, in some cases, encouraged, you know, their hosts to go into neighborhoods that were never meant for vacation rentals. And, you know, what the argument is, is that they are buying up affordable housing. Right, this is a real problem if we get painted with this brush. So, you know, we've spent time with, you know, political leaders speaker, the House Speaker, the Senate, we even met with Governor DeSantis, just to make sure, you know, he was clear that professional property managers have a different agenda than Airbnb and that we're not a San Francisco based company, actually, you know, V trips is based right in Florida. And, you know, we want to do stuff that works within the framework of communities that live here, you know, people that live here full time.

Yeah, that's a really good point. And I think something that's misunderstood, I had somebody recently asked me if you know, or just say, actually didn't even ask, but that VRBO all that they want to do is just push the legislation that makes it so that any property can be rentable. And I don't think that's verbo. I mean, maybe Airbnb wants that, certainly more than than VRBO. But I think it seems like we've made a lot of progress with VRBO, with Expedia with that side of the business to understand that we've got to maintain the business that is supposed to be vacation rentals, short term rentals, and, you know, protect the regular land. And my gosh, that the housing issues this is going to cause is really serious for destinations and for just for the real estate economy in general. One question I also wanted to ask you about governor does Governor DeSantis I know you made great strides with him during COVID At a time when there's again, more miscommunication that Florida was opened after the lock downs, but that vacation rentals could not open to visitors. And you and Tiffany and some of the others down in the Panhandle led the charge to talk to him and get him to understand but I feel like that's a good example for other states to replicate. And I know in Florida, you have the statewide ban, or that makes it that they can't ban vacation rentals. Do you feel like other states should be pushing for that same thing through their local vrma chapters and advocacy efforts?

Well, I mean, I think it's situational. I think there's certain states where the political environment is right where preemption of vacation rentals to the state makes sense, right? Because hotels are regulated by the state bed and breakfasts are regulated by the state timeshare are regulated by the state. And I think that is something where certain states like Texas or Georgia, certainly Florida, Alabama, Tennessee, I think we can have success there. That means compromise, right? And sometimes the OTAs don't want to compromise anything. Verification is one of the things that the OTAs don't like because, you know, it holds them accountable for verifying, you know, sales tax and bad tax and and etc. And the OTAs would like to have no verification at all. And, and that's part of why Airbnb right now is having so many issues. And hopefully Expedia is paying attention, you know, I know that there's somewhat of a disconnect, because Expedia is such a huge corporation, between leadership. And, you know, in some cases, what's happening politically, but I hope they're paying attention to all of the terrible social media that's happening right now with Airbnb because it is out of control. So they're going to have to be reasonable, they're gonna have to work with property managers, like V trips, and work with us on Common Sense reform, so that we don't get zoned away. You know, the other thing is really, the national organization. Alex has to do a better job, on media. And I know there's been a lot of talk, there's always a lot of talk to the VRMA about what else they're going to do other than advocacy and education. But I think it's really time, the VRMA to spend money on educating the industry that we are not Airbnb, I am so tired of people calling us an Airbnb. And it's really something I think there's an opportunity now, because of all the terrible social media that's going on with Airbnb to come out with a campaign that says, you know, we are not Airbnb. And that resonated with Governor DeSantis. I mean, we had 12 property managers, and we scripted it. And we all said the same thing. We are not Airbnb, that's a San Francisco based organization. And they didn't care if people were renting properties, when you said, No, you can't rent. They didn't, they didn't care if people were coming from New Jersey, in New York, when you said, Hey, you can't have people from New Jersey and New York coming here. They don't care if they had, at one point party houses, now they've tried to ban the occupancy, but they don't care. Certainly people are going into residential areas that had never anticipated vacation rentals, certainly some that are not even zoned for vacation rentals, you know, they are a company who is out of touch. And we as professional property managers care very deeply about doing things the right way, and not taking properties that shouldn't be rented. And we've all turned down many, many properties where they're just not, you know, either in an area that we want to manage, because it's in a residential area, or we're gonna have to take something that's not legal, right, we're not going to take a building, and try to do it, you know, under, you know, under the dark and try to rent it out. That's just terrible stuff.

Yeah, yeah,

we've found a lot of people that are listening to us are actually in that, just getting into the space, they're just wanting to start out, you know, they may have one unit, they might have 5,10 units, but they're not a what you would deem a professional management company at this point. And so one of the things that Alex and I have tried to really put in the forefront of conversations that we're having with people and doing some outreach is trying to bring in these people that if they want to be in the business, great, we want you to be in the business, but do it the right way. Be professional about it, get your education, you know, understand that the technology will help you do some of the things, understand what the regulations are understanding where you should be. And so

we participate in advocacy, participate in addressee donate, you know,

I think the the challenge that we face is that from a professional side, we are such a small part of the pie, the unprofessional, or what you would like what sits in that STR bucket is a very large portion of what is deemed rentals in this in the United States. And so we have to make sure that these people are being a good steward of what our what our brand, and our mission is as vacation rentals. And so I think there's a lot of work to be done, but I wanted to, you know, congratulate you and applaud the efforts. And you've really taken a lead in that. And I know that sometimes, over the years, you know, you are very outspoken, and sometimes that can be a lightning rod for conversations. But you've always stepped out there and you've been very true to your word, and stood up for what you believed in. And whether people believe it or you know, they like it or not, you know, you're always championing our cause and our mission as vacation rentals. And so, for whatever you do in the future, I mean, just thank you for everything that you have done. I can say that I truly appreciate that. And I hope that you know, you will continue to lead the charge for advocacy because we definitely need somebody who's got a good strong voice in it.

I second that, but I don't want to let them off the hook yet because I think you touched on a good question that what do you see as how do we bring both sides together knowing that I think that's really good point that I totally agree Vermont needs to work on. Defining that professionally managed property vacation rental companies are not just Airbnb or not Airbnb, but knowing that that side of the industry is so large and has as has grown Growing voice, how do we work together? I mean, what do you see as the future for that? And, you know, bringing them into vrma, they are now allowed to attend. I think that's a good thing. But how do we bring them together while also still maintaining the opinion that we're not the same thing that we're not Airbnb? Which is more what they associate with?

Well, I mean, I think, you know, this is something I've actually had some conversations with Matt Landau, who cares very much about this subject. And, you know, he has a really sizable following among hosts, and even in some cases, single owners. And the question is, you know, how do we have a common, what is our common goal or commonality, which allows us unite and to me, I would unite with any rent by owner who agrees to completely stay within the rules of compliance, that means registration, regulations, paying all their taxes, and also agrees to be a good neighbor, right. So making sure that they don't over occupy their property that they're responsible for noise and trash and parking. And then third, is committed to, you know, the industry of advocacy. So we can unite rent by owners. Right now, I don't know that there's a vehicle that's operating in a way that's going to allow that to happen, it could be the VRMA, it's certainly not rent responsibly, the way they're formatted right now, because responsibly is a puppet for the OTAs. And that's where the bulk of their funding is coming from. So we have to have a mechanism for these rent by owners to be organized in a way where we can we can work with them, and we can weed out the bad apples. And that's really the case here and the OTAs. Again, and I don't expect Airbnb to change. But I do think Expedia might, particularly if we, you know, start to engage leadership, that they're going to have to work with professional property managers, and rent by owners, and they're going to have to give stuff up, right, they're going to have to be willing to get off this, Hey, we don't want to be in the compliance or have any aspect of compliance. You know, look, you know, we know that OTAs worked against our Florida bill and 2022, we heard that from the Speaker of the Senate, she told us point blank, that at least one OTA and maybe two worked against us. And, you know, the lobbyists and the government advocacy component of VRBO, Expedia and Airbnb, at the end of the day, leadership gives them direction, and it's up to leadership to determine are they interested in a sustainable business model? Or are they just in it for the short term, I don't believe expedience and short term. So it's up to their leadership to have conversations with VRMA and companies like V trips that are completely committed to the long term, not just short term, but the long term, and to clean up some of their some of their issues, because in some cases, they are working against us. And we are outgunned by hotels, and we are outgunned by many cases, local governments who would like to just zone us out. So it's time for them to understand if they want long term sustainable, they have to work with us. And it shouldn't be us chasing them. And it shouldn't be us having to talk about some of the problems that rent responsibly is creating for this industry. They should be coming to us and going lo we understand. We're in it for the long run as well. And we're going to work with you. And we're going to be a good partner. And we're not going to work behind your back and do it in a sneaky way. And then smile and say Well, what did you expect? That's not going to work? And those people who've done that they know what I'm talking about?

Very interesting.

Yeah, yeah. So gosh, I mean, so much, so much we could dive into and we're kind of at time. So Steve, we would really love it if maybe we could come back at the end of the year. And have you kind of recap your, your year and maybe we'll be at 10,000 units for you by December we can celebrate. But wanted to wrap it up you we had asked you a couple of questions. And you said there was a couple that you were willing to ask. And so I think we've talked about a lot of things. But is there anything that you think we're not talking about in the industry that we should be talking about?

Well, I mean, one of the, you know, one of the issues is really this obsession with unit count in terms of judging whether companies are successful or not. I agree. I think that is really one of the worst metrics that anyone has come up with. And I know it's really not necessarily people within the industry. It's really people on the outside, right? We're judging the success of companies based on the number of units. And that is just such a terrible metric. Right? So, within our company, we have talked a lot about unit market economics, and how important it is not have a huge you have, but really what are the economics of this unit? So, I know, Annie, you can certainly agree this, you can generate a lot more revenue with less units than in some cases, more units, right? Because, right, you know, we know which units are producing really great revenue, and in some cases, which units are not generating revenue, and actually pulling down our review scores, and a company like V trips, you know, right now, unfortunately, the way we're measured by some of these OTAs, is by the entire entirety of our company. So, you know, we have, you know, as a, you know, all of our units are bucketed. And so we don't want units that bring down our, you know, our entire Q Score. And so we're, you know, working really hard on those review scores to get rid of those units waist down. And, you know, by bringing in better units, that helps. But I think that's really, you know, the key issue here is to start to educate and talk within this industry about how important not just unit growth is, but, you know, actual what produces revenue.

And that really leads back to the professionalization of it and maintaining that professionalization of it. Because if you've got units that aren't performing, and the homeowners won't update them, and there's just issues for us, as professionally managed companies to keep them, it's just it's leading to bad reviews, bad guest experience. And if we're really being the ones that are trying to lead the charge on, you know, where the face of the industry goes, and how that does continue to be professionalized with standards, we have to do that. And I think you're, you're spot on. And that's always the advice that we give other companies that ask about it, too, that it's not about inventory count. It's about looking at your margins looking at profitability, and you can definitely make more money with less units. So it's a bit of a myth that's going on in the narrative there and some of the other sides of it. But, Steve, this has been wonderful and enlightening. And we truly appreciate the time. And I think some of your points on what Burma's role can be going forward or well taken and hopefully we can work with them and support you and Advocacy Fund and everybody because we all are in this together. I know it's hard you hear it all the time, but it is the truth. But thank you for everything that you do for the industry and certainly for your support of us and we will talk to you soon.

Thank you. Thanks, Steve. Thanks, Steve.