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"Build your business as if you'll own it forever, but could sell it tomorrow"

Only after publishing this week's Unlocked Interview with Eric Broughton of InhabitIQ -- who is buying up various property management software companies -- have I (finally) come to (fully) understand the (irreversible) way our cottage industry is evolving:
  • Starts out fragmented = large number of small players
  • As popularity grows, a smaller number of larger players begin to consolidate the fragmentedness
  • They do this by either a) acquiring smaller players or b) directly competing with smaller players using the unfair advantage of economies of scale (ie. cost reductions that result from increased production)
  • As popularity continues, that consolidation cycle continues in waves: with an even smaller number of even larger players entering and consolidating the consolidators.
This cycle of business has meant the end of many mom 'n pop shops around the world because the convenience/efficiency/value of the few big players are impossible to compete against when you're selling the same product.

But when it comes to small vacation rental players, is there a saving grace?

The DNA of what makes the vacation rental experience popular (to guests) is "one of a kind" individuality, which fundamentally conflicts with the dynamics of consolidation. (If you haven't listened to this podcast featuring @LindaS -- it's a powerful lesson in this discord.)

Which means, if you are building a small, high-quality, Limited Edition business, you are effectively distancing yourself from commodity rentals and disqualifying yourself from the cycle of consolidation. And as we have seen lately, that can also turn into a pretty nice exit too. So why not double-down on these aspects that only we can emphasize, commanding top dollar in the marketplace, attracting only guests who admire and respect our operation, and doing what we love on our own terms?

I'd like to end this thought-process with a mantra: "Build your limited edition vacation rental business as if you'll own it forever, but could sell it tomorrow."
 
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HeatherB

Counselor
Inner Circle
Absolutely we can beat consolidation! That's exactly why StayLuxe was created. My partner, Beau, and I were working for one of these consolidation-style companies before deciding to make the move to open our own company, and the dwindling quality for guests and value for homeowners were two of the biggest reasons we made that (somewhat risky) decision.

During our tenure with the original company, we had created very meaningful personal and professional relationships with every homeowner in the portfolio, and as a testament to those relationships, 2/3 of the original company's portfolio decided without hesitation to immediately move with us to our smaller, "Limited Edition" style management company. I suppose you could say that we did the exact opposite of consolidation.

Our story is one of dissolution. We have since grown that portfolio (over the course of 12 months) by close to 50% while continuing to provide the exceptional service and value to both our guests and homeowners that we built our brand on. We take this so seriously that we are currently slowing things down a bit before acquiring more inventory (we get inquiries from homeowners all the time just from word of mouth) so that we can be sure our systems and processes are rock solid and can keep up with future acquisition while still providing the quality of service we pride ourselves on.

Keeping human connection strong is at the core of StayLuxe Properties (aka StayLuxe Luxury Vacation Homes), and we firmly believe that we are in the business of connecting people, which means that human touch and interaction is a must.

As you mentioned, Matt, convenience and efficiency are things that what I call the "Big Box" management companies can consistently provide; however, I would argue the use of the word value when referring to these types of companies. I believe that the definition of value for those seeking a quality and extraordinary vacation home lies in the experience they will receive, not just in the structure itself. Clearly, there are many parts and pieces that make up that experience, and the home itself, cleanliness, design, etc. are important and vital pieces of that overall experience; however, I feel strongly that if the human interaction piece of that puzzle is removed, the value has greatly diminished.

My firm belief is that the future of our industry lies in offering experiential stays. Anyone can provide a clean space inside of 4 walls, but the reason that "Limited Edition" managers/companies are sustainable is that people want to know that they are more than just a reservation number and a set of dates in your calendar. Humans will always want to feel special.
 
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Judith

Counselor
Inner Circle
As a Mom and Pop business (one of our mega competitors used to disparage anyone who had this kind of shop), we grew from 6 to 125 properties in 15 years in a small market. After a near death from a large hurricane that missed us plus our "over 65" age range, we decided it was time to prep the company for eventual sale. Our staff and owners were "family" so we knew we could never sell out to a megacorp. Too many years building brand loyalty.

We were fortunate to be approached by another VRM who wanted to expand their territory and maintain the individual companies as separate entities. Our staff got benefits we couldn't afford and the transition was smooth. And we got to eventually retire with great compensation for all of our hard work. It can be done gracefully.
 
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AndyM

Counselor
Inner Circle
Guests might value uniqueness in property style, but they sure want consistency in amenities and booking experience. Our Guests are very vocal about ease of booking, instant maintenance fixes for things that break, quality furnishings, a thorough kitchen supplies inventory, bedding and linens, cleanliness, high speed WiFi, outdoor furniture, TV packages and on an on!

We can survive and thrive against the big guys because not many can figure out how to meet this Guest demand consistently at high volume while also catering for hospitality specifics from Guest to Guest (birthdays, special preferences etc.).
 

Jefferson

Attaché
Inner Circle
Maybe I'm just over optimistic but I feel like there is plenty of room for both. I see this industry following the same path as restaurants. Meaning that McDonalds may have put a few burger joints out of business when they first started franchising but that doesn't mean that they dominated the burger market. There are some that value consistency and reliability (like my children) and will always pick McDonalds over the "risk" of a hole in the wall restaurant. In contrast, my wife and I consider ourselves "foodies" and think of restaurants more like experiences and will never pick a chain when we have the opportunity to try someone's homemade craft. The only mom and pop businesses that need to worry are the ones that aren't doing anything "special". So I think the only question we need to ask ourselves is "how well am I catering to foodies?".
 

Matt Landau

Ambassador
Staff member
Maybe I'm just over optimistic but I feel like there is plenty of room for both. I see this industry following the same path as restaurants. Meaning that McDonalds may have put a few burger joints out of business when they first started franchising but that doesn't mean that they dominated the burger market. There are some that value consistency and reliability (like my children) and will always pick McDonalds over the "risk" of a hole in the wall restaurant. In contrast, my wife and I consider ourselves "foodies" and think of restaurants more like experiences and will never pick a chain when we have the opportunity to try someone's homemade craft. The only mom and pop businesses that need to worry are the ones that aren't doing anything "special". So I think the only question we need to ask ourselves is "how well am I catering to foodies?".
^^^BEAUTIFULLY said^^^
 

JBou

Joan Bou
Inner Circle
Great subject Matt. I agree it is somehow scary to see the trend of the market with all the consolidations but this is the same in any industry and larger corporations and smaller business can live together. But it is not easy for the smaller ones, and the key in my view is to make sure you offer something UNIQUE. In our case, we positioned our business in the luxury segment with large homes (4 to 10 bedrooms) and we have been very consistent in what services we offer and the type of homes we add to our portfolio. Other business might chose a different approach and it's important to be consistent and make your business THE BEST in whatever segment you chose.
 

HeatherB

Counselor
Inner Circle
Maybe I'm just over optimistic but I feel like there is plenty of room for both. I see this industry following the same path as restaurants. Meaning that McDonalds may have put a few burger joints out of business when they first started franchising but that doesn't mean that they dominated the burger market. There are some that value consistency and reliability (like my children) and will always pick McDonalds over the "risk" of a hole in the wall restaurant. In contrast, my wife and I consider ourselves "foodies" and think of restaurants more like experiences and will never pick a chain when we have the opportunity to try someone's homemade craft. The only mom and pop businesses that need to worry are the ones that aren't doing anything "special". So I think the only question we need to ask ourselves is "how well am I catering to foodies?".
This is the sentiment that I share with those who ask me about what makes StayLuxe different in our market. I am always happy to recognize the place that these Big Box companies hold in the industry. There is absolutely enough room for everyone and whatever "recipe" they are offering.
 

Karla

Karla, Owner of Tropical Blessings
Inner Circle
Where is the Dalai Lama when you need him? I so happened to meet the Dali Lama on Peace Hill, St, John with a group of locals, circa 1989 or 1990. In 2021 age 86 sounds just about right for the Dali Lama today. Were I to ask him about the topic of consolidation today he might suggest that I find my balance and respond with “Om.” The concept of consolidation, however, instead brings me to say “Hmmm” as as I face a major pivot point in my business and try to fathom out smooth juxtapositions. Fortunately none of the assorted business dilemmas I’ve faced through the years have yet caused me to break. I gratefully continue to break through them all.

I bought Tropical Blessings over a decade ago and needed to sort out the complexities and dynamics of dealing with not only one consolidation but two, a smaller consolidation that is part of a bigger consolidation, yes two of them intertwined. Needless to say this topic is not an easy one to address and it showed up just as I found myself in a “betwixt and between” place, a challenging moment to address the topic since major pending decisions coincided right with it. When you find yourself in the middle a battleground, assessing your strategies comes at a time of pressure and aligning your sites and sights can temporarily obscure clear vision.

Despite the fact that the topic of Consolidation vs. de-consolidation showed up at a time when I’m facIng a major business decision I cannot disregard the relevant topic of consolidation, it’s like the yin and yang of my story.

Ten years ago I encountered a major consolidation, namely the Big Agency which rented out and managed about 40 vacation rentals but it also included a sub-consolidation, a condominium of six units of which mine is one.

Facing up to or facing off against two consolidations has been a necessary undertaking but has never been a simple matter. I had to come to terms with both one and also the other. Both consolidations merge together but as I contemplate the idea of consolidation I find myself leaning more toward “coalesce” (v.) or “coalescence” (n.) Whether verb or noun, either word sounds smoother and more fluid to me. Coalescing, although synonymous with consolidating, suggests a sense of motion that flows.

I can never forget a single line from a poem by W. B. Yeats that I read when I was only 15 years old:

“Things fall apart, the center does not hold.” If I could pivot that line I’d instead be reading: “Things fall together and the center does hold.” That’s the direction I decided to pursue with Tropical Blessings from the start. Over 10 years later I still try read my inner compass and stay on track so that things fall together with the way I run Tropical Blessings.

My first order of business when I discovered that Tropical Blessings was part of a commoditized inventory of vacation accommodations on a shelf was to identify and establish my own identity as a VR owner. I then needed to decide what actions I needed and wanted to take. Two questions always bring me back to center: What is the right thing to do now? What looks to be the next right thing to do after that?

Back in the day when VRBO was a mom and pop operation it turned out to be an excellent boot camp for me to go into training as a new VR owner. Before communications became restricted in the way that VRBO limits them today it was a great place to find my voice and own it.

With VRBO I began weaving stories, stories that informed people, intrigued them, charmed them, and enchanted them, persuaded and advised them. I sometimes also had fun making people laugh and my sense of humor had a curious way of finding its way into my stories. No longer VRBO dependent I still use the skills I first practiced there in other places too, my network is much more diverse today.

The bottom line is: What does a guest need and what do they want? What do they have in mind? I’ll check myself against my available resources and assess my ability to provide an exemplary experience for a guest. To date my track record is excellent and I love setting the stage for a dream to unfold for a visitor.

As I first I began to establish my credibility as a St. John expert, and given 35 years of island experience I know a lot about Love City. Nonetheless, as a VR newcomer I was surprised to find that I was skilled at closing sales. It was as if I wasn’t even trying to make sales, they simply began to happen.

Conversation takes at least two participants to exist and just as important as it is to speak, it’s equally important to listen. What do you want? What do you need? I’ll be completely honest and transparent with you. If for any reason Tropical Blessings does not seem to be a good fit for you, with every best wish I prefer that you stay somewhere else. Perfection isn’t attainable but I can at least meet one objective: I’ll disappoint no one if I can help it and I go to great lengths to avoid disappointing anyone. A vacation should be about everything and anything but disappointment.

A vacation is meant to be an enjoyable and memorable experience. I try to facilitate exceptional St. John experiences for people but I possess no one size fits all formula for making such times happen. Do I have a gift for doing that? It looks like I do. To hear Mary exclaim “I plan to stay here for at least two weeks every year forever” is worth gold to me, maybe worth even more than the dollar value of Mary’s rental payments. Does “consolidation” have anything to do with the value of Mary’s vacation experience? It does but everyone knows this already: No formula or recipe exists for making what we do work and also work very well.

The owner of Big Agency Consolidation was a personification of Total Grumpiness and Control. The owner of that agency made the rules and he was none too pleased that one single condominium owner dared try to break free from his fiefdom of his vacation rentals. Oh well. He indirectly pronounced his ruling powers. He wrestled me into forking over to him a 10% commission on all of my direct sales, tried to thwart me by renting out Tropical Blessings himself via Big Agency for such an insultingly low number of nights that any VR owner would have to be blind not to recognize that as hostile behavior. Being taken hostage is unacceptable so it was time to stand up against a bully.

Neither of us ever stated it to the other but the gloves pretty much came off the day I met him shortly after closing on my place. He was adamant that everything should always go “this way.” In the meantime “this way” somehow looked to be enormously flawed to me from the very start. At the beginning I couldn’t help but wonder if “that way” might be better than “this way which leads me to the smaller consolidation, our COA.

Right after closing on my property I asked Big Agency if a COA existed. The answer was yes. I asked if the COA had a President and the answer was yes. Finally I asked if the COA had ever held a meeting and much to my surprise the answer was no. Construction on the second of two buildings had been completed over 5 years prior to my purchase. I couldn’t help but wonder who was running the show, Big Agency or the owners of the condominiums?

We began to hold COA meetings and board officers were duly elected. Limited improvements got voted in and were implemented by Big Agency.

It took me over two years to break free from Big Agency’s stranglehold and start putting together my own independent Property Management team.
New owners came along and refused to raise rates. Even though Big Agency endorsed the idea of higher rates according to HUD laws the new owners didn’t have to agree to our proposal and decided not to.

In various ways I got caught in the middle of a firestorm and no board officer other than myself was willing to do much work until another new owner later volunteered to step up to the plate and become our new COA president.

Changes began to happen slowly. Our COA decided to start charging each unit for water usage (we depend on rain water in the USVI) according to unit meter readings instead of dividing the cost of water truck deliveries equally between 6 units, a practice that had never made sense to me. The Refuse to Increase Rates owners bought a second unit and still balked at a rate increase. I timidly dared increase my rates slightly but felt caught in a rate lockdown mode, afraid to increase my rates more than a little since I wasn’t sure how I’d explain the rate differential to prospective rental guests.

The tables got turned in a major way about 6 months ago when our COA President discovered that a COA had never been legally established. That was quite unnerving since nobody knew what perilous tax consequences might exist for our nonexistent COA.

Four or five attorneys later our COA located the one who drafted our CC & R’s and we now finally exist as an 1120H non profit organization. Big Agency quit two weeks before getting fired. Our new PM’s are fantastic: financial transparency and honesty displayed in every way, great observations and suggestions, and thorough attention to all details. That job is finally getting done the way it always should have been done.

At our most recent COA meeting I had the deepest pleasure of announcing to our President that our board has unanimously voted to sponsor the education of one student at a school he founded in Ghana for orphan children. He was moved beyond words by that heartfelt gesture of appreciation and respect. I know he’ll smile when he opens the card that reads “Some people go the extra mile and you are one of them.” When he receives that card he’ll find another very nice surprise tucked inside, a gift certificate for dinner with friends at Extra Virgin Bistro, one of St. John’s finest restaurants.

Despite our COA finally pulling together it it is still necessary for me to take a position as the independent owner of a single VR condominium unit. The Refuse to Increase Rates owners came to own a second unit of our six condos and have held the rest of us in a rate lockdown position for 8 years. During this long time I’ve been afraid to raise my rates. What if a group rents my place and their friends rent another unit with a lower nightly rate? Might they not wonder why the rate is higher at Tropical Blessings than the rate at “Unit X?” That’s a perfectly reasonable question to ask, I might ask the same question myself and expect a good explanation.

I finally concluded that although the floor plan of Tropical Blessings duplicates the floor plan of Unit X the two units are not one and the same, not comparable to two identical hotel rooms where room 508 is exactly the same as room 714 and if later asked which room I stayed in I might not remember. Both rooms are one and the same, no special features distinguish one from the other which can only lead one to say “So what” about the numbers of the rooms.

Unlike a hotel room Tropical Blessings will never blend into a landscape of So What. I’ve been poised at a tipping point: Increase my rates or do not? The ego of the owner of Big Agency’s took a major hit when our COA decided we didn’t need him or want him. Pardon me but I wish I’d had chilled champagne ready when I heard the news that he quit.

Go figure, two first condo buyers are still hanging in with Big Agency who books and manages their units. About a month ago I finally asked those two owners if they would be willing to raise rates for 2022. They said “maybe” they’d consider raising their rates after Refuse to Raise Rates owners sell. Gosh darn it, what was I to do?

By sheer coincidence I met the under contract buyers of one unit currently owned by the Refuse to Increase Rates people and we happened to just hit it off famously and I handed over my business card in case he ever felt like contacting me. The sale of that unit has already already fallen through once because the buyers who hoped to move in as permanent residents had “two small dogs,” not permitted by our CC & R’s and the rest of us could only contemplate possible endless yipping and yapping which could end up driving vacationers crazy. Thankfully our COA vetoed that sale.

I’ve behaved entirely ethically with the new under contract buyers but they contacted me and I ended up sending them in some very helpful directions that will put them in a power position to close the sale. Those buyers remind me of myself. They’ve fallen in love with St. John like I did and will enter the VR world as newcomers, also like I did. It’s such a fluke that we happened to meet. I never thought I be an advocate of a neighbor’s sale but I want Refuse to Increase Rates owners gone.

Under Contract Buyer and I have had some terrific conversations and although he owns a printing business that might be helpful to me I’ve worked out any all printing issues very well by myself to date. Under contract buyer is free to do whatever he wants when he closes but I believe he won’t low bottom rates, or accept too many people for very short stays which creates too much noise. Knowing the he’s seeking a substantial mortgage, based on a recent COA vote I saw that he would be walking right into a major trap involving property insurance so I told him he should have his attorney contact the seller’s attorney and request all COA meeting minutes. I don’t know if that sale will close but I believe it will and it looks like his closing terms are about to improve.

Under Contract Buyer agreed with me that rates should increase and named a percentage that was frankly too high but it sure looks like we’re on the same page. I passed on some other very helpful additional info and suggestions and the under contract buyer is exceptionally grateful to have bumped into me. What a coincidence but I feel optimistic about a probable great new neighbor who will be a team player and good comrade as part of our condominium sub-consolidation.

I can’t count on that closing or wait for it to happen in order to increase my rates but the timing of that probable sale was just the nudge I needed. I had to call myself out and remind myself that I’m the one who calls the shots. I’m the director, I’ve had enough of handing my power over to someone else. I to a good look at what I do and recalled the very first question I asked myself: “If I was a guest in my own home what would I really appreciate?” I’ll never stop pursuing answers to that question.

The WHAT IF question is always at the back of my mind. What if the power goes out in the Virgin Islands? It’s not an uncommon occurrence so I have high lumens lanterns on hand just in case.

There’s also WHY NOT question too. Why not rename change the name of Aqua Room to the Aqua Serenity Room? The Coral Room also becomes the Coral Dreams Room. The soft pastel colors of both rooms are lovely. Those new names for the rooms seem delightfully evocative to me and suggest magical dreamy nooks, spaces to retreat to and simply be as you are.

Am I worried that Big Agency owners are booked more fully ahead into 2022 than I am so that I should stop in my tracks and not raise rates? No. Am I worried that two VRBO instant bookers cancelled January reservations and left me with a big gap of available dates? No. I pretty much knew both parties were looking for bigger places and that Tropical Blessings was their safety booking. I have plenty of time to sell those dates.

Of surprising relevance is a the story of my Favorite Cousin’s recent visit to my home in Maine. He brought his new girlfriend of 6 months with him. I’m not at all surprised that Jeff is already dreaming of marrying Ezia. Although I cautioned himto take his romance slowly I also told him that when the time comes to propose we should probably visit the Jewelers District together in Boston and I’ll help him choose a fine loose stone from a diamond merchant. A diamond’s measure of excellence is evaluated by the Four C’s: Carat, Cut, Clarity and Color.

Like a fine diamond, Tropical Blessings is also precious. I’m willing to share my treasure with those who can discern the value of its excellence and pay for it too.

My current rate dilemma represents a call to action. I don’t need to possess the finest diamond in the world to know that I do indeed own a precious gem. The prongs of its settings need to be checked from time to time and a periodic appraisal of is also a good idea. However, plain and simple my rates are underpriced.

Waiting for other owners to raise rates has been like watching paint dry, infinitely tiresome and frustrating and I don’t know how long it will take or if it will even happen. Enough coincidences have occurred in recent times including a group who wants to make a reservation a year and a half into the future that I have no choice but to address the dilemma.

The people who want Tropical Blessing for a Feb/Mar week in 2023 have already made arrangements with the Big Agency units at the same rate those units rent for now. The representative of that group and I have had great conversations and he doesn’t mind paying more. He says I’m much more fun to work with than the agency and joshed around with me about how boring the name of one of the other units is, “The Penthouse.” I agreed and told him I had suggested “Top It Up” but that the owner is set on “The Penthouse.” I’m confident that Tropical Blessings is better. I was forced to send him a quote.

I made by decision to go up 5% for the 2021/2022 holidays then 5% for most of 2022 and 5% again in 2023 with a few tweaks since I understand for example October is a usually a slow month.

I’ve been wrestling with official calendar rate changes for a couple of weeks now, verging on making them just as the consolidation topic showed up with very inconvenient timing. That’s okay since convenience is not always par for the course in our industry.

Tropical Blessings is a diamond of a place and a diamond of an experience. Disregarding the “C” of Consolidation if I had the measure excellence of Tropical Blessings according to Four C’s, off the top of my head maybe I’d select: Commitment, Communication, Creativity and Courage.

If your VR was a diamond what might your Four C’s be? Capital? Collaboration? Consistency? Caring? It’s hard to choose those C’s isn’t it?

Just as I began this writing with a phrase from a poem by W. B. Yeats I’ll close with another phrase used by another poet, e. e. cummings, that I’ll also never forget: “the we of me.” What does that phrase mean? Quite simply: “Us.” Us suggests a relationship of which there are many kinds, including my relationship with guests, my relationship with my management team, my vendors, my webmaster, and my colleagues in this community.

Whether we choose to consolidate or not I believe we join together as part of an evolution that sometimes also seems to be a revolution. I don’t always feel comfortable with either process but I do find both processes to be exciting. I also see many diamonds around me here of various shapes and sizes but they share one commonality: they all shine with brilliance.
 
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AlexC

Envoy
Where is the Dalai Lama when you need him? I so happened to meet the Dali Lama on Peace Hill, St, John with a group of locals, circa 1989 or 1990. In 2021 age 86 sounds just about right for the Dali Lama today. Were I to ask him about the topic of consolidation today he might suggest that I find my balance and respond with “Om.” The concept of consolidation, however, instead brings me to say “Hmmm” as as I face a major pivot point in my business and try to fathom out smooth juxtapositions. Fortunately none of the assorted business dilemmas I’ve faced through the years have yet caused me to break. I gratefully continue to break through them all.

I bought Tropical Blessings over a decade ago and needed to sort out the complexities and dynamics of dealing with not only one consolidation but two, a smaller consolidation that is part of a bigger consolidation, yes two of them intertwined. Needless to say this topic is not an easy one to address and it showed up just as I found myself in a “betwixt and between” place, a challenging moment to address the topic since major pending decisions coincided right with it. When you find yourself in the middle a battleground, assessing your strategies comes at a time of pressure and aligning your sites and sights can temporarily obscure clear vision.

Despite the fact that the topic of Consolidation vs. de-consolidation showed up at a time when I’m facIng a major business decision I cannot disregard the relevant topic of consolidation, it’s like the yin and yang of my story.

Ten years ago I encountered a major consolidation, namely the Big Agency which rented out and managed about 40 vacation rentals but it also included a sub-consolidation, a condominium of six units of which mine is one.

Facing up to or facing off against two consolidations has been a necessary undertaking but has never been a simple matter. I had to come to terms with both one and also the other. Both consolidations merge together but as I contemplate the idea of consolidation I find myself leaning more toward “coalesce” (v.) or “coalescence” (n.) Whether verb or noun, either word sounds smoother and more fluid to me. Coalescing, although synonymous with consolidating, suggests a sense of motion that flows.

I can never forget a single line from a poem by W. B. Yeats that I read when I was only 15 years old:

“Things fall apart, the center does not hold.” If I could pivot that line I’d instead be reading: “Things fall together and the center does hold.” That’s the direction I decided to pursue with Tropical Blessings from the start. Over 10 years later I still try read my inner compass and stay on track so that things fall together with the way I run Tropical Blessings.

My first order of business when I discovered that Tropical Blessings was part of a commoditized inventory of vacation accommodations on a shelf was to identify and establish my own identity as a VR owner. I then needed to decide what actions I needed and wanted to take. Two questions always bring me back to center: What is the right thing to do now? What looks to be the next right thing to do after that?

Back in the day when VRBO was a mom and pop operation it turned out to be an excellent boot camp for me to go into training as a new VR owner. Before communications became restricted in the way that VRBO limits them today it was a great place to find my voice and own it.

With VRBO I began weaving stories, stories that informed people, intrigued them, charmed them, and enchanted them, persuaded and advised them. I sometimes also had fun making people laugh and my sense of humor had a curious way of finding its way into my stories. No longer VRBO dependent I still use the skills I first practiced there in other place too, my network is much more diverse today.

The bottom line is: What does a guest need and what do they want? What do they have in mind? I’ll check myself against my available resources and assess my ability to provide an exemplary experience for a guest. To date my track record is excellent and I love setting the stage for a dream to unfold for a visitor.

As I first I began to establish my credibility as a St. John expert, and given 35 years of island experience I know a lot about Love Nonetheless, as a VR newcomer I was surprised to find that I was skilled at closing sales. It was as if I wasn’t even trying to make sales, they simply began to happen.

Conversation takes at least two participants to exist and just as important as it is to speak, it’s equally important to listen. What do you want? What do you need? I’ll be completely honest and transparent with you. If for any reason Tropical Blessings does not seem to be a good fit for you, with every best wish I prefer that you stay somewhere else. Perfection isn’t attainable but I can at least meet one objective: I’ll disappoint no one if I can help it and I go to great lengths to avoid disappointing anyone. A vacation should be about everything and anything but disappointment.

A vacation is meant to be an enjoyable and memorable experience. I try to facilitate exceptional St. John experiences for people but I possess no one size fits all formula for making such times happen. Do I have a gift for doing that? It looks like I do. To hear Mary exclaim “I plan to stay here for at least two weeks every year forever” is worth gold to me, maybe worth even more than the dollar value of Mary’s rental payments. Does “consolidation” have anything to do with the value of Mary’s vacation experience? It does but everyone knows this already: No formula or recipe exists for making what we do work and also work very well.

The owner of Big Agency Consolidation was a personification of Total Grumpiness and Control. The owner of that agency made the rules and he was none too pleased that one single condominium owner dared try to break free from his fiefdom of his vacation rentals. Oh well. He indirectly pronounced his ruling powers. He wrestled me into forking over to him a 10% commission on all of my direct sales, tried to thwart me by renting out Tropical Blessings himself via Big Agency for such an insultingly low number of nights that any VR owner would have to be blind not to recognize that as hostile behavior. I Being taken hostage is unacceptable so it was time to stand up against a bully.

Neither of us ever stated it to the other but the gloves pretty much came off the day I met him shortly after closing on my place. He was adamant that everything should always go “this way.” In the meantime “this way” somehow looked to be enormously flawed to me from the very start. At the beginning I couldn’t help but wonder if “that way” might be better than “this way which leads me to the smaller consolidation, our COA.

Right after closing on my property I asked Big Agency if a COA existed. The answer was yes. I asked if the COA had a President and the answer was yes. Finally I asked if the COA had ever held a meeting and much to my surprise the answer was no. Construction on the second of two buildings had been completed over 5 years prior to my purchase. I couldn’t help but wonder who was running the show, Big Agency or the owners of the condominiums?

We began to hold COA meetings and board officers were duly elected. Limited improvements got voted in and were implemented by Big Agency.

It took me over two years to break free from Big Agency’s stranglehold and start putting together my own independent Property Management team.
New owners came along and refused to raise rates. Even though Big Agency endorsed the idea of higher rates according to HUD laws the new owners didn’t have to agree to our proposal and decided not to.

In various ways I got caught in the middle of a firestorm and no board officer other than myself was willing to do much work until another new owner later volunteered to step up to the plate and become our new COA president.

Changes began to happen slowly. Our COA decided to start charging each unit for water usage (we depend on rain water in the USVI) according to unit meter readings instead of dividing the cost of water truck deliveries equally between 6 units, a practice that had never made sense to me. The Refuse to Increase Rates owners bought a second unit and still balked at a rate increase. I timidly dared increase my rates slightly but felt caught in a rate lockdown mode, afraid to increase my rates more than a little since I wasn’t sure how I’d explain the rate differential to prospective rental guests.

The tables got turned in a major way about 6 months ago when our COA President discovered that a COA had never been legally established. That was quite unnerving since nobody knew what perilous tax consequences might exist for our nonexistent COA.

Four or five attorneys later our COA located the one who drafted our CC & R’s and we now finally exist as an 1120H non profit organization. Big Agency quit two weeks before getting fired. Our new PM’s are fantastic: financial transparency and honesty displayed in every way, great observations and suggestions, and thorough attention to all details. That job is finally getting done the way it always should have been done.

At our most recent COA meeting I had the deepest pleasure of announcing to our President that our board has unanimously voted to sponsor the education of one student at a school he founded in Ghana for orphan children. He was moved beyond words by that heartfelt gesture of appreciation and respect. I know he’ll smile when he opens the card that reads “Some people go the extra mile and you are one of them.” When he receives that card he’ll find another very soon nice surprise tucked inside, a gift certificate for dinner with friends at Extra Virgin Bistro, one of St. John’s finest restaurants.

Despite our COA finally pulling together it it is still necessary for me to take a position as the independent owner of a single VR condominium unit. The Refuse to Increase Rates owners came to own a second unit of our six condos and have held the rest of us in a rate lockdown position for 8 years. During this long time I’ve been afraid to raise my rates. What if a group rents my place and their friends rent another unit with a lower nightly rate? Might they not wonder why the rate is higher at Tropical Blessings than the rate at “Unit X?” That’s a perfectly reasonable question to ask, I might ask the same question myself and expect a good explanation.

I finally concluded that although the floor plan of Tropical Blessings duplicates the floor plan of Unit X the two units are not one and the same, not comparable totwo identical hotel rooms where room 508 is exactly the same as room 714 and if later asked which room I stayed in I might not remember. Both rooms are one and the same, no special features distinguish one from the other which can only lead one to say “So what” about the numbers of the rooms.

Unlike a hotel room Tropical Blessings will never blend into a landscape of So What. I’ve been poised at a tipping point: Increase my rates or do not? The ego of the owner of Big Agency’s took a major hit when our COA decided we didn’t need him or want him. Pardon me but I wish I’d had chilled champagne ready when I heard the news that he quit.

Go figure, two first ccndo buyers are still hanging in with Big Agency who books and manages their units. About a month ago I finally asked those two owners if they would be willing to raise rates for 2022. They said “maybe” they’d consider raising their rates after Refuse to Raise Rates owners sell. Gosh darn it, what was I to do?

By sheer coincidence I met the under contract buyers of one unit currently owned by the Refuse to Increase Rates people and we happened to just hit it off famously and I handed over my business card in case he ever felt like contacting me. The sale of that unit has already already fallen through once because the buyers who hoped to move in as permanent residents had “two small dogs,” not permitted by our CC & R’s and the rest of us could only contemplate possible endless yipping and yapping which could end up driving vacationers crazy. Thankfully our COA vetoed that sale.

I’ve behaved entirely ethically with the new under contract buyers but they contacted. me and I ended up sending them in some very helpful directions that will put them in a power position to close the sale. Those buyers remind me of myself. They’ve fallen in love with St. John like I did and will enter the VR world as newcomers, also like I did. It’s such a fluke that we happened to meet. I never thought I be an advocate of a neighbor’s sale but I want Refuse to Increase Rates owners gone.

Under Contract Buyer and I have had some terrific conversations and although he owns a printing business that might be helpful to me I’ve worked out any all printing issues very well by myself to date. Under contract buyer is free to do whatever he wants when he closes but I believe he won’t low bottom rates, or accept too many people for very short stays which creates too much noise. Knowing the he’s seeking a substantial mortgage, based on a recent COA vote I saw that he would be walking right into a major trap involving property insurance so I told him he should have his attorney contact the sellers attorney and request all COA meeting minutes. I don’t know if that sale will close but I believe it will and it looks like his closing terms are about to improve.

Under Contract Buyer agreed with me that rates should increase and named a percentage that was frankly too high but it sure looks like we’re on the same page. I passed on some other very helpful additional info and suggestions and the under contract buyer is exceptionally grateful to have bumped into me. What a coincidence but I feel optimistic about a probable great new neighbor who will be a team player and good comrade as part of our condominium sub-consolidation.

I can’t count on that closing or wait for it to happen in order to increase my rates but the timing of that probable sale was just the nudge I needed. I had to call myself out and remind myself that I’m the one who calls the shots. I’m the director, I’ve had enough of handing my power over to someone else. I to a good look at what I do and recalled the very first question I asked myself: “If I was a guest in my own home what would I really appreciate?” I’ll never stop pursuing answers to that question.

The WHAT IF question is always at the back of my mind. What if the power goes out in the Virgin Islands? It’s not an uncommon occurrence so I have high lumens lanterns on hand just in case.

There’s also WHY NOT question too. Why not rename change the name of Aqua Room to the Aqua Serenity Room? The Coral Room also becomes the Coral Dreams Room. The soft pastel colors of both rooms are lovely. Those new names for the rooms seem delightfully evocative to me and suggest magical dreamy nooks, spaces to retreat to and simply be as you are.

Am I worried that Big Agency owners are booked more fully ahead into 2022 than I am so that I should stop in my tracks and not raise rates? No. Am I worried that two VRBO instant bookers cancelled January reservations and left me with a big gap of available dates? No. I pretty much knew both parties were looking for bigger places and that Tropical Blessings was their safety booking. I have plenty of time to sell those dates.

Of surprising relevance is a the story of my Favorite Cousin’s recent visit to my home in Maine. He brought his new girlfriend of 6 months with him. I’m not at all surprised that Jeff is already dreaming of marrying Ezia. Although I cautioned himto take his romance slowly I also told him that when the time comes to propose we should probably visit the Jewelers District together in Boston and I’ll help him choose a fine loose stone from a diamond merchant. A diamond’s measure of excellence is evaluated by the Four C’s: Carat, Cut, Clarity and Color.

Like a fine diamond, Tropical Blessings is also precious. I’m willing to share my treasure with those who can discern the value of its excellence and pay for it too.

My current rate dilemma represents a call to action. I don’t need to possess the finest diamond in the world to know that I do indeed own a precious gem. The prongs of its settings need to be checked from time to time and a periodic appraisal of is also a good idea. However, plain and simple my rates are underpriced.

Waiting for other owners to raise rates has been like watching paint dry, infinitely tiresome and frustrating and I don’t know how long it will take or if it will even happen. Enough coincidences have have recently in recent times including a group who wants to make a reservation a year and a half into the future that I have no choice but to address the dilemma.

The people who want Tropical Blessing for a Feb/Mar week in 2023 have already made arrangements with the Big Agency units at the same rate those units rent for now. The representative of that group and I have had great conversations and he doesn’t mind paying more. He says I’m much more fun to work with than the agency and joshed around with me about how boring the name of one of the other units is, “The Penthouse.” I agreed and told him I had suggested “Top It Up” but that the owner is set on “The Penthouse.” I’m confident that Tropical Blessings is better. I was forced to send him a quote.

I made by decision to go up 5% for the 2021/2022 holidays then 5% for most of 2022 and 5% again in 2023 with a few tweaks since I understand for example October is a usually a slow month.

I’ve been wrestling with official calendar rate changes for a couple of weeks now, verging on making them just as the consolidation topic showed up with very inconvenient timing. That’s okay since convenience is not always par for the course in our industry.

Tropical Blessings is a diamond of a place and a diamond of an experience. Disregarding the “C” of Consolidation if I had the measure excellence of Tropical Blessings according to Four C’s, off the top of my head maybe I’d select: Commitment, Communication, Creativity and Courage.

If your VR was a diamond what might your Four C’s be? Capital? Collaboration? Consistency? Caring? It’s hard to choose those C’s isn’t it?

Just as I began this writing with a phrase from a poem by W. B. Yeats I’ll close with another phrase used by another poet, e. e. cummings, that I’ll also never forget: “the we of me.” What does that phrase mean? Quite simply: “Us.” Us suggests a relationship of which there are many kinds, including my relationship with guests, my relationship with my management team, my vendors, my webmaster, and my colleagues in this community.

Whether we choose to consolidate or not I believe we join together as part of an evolution that sometimes also seems to be a revolution. I don’t always feel comfortable with either process but I do find both processes to be exciting. I also see many diamonds around me here of various shapes and sizes but they share one commonality: they all shine with brilliance.

This was incredibly thought provoking. I also think this is extremely timely after attending the DARMA conference and having spent the week deep diving into how the traditional VR side of the industry and vendors supplying solutions for the entire STR industry are thinking about things in the own words.

The underlying theme to me is that pricing management/guest experience management face unique challenges when looking at adoption and innovation in what I would call traditional vacation rental markets and companies that pre date the STR boom a few years back. It feels like all the newer companies started with a blank slate on operations (causing all sorts of other problems, primarily around hospitality and responsibility), but there hasn't been the headwinds of changing existing structures and ways of thinking that are epitomized by the slow pricing increase pace you note. Dynamic pricing has been a thing for 3+ years and when I started my company, it was already something we knew we needed to implement into our pricing processes; whereas, situations like the one you are describing have to actually CHANGE the way things are done and, in this case, change how pricing should be thought about at a macro level and as a part of a revenue management strategy for any one company. Thats a seismic shift, and I think something we should be really pushing innovation adoption of new models and for innovative thinking based on the experience the VR side brings on things like guest experience (this is where the other side, due to trends in where supply has come from, has been a headwind of their own to adopt and innovate against).


I have a lot of thoughts swirling around in my head that your post has been thinking through, so I am going to stop there on trying to piece together drivers of trends I've been noticing as it relates to your post, but I do want to revisit later with some concise thoughts, because theres a lot in there.

On a macro level, I think its an important insight that we should be noting the systemic challenges older VR companies/owners/structures face due to the need to actually change vs being able to build new...at the same time, it points to the advantage the VR side has, which is on the guest side (you thinking constantly about guest experience is not a normal practice for many newer "scaling" companies). It just so happens those two things need each other, so innovating and problem solving seems to me will be critical to accelerate on so that companies can sustainably compete for the most profitable guests and owners in the future by tying revenue and guest experience together.

Thank you for taking the time to write out the level of detail you did on how you are thinking about this....it has really brought some clarity and focus on my own thinking on how this puzzle of what is happening and what is likely to happen in the future in an industry that is just about as old as civilization but is right now rocketing toward developing into something new that may be unrecognizable in 10-20 years from now. With posts like this, I think we get a little closer to identifying some fundamental concepts some of our companies should be putting focus on to ensure future sustainability.
 

Karla

Karla, Owner of Tropical Blessings
Inner Circle
Two chairs @Matt Landau, what a great find. I have thought about those two chairs. What if you had found only a single chair? Would you have taken only one chair anyhow? A single chair reminds me of the sound of “one hand clapping.” One chair would have served your needs as a place to sit down and enjoy your morning coffee by yourself but two chairs suggests an invitation for somebody else to sit down in the other chair and join you in a conversation. To me that symbolically represents exactly what we try to do in the VR world.

Solitude is sometimes exactly what people happen to need so I try to provide for that too.

Furniture procrastinator that you have honestly confessed to being, might a sanding/oiling job on those chairs be a job worth finding the time to do? Personally I think so but with your own private space you’re not facing a competitive VR market so refinishing those chairs is not an essential task.

I have no idea of the square footage available to you on your balcony space might be but perhaps a time will come along when you decide to add two comfy chairs. It won’t matter at all if they don’t match up with the chairs you unexpectedly found. What might make a difference, however, is that two more chairs would provide you with the opportunity to invite others to join your conversation. Opportunities like that one speaks volumes to me about what we aim to do as VR professionals. Bringing people together seems to express the all and everything of what we do. Cheers to your two chairs!
 
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