How a Las Vegas investor utilized Guesty to grow exponentially
January 17, 2018
David Malka | Better Vacations
Las Vegas • Member since January 2016
This story starts with David Malka, all the way from Los Angeles. In 2012, David purchased his first property in Downtown Los Angeles with the intention to rent it out through Airbnb while he was traveling. Just like every other Airbnb rookie, David did everything wrong. Not only was this property part of a HOA (Homeowner’s Association), yet it was also not fit for keyless entry. Running an Airbnb within an HOA is a mistake 99% of the time, as most HOAs do not allow tenants for less than 30 days. David spent his first year running around town greeting guests at check-in, no matter what time of the day or night, handling emergencies first hand, dealing with lost keys, and avoiding the HOA’s management staff. This continued until a culmination of all his mistakes finally led to some intimidating letters from the HOA followed by a prompt sale and exit of the property.
Despite his discouraging start, David quickly recognized the inherent value of the Airbnb arbitrage model. He had seen his Airbnb income cover his mortgage and operation expenses by up to 3x, compared to a typical long-term rental of 6 months or more, where you’re lucky to breakeven or even see a 10% return. After performing a significant analysis on both the short-term income data, relative to property values, and legislative stance towards Airbnb in Las Vegas, David had decided on his next market and seemed to be very convinced of its success. It was also most fitting with the fact that he was already traveling to Las Vegas frequently for work. By the end of 2013, David had purchased his first 2 homes in Vegas, targeting 4+ bedroom single family homes with pools and spas. He was grossing roughly 15% of the purchase price on each property – quite difficult to achieve in the real estate space! At this time, David was still personally handling all pricing, inquiries, guest relations, cleaner schedules, synchronizing platform calendars, maintenance and more. This was a lot of management work and didn’t allow for much vacation time as he had to always be available for guests. Little did he know that there was a service available that would not only increase his revenue to 25% of purchase price but would literally solve all the major pain points that come from personally managing vacation rentals. David began to use Guesty, a technology driven solution for vacation rental companies that would ultimately boost David’s income per property by over 30% and allow him to scale at an incredible rate.
One of the most common mistakes that vacation rental property managers make, including David, is not utilizing all the available platforms for advertising and marketing. Airbnb comprises only 60-70% of the American vacation rental booking marketplace, yet many property managers are steadfast loyal to them! While the notion of advertising on over 25 channels is a pleasant thought, in practical terms it is extremely difficult, so most property managers just stick with Airbnb – sometimes throwing in the VRBO / Homeaway network. The graph below illustrates that in early 2016, while Better Vacations was doing a great job at acquiring new properties and generating high monthly revenue, they could be increasing their bookings by advertising on “Non-Airbnb” platforms, which if utilized correctly should comprise around 30% of gross revenue!
When you are personally managing all aspects of your vacation rental business, it’s very easy to get caught up in a work mode that David calls “putting out fires.” This is when 90% of your day to day operations are spent managing your existing business such as communicating with guests, scheduling cleaners, and paying contractors, as opposed to being focused on growth and generating new business. One of the greatest challenges Better Vacations faced in 2016 was how to spend less time dealing with the day to day operations and spend more time growing the business.
“We were aware of alternative platforms available to advertise on, but in reality there was no way for a low staff human operation to manage 11 properties across multiple channels. The workload required to synchronize our calendars across 25 different websites for each of our listings, to ensure all of my employees had the correct logins and were getting properly notified of inquiries, to process payments and refunds across multiple channels – it just wouldn’t have been possible, or the workload would have eaten into our bottom line too much.”
The first and most immediate solution provided by Guesty was the ability to delegate the communication with guests and operations. The fact that Better Vacations is now able to have automated hooks through emails and texts that are sent to staff members notifying of new confirmations, modifications and cancellations was huge. This was not only time-saving, but also increased efficiency. Scheduling mistakes were reduced to 0. Now not only does Better Vacations have up to date notifications for their staff, but also a staff management app with reservations URLs where cleaners could now confirm all tasks prior to arriving at a property. On-the-ground staff, such as gardeners, can make sure guests aren’t at the property prior to beginning a disruptive landscaping project. This freed up David’s time to focus on generating more business and revenue forBetter Vacations, and the results are significant.
As pictured above, November 2017 alone shows a 20% bonus in revenue generated by additional marketing platforms. This is made possible through the partnership with Rentals United that Guesty provides, which allows property managers to list properties on a multitude of platforms. The graph also illustrates a 3x increase in revenue over a 12 month period. In March 2016, David’s revenue was at $30,000 and by March 2017, he had hit $90,000 in revenue. Prior to working with Guesty, Better Vacation’s growth had been stagnant as much of their hours were spent “putting out fires”. Guesty was a game changer for his business.
David is so impressed with the the new solutions that Guesty continues to put forth that he will be visiting their headquarters this month to meet the team in person and learn more about what’s next on the horizon.