We sit with Carlos Perez-Lanzac de Lorca, the Founder of Vitur Summit and CEO and Founder of Caleta Homes. This is a super insightful conversation that dives into the pandemic’s impact both overseas and in the states. The changes that have come from this have brought much attention to the short-term rental market and changed the way we manage our inventory. Carlos talks about the importance of technology, how creating smart apartments helps us to better understand our customer’s experiences, and how that translates to management services.
Vitur Summit brings together some of the smartest people from around the world to strategize. Carlos likes to implement “mandatory” conversations between people, companies, and tech that may not organically align, but he has a hunch they should. It’s some of these conversations where ideas are born that create real change. We also talk about the importance of building out brand and who should capitalize on brand loyalty programs in our industry and if they can effectively work as the hotel industry does. This write-up doesn’t give this conversation its due diligence.
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Bringing The Right People Together With Carlos Perez-Lanzac de Lorca
Mateo, how are you?
I’m fantastic, John. How are you?
I am good. I’m getting this one in. I’m just wrapping up my time here in Orlando, Florida at FAVR Event Xtravaganza. I’m super excited. We got a great guess. Go ahead and I’ll let you do the introduction here.
In this episode, we’re honored man to have someone I met a while ago overseas and have been in contact with. I consider him a good friend. I always have a great time with him. I learned so much from him and was inspired by someone who has their hands in the business overseas at a level that I don’t think we see here in the States a lot. Without further ado, I’d love to introduce Carlos Perez-Lanzac de Lorca. Carlos, welcome to the show. It’s great to have you. How are you? What’s going on?
I am good. Thank you. That is an introduction, but it’s cool to see you guys. We do not see in person. We hope to have you guys soon out here too, but it’s been hectic. Look at 2023. We started with the pandemic and we’re going to finish with a recession. It’s quite a woo-woo bumpy time but it’s exciting. Our industry is pretty hot.
It had to be some turbulent times. We’ve talked to a couple of people and our friends overseas through the pandemic and everybody was in different places, but it seems that through it all, everyone is on the rebound and pushing back up. The industry seems to be working towards thriving. You and I did not talk through the pandemic. Just a little bit. I don’t want to go too far down that road, but how was that for you, especially as someone who’s involved in the space as you and in so many things, both at the advocacy level and at the business level? It must have been quite a shock to have the world stop.
It was pretty scary, but we kept a very positive mindset. What we see now, it feels like that was coming together during the pandemic. People were still focused and getting ready. We knew that this was going to end at some point and we were getting prepared. In terms of our operation company, we got prepared for that. We changed some strategic decisions like software and strategic suppliers. Right after the pandemic, we doubled the size of our portfolio. We’ve got a small one anyway.
[bctt tweet=”We need to keep a positive mindset. Be focused and ready. This pandemic is going to end at some point, and we need to start preparing.” via=”no”]
At the VITUR Summit, we could also see the companies and a lot of what they’ve been launching. Here in Europe, we are having a lot of companies from the US coming. What you see is they’re super well-prepared. They did a lot of changes and they’ve been growing massively. They have a very active M&A market also here in Europe. Again, the pandemic was scary, but people who were serious about this industry and dip into it got reinforced, which is normally what’s meant to happen. There was a cleanup of the industry.
We saw the same thing here for sure. It’s those companies that took advantage of a downturn in the economy or downturn in whatever like the pandemic or whatnot. The slowing down of an outside source progress, those that have the ability to, and again, we overuse this word, pivot are the ones that came out of it successfully and were able to go ahead and almost be reborn with a new sense of purpose and focus.
You guys had in the US quite impressive figures in terms of national travel and occupancy level. You were way more active than Europe, I remember right after the pandemic. At least that’s the data that we got.
It was almost like it never happened.
In 2022, we’ve seen ADRs and occupancy rates going higher. Everyone has been super active in terms of travel. Again, we see that short-term rental and multifamily is a preferred option. I was talking to Carlo Olejniczak, the Managing Director and Vice President for EMEA of Booking.com. He was sharing some impressive data. They got $6.6 million in short-term rentals on the platform and 1/4 of the supply was a short-term rental, but 1/3 of the revenue was coming from rents. The demand is looking at this kind of product.
That is an interesting stat. I like that stat. A quarter of their inventory, but a third of their revenue but it’s also a double-edged sword. You could look at it with ADRs skyrocketing, what is that going to do to everybody? I think it’s positive as far as trending, but at some point, these ADRs are going to have to plateau and we’re going to have to bring it back down to Earth a little bit to make it more accessible for everybody. The economy will write itself out in a little bit. We’re going to hit that plateau. We’ve talked about it a lot over here. We’re going to hit it here first before it hits overseas but we’re going to see that ride itself out.
I think it’s going to be interesting though because, in my opinion, the dynamic that’s going to move the needle is what happens with people at work. A lot of those numbers were because of the situation where people were doing their work, people not going into offices and renting places. Digital nomads sprouting and continuing to be able to go do their thing as well as families that are taking this nomadic approach now that they don’t have to be stuck in one place.
It’s interesting because I was talking to Jamie from AirDNA about this. Where does that dynamic fit into this? It’s because one of those trigger points is always like, “Are businesses cutting their travel back? Are people not traveling for work anymore? Now you have this dynamic of people living anywhere they want and working wherever they want. That’s going to be a huge factor in terms of how much our numbers ebb and flow or continue.
I think it’s going to be both on what you’re saying. Basically, in this recession, that’s how the demand is going to change their behavior. Also, they’re going to be forced by their recession. They’re going to create that adjustment on the ADR that John was saying. It was too hectic. Again, people had that massive desire to travel and that’s going to go a bit calm down. Number one, because people are not going to be able to afford it and people also are going to have a recession. They’re going to have more utility costs and less disposable income. It’s going to be interesting. We are all looking at the last quarter with a lot of attention to see how the demand is going to react here in Europe.
I think tourism is going to be up there. People want to fly. There’s going to be a lot of remote working. It’s happening big in a few countries like Spain where we host the VITUR Summit. It is a massive destination. Before the pandemic, we had 83 million visitors in one year. It was the second destination after France and most of the tourists I’ve seen come from Paris. The data we have is that we going to be there between the end of 2023 and 2024. Countries like Spain, Portugal, Italy, and all the Mediterranean countries, are going to be very important as inbound destinations.
We throw some numbers on the board, John. I’m very interested because I’m betting on the Millennials, the younger generation, who are not trying to go to offices. They want flexibility. Unless something happens in the economy that’s going to force them back into traditional workspaces and force them back into this, it’s going to be significant. I could be wrong but it doesn’t mean that I’m not going to look at these factors and say it’s significant.
I was having this conversation with someone and we were talking about hotel life and how people travel. We have a whole generation of people who have known only short-term rentals. Their parents stayed and traveled in hotels. Even when they go to hotels, they’re looking for hotels that can provide them with more than the traditional bedroom and bathroom. We have a customer that’s grown up wanting more and needing more. I think if they have the opportunity to ingrain their living and working as they have, it’s going to be very hard to get them back. It’s going to take a shock to the system to make them or force them back. I’m interested to look at these numbers.
I want to talk about your summit that’s coming up. This summit is an offset of what you do day-to-day. Looking at your resume, you’ve been doing this for many years in your current role. We love asking this question. Most people we talk to stumble into the industry. No one wakes up that’s like, “I want to be a short-term rental operator. I’m going to get into vacation rentals.” Everyone stumbles into it. At least now, as we’re getting older, we’re going to see people in high school and secondary school and they’re going to be like, “This makes sense. I see that this is something positive. I’m going to learn about this. I’m going to get some education around it.” How did you stumble into space?
To be honest, I come from hospitality. That’s what I’ve been doing my whole life. I was in hotels running these ski resorts. I was with property management in ski resorts like chalets and staff across Europe. That was fun and then I came back to Costa del Sol. If you look at Europe, Spain is an important destination across Europe. We’ve got 50,000 vacation rentals across Spain in the South. In Andalucía where I’m based, they’re 92,000. It’s a massive market for short-term rental.
In Malaga, Costa del Sol, and all this area, it’s 51,000. It is a massive destination for property management. Tourism was always there since we started with small property management. We still have. It’s a management company. We start doing this gathering. Again, we had these questions and pressure from the hotels. That’s why we had some advocacy as we were saying in the event because it is part of the industry. Whether we like it or not, a lot of property managers don’t pay a lot of attention. They don’t see that’s relevant, but it can change your bottom line big time because you might have to reshape your whole portfolio because of new legislation.
The structure changed because of that. We started getting all these. I’m trying to get answers to these guys with a bunch of property managers, etc. and it went bigger and bigger. We started a room with 150 square meters. Now, we have 2,000 square meters with an exhibitor area and we built a smart apartment of the future. We want to understand what the short-term rental of the future or a multifamily apartment is going to look like. How is that going to change?
It’s because a lot of people are doing that. A lot of property managers are already investing in tech like smart logs, noise detectors, etc. We reached out a little bit. We got a pavilion and then we built this smart apartment. I think it’s something cool because that’s going to help you as a property manager to understand how is interaction. How is this technology going to change the way you understand customer experience and the way you understand sustainable teams, which is a big thing?
I think people are way more sensible after the pandemic. How you understand technology and your property management services, and where you are embodying it. That apartment is helping you to interact with the technology and to know how it feels to emphasize with your clients. That’s a big part of the event. Obviously, the conference and listening to some of the most amazing CEOs that we managed to put together in the agenda. I’m super excited.
You were going over the agenda with us and it’s super stacked with great names, backgrounds, and pedigree. We’re excited to hear about it. In your mind, outside of what you mentioned, what’s the big differentiator between your summit and your conference compared to some of the other ones that are taking place across Europe? Here in the states, the majority of our audience is probably here in the states.
We hear of a handful of conferences that, “Should we go? We’re excited about this. We heard good things about this.” Yours was one of them, but there’s a handful. What separates you from the other one? The World Summit just happened. There’s The Book Direct Show, which was overseas and now it’s coming here. Why go to yours?
Something we are very proud of is that we presented the whole industry across. Our industry is super horizontal. We’ve got from the real estate investment because it’s a massive real estate part of the industry and in a lot of the conferences, that’s not covered. We want to understand real estate investment, tech and those tech investors also. We want to understand the customer experience and the legislation.
The true living experience of what we call that smart apartment, it’s something we are very proud of. Having the whole view and all the services available for those property managers, it can go for an alarm system, smart log, or even laundry services. Anything that you might need as a property manager is there.
Sometimes what we trying to avoid is having the same companies and the same presentations that you see across all different short-term rental events. That’s why we are trying to make sure we cover the whole spectrum of the industry. As I said, that advocacy. Legislation is a massive thing, at least here in Europe. We’re having it a little bit late and the European Commission is launching the short-term rental initiative. We all expect them to see what that’s going to imply.
A lot of destinations across Europe are having genius legislation. If you do your SOAP analysis as an investor or property manager, definitely destination is something you’re going to look at as a main priority. We do see some real estate investors not investing or stopping their investment if they see legislation coming on underway. They look for a safe destination where they know that this is black and white. It’s not going to change. We are covering all that. We do make sure we have the high-level leaders of each field participate in the events.
One of the interesting things that you do too and knowing you, the advocacy part that you bring in, you do it differently. One of the things that we don’t do and don’t see a lot of at the conferences here, number one, I think you build a conference with the value that the manager gets across the board leaving your conference. People talk about advocacy at conferences, but we don’t see a lot of the politicians, the other side coming to the conversation, meeting the managers, and talking to the professionals in the space.
Being engaged and being a part of the conversation in learning about the industry from the industry versus getting data points from a report, a case study or from some other organization. It is something that was always impressive in knowing you. That’s your fingerprints all over it because you’ve been involved in that advocacy and in getting the government involved in and engaged directly with the industry as opposed to intermediaries or other lobbyists. The way we do it here is like they’re over there and we’re over here.
I love what you’re doing with the VITUR because you’re bringing the people who should be a part of the conversation together. I think that’s bringing meaningful conversations about how to bring sensible regulation and policies throughout Europe. The other thing I always see that you do is you bring the investors in and they’re engaged in a part of the conference in a way that managers, companies, and vendors are looking for investment. All of those people want to know how to get the money to continue to build their businesses in an effective way. Hats off to you for that man. I think that’s going to continue to add value.
I think I answered your question from John because the value that you’re bringing is a tangible value that they can walk away from a conference. This is from people that I know who go to VITUR from vendors to managers. They always speak so highly of it. It sets the stage for raising the bar for other conferences and other spaces because when they come here, they’re like, “Why don’t you do that? Why don’t they have that?” “I’m not the one planning the conferences.”
Thank you. I appreciate what you’re saying, Mateo, but something also trying to do as an organization, you have to be active and proactive. What we do is we do have American companies that are coming. We’ve got Steve Milo. Matt Loney of Xplorie has been here several times. A lot of American companies come into VITUR and they want to understand the European market. We try to be proactive and make sure we engage with the right connection. As the organization, we make sure we do the right networking.
It’s something very cool as well because again, a conference should be adapted to each level of attendee. If you got all the CEOs and decision-makers and leaders of these companies, they should have a different conference experience. We prepare a Michelin-star private dinner for these decision makers’ focus group and that privacy to understand what’s coming next. The claim for 2023 is the VITUR Summit next. It’s been a lot going on with the pandemic. We are all looking forward, but we need to prepare for what’s coming next. You need to adapt and have a conference that is versatile enough to be useful for everyone.
[bctt tweet=”There’s been a lot going on with the pandemic, but we need to prepare for what’s coming next. We need to adapt.” via=”no”]
It makes so much sense. I love curating and getting the minds together that are at the forefront. They can go ahead and talk alone in a private, but also talk about what they’re seeing. We’re seeing that here as well. We’re seeing different organizations and top CEOs coming over from across the pond and learning about what’s going on here and why we’re different. There’s so much value in that. We’re all in the same industry together and it’s interesting looking at the trends. In certain things, North America and the US are ahead of the curve, but in many things, we’re behind the curve. I love the meld between everything and it’s so valuable.
It is. I was talking to Matt Landau and Donna. They were doing a great job. We were sharing also where you are in the States and it’s exactly what you said, John, and where we are in Europe. It’s all consecutive. We see a lot of common points as the leaders and the decision makers of the property management companies that we are facing the same problem. You can take a lot out of those gatherings and all of these events. If you get the right people together, that’s how you take the industry to the next level. Something very relevant that Mateo was saying is it looks like politicians and investors, especially institutional investors were scared of our industry.
When you bring them here and you put them together, they are people like you and me. They have questions and maybe they find the solution to understanding that this is as good or even better than hoteliers or any other type of model. The investment is safe and it’s a regulation. You advise and you’re in business with it. What you see with this event is that normally, our industry takes one step forward. I think it’s relevant that property managers, we are super active there and we are a part of it.
This conference is coming right up. You got a lot of things going on and you mentioned next being the focus of the conference and the focus of everyone coming together and where we’re going. What is next for you with your property management company? My assumption is you’re going to continue pushing the envelope with VITUR and what you’re doing here, but what’s next for you?
I would say consolidation or professionalization. Amazing technology is available for property managers. We are all trying to understand what’s the best and the most suitable for you. I think that’s happening. Once you implement that tech, you got different needs and suppliers. That restructure and the whole industry is happening, and then growth. A lot of property managers are growing.
You see 1,500 units of property managed by bigger players. There’s a lot of M&A going on there. Hopefully, we going to have a bit more diversified option for big players. I think that’s always good. Also, building a brand. There are a lot of companies that have to do strategy instead of going for volume. They want to make sure they have different destinations and then drive to the right locations like Berlin, Paris, London, Madrid, and Barcelona.
They are emphasizing their marketing on the brand. It’s time for me to build a solid brand with good values and ground hospitality values and try to differentiate your brand as a property manager. It’s time also to start looking at what your value-add is and see how that is going to be changed with the technology. That’s where we are going.
We pounce and we talk a lot about the brand here on this show and the importance of brands. I love that answer. It’s so important.
For us, it’s so different because our space is new. You have a lot of what I like to call buddy brands. Everyone has their idea of whether you’re Vacasa, VTrips, or onefinestay. Whoever you are, you have so many companies that are coming up right now. It’s almost like brand is the tag word of the day. Everyone is like, “Who’s going to make it? Who’s not? I’m not even there yet, because, at the end of the day, the one that’s going to win is the one that can get the most feet through the door and in heads in those beds.
That’s the winner. Who can do that repeatedly? Who can build loyalty to that brand? That’s going to be the challenge because if you’re building something global, it’s not one pill that solves everything. You’re going to have to be that whatever destination, whether you’re in Malaga, Berlin, Galway, London, LA, or New York, that brand has to resonate in all of those places. It can’t be one thing. It’s got to be everything to everyone.
It’s a great intersection and a very interesting base point. Number one, building consistency in a brand is super difficult, especially in such an operational business and human incentive. It’s a people industry. Creating a culture that represents all of the brands and those values is super challenging. To be honest, I don’t think we need to be a massive property manager with properties all over. It’s more about creating that brand and making sure you go those 50 units and 80 units in this destination, and then you’re jumping to the next one.
I was talking to some people, and again, the intent of the investors is if you have a small brand, but then you are in one that managed to get a higher ADR on occupancy rate because you create more direct bookings, and that loyalty to your clients, then you are way more available and powerful because you got great reviews and higher margins. A guy who sold his company is like, “You shouldn’t start your company with the objective to sell it. You’re building something and then if that happened, that’s part of your entrepreneurial lifetime.” At least here, you don’t see that many operators working on that. I think it is the right time to do it.
I like that answer a lot but I think if we were to dissect the brand a little bit more, ultimately, logos or whatever, that’s a super small part of the brand. If we were to take brand even a step further and as an industry, we look at brand as the guest experience and that be the brand. If we were to go ahead and say, “Overall, this is what the brand of short-term rentals or the brand of vacation rentals is this guest experience,” then we’re all working on the same brand.
Truly, at the end of the day, I don’t necessarily give a shit if I’m saying here or there as long as me and my family have the same guest experience or the same high level of the guest experience from point A to B and booking to checking in to my stay to leaving and going home. As long as that’s guest experience, that’s the brand I’m looking for. It’s a little bit different look at the brand, but it’s still the brand. I think UX and UI are all super important in this as well. I think that a lot of times in these conversations, we separate the two, but it still always comes back to the user experience.
That hits the nail on the head. You can translate that across the board and hit multiple demographics and generations. It’s consistency. It’s identifying those points and doesn’t overcomplicate them. You hit five points of what you want your brand to be and be consistent around that.
Look at the Marriotts of the world. That’s how they did it. They did it on, “This is the level that we need to be at across every one of our doors.” By that, their brand emerged from that.
I come from a hotel company background. If you look at the hotel industry, most of these companies like the Marriott and Hilton, all these guys, the big players now, they’ve been there for centuries. There’s not a brand out there that I can remember that has been for so many years. Maybe the ones that we got here in Europe like Interhome and Awaze which they’ve been wrapping up together like NOVASOL. It was an old brand. That’s why they have 40,000 units or 100,000 because either they are buying and building this massive company or Interhome, which is quite a case study, but because they’ve been in business for over 50 years.
After that, short-term rentals we understand also now. I don’t think that there are that many old companies. You were saying, “What’s coming next?” That’s the line and the route that we are going to be taking as an industry. Having that consistency is super challenging. We are going to need tech. Tech is going to be a major player there. It is going to play a massive role and that consistency across the board as Mateo was saying.
[bctt tweet=”Tech is going to be a major player in the rental industry.” via=”no”]
My question to everyone is who’s going to create the best brand loyalty program? When you look at Marriott and Bonvoy, it was huge. I don’t think we made enough noise. What homes and villas are doing with that and they’re keying into that, who’s going to build that out?
Accor bought onefinestay but they didn’t manage to make it profitable yet, and they got all this solid know-how from one of the biggest hotel groups on the planet. They keep the baby because at one point, there is a beautiful pearl there, but I don’t know. It’s a difficult answer.
That’s what I’m saying. I want to see who does that first. Who’s going to have people racking up credit card points so they can stay in short-term rentals? Who’s going to engage with AMEX, Delta, and all of these other programs to build a model? To me, that’s the branding part. That’s what’s going to build customer loyalty. That’s what’s going to get people excited. Again, you think about it. How many people do you know have an AMEX right now and all they’re doing is paying their bills and doing these other things so they can travel, get flight points, or whatever points they’re trying to get?
There are so many different directions, Mateo, that you can go with this because it’s brand loyalty from the brand being a Marriott that we’re talking about there or Delta or something like that. You take it to another step as to what we’re doing at Hopper. We have brand loyalty built in because we have the damn stickiest app in the world. With loyalty, with our Carrot Cash, or in-app incentives, we don’t worry about people leaving our app to go book elsewhere because we know they’ll always come back because we’re building that brand loyalty.
This isn’t a Hopper commercial here, but there are different directions with brand loyalty and keeping people sticky about what you’re doing. I’m not sure whether it’s the end is the destination or the travel in general. There are so many different things. Would it be best to be served on an OTA or a Supertravel app? Is that where that stickiness is? Also, it’s the relationships from that stickiness to these other companies. We could go on for hours about this.
When I open the Hopper app and I see my little Carrot Cash in there, I like that. I do book with Hopper just an FYI sometimes, but at the end of the day, I’m a consumer also. It does make me feel good to know, “I got this Carrot Cash. This is cool. I can use this on my trip.”
At Hopper, we see the value in these partnerships and that’s why we partnered with Capital One. When our Capital One card users want to go ahead and book flights and hotels and cars now using the rewards points through their Capital One portal, it’s all powered by Hopper.
That’s what I want to see in our industry.
That was exactly what I was going to say. What you see is that most of the loyalty programs that have been successful are in the hands of the OTA. Simon Lamont was also saying that we, as property managers, are giving away our loyalty programs to the OTAs. Again, because we are subsidizing those genius programs and mobile rates so as property managers, we are not investing as much as we should in creating that loyalty.
If you’re going to go to AMEX-level loyalty or Marriot loyalty programs, it should be a massive player. It has to be the big and first ones. We haven’t seen that yet. It might not be as easy as we think because we got this company with massive portfolios, like 20,000 units and they still don’t have that much. They do invest a lot in their booking, but not like a loyalty program as such.
I love this conversation and I think that so much can be done and said about it. I’d love to see some loyalty programs work. It’s easy for a company like Hopper or Booking to do these types of things because the infrastructure is already built. It’s already there and they have millions of daily users. Where you’re not getting in these hospitality brands, particularly, you’re not necessarily having millions and millions of daily users. You’re having daily users, you’re having a ton and it’s going to take time. It’s going to take a lot of outside-the-box thinking, but it can be done for sure.
It’s going to be interesting to see how that’s going to go.
A challenge, Carlos, is figuring out how to get it done. It’d be huge in the industry and for whatever brand.
The technology and the platform is available. It’s more about making sure we land it. At VITUR Summit, we get some companies. They have amazing technology. As I was saying, some of the work that I do myself at VITUR Summit is getting the CEO and being like, “Did you know about these guys or what these guys are doing?” “No.” “You don’t know about each other. They just get here and you need to come out of these conversations with integration because you both are adding a massive value to the industry. It’s stupid that your technology is not connected because that’s what we need as property managers.”
I am forcing that technology to move forward because we cannot be independently working on whatever we think is the best because it’s not only one solution. It’s a combination of all these great companies that are providing that great experience. That’s also part of the consolidation we need to go through by connecting all the great technology that we are developing in the industry. That’s also going to help take us to the next level.
[bctt tweet=”We need technology to move forward. We can’t independently work on whatever we think is “best” because it’s not just one solution. It’s a combination of all these great companies providing that great experience. ” via=”no”]
I love that you’re forcing them to sit together and break some brand.
It’s the value of partnership.
That’s the value of these things.
That’s networking. That is what it’s about.
Carlos, this has been such a pleasure to have you on this show. We appreciate you joining us. If people want to go in and attend your conference and they haven’t signed up yet, how do they go about doing that? We already told them what they’re going to expect and what they’re going to get out of it, but how do they go ahead and sign up?
It’s at ViturSummit.com. It’s on the 5th, 6th and 7th of October 2022. It’s going to be in Malaga, South of Spain. It’s going to be good excuse to get all these networks and all these people together. It’s truly an experience that the Future is going to be there in the convention center. It’s great if we get more people in.
We’re going to check that as soon as possible. We appreciate you joining us. This has been great. It’s been great to get to know you. I can’t believe we haven’t had a conversation before. We need many more with you.
Thank you for making such a cool show. It’s such a good vibe. You made me feel very comfortable. I am pleased to meet you and have this chat as well. Mateo, we will continue our conversation.
We’ll be talking. It’s great to see you.
Thank you.