Sebrina – thank you for speaking with me today.
I believe you are CEO at Simplified Retreats based in Charleston SC?
Yes I am, Simplified Retreats have been in business for the last 8 years operating in a very competitive marketplace with Charleston being continually nominated as No 1 vacation destination in the USA.
So you are US Based, some of our words and phrases are a little different, you manage vacation rentals whereas we manage holiday lets?
Yes there are some differences and that can get you into trouble sometimes! However in my past life I was 12 years working in London so I’ll try to keep it mid-Atlantic so to speak.
Can you tell me a little about your journey
We started small operating a few of our own homes (we have a construction arm and build our own). These were in downtown Charleston just as the tourist boom began to take off locally. Firstly we rented mainly long weekends with simple systems and have developed from there, expanding to the beaches of the Carolina’s and now down towards Savannah at Palmetto Bluff. We now manage over 50 homes for various second home owners and investors as well as a couple of our own.
How does the industry differ from what you have seen in the UK?
I think the biggest difference is the return on investment for the home owners. We operate where returns are considerably higher than those typically achieved in the UK. I don’t feel standards are much different apart from US Interior design tastes but feel the vacationers (customers) are more demanding in the US. For most of our homes we operate a concierge service arranging trips, meals and similar outings plus catering if the vacationer wants. We often operate more like a hotel than someone’s house which was the original intent of platforms such as Airbnb, VRBO etc.
You mentioned returns, can you expand on that?
Yes. A typical 4-bedroom home of a high standard and well situated is expected to earn $100-150,000 a year in gross income. That is operated as an investment with the owner domiciled elsewhere. We see ourselves more as investment managers than rental managers. The investment is the asset aka the home, its contents, how it is marketed and promoted. We seek to maximize that for our homeowners. Our raw material is the vacationer and in catering for their needs, we generate an income.
Tell me about the vacationers.
Ours are mostly in a middle class salary band though for the larger properties commanding $2000 a day upwards we are at the upper end of that bracket. We treat them with care investing in the beginning of what will be a life cycle in a relationship. Some 60% of our vacationers return to the same or other properties on multiple occasions.
Tell me how you attract vacationers?
It starts with reviews, we are in the top 3 in the Carolina’s based on feedback given to Airbnb.
How do you claim that?
Airbnb is allied with their sister company Air DNA, they create statistics for rental companies based on real bookings and feedback across the USA. Air DNA voted us in the top three for feedback and ADR, Average Daily Rate. We can gain a good rate by the standard of our service and properties. That helps both our owners and us win.
Tell me about marketing.
We invest in the usual suspects, Facebook, Instagram, Pay per Click. We also write on our Blogs continuously advertising events and celebrations plus other activities to get up to. About 40% of bookings are repeat guests and go through our own website, the remainder come through the online travel agents such as Airbnb, Homeaway/VRBO. I’d note here that we believe having your own site is important as you retain the position of merchant of note, aka own the vacationer/rental company relationship. That protects us and our homeowners when the online travel agents do not act in our interests. For example, Airbnb created a block cancellation of bookings in 2020 due to the pandemic without compensation or notice.
How do you manage the homes?
We physically manage their condition and interior aesthetics. When we take a client on there is a honeymoon period where we prepare the home for rent and to show its best aspects. That’s how we make it stand out. Occasionally, an owner wants to manage differently and in that event we will politely withdraw, it happens and it is not personal.
Our pricing is dynamic in that we review it daily based on upcoming events and future bookings. We know the markets we operate in and how cyclical they are. Future bookings are used to set daily rates and maximize owner return. When we hit the mid 90%’s then it is time to adjust prices, 100% occupation may sound good but can also mean that the home is sold too cheaply or under rented. We do this occasionally but mostly for a new home where we want quick returns and to generate reviews. The second season we rise to the top of the list again. It takes a lot of effort but has been demonstrated to produce an additional 30/40% return for our homeowners. Guests are happy also as they keep coming back!
We also look at the market demand, for example short term rental vs monthly furnished rental. We will switch between these depending on what produces the best return. However, I do know that our rental laws are very different from the UK. Here it is very easy to do and our tenant laws aren’t strict like the UK. If we know that the winter will be slow at the beach, we will try and do a monthly rental for January in February for all the snowbirds looking to escape the North during the winter.
Do you rent your own home?
Yes we do. We travel frequently and when our youngest son is out of school we pack up our bags and hit the road. We have organized our lifestyle for this and can generally be out within 36 hours with all personal belongings packed away. Also we have an apartment in our carriage house that is rented almost permanently. As the home is in an LLC (company) we can then pay all expenses including a portion of our own living and travel before tax on the income meaning our tax bills are generally de minimis. I know the UK tax system is based on similar principles but beyond that see no reason it would not work the same way in the UK.
How has Covid affected your business?
In the spring of 2020 it was a wasteland and we injected cash to keep salaries paid, we believe loyalty goes both ways and did not want our staff to go through both covid and redundancy. However as covid became worse, the cities emptied, especially New York. A flood of people came south and snapped up anything that had a roof. If I can point out here that the USA is a continent not a country and people are very mobile. The world has not changed much since and we have had one of our best years ever. Our staff have worked incredibly hard under quite dire circumstances and we won’t forget their efforts. The rentals for beaches and the city used to be seasonal though with covid it is anyone’s guess. We did have lockdowns and other restrictions but they are very different from those experiences in the UK. For better or worse.
Sebrina, thank you for all your insights into your company there. We share some similar practises though the two countries and their various intricacies differ in many ways. We wish we could say the same about how covid affected our business but alas, we will get there in the end! Thank you for your feedback and for a little insight into how our industry works in the USA. I will take time to contemplate what lessons we can draw from this for our own business model in the UK.