How Dale Smith scaled his Vacation Rental Company from 4 to over 700 properties in just a few years. Strategies to brand, scale, and retain your guests.

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How Dale Smith scaled his Vacation Rental Company from 4 to over 700 properties in just a few years. Strategies to brand, scale, and retain your guests Transcript

John (00:00):

So thank you for joining us for another episode of Vacation Rentals with John. And while it may seem easy to generate bookings through online travel agencies, especially in the initial stages, putting all of your trust in them can lead to significant risk for investors. And furthermore, as the marketplace has continuously expand with the influx of more investors, it becomes increasingly challenging to stand out. Most critically entrusting your business entirely to third party introduces a considerable degree of uncertainty. So today we have the pleasure of hosting Dale Smith, who manages an impressive portfolio of over 700 investment properties and has successfully generated revenue exceeding 30 million. During our discussion, Dale will present a strategy that strikes a balance between establishing your own brand identity and relying on online travel agents. So first off, Dale, thanks so much for taking the time out of your day to connect with us here.

Dale Smith (00:51):

Fantastic to to be on the show, John, and, and thanks for having me.

John (00:55):

Thanks so much. And can you tell us a little bit about your business? I gave a little intro, but just more high level about what you do and how your company stands out from the other property managers in, in the United Kingdom.

Dale Smith (01:08):

Yeah, absolutely. So our business, which is host and stay, so we manage as of today just over 900 holiday homes in, in England, in the United Kingdom. We are mainly focused in the north of England but gradually we’re working our way further south, further west as well. And you know, we, we’ve grown pretty quickly, John. So we started with our own first vacation rental property back in March, 2017. That’s what got us started on this journey when we launched our horse and steer brand. That was December, 2018, and we had nine properties under management at the time. So we’ve grown from, from nine to 900 in the last four and a half years. So it’s been and, and we’ve had covid in between. So it’s been a bit of a whistle stop tour, but exciting time,

John (01:52):

Whatever you’re doing, it’s working because <laugh> companies don’t grow that fast <laugh> in the states <laugh> unless they’re doing something really right. So 2023, it’s like a very different year from let’s say 2021. And you’ve been through, like, we had the pandemic and now, you know, things in the world are not the same as it were. So with marketing, what’s working for you right now?

Dale Smith (02:14):

So marketing, so, you know, we’re a, we’re a big advocate of, of hitting all channels. So, you know, in your intro there, Johnny touched on you know, online travel agents, so our booking.com, the Airbnb. So, you know, essentially those online travel agents allowed us to build our business in back in 20 17, 20 18. If those channels didn’t exist, it would’ve been much tougher to, to get started right in the vacation rental space. So we’ve always [email protected], specifically verbal, Expedia, et cetera, as partners in our business and, and generating those guest bookings for us. We then see our job as retaining that guest going forward. So for us it’s about having, you know, a good c r m process from that initial booking through to the guest and, and kind of an ongoing email relationship with that guest to drive as many bookings directly as we can thereafter.

(03:05):

And that’s always been the core of, of how we see that, the guest acquisition, you know, as we’ve gotten bigger and evolved, we’ve, we’ve evolved into other marketing areas. So, you know, one that we are trying to grow, you know, incrementally at the moment for us is is affiliate network. So in the UK we have a program called air Win, which is short for affiliate window. And ultimately we work with those guys to find publishers within the short term rental space or you know, or holiday space who can try drive guest traffic to our website that we can then convert into guest bookings. And very much like the online travel agent, you are only paying for successful bookings, whereas we all know the other areas to, to kind of grow that booking basis through, you know, paid search, paid social, you know, investing in your organic strategy, which can have some big upfront costs and capital costs before you see that return on investment. So we are always looking for ways that we can drive bookings at a, a price for a converted booking versus necessarily always invest in those kind of bigger capital place. But certainly tying back to that first point, a really good c r m process from, from guests that you are getting from those O t A channels, that’s the starting point for me. That’s the foundation really.

John (04:22):

So it’s like once you have them from the platform and these major OTAs, you’re, you’re nourishing these relationships over time and, and you’re, you’re investing in keeping these guests repeat guests, right? So like once they’ve stayed with you, you’re touching base with them not just Oh stay, I mean, not just Bri stay, but you’re also touching base with them after they leave often to try to get them to come back. Am I correct?

Dale Smith (04:45):

Absolutely, yeah. Or, or getting recommendations. We have a rewards program where if a guest recommends another guest, they’ll get credit towards future travel with us, that that guest they refer will get a, a discount coupon that they can use for their first booking. So again, you, you’re trying to turn that, that one guest that you’ve got and really looked after into, you know, another two or three guests through, through their network as well and really leverage that relationship.

John (05:09):

Yeah, we’ve seeing you have a rewards program and Airbnb right now they don’t even have a rewards program and I stay with them a lot, but there’s no points or anything like that. Yeah. But guests love the rewards and I love my, like I use ’em for flights and hotel travel. Can you speak a little bit more about your rewards program and how that helps like drive bookings and with guests and brand loyalty as well?

Dale Smith (05:29):

Yeah, absolutely. So if you take our rewards program, so at its basic form, so we give if a guest refers another guest and they haven’t stayed with us before then, then we give that existing guest a 50 pound credit towards, towards future travel with us. And then we give the guests that’s coming in for the first time 50 pounds off their first booking with us. So there’s incentive on both parts to expand out and, and refer. And we, we try and make sure that sure, all of our communication. So every single email that goes out to our guest database, which is around a hundred thousand people on that at the moment that will always carry a message towards the bottom of the email advertising our rewards program, encouraging people to sign up to that rewards program and to, to recommend people if they’ve had a great stay with us.

(06:16):

So we are just always looking for any communication that’s going out to guests no matter how, you know, no matter how smart you could do this with, you had a a guest database of a hundred people, right? Their logic is, is the same. We are always looking for it. Where can we drop that message in and encourage people if they’ve had a good stay with us and like what we’re doing then to recommend us to friends and family and be rewarded for doing so. And ultimately that, you know, that then can grow in line with that database. Obviously our rewards program today is much bigger than what it was two years ago versus four years ago. But I fundamentally believe that’s also one of the ways that we’ve been able to continue to drive direct bookings as well. ’cause We are leveraging those relationships that, that we’ve built with guests that inevitably some of those will have originally come from a, a booking.com or an Airbnb ultimately.

John (07:02):

Yeah, though that rewards program is brilliant because in, in the states, not a lot of companies do it. And it’s, it’s smart because you’re gonna spend more money on pay per click or spend more on acquiring a customer In social media, sometimes impressions are so expensive that just giving something to one of your previous guests or their network, it’s, it’s cheaper and, and you, you create a network effect with that, right? And it’s smart to do a, a rewards program. And then I was looking at your website and you have these excellent local guides and your blog has like the best things to do or it’ll say the best campsites, right? Yeah. And I always preach having a blog with great content, it’s a smart way to get in front of potential guests. So how does your firm think about content marketing in the mix of things that you’re doing to market your properties?

Dale Smith (07:50):

So, so yeah, so exactly we, what we’re trying to look at all the time is what is that, what is that experience or that guest experience journey and kind of where it starts. So I would say it starts also with what I would call the zero moment of truth. So it could start before they’ve even booked with us before. And that’s where our really localized area guides come in. So all we’re trying to do there is, and we’ll, we’ll push those those guides in email communications and obviously on social posts as well. But we want to pick up people who are exploring a certain areas. So we take a place called wpi, which is one of our biggest markets. WPI has loads of different places to eat, drink, events going on. So we wanna pick up traffic for people generally searching for that, which for me is kind of zero moment of proof.

(08:33):

They’ve not booked with us yet. But those blogs also serve a purpose. If someone made a booking with us and they’re staying in Whitby, then those blogs will feature within our, our welcome email before they get to the property. They’ll feature within our, our user guides that go out to guests before they check in with all their access information. We’ll be then furnishing with places to eat, places to go, you know, sites to see events that are going on in the area. So if you take that, that guest journey from the point they’re deciding where they’re gonna go, they then book the property, they then need the checkin information, we then check on them four hours after they’ve checked in to make sure everything’s all right. Then you’re into the post there. All we’re trying to look at in all of those steps is how we can give guests the kind of information and knowledge they need, but also nurture that relationship as they go along.

(09:24):

 And we’re about to take that one step further and we’ve got a product that’s gonna launch in the next couple of weeks as part of our host and stay Up will launch, which is going to effectively give our specific horse and steer guests access to incentives, discounts, kind of buy one, get one free at local independent retailers in the areas that we operate. Because again, we’re just trying to elevate that relationship and that reward that we’re giving to guests, to choosing to stay with us in one of our vacation rentals and connect them to those local areas and those local businesses and operators as well. Just trying to, again, really amplify what we’re doing from the guest point of view, but also from that kind of regional geographic point of view as well.

John (10:07):

Just how it’s all set up with the rewards and the value you’re adding through the content on the site. And then that new, that new system you’re setting up, it’s, it’s building a brand. I see it because other companies like you stay with them and you don’t get anything in return or you just stay at the property, you know, they give you the code and then you leave and they say, thanks for staying, can you leave me a review? That’s it. You know, you don’t, you don’t have any sort of like, you don’t feel so taken care of, but I feel that like booking with you would be like booking with a Marriott, right? Where you’re getting all these advantages and rewards that you’re not gonna get booking with another vacation rental company. And I, I see how that’s different. And then I was on your website and you have a popular Searches button too, and I love how your site sections is off because it’s kind of like Airbnb categories. You have pet friendly, family friendly, larger stays. Do you find this helps you convert like traffic and people on page into bookers at all?

Dale Smith (11:03):

Yeah, it does. Definitely. And, and one thing we’re, we’re working on, so AI on the front of our site is, is one big thing that, that we are working on. So you’ll see on the front of of our site, there’s a recommended for you section, which is essentially, you know, tracking user behavior in terms of, you know, if you’ve been on site before, then it’s been the feedback in properties that we’re, we think you are most likely to book. And we we’re in the process of doing exactly the same with what you touched on there, John, around, you know, dog friendly, family friendly, large holiday homes. So at the moment we wanna be feeding in those categories based on what you are most likely to book. So, you know, if if you are not a pet owner, then we don’t wanna be serving you dog friendly properties or dog friendly images ’cause it doesn’t fit, you know, what you are looking for.

(11:49):

But if you are, you know, a group and you’re going away and you travel in a group of 10 or 12, you know, six couples, five couples going away and we know that and we’re learning that about you, but we want to serve you relevant content from that point of view. So, you know, what we started out with in the early days, which is exactly what you said there, you know, if I come on and I’m, I know I’m looking for dog friendly, then I can easily access that area by going to that popular searches. The next evolution for us is us knowing when you come to site that you are a dog owner and you’re looking for dog friendly and us then serving that relevant content for you. So we’re, we’re hopefully going to that, that kind of next phase of intelligence now and and improving our user journeys off the back of that.

John (12:27):

It definitely is helpful because it’s easy to find what you’re looking for. And in my main market in Florida, we, we have this experience like we’re experiencing this constantly decreasing nightly rates because we have market saturation here and there’s a lot of oversupply. So do you have these same issues in your markets in the United Kingdom where there’s a lot of supply because Airbnb just added all that inventory this this quarter. So do you have a, like in in the uk do you have the same supply issues or is it kind of different?

Dale Smith (12:58):

Yeah, no, we we’re seeing exactly the same John as well, to be honest with you. So certain markets are more impacted than, than others. But, but definitely we’ve, we’ve seen a big increase in supply over the last, really over the last 24 months, kind of second half of the Covid period and immediately post, post Covid, we saw a lot of supply come into the market. You know, I think we did see a lot of investors think that, you know, vacation rental was in the a way to make a quick book, which we all know it’s a bit more difficult than that. But I do believe that this year will kind of be the, the crunch point for a lot of those people that came into the market thinking, you know, there were gonna be, you know, overnight successes in, in the market.

(13:38):

And I think we will start to see supply and demand even now as we head, you know, through the end of 2023 onto the first half of 2024, I think we’ll see that supply and demand kind of correct itself. We’ll see those people that are in the ga in the game for the longer term will survive and know that we’re not in it for the long term and wanting to quick a make a QuickBook, we’ll see them drop back out and we’ll, we’ll, we’ll get back to kind of a bit of pre covid supply and demand normality, to be honest,

John (14:08):

A little more normalcy. Yeah, no, I’m with you there because we have a lot of people enter into our markets and it’s just like every, there’s a lot of property management companies, so like what sets one’s apart from the other Is all this that you’re doing? Not a lot of people are doing what you’re doing, but a lot of people are, you know, throwing their, their boxing gloves in the ring and saying, Hey, I can do it too. But it’s, it’s like much harder than that, you know. And one, one question I wanted to ask you is, you scaled very quickly and you did it successfully. Like it doesn’t seem like your growth was how some companies grow too fast and don’t manage your growth, but your company grew so fast and so in, in other terms like clean that it’s, it’s really inspiring and anyone looking to scale their vacation rental businesses, what advice would you give someone who’s just starting out with one or two properties and they’re looking to scale two?

Dale Smith (15:02):

I think really picking out what, you know, what your point of difference is. You know, we’ve been, we’ve been really clear from the beginning, which, which all really came from a conversation. So when we bought, bought our first vacation rental property, our plan was not to manage it on our own at that point in time, but we just couldn’t find a service that we felt was a wide service in terms of being a full management service. And the services we were offered by what are now our competitors, we felt were overpriced. So when we came into the market, we were really specific, we wanted to be really price competitive on our management fee. So we charge a 10% plus v a t a plus sales tax management fee. So we have very, very cost effective for property owners. But on on the other side, we offered a hands-free service.

(15:49):

So full management service, so housekeeping, maintenance, compliance, you know, we take all that away from the owner and we deliver that and obviously we charge separately for that depending on what items they take. But that’s always been our u s p ’cause most of our competition want to just focus on the front end part of the process. So generate a booking, but when the guest gets to the property, they kind of want the owner or third party to take care of that. So, you know, we’ve been, you know, we’ve tried to be, you know, laser focused on being really competitive on price, but delivering that in-house management and taking ownership of that and really being focused on making the operations and the logistics work ultimately. And that has, that’s enabled us to scale because we’ve built the business with really good foundations off the back of that making off the back of making that decision.

(16:38):

But also, we know a lots of homeowners, they want that hand off approach. They’ve got, you know, capital to invest, but they don’t have time and they don’t have the energy to do it, which is where they need someone to do it for them. And in the uk, US might be a little bit different. In the UK it’s really difficult to, to get that level of service, but then from a scaling point of view, you’ve gotta be really invested and willing to get stuck into, to really grow that side of it because, you know, it, it’s not, it’s not an easy way of doing it, but we come from a, an operations background, so we’re, we’re comfortable with it, I guess.

John (17:10):

Yeah, that’s really helpful. And doing research on you before you came on the show. I see. You’re, you’re a family company, but you’re doing it at, how do you say it, like rapid fire pace. So you’re able to work like with family and a lot of vacation rental entrepreneurs are doing it the same way, but there comes unique challenges with that, but it doesn’t seem to have slowed you down. So can you speak a little bit to how that comes into the mix of growing a thriving business working alongside your family?

Dale Smith (17:42):

Yeah, totally. So yeah, so we’re, we’re my original founders, myself, my mom, my dad, my sister. So we’ve, we’ve all been more or less involved from, from day one. And we’ve always had quite a nice blend. So my dad is very hands-on. So whenever we’ve been doing, you know, refurbishment projects for clients, kind of the maintenance and the compliance side was always my dad in terms of hands-on, on the property stuff, I’ve always dealt with my background, sales and marketing. So sales, sales, marketing, finance, dealing with clients was always my piece. My mom and my sister really started on the housekeeping side of the business and making sure the properties were, were taken care of from that point of view and built out the housekeeping team. So as a family unit, we all had our respective departments and we were all really clear in terms of we knew who was responsible for aspects, kind of, you know, I’ve always overseen the business, if you like, in terms of, you know, I’m the one I guess with the kind of vision on where we wanted to take things and where we still want to take things, but we work well as a unit because we, we’re all different in our skillset, which means we can, we can go, we can go quickly ’cause we’re not waiting for one another.

(18:52):

We’re kind of mm-hmm. <Affirmative> going forward at the same time. And again, you know, that dynamic changes as the, as the business gets a bit bigger. My mum, dad, my sister are are, are less involved in the business day-to-day now. But as that’s evolved and we brought other people into the business, they’ve taken certain aspects off, off each of us. So we’ve been able to focus then on the growth and the day-to-day operations have been, you know, left ultimately with people that we’ve brought into the business and trained up and developed. So, you know, I think it comes back to, we, we’ve all been super hands on and all done pretty much every, every job in the business, which, which always helps. I’m a big believer of that and even, you know, a new colleague coming into hosting day to day will always go and spend you know, a day out without our housekeeping team carrying out a changeover and a clean and seeing how the linen works.

(19:41):

They’ll always spend a day on the road with our maintenance technicians going and attending emergency call outs and seeing what happens in terms of the general day-to-day care of a property. They’ll always spend time in guest relations and owner relations answering calls from guests and owners. So when they come into the business, we want them to get a feel for each aspect of the business because it, it’s actually critical that those departments work together. If one of them drops the ball, then that’s gonna have a critical impact on whoever’s next in line, ultimately. And as a family business, we, we got that and we’ve tried to make sure we’ve kept that within the culture of the business as we’ve grown it really and brought new people in.

John (20:17):

I love that it seems like there’s not like this ivory tower leadership, but everyone is in the trenches and everybody’s where, where the rubber meets the road, right? So you’re not far from your product. And then one question I had, because this is on the topic of branding, I’m on s d d smith group.com Yep. And you not only are, you have host and stay, but you have like an enterprise here of different brands, but they all compliment each other. Yeah. So when I’m looking at at the page, it’s sometimes for some businesses it’s hard to wrap your head around multiple things that a business has going on because they have so many different verticals and things that they do, but the way it’s presented here and the way I read it, everything flows and compliments each other. So I’m wondering from a leadership perspective, like how does that all, because everything is in the same realm of real estate and, and in a short term rental industry, but have you found it challenging managing a lot of different brands and scaling them at the same time? Can you speak to that?

Dale Smith (21:15):

Yeah, it, it’s challenging definitely. Like that is a <laugh> it goes out saying that is a daily challenge managing that kind of what is a broad spectrum of brands, but you’re absolutely right, John. They all work together and ultimately the most of the brands that you see on that page have spun out of the horse and stay business. So, you know, the S d d Smith Group horse and stays at the, at the epicenter of that, that is the core in terms of what we do. So if you take Dialed Interior design, which is our interior design business, you know, we’ve always provided that service to clients, but we would initially, either I would do some of the design work or it would get outsourced and, you know, the family, we would arrange the fit out and do that as we scaled up the volume on horse and state and more and more clients after that service.

(21:59):

Then we recruited two people to come in and, and just do that explicitly. They just designed a project manager, managed the interiors, and then at a certain point, as the volume built again, we then spun that out as an outward facing brand so that it would stand on its own two feet and actually, you know, bring in incremental revenue, not just provide a service to the horse and stay business. And essentially we’ve done that with each one of the brands that we, that we now have. So if you take Ray Smith Legal, we had investor clients where we would be finding properties for them and refurbishing them, putting ’em on horse and stay. So before we would just refer all of our legal work to a third party supplier, again, we started to see that third third party supplier dwindle in terms of the customer service.

(22:43):

They were able to offer us our owners, which then pushed us down the track of saying, right, let’s do that ourselves. And then, you know, spin up its own, you know, its own brand, its own entity to provide that service. Subsequently, we’ve then ended up acquiring another legal business to expand that business. So everything that we have done so far has been where we’ve been outsourcing a service for our clients and reached a certain point when we thought, actually this now adds value to bring that in-house into our own suite of brands because we can, we can better control the process, which means that inevitably we’ve got revenue and margin we can generate from it, but also it means that we hold that customer experience, which for me is key. It, it’s all in the customer experience because as soon as we have to rely on a third party, I’m no longer in control of that, that customer experience, which can have a negative impact on, you know, on our own business.

John (23:37):

And to summarize the strategy that you use for our listeners and you correct me if I’m way off base, but yeah, you, you, it’s not to rely a hundred percent on OTAs or third parties because there’s so many costs that go with that and mm-hmm <affirmative> loss of control too. But it’s taking care of your, the relationships you have with guests and future potential guests and then nurturing those relationships through many means, whether that’s a rewards program through content through helpful guides that you have on your page through a unique search experience when you’re on page and then through a, through a robust email marketing campaign that touches base with them throughout the year. And am I missing anything?

Dale Smith (24:18):

No bang on John. Yeah, absolutely. Bang on.

John (24:21):

Awesome. And if our listeners want to find out more about you or Host and Stay or any of your family any of your company’s family brands Yeah. Where can they go?

Dale Smith (24:32):

Linkedin would be would be my, my social media of choice definitely. So yeah, find, you’ll find me on LinkedIn. You’ll find Host and Stay CD Smith Group, et cetera on LinkedIn. And yeah, more than, more than happy to take messages and, and help anyone I can do

John (24:46):

Amazing. And I’m going to include a link to your LinkedIn in the show notes for our listeners and also a link to your website so that they can learn more. Okay. And once again, Dale, thanks so much for doing this because I learned a ton, took a ton of notes, my notebook is all written up, so I do appreciate you doing this with us today. And I’m also leaving an open door for our audience because I’m sure there are some holiday homeowners that will want to follow up. So thank you.

Dale Smith (25:12):

No, great. So thanks having John, enjoyed it.

John (25:14):

So I hope you found this episode helpful. My biggest takeaways here were to create a brand. There’s a lot of value we need to add for our guest and people looking to be future potential guests. And part of that is offering a rewards program because if you give back to your guest, you get a lot back. And if you also use your website, make it easy to navigate, create a unique search experience so people can find information that’s actually helpful and that’s worth reading. And in constantly doing content marketing, you can set yourself apart as a unique brand and that’s uniquely yours. You can have a listing on Airbnb that’s optimized and that’s one element of having a brand for your property. But if you stop there, you’re forfeiting lots of opportunities to actually create a following for your property and for your business. Now, if you do things that create value on page and off page, what I mean by off-page is through email marketing, you can actually turn previous guests from Airbnb, booking.com, vrbo into recurring guests and they can come back and visit you year after year.

(26:17):

And if you’re constantly hitting your inbox, not in a spammy way, but in a adding value way, you’re bringing them back into your sphere and you’re increasing the likelihood that they will book with you again. So creating a brand is doable and we can use lessons from this episode to start creating our own brand. And if you haven’t joined the Facebook group, I really encourage you to join the family. I know it’s small, I know it’s just starting to get going, but the more people that joined, the more we can get dialogue started and all level up our vacation rental game. I’m super looking forward to you joining the Facebook group, and if you haven’t had time to leave a review yet, please let me know how I’m doing. It helps with the algorithm, it helps get to show in front of more hosts that can potentially join our family, right? So if you haven’t had time to leave a review, please take two or three minutes to leave a review on the podcast platform of your choosing, whether that’s Spotify or Apple Podcast, all reviews are appreciated. So thank you so much everyone for your support and until next time, take care.

Vacation Rentals With John is one of the fastest growing short term rental podcasts. The show has been growing in popularity because of its no BS, to the point lessons on how to grow and operate a vacation rental. Join the facebook group. To listen to any of the past episodes, check out this page.