STR Global Unlocked with Simon Lehmann: Unfiltered knowledge for the short term rental industry

026: What AI-Native Actually Means: Arbio's Bet on the AI Operating System for Short-Term Rentals

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Nobody calls a property manager "a software company." Arbio is replacing the traditional tech stack with a single AI system designed to run operations end to end.

Constantin Schröder is the Co-Founder and CEO of Arbio, one of Europe's fastest-growing short-term rental operators, managing over 1,500 units across Germany and Austria. Under his leadership, Arbio has positioned itself not as a tech-enabled property manager, but as an AI-native one, building a single AI reasoning engine that replaces the fragmented SaaS stack most operators are still held together by. The company recently closed a $36 million Series A to accelerate that vision.

This is not a conversation about chatbots and pricing tools. It is a ground-level look at what it actually takes to rebuild property management infrastructure from the inside out, and what breaks when you try.

In this conversation, we discuss:

  • Why the distinction between "AI-enabled" and "AI-native" is not semantic, and what it means for how an STR business is structured.
  • How Arbio built one operating system that handles guest communication, operational ticketing, owner transparency, and service provider dispatch, and why that architecture is the real moat.
  • What actually breaks when you scale, and what those failures revealed about the limits of legacy property management tools and traditional operator playbooks.
  • Why investors backed Arbio's $36 million Series A on technology defensibility and unit economics rather than growth-at-all-costs narratives, and what that signals for the next wave of STR capital.
  • How Arbio turned urban regulation into a competitive advantage, and why leisure and alpine markets are the next strategic move.
  • Whether AI will eventually displace OTAs, and what it would take to build a booking experience that actually competes with Airbnb's.

Explore more:

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SPEAKER_01

But I think also there will be a point in time where AI, artificial intelligence, maybe even robots, will be able to provide really good experiences to guests.

SPEAKER_02

The human aspect in our industry continues to remain very important. At the end of the day, no AI tool will fix a broken dishwasher or washing machine.

SPEAKER_01

They see a ticket popping up, reprioritized based on the urgency or the sentiment of the guest.

SPEAKER_02

I'm sure there is that a lot of our listeners who want some time back to their lives with exactly what you just alluded to.

SPEAKER_01

We would love cities and municipalities authorities to understand how much work it actually is to run a vacation rental.

SPEAKER_02

If the unit economics don't come around, if if your operating synergies don't come around, it just becomes a mess.

SPEAKER_01

So I think that it will only have a positive impact on us as long as we as we realize what booking trends look like in the next episode.

SPEAKER_02

You are listening to STR Global Unlocked, brought to you by AGL Up Today, the show where I speak with the leaders shaping short-term rentals worldwide. I am Simon Lehman, and after two decades buying, selling, advising, and investing, I've built a network that spans continents and categories. This podcast brings that network to you. Real conversations, global insight, no PR fluff. Let's get started. The next generation of operators is not asking how many units can we add. They're asking how much can we automate. Today's guest is building what he calls an AI native property manager. So the real question is not whether technology supports operation, it is whether technology becomes the operator. Today I'm joined by Konstantin Schroeder, co-founder of RBO currently in London. RBO is one of Europe's fastest growing short-term rental operators, managing over a thousand units across Germany and Austria. The company recently closed a 36 million US dollar Series A and positions itself as an AI native property manager using artificial intelligence as the operating system across pricing, desk communication, and operational workflows. Constantine, it's a great pleasure to have you on the show.

SPEAKER_01

Thanks a lot for having me.

SPEAKER_02

Awesome. So uh let's dig right into it. Uh, we'll do a quick rapid fire with you. Um, so I'll give you basically two words in relation to each other, and you tell me which ones get to your mind first or or is going to win. AI advantage or overhout. Asset light or asset ownership.

SPEAKER_00

Asset light.

SPEAKER_02

Growth or profitability?

SPEAKER_00

Profitability.

SPEAKER_02

Urban or leisure.

SPEAKER_00

Leisure.

SPEAKER_02

Human or machine?

SPEAKER_00

Human.

SPEAKER_02

Regulation, threat or motor.

SPEAKER_00

Motor.

SPEAKER_02

RBO in one word in 2030.

SPEAKER_00

Seamless.

SPEAKER_02

Excellent. It's um it's uh great to have you here, and you made your schedule work while uh you're busy in London. You just told me you're uh made a couple of acquisitions, which is interesting. You've had a big busy year of the start already, and uh things continue to evolve with RBO, so it's perfect timing for us to have a conversation. But before we do that, we want to talk about you, Constantine. You were a provincial professional Bundesliga hockey player before uh becoming a founder. What mindset from elite sports help you most in building RBO to where it is today?

SPEAKER_01

There was a long period while playing hockey where we were losing a lot. And I remember at least two or three years in my career where we would lose nearly 80% of the matches every single week. It really frustrated me. And then came a time where the team changed. I started playing with older teams and we started winning a lot. And I think this kind of experience of feeling how it is to win, become I was a German national champion, English national champion. I went to boarding school here in the UK, so I was playing for their school team as well. And that feeling of starting to actually win after a long period of losing, I think was really my hunger to win. I think to build also a fantastic team of people. Back then I was part of the team. Now I see myself more as a potentially coach of a team, more trainer. But we have an absolute kind of team mentality in our company where we have different skills, different aspects, different points of view in our company on problems, but ultimately everyone kind of strives towards winning and competing. It also reflects in how we, you know, handle mistakes in our company. We all kind of we don't blame each other, we just move on, and everyone steps up to support others that do mistakes. And I think this kind of experience in being part of a really competitive, high-performance team is how I kind of view and what I've brought also to Arbio when we when we started the business.

SPEAKER_02

Yeah, and you could have not chosen a harder industry than short-term rental to do that. But you've learned it the hard way, playing hockey and uh, you know, dealing with uh with defeat uh a long time and then building that up. And I think that makes a ton of sense in terms of your confidence that you have now and bring these learnings into structuring and operating and leading the business also more as a coach than anything else, and bring that spirit into your organization. But why did you and Paul decide in 2021 that exactly the short-term rental needed a fundamental different operating model? That's interesting to me. You would have had the world open to you with your background and what you have seen also going to school and everything else.

SPEAKER_01

Yeah, I think like um it was ultimately two things. First of all, our passion for travel. Um, Paul and I were traveling a lot and had always aspired to traveling the world. Like Paul is my oldest friend. I know him since I'm actually a baby. My dad is his godfather, so we've actually come a long way through school, through university, and we did those trips across South America, Europe, and we would stay in Airbnbs every time we we did that, and we would really enjoy Airbnbs on the one hand, but we would also kind of always put like our customer lens on and think about how could like the Airbnb experience improve. And we saw this kind of unreliability, this pattern of beautiful places where we stay, but there would always be like a human component to it that would make some stays difficult, checking in late, uncleanliness. So that kind of started, the seed was planted during us traveling. We thought, how can we combine these two worlds of beautiful, authentic local traveling and a hundred percent kind of reliability that you would only get in in really high-quality hotels? And then the second thing was that Paul and I had looked at different markets, different industries. And first of all, we loved that short-term rental and property management was kind of from our point of view still very unstructured, very fragmented market, many different players, and there was a lot of potential, we thought, to create like a beautiful, seamless experience, both for owners but also for guests, and bring like clarity, as I said also previously to clarity into this world. So that intrigued us, and that's ultimately why we went into it. So I think a mixture of passion and opportunity that we saw. Yeah.

SPEAKER_02

So basically, when you traveled, you didn't just stay in hotels, obviously, because otherwise you would have had a different experience as well. But let's let's move on to that. When you say that it's AI native, what does that actually mean in practice? AI is probably the most abused and used abbreviation in the world right now.

SPEAKER_01

So what what we generally saw in the market, and also that's how we started, that the kind of tech stack that property managers run on is very fragmented. There would also always be like a SaaS tool here, SAS tool there, and they would be punched together through APIs. You would have your PMS, your pricing system, your ticketing tool, and maybe some kind of accounting software. And so we saw that these tools were communicating with each other, but there was no kind of brain, no layer behind that that would actually control that. And we believe that we can replace what typically kind of these software tools, these SaaS tools do, with one control layer that understands the guest, that understands the owner, that understands also the apartment. What are the feelings and the intents of an apartment? It wants to be cleaned, it wants to be handled well. And that together, we believe, can be a system that learns, that iterates, and that thinks intelligently. So if a guest has been complaining about a sofa quality multiple times, that system understands we need to replace a sofa and uh triggers uh a request to the owner of that property saying, hey, we would advise you to replace the sofa because we saw guests complaining. And if you press approve, we'll automatically kind of order something based on the preferences you have. And we believe, you know, that whole system can be the brain-powering kind of shorter metal property management. We're not there yet. We started like with a couple of tools that we believe are essential to understanding that, but ultimately that's what we strongly believe in in this still operationally heavy business. And at the same time, we also want to keep a human touch. We very strongly believe that guests will always, especially like that currently guests are not ready yet to be 100% kind of handled by robots. They want to have some kind of human interaction. But we want to ensure that our team and the best people that we can get that really understand hospitality just can have impact on a lot more guests, on a lot more properties and give them the right tools that they can bring their authenticity, their ideas to a lot bigger kind of audience. But we do want to remain human-first company as well. Yeah.

SPEAKER_02

So is are we our property manager using AI, or are you actually a technology company that just happens to manage properties?

SPEAKER_01

It's a good question. And I think for us, if you look at kind of where we put our focus as a company, our number one kind of KPI we track every single week, every single month, every year is like guest reviews. And we want to make sure that guests have a good stay in the partners they stay with. On the other side, we only believe this can come through kind of the technology we're building and the product we're building and the way these products work. So I strongly believe that our focus has to be the technology first and then go into kind of the property management part. I think many of the companies we've seen in the last years that have scaled incredibly quickly, that were run by very strong teams that had operational experience from Uber and Rocket Intel and the likes, I think they were very operational, but still they broke in the end because they couldn't handle the amount of properties with kind of the setup they'd built. I believe that we are still in this position where at a thousand units we have enough data, enough information, enough kind of experience and processes to learn from. We're still not in the phase where we want to completely scale and you know be a global property manager, but where we want to be a technology company, build a technology that services our properties, and then really go out. So I would rather tend to say we're a software company. And I also think that what we're doing here can be applied to other service industries at one point. We're thinking about how we can improve the life of our cleaning providers, of our laundry providers, of our maintenance companies. They're also super service and operationally heavy companies and businesses where there's no real kind of edge, no technology yet to improve how these companies run. And so I do think that what we're building can also be applied to other verticals, other adjacent industries.

SPEAKER_02

Interesting. Well, being the devil's advocate, once you get a homeowner to change a sofa by a click of a mouse, please call me and I want to be part of your business. I've been around the block for 20 years, and I know dealing with homeowners and getting them their loved sofa to be changed because you had complaints about it is going to be a challenge. But that's where the trust element comes in, and that's where the relationship element comes in with the human capital. Because at the end of the day, trust is the only element and asset that the industry has next to technology and the team that you are building. So that is going to remain the biggest challenge as the business obviously is uh is is going through the evolution as well, right?

SPEAKER_01

Yeah, 100%. We know like the first thing that breaks at a thousand units is not like kind of the AI, but the washing machine on a Sunday in August and peak season. And that's where we're still obviously kind of figuring out how technology can really support. But what we just launched, for example, for all owners that we work with is their custom revenue agent. So a chat GPT-like interface where they can ask all the questions about their revenue, about their occupancy, about their future rates. We've trained that agent on all kind of data that we use and all questions we've been asking over the last three years. And they get every insight, every piece of detail out of kind of that agent they can work with. And we see owners kind of already loving that and playing around, sending us further suggestions on that. So I think we can bring like joy to the owners as well, where we see, and and we've also been in the same situation already, that um owners tend to be frustrated with the services they get from the property manager. They always always expect more, they've been promised more than they actually get. Um and we're trying to change that with some delightful tools, some small things that make them enjoy working with us.

SPEAKER_02

Yeah, absolutely. And you know, at the end of the day, it's this trust element. And also the the future owners have different ways to ways to interact. Uh, there will be others who will be overwhelmed with technology, and uh, but they've done this uh for years. So I think addressing that trust element uh through through new technology with homeowners is definitely uh uh the way to go. And also, you know, in a way, we we've had a long, like probably a year or two ago, we had big debates how transparent do you want to be towards your homeowner? Um, because you open the conversation that they're feeling they're not getting value from money, and that needs to balance itself out. But I personally believe, and I'm a strong supporter of that, in today's world where you know we're building our businesses on third-party assets, that you need to provide full transparency to homeowners. And if you don't, then you know it's gonna get very, very challenging. So let's unpack that AI native model a little bit more. So the operating system, where does AI create the biggest efficiency gains next to what you just alluded to with homeowners, like pricing, communications, or even cleaning coordination or operations as well?

SPEAKER_01

So, what we started with in the beginning, where we saw the biggest workload and impact is like entire guest communication. So we built a chat agent that was based on our knowledge base, on everything we knew about our apartments, about our way of working, about our company. And we know there's chat agents out there, but we had built one that we believe was really customized on the information that we had. And that was the first thing where we where we started seeing value. But what actually we we built on top of that was a system that would cluster and extract information out of the conversations with the guests. So we would get tags on the sentiment of the guests, we would get information on the key issues they were talking about, we would get very detailed summaries of what was going on. We built the same thing for voice now, working with kind of big AI labs and models too. We haven't launched that completely, but the same thing. So communicating with guests through voice AI, like kind of the voice agents are getting a lot better. But we didn't dare yet to do that because we were scared that guests would still feel that there's an AI talking. But so we still have a team doing that. But we're already collecting all these information through live transcription, tagging, summarizing, and sentiment, which we believe is the most important information for actually automating and building this AI brain behind. Because what we do with that information is we've built an AI ticketing tool that understands all these different kinds of issues, clusters them, and based on workflows and processes that we've defined, which are always based on outcomes. We want the guests to be refunded in 24 hours. We want the apartment to be visited if and and repaired if there's a broken shower. I don't know, two hours. Like we very clearly defined these outcomes. And then we basically built this AI ticketing tool where all these information, the tag, the issue, and the sentiment go into a ticketing to a workflow engine that would then distribute that to other tools that we've built. So we have an interface with our service providers where they have their custom app, they see a ticket popping up, and that ticket would be reprioritized based on the urgency or the sentiment of the guest. We would have our owner app where certain tickets would go to. We have tools like you know, Stripe, all the payment information, so on at the end that you could trigger. But I think this backbone of taking away the coordination effort that every single kind of operational member, staff member has, that is what we strongly believe to make a big impact operationally on our business. And at the same time, what we're doing with every single ticket that is running through is kind of tracking how fast did it go? Was the outcome good? Did the guest give us a good review? Um, did the ticket, was it handled in a certain amount of time to kind of then improve how these tickets are running all that? And we really believe to have one big operating system sitting at the center, at the core, that then does all the tool calls to external applications where all the intelligence, all the knowledge kind of starts building over time, which you cannot get if you have multiple different SAS tools punched together that just communicate with each with each other, but that can't make decisions. And ultimately the big goal is to build a if you want a brain, a reasoning engine that really understands the business and can make own autonomous decisions for issues that arise during the business.

SPEAKER_02

That's the time when you go back into hockey and let the business run behind you, right? As a coach or whatever. Um, yeah, it makes a ton of sense. And you know, if you ever want to come to Switzerland, I know Voice uh also in Switzerland now works with uh Swiss German. I'm using a transcription tool uh from the ETH in Zurich, funny enough, called Optiverse. And uh and their transcription is absolutely incredible, uh, even with Swiss German. And that was a big stumbling block years back with Voice. It was, you know, any voice device that you had at home was just a pain because Alexa always told you she doesn't understand you, especially in Switzerland. It's very frustrating. Um, but uh I think these days are are definitely over.

SPEAKER_01

So yeah, go ahead. We we love voice. We think voice is a lot better than text. So you will see our engineers actually coding with voice. You will see us recording every single session in the company and transcribing that and giving that our agentic AI as context as well. What I want to work on, for example, is that we do onboarding of apartments. We were talking about integration earlier with voice as well. That owners go through their apartments and just describe what's going on, do videos. When they integrate, when we integrate businesses, the seller of the business will just talk and just tell us exactly how he runs the business, what the classical kind of SOPs are and so on. So you really want to kind of change how integration onboarding works through through voice. Also, service providers, if they go on the ground, actually just, you know, giving us a quick memo, hey, apartment was clean, but remote control was missing, creates a ticket. Because they don't want to log something. They don't want to have like long, you know, tickets and so on. They write and create, uh, but they can talk.

SPEAKER_02

So, where is the human element in your strategy at the end of the day? We're in hospitality, right? You can't automate everything and you can't operate without the human capital as well. And it seems like, you know, you're you're you're doing absolute, you're maxing it out, but at the end of the day, you know, we still manage relationships, we still manage um, you know, homeowners who want to build trust with us, and you need people to run your business at the same time, right?

SPEAKER_01

Yeah. I think it's like essentially like four different buckets, I would say, where the human element is super important. And that first and most important one is um I think our hospitality tone and brand voice. So like I can just respond and just do something, but we need a human that actually has been in hospitality, that knows how guests feel, that knows what what guests want to feel and see when they're there. And defining that concept and being there for the guest also in certain cases, I think that's super important. That brings me to the second point, which is exception and kind of outliers, handling that. There's always outliers, exception that you know AI won't be able to handle. We see like 85, 90% accuracy on the AI agents that we currently work on. These outliers are super important to have like a human in the loop that can just jump on, be quick, be authentic, and be there. And then the third part is you know, physical operations. We heavily rely on actually having people on the ground that we empower, that we work very closely with. What we do once a year is like invite all our CSPs to our headquarters, do like a summer barbecue with them, and just realize that they're also the key pillar and foundation of our business. Um, and then the fourth part is like just strategic decision making. Like, we still need humans to think about where the company goes, what are the important pillars. How do we build culture? When do we enter new markets and so on? And that I think is still very inherent to kind of the business. But I think also there will be a point in time where, you know, AI, artificial intelligence, maybe even robots, will be able to provide really good experiences to guests. I don't think we're there yet. Maybe 20 years, maybe 50 years, but I think that in many things, I see AI to be a lot better than what we do as well. There's less kind of error. There's no bottlenecks. So if we look at kind of guest communication, we always had to staff and schedule team members to be at certain points in the day or in the night when we had peaks in demand. AI doesn't have that. And I think there's also advantages that we should definitely kind of capitalize on and worship.

SPEAKER_02

Yeah, without a doubt. So that means I'm glad you're being honest there, Constantine. That means you don't work 24-7 either.

SPEAKER_01

No, I don't. There were days where the team works a lot, especially. And I think that's really important to acknowledge. Like our operations team is on Christmas, on New Year's, on weekends, and we still haven't built a system where we can't where we can 100% rely on AI to do that.

SPEAKER_02

And at the end of the day, nobody will uh no AI tool will will fix a broken dishwasher or washing machine. And and the human aspect in our industry continues to remain very important, but at the same time, the transition is happening very fast. A quick look into the crystal ball, is that the end of all the traditional property managers from your point of view?

SPEAKER_01

I think there's um beautiful run property managers that we talk to that are, you know, family-owned, that have extremely unique properties in their portfolio that service very happy owners and that provide absolutely kind of unique um guest experiences. So we do talk to many property managers which we think are actually killing it, completely killing it. But we also think that we can empower them and we can support them in having a lot less hassle at the end of the day. And we know that many of these property managers are absolutely working their ass off. And was talking to you previously, we just acquired a very cool kind of property manager in in Austria and the Alps, family run in the second generation, the daughters already in the business. And we asked them, like the first thing in the call, like, what can we do? How can we support you in just, you know, making life easier for you guys? And the first thing they said was like kind of guest communication. We always get calls in the night, in the morning, and on weekends. And so I strongly believe that you know there has to be a transformation in the in the business because we have the tools now, we have the technology to make property managers' lives easier. And I think it's a slow transition, it will take time, uh, but it will happen for sure. It's it's happening in every industry. And um, I think property management is a prone into industry, perfectly you know, applicable for what for what the technology has just just brought through.

SPEAKER_02

Well, I'm sure there is a lot of our listeners from Australia to Southeast Asia, Europe, and the United States who want some time back to their lives with exactly what you just alluded to. And that's still one of the biggest single challenges, especially for the small operators, dealing with guest comms and inquiries and 24-7, and especially people who've started this business from scratch. I don't know, many of them also in the Swiss Alps, who've worked 24-7, five years, no vacation, just dealing with it. And I think that uh will definitely change, transition the industry quite remarkably so you can actually focus on the guest experience and owner relations and where the human capital is ultimately required. This episode of STR Global Unlocked is supported by Avivo. A vivo provides an all-in-one property management platform designed to help independent hosts and professional rental operators simplify distribution, automate workflows, and gain better visibility across their portfolio. If you're looking to streamline your operation with advanced automation, Avivo are offering SCR Global Unlocked Listeners an exclusive 50% of the first six months. Simply book a free demo using the link in this episode show notes. Now back to the conversation. Let's move on. You you you've you've raised impressive amounts of capital, and uh I want to talk about capital and your series A, and you just closed the 36 million Series A round. You know, finding like raising capital in in today's environment is definitely not an easy thing. And and I think regardless in which industry right now, two weeks ago we saw uh 300 billion USD in market cap evaporating at Nasdaq. SaaS businesses are nervous, nobody knows what's happening on the other side, and we just go right into it. What actually buy investors into when uh when they invest into RBO?

SPEAKER_01

I think it's like essentially two things again. Um the the first one being um building technology that empowers and transforms, actually powers, powers industries. I think that we are trying to build a technology that at the end of the day is the could be the backbone, um, the brain of the kind of property management vocational manager industry. And we want to kind of partner with businesses and give them that technology so they can run kind of their operations better. And so I think we we really believe in this, we call it service as a software, not software as a service, but actually building a tool that changes the service into actually becoming a software. And so I think investors really love this idea of on in which industries that are typically very manual, very operationally heavy, can we apply software to make that industry actually a software business? That's the first thing. And I think the second thing is everyone talks about mode, what makes you defensible. And there's many SaaS tools, there's many new AI tools out there that will simply be overrun by the big tech companies, by Anthropic, by OpenAI. So in our business where human relationships to owners, to guests, to the physical property itself are so important in actually being successful, I think there's there are higher guards until the big tech companies will come and just, you know, go inside and take away kind of whoever is building there. So I think there's a there's a higher mode in what we're building. And we're seeing that there's so many other companies in in property management as well that are starting to build similar tools and products to what we're building. And we encourage them to do that as well because I think the industry just needs it and deserves it. Do you believe there will be more capital running into the whole ecosystem? And I think it's a good thing at the end of the day. So two things are something that would come to my mind right now.

SPEAKER_02

Yeah, it's interesting to see we're going full circles. Uh, we had back in 2016, 17, we had uh technology-driven property manager companies called Vacasa and many others who call themselves were technology driven, right? Now we've gone full circle. We've got a massive tech stack out there in the STR space that actually solves pretty much most of the challenges. And now it becomes, again, in a way, potentially easier to build your own tech stack and you don't need 50 engineers anymore. And uh, that's definitely going to be interesting. So going back to your conversations to investors, so it's not about growth margin, it's more about actually technology. And would you also focus more, has the conversation for with investors more shifted on expansions to profitability? Or what do they want to see? Because I think that has been one of the big stumbling points in terms of a lot of money has gone into growth, growth, growth, growth, growth. But then if the unit economics don't come around, if you know, if your operating synergies don't come around, it just becomes a mess. What do investors want to see from an expansion to a profitability standpoint?

SPEAKER_01

Yeah. 100% they want to see kind of value creation and value creation towards owners and guests. Like actually, they look at reviews and like NPS of owners. And does what you deliver, what service you're delivering, actually, you know, make make these customers happy? And then also margins. I think the market has been quite burned with these models of Facasa. And also there were similar models in the e-commerce space where there are lots of acquisitions, hypergrowth, but the technology at the end didn't deliver what it promised in the beginning. And so we try to stay dense in the geography that we run. And we also try to stay focused on actually showing that we generate uplift with the technology we're building on our portfolio. I think that's something we always try to do is when we think about products we build and what we want to build next, we always estimate very thoroughly how much impact will that actually have on margin, on profitability, on efficiency, on guest reviews. And only then we, when we're actually actually convinced that this will have a big impact, we start building. And that's really important to everything you do. We're trying to think growth differently than the large models we saw, like Vicasa. We see ourselves as partners. We don't see ourselves as just the huge company acquiring, rolling over, stripping everything out of the business and being PE style, you know, in their investor side. But we see ourselves as a partner that comes in that doesn't have to, you know, acquire the full business. We also do smaller investments into businesses that are growing. We do majority investments. But we see ourselves as the one actually giving the technology and being responsible for taking away the operational hassle. What we don't see ourselves as, in every case, is being the one growing the business, is being the one building the brand towards guests. So we think that many property managers are doing an awesome job in having owner relationships, having uh growing the business because they have many contacts and a good network, but also kind of understanding, figuring out what the local experience actually is and what guests need. And I think Vacasa has always just run over. There was this huge Wakasa brand. We saw it with other European kind of rollups as well. And we don't believe in this one single ABU brand that has to be there, but we believe there can be multiple local, very, very well-run brands, which we partner with and which we power with the technology we built. So that's how we reinterpret and have learned from what's been there in the market already.

SPEAKER_02

Yeah, that's super interesting. And some UK operators do the same. Well, they have acquired a lot of old family brands and kept them alive and centralized what you can centralize and leave the power to the what remains not going to change in our industry is that the action is happening locally and not centrally. So that's where the guest is, that's where the owner is, and and and everything else. Let's continue to convert the conversation about scale. And we have a lot of listeners, subscale, mid-scale type sizes. And now you've grown over a thousand units already. And and with your experience, what do you think breaks first when you, let's say, scale above 500 units or something like that? Because you build such a solid foundation, nothing broke.

SPEAKER_01

Yeah, we we I think we just surpassed 1500. And I remember sitting down with Alex from Guest Ready quite early. Um, and and the two first investors um that invested into Guest Ready or kind of co-co-built the company, and they told me after like kind of 300, 400 units, that's where you know you you see if the kind of business works or whether it breaks apart. And um we had, I think we did two things well, and that was um absolutely relentlessly hiring people that knew the business and that had run a large business already. I don't come from hospitality. I can motivate people, I can inspire people, I can keep them, I can keep them upbeat during tough times, and I can I can think, but I can't, I'm not the person actually running the actual show. Um so what we quite early did is we got people from industries and from actual companies where they were gr running large portfolios. I remember back then early from Oyo, which I don't I don't think is the perfect example because at scale their business also struggled. Um but we learned a lot from from these people. Um and that's the first thing we did, and the second thing we did was relentlessly documenting every single process. We had when every single Wednesday for two years, we would sit down with our operations team and we would write down and map out every single process that happened in the company, and we would update that process if we saw it it broke and it didn't work anymore. And we would track if how many of these processes were up to date. We would feed those processes into our agents that we're now running. I think this relentless documentation is extremely important to scale a company that is operationally heavy and that feeds on this kind of every single workflow has to work. And so for every single workflow and every single process, we defined ideal outcomes, we defined the time it should take, we defined like who should be involved and which steps would it be. And that kind of mentality has helped us to surpass the growth stage. I'm thinking about what actually broke or broke first in our business. I mean, there's like multiple different phases. There's like a phase where we had one apartment and Paul and I were doing everything ourselves, and we were basically doing cleaning, guest comp pricing, everything. And we then scaled, I would say, to 10 apartments. We got the first kind of cleaning provider that worked with us. And I remember that cleaning provider was a one-man show, basically. He always told us he had more people in the business, but we realized at one point it was himself cleaning 10 apartments, and he actually collapsed in one of our apartments, and we we had to visit him in hospital because he was just so overworked. So that was the first time actually things at scale broke suddenly. Then we had this kind of transition from, let's say, 10 to 50 apartments, where we hired the first revenue manager, we hired the first head of operations, um, we we started pulling ourselves out more out of the daily operations business. And we made many mistakes there in hiring the wrong people, I would say. Um, in that kind of period, we had to kind of quickly iterate and just see who was suitable for that. And as soon as we reached this kind of 50 plus, maybe 50 to 100 units, that's where we knew we could attract people that, you know, would buy in into our vision, that we could pay for, that were higher caliber, and that would take a pay a lot of kind of the pain away from our business. And then 100 to 400 units, we started opening new markets. So we had to be quick and kind of we opened Vienna back then, we had to be quick in um setting up the office there, hiring the team, having a very trustworthy team. And we, the biggest mistake we did there, I think, was not being in Vienna often enough. We were actually completely kind of uh scammed by someone we hired there. I remember like we had a city manager for Vienna that just ran away with all the keys of our office, of our apartments and a credit card, our company credit card. And we would later see that he was spending thousands of euros in like golf hotels and in spas with our company credit card. And so we we realized we had to be a lot closer to the local business there. Very seasoned kind of person that uh we gave the responsibility there, coming from one of the big kind of apart hotel chains as well. But uh yeah, so that was something we saw there. And then scaling past the 500, then we really like had our setup where we where we felt comfortable with. We hired a very strong COO that basically had full responsibility for the operating business that we could share our vision with, and that was just taking care of hiring the right people, structuring the teams, and and so kind of making sure the business runs day to day. So yeah, we did, we did mistakes. We broke probably every process broke here and there that could break.

SPEAKER_02

Great story. But if you summarize that, is that what broke is the human capital and not the machine going down or the server not functioning? And and that reminds us that, you know, hiring the right people, having the right processes in place, and supporting the scalability of still at the end of the day, operational business cleaning maintenance is still at core at short-term rental, just requires that human aspect while you're trying to automate as much as you can within the process. It's it's again reminds us very nicely, and it's a great, great story to think about hey, depends who do I trust and who I work with, is does it fit into the culture, into the business and everything else, and how close am I? And while you probably build a very scalable tech platform right from the beginning that iterated over time, but the human aspect is uh is still remains at core when we do that. You already sort of alluded to or gave me a segue for for the next topic I wanted to touch on, which is basically the uh the regulation and urban reality. I mean, RBO came more from the urban side of things, and uh, and I think also you are now looking at going after more leisure type of markets because you have obviously a scalable business model, you have all the processes down path, you have done a lot of great things, understanding the balance between local brands, your own brand, your distribution, and and everything else, and and you can apply that into other markets. And you operate in Germany and Austria, so now you're you're also uh going after the UK and potentially some other markets as well. So these two markets are not light touch environments, right? So is is regulation uh a true threat or all or do you see it more also as an opportunity for RBO at the end of the day?

SPEAKER_01

We've had learnings and we've we've we've we've come kind of a long way until we we had our good setup. But what we believe in regulation is that at the end you can't kind of you know go the grey, the grey zone path. At the end, like kind of authorities will always will always understand what you're doing and will always kind of follow up on executing the law. We exclusively manage commercial properties in the cities that we are at. They're all licensed as hotels or vacation rentals and have been potentially previous offices, shops, something like that. But many of them are also kind of multi-unit buildings that have commercial kind of licenses. So that's exclusively what we do in cities right now. And so our portfolio in Germany and Austria, which is roughly a thousand units, is only that. Now we see that for other reasons which are more demand-driven, that it makes a lot of sense also to go into holiday areas, classical kind of vacation areas, where we think tourism and kind of also vacation rentals are a far more important kind of pillar of the local business and where they are deeply rooted in the history and the culture as well. In cities like Berlin, it's always been like apartments, holiday rentals have been this scapegoat for for cities failing to provide affordable living, whereas in in vacation rental areas the narrative is a little bit different. And also the kind of hotel lobbies and the kind of powers aren't aren't that strong as in as in cities, as we see. And so we remain to see how it looks like. But currently, I mean, we just told you we launched in the Austrian Alps, we're looking at the Swiss Alps, the French Alps, uh, we're looking at the countryside in the UK, and we do our research very thoroughly and we create theses on on the future, but we we would only go in areas where we believe that regulation will be in favor of us and where it might even be an opportunity. In the cities where we are, I mean in Berlin, when we started, there were roughly, I think, 18,000 Airbnbs. I think now it's around 10 to 12,000 because the city really followed up on uh getting the the illegal kind of residential Airbnbs out. And so that was an opportunity for us as well when we said we're gonna focus on the commercial part. Um like every every side has advantages and disadvantages. And we'll see, we would love for cities and for municipalities authorities to understand how much work it actually is to run a vacation rental, how much joy it brings to guests that stay in them, and have them recognize a lot more as an asset class in tourism. Somewhat kind of sometimes um surprised by by why they are being blamed so much because they only, you know, account to a very small fraction of the problem that we call affordable housing. And at the same time, they are such an important part and have always been in the last 50 to 100 years of tourism. Um so I don't I don't get it, but that's my personal opinion.

SPEAKER_02

Making understand regulators and town councils and any destination, what value creation a short-term rental has with a destination is significant, and we have never done a good enough job to communicate that. It's not just the rental in itself. It's not going to make affordable living better for a city, but it's also the spend that they have. An STR client spends in the local community. They go to the local shops. You have cleaners, you have maintenance people. So the value creation of a vacation rental is totally different in comparison to a hotel room, which is in one building. And that's definitely something that we as a short term rental industry need to do and communicate a lot better. Uh, what is the value creation and what actually happens? Behind it. So that's something I I totally support you with. Another aspect, I had an interesting conversation with Chip Conley. He he was basically the right hand of Brian Jesky, being part of building the hospitality Airbnb said, he said in the early days, he said, you know, if you guys are refusing to pay tax, you're not you're not a mature business. And that came a long way, obviously, when Airbnb just really ramped up. In that relation, I think, would you think also that professionalization through AI can actually make compliance easier too, because tourist tax and all the other things as well. Homeowners have some obligations to report their revenues and things like that. I mean, if you're building what you have alluded to, then that would help as well to uh deal with these regulation conversations.

SPEAKER_01

Yeah. I mean, there's a new transparency act that, you know, will happen this year as well, where all vacation rentals are obliged to share their name and their ID on Airbnb and the booking channels. So if an owner works with RBO, we take care on providing them everything they need and also filing their city tax for them through POAs that we have in order to comply with taxes. Um we are trying to make life as easy as possible for the owners we work with so they don't have to worry about it. And even go the step that we say we we can connect to local kind of uh uh tax softwares and tax um tools to actually file their tax claims. So we don't never think about it as you know an opt to not to not pay tax or not not kind of comply there. But we want to make life for owners as easy as possible there. We did a big mistake two years ago when we started where we tried to launch kind of the London market because we saw London was uh on the outside beautiful, loads of big property managers, very well run, profitable somehow, they looked like. And then when we dig dug deeper and we kind of went into due diligence with two, three companies, we saw all of them were illegal. There's a very kind of specific license you need in London, the C1 license, and all of them were not paying tax essentially. So we immediately said, okay, we have to kind of draw back out of the market. And um I think that's it has to change in order for the kind of business itself also to have the impact and kind of have the position in the market as we want it to have.

SPEAKER_02

Yeah, that makes a ton of sense. And you know, selling an illegal business to investors is a challenge. So yeah, I totally agree. So before we wrap this up, I want to talk to another, you know, one of the biggest talk conversations, and I would love to have your review in in relation to distribution, right? And the future of search. Um, you know, I understand that you want to build a strong direct business, brand is important as well. And, you know, the big question out there within the industry today is, you know, how is search and the whole booking funnel going to change? What roles are going to be playing the OTAs versus the large uh um AI platforms like OpenAI, Cloud, and many others. Is there going to be a platonic shift in how the transaction is going to happen? Who is going to be the merchant of record in the future? And how do you deal with that?

SPEAKER_01

So I think first and foremost, you have to realize that I think Airbnb has, from my point of view, one of the most beautiful products that uh you as a customer can use. I love booking Airbnb every single time I do it. And the way the customer journey works is just so delightful, so clean, so modern that I think text itself cannot replace that. Um, and just communicating back and forth and saying I want to book here. So it has to be a superior kind of booking experience, I think, that has to be created by Anthropic or Claude and ChatGPT and so on to actually have to replace that. On the other side, I do see that you know the shift from actually using Google as search to actually to using ChatGPT on these tools is real. We're also looking at how can we rank our properties on ChatGPT on Cloud and how can we position ourselves there. And we don't want to miss out on that opportunity. But I think it will take a long time until the actual booking experience will be a lot more joyful than it is on Airbnb and also on booking.com. Let's see. And I think it's a healthy competition. I think like having more booking platforms or more opportunities to actually advertise and register supply and inventory is good for the whole market. It brings kind of competition, it lowers potentially prices. We're paying huge commissions to the platforms, we know that. And we want a healthy competition. So do we in property management. We have competition there. So I think that it will only have a positive impact on us as long as we as we don't miss out there and kind of realize what kind of booking trends look like in the next years.

SPEAKER_02

Yeah, I don't think there's no clear answer to that right now, because as long as you stay on top of it and make sure you're part of the game, I think that's the as good as you can do it and understand how the logics work and how the evolution happens very quickly and and and see your own behavior when you search and book. And I I love your analogy or or example about Airbnb or your passion for the Airbnb uh process. But one thing that Airbnb can't do on my last Airbnb experience, uh, there was no toilet paper arriving at 11 at night with three with three children. So your process can be as seamless and nice as it ChatGPT won't change that, I'll tell you. Exactly. That's what our industry is all about.

SPEAKER_01

I hope that we can change that as RBO. That's our mission. We want to support Airbnb and whoever like kind of sells our properties at the end um to complete the whole kind of experience that guests have, um, and not only the search and booking experience that you have.

SPEAKER_02

It's been super intriguing. Um, Constantine, it was great to have you uh on the show and and learn also from the new kids on the block in what's happening out there and how you're tackled that. It's been super informative. Uh, you've shared a lot of insights and uh and I think you're on a on a great journey and interesting to hear also to the global audience what you guys at RBO are doing. Constantine, what you're building represents a new chapter, in my view, in the European short-term rental. Less hustle, more infrastructure, less manual operations, more systems, and drive execution. And it's been a great pleasure to have you on STR Global Unlocked. I'm your host, Simon Lehman. Thank you so much, and good luck with RBO. It's been a pleasure.

SPEAKER_01

Thanks so much for having me again and greetings to everyone out there listening.

SPEAKER_02

That was STR Global Unlocked, where we say what others want. If you got value from today's episode, send it to someone who is still playing it safe. Follow the show and get more global insight at ajlartelier.com. The globally recognized STR consultancy, I founded and that proudly brings to you this show. More bold conversations are on the way, so stay tuned.