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

030: No Phone, No OTAs, No VC Time Horizons: Can Unplugged's Digital Detox Cabins Actually Scale? | Hector Hughes

• Powered by AJL Atelier • Season 1 • Episode 39

Share episode

Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.

0:00 | 47:06

In this episode, Simon Lehmann sits down with Hector Hughes, Co-Founder & CEO of Unplugged, a UK-based cabin brand built entirely around one conviction: that spending three days offline in nature changes people.

Founded in 2020, Unplugged operates a portfolio of off-grid cabins across the UK, runs a direct-only booking model with a mandatory three-night minimum, and has never listed a single property on an OTA. The company is on track to reach profitability and generates a 40 to 45% return on capital per cabin.

This conversation examines what happens when brand conviction becomes the only distribution strategy and whether that is a ceiling or a compounding advantage.

In this conversation, we discuss:

  • Why going direct-only was never a revenue decision, and how removing OTAs as an option forced Unplugged to build brand and community muscles most STR operators never have to develop
  • How the three-night minimum, a deliberate friction point in a market averaging 1.8 nights, became one of Unplugged's most defensible product choices.
  • Why direct bookings only work at scale if you are remarkable enough to stay front of mind and how Unplugged engineers word-of-mouth as a core growth mechanism.
  • How Unplugged's movable cabin model redefines the unit economics and risk profile of STR supply expansion.
  • What the tension between venture time horizons and brand compounding reveals about the type of capital Unplugged needs, and why most funds are structurally the wrong fit.
  • What the rise of AI-driven distribution means for experiential hospitality brands that don't live on OTAs, and why being genuinely remarkable is no longer optional.

Explore more:

Connect with Hector Hughes on LinkedIn https://www.linkedin.com/in/hector-hughes-10082195/ to learn more about Unplugged https://unplugged.rest/

-

Podcast supported by Breezeway

Built around the work that happens behind the scenes, Breezeway coordinates the operational service touchpoints that define guest experience. Their focus on execution and standards aligns with a core insight from this conversation: growth only works when operations can keep up. 👉 Get started with Breezeway here: https://shorturl.at/moW7U 

Resources

Stay connected:

SPEAKER_01

That was a r really the watershed moment. But I I came back from that and and quit my job a week later to do unplug. The important point there is simplicity and making it easier for people to spread your message. I went to the startup that locks your phone in the box, in a cabin, in the countryside. Easy. If we want people to come and lock their phones away, then we need them to not just think of this as another accommodation. And as soon as you go into OTAs, it's just it just becomes another accommodation because those platforms, that's what they're selling. We need to be talked about. We need to make people feel something. That is the whole game. Because it's not scalable if you can't be remarkable.

SPEAKER_02

You are listening to STR Global Unlock, brought to you by AGL 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. What if the future of hospitality is not more scale, not more distribution, not more dynamic pricing, but less noise? What if technology's greatest contribution to travel is helping people get disconnected? What happens when you build a direct-to-consumer hospitality brand in a world that is dominated by OPAs? Today I'm joined by Hector Hughes, co-founder of Unplugged. Unplugged has built one of the most distinctive cabin brands in the UK, offering off-grid, tech-free days design for digital detox and mental reset. But beyond the cabins themselves, what's fascinated me is the brand conviction. Unplugged has chosen direct distribution. They've leaned heavily into community, and they've built something that feels more like a movement than a market. Hector, it's a huge honor to have you on the show today.

SPEAKER_01

Simon, the pleasure is mine.

SPEAKER_02

So I uh I want very short answers. I give you literally two words, and what comes like what is the most obvious or the strongest for you? You call that out. Right? OTA, partner or distraction. Distraction. Direct booking, essential or optional?

SPEAKER_01

Essential.

SPEAKER_02

AI, opportunity or threat.

SPEAKER_01

Opportunity.

SPEAKER_02

Biggest myth about building a hospitality brand.

SPEAKER_01

You have to do whatever else does.

SPEAKER_02

In ten years, is unplugged bigger or deeper?

SPEAKER_00

Bigger and deeper.

SPEAKER_02

Yeah, that was uh an obvious one. When we first met and talked about unplugged, the biggest urge that I had is to use your product immediately. Having three children at home with mobile devices and everything else, we have decided to make our kitchen digital free, which is a good starting point, but there's still a lot of work to do in the meantime. But let's talk about the idea behind Unplugged. Where did this come from and how did you start this?

SPEAKER_01

I guess the inspiration for this came back in 19. And three years before that, I'd met my co-founder. So we were the first two employees at a tech startup. So iPad Till Systems, nothing like what we're doing now. And did that for three years, did the whole high growth international expansion, a lot of fun, uh, a lot of great lessons learned, and was just living the classic busy London life. I was flying around the world to set up these offices, spending all day on my phone. And I just started to notice this real dissatisfaction with life, constantly distracted, looking for stimulation, whether it was going out or being on my phone or work or whatever it was. But the the theme was just this constant need for distraction. And I had this, I would say, growing resentment uh towards my phone and started to read a bit around the topic. There's a great book called Digital Minimalism by a guy called Cal Newport. So I read that early in 2019 and had been getting more into reading meditation, so really starting to, I think I was in hindsight just seeking some answers or seeking some respite. Anyway, I eventually uh really ran myself into the ground that summer, again, just work, going out, all of these things. Uh, just got busier and busier and busier. And a friend of mine recommended a silent retreat in the Himalayas, which was this Buddhist temple on on top of a mountain. And I initially laughed it off. I thought, you know, I'm I'm not the kind of person who goes and does a Buddhist retreat. I can't I can't do that. What would the guys at work think? Um, but eventually I I thought, you know, what have I got to lose? So got myself out there, and uh it was 10 days completely offline. And the best thing about it is when you get there that you give your phone in and you spend those 10 days completely cut off from the outside world. So that that was a really the watershed moment and uh yeah, very cliche, but I I came back from that and and quit my job a week later to do unplugged.

SPEAKER_02

I love it. So tell me a little bit more about that experience for for how long did it hurt when you had to give in your phone?

SPEAKER_01

Yeah, for sure, for sure. So it was um it the the whole experience was a real roller coaster. Like these things always look so uh shiny and positive in hindsight, but I remember really going through it. The the giving away the phone was not the hard bit, to be honest. I I think I was at a point in life, at a point in the year where I was just so ready for that. So it was actually just a relief. I remember that feeling of giving away. Yeah, and there was there was just a sense of like whatever, whatever's happening for the next 10 days, I just don't need to worry about it, you know, and I just don't need to um do that. What was really hard was sitting cross-legged on a cushion with a straight back for hours and hours and hours, because growing up in the Western world, I spent my life slouched over on chairs. Um, and so that took some real adjusting, as well as just just meditating. It was it was half meditation, half Buddhist philosophy. So just having to be present, whether with the teaching or the meditation for hours and hours and hours was incredibly, incredibly uncomfortable, but also a very profound experience.

SPEAKER_02

Yeah, that's that's amazing. So it's interesting that it was actually not handing in the mobile phone, it's everything else that comes with it, and being disconnected and and feeling FOMO that things are you're missing out, and obviously you were at a stage where you wanted to do that regardless, and that's probably what your customer base is all about. So basically, going back, you were not building accommodation. I think now you are building a reaction to modern life. Would that be a fair assumption?

SPEAKER_01

100%. The fact we've ended up effectively running a short-term rentals company and and using accommodation is just a means to the end of can we get people to spend three days off their phone? Like that has been the deep conviction since the very start, which is when you do that, just by spending three days offline in nature, magical things happen. And really the whole focus was how do we do that? And cabins happen to be a convenient or an effective way of doing that, shall we say? And so everything that's come off the back of that has really been built on that initial conviction.

SPEAKER_02

Yeah, absolutely. I can imagine. When you looked at the market in itself, was there anything missing that you saw at the consumer that they were ultimately looking for? Or was that just built simply on your own conviction?

SPEAKER_01

Yeah, because because there are there were quite a lot of cabin concepts out there and there still are, and actually a lot of them have, you know, very similar looking cabins still to this day as us. But what we decided and what we noticed is that any of them that spoke about being offline or digital detox really just did it as a marketing gimmick. It was just marketing copy on the website, you know, rather than a part of the experience. So I went and stayed with a big player out in the US right at the start of forming the company, really excited to get my phone. And you know, they spoke about having a phone box, but then it just wasn't really part of the experience. And so you just end up not doing it, you know. I I went with the best intention of the world of spending time offline, but it we're our own worst enemies, and so within half an hour I was I was back on my phone. So I think what we saw was missing, it's almost binary of what we're really interested in. In theory, if you talk about digital detox, then you can get people to be off their phone, but in reality that doesn't happen. And what we're really concerned with is the reality of it, and that can we actually get people to do this? So our whole focus as a company is can we actually get you to spend three days offline, not just talk about it? So every decision we've made, everything we've made from a product point of view, from a marketing point of view, is really towards that goal.

SPEAKER_02

Okay, so it's obviously not Hector who's standing at the stairs of the cabin that collects the mobile phones, and we'll talk about that in a second how this works because it's very intriguing as well. And doing it, it needs to have a purpose and means to make it happen. And I totally get that. Before we get there, I want to talk about brand versus platform. You made a very deliberate decision to go direct, not depend on OTAs, not to compete in the algorithm, and especially when you start, because when you start, you just need traction, you need bookings, you need some revenue coming through the door. And you didn't do that, which when we first met, I thought that was incredible to learn about. Why did you do that? Because if you look at many others who start in this business, I mean, first of all, you have one unit thrown in Airbnb, something happens very quickly, and then you scale from there, and then eventually you realize you have 50 units and you still have 90% OTA demand, and then you want direct bookings, but you went straight from the beginning, and that's all you do.

SPEAKER_01

Yeah, for sure. Well, it it was very deliberate because I think these things can become a crutch. And again, it's about what muscles you don't want to develop as a company. And there's also I'm a big believer in doing one thing well, and OTAs is it's a whole different game. Building a consumer brand and really mastering that is very different to mastering OTAs, and it really comes, there's such an opportunity cost with everything you do. And I'm a big believer in the idea of burning the boats. Uh, are you familiar with that that concept?

SPEAKER_02

You can explain that to our audience for sure. Yeah, for sure. That's a great analogy.

SPEAKER_01

I think it comes back from the Spanish when they were building their empire and they basically landed on an island and there was a fortress on the island, they were, they were massively outnumbered. And the leader at the time decided that they were just going to burn all of their boats. And the reason behind that is then they had no choice but to conquer the much bigger army on the island. And there's a sense of if you have a plan B, if you have a if you hedge your bets, then you don't have the almost relentlessness needed to really solve hard problems and and do hard things. And I think we always saw this as a very hard problem to solve. You know, people are spending all of their times on phones, it's a it's a massive part of society now, and the momentum is all in that direction. So if we want to actually build a company that can move society in a different direction, we have to be all in on that. And fundamentally, we have to completely own the narrative. And through that lens, OTAs is just not a way of solving that problem. So again, through this North Star of how do we move society in a different direction, the revenue that we could have got by putting cabins on OTAs actually takes us far further away from what we're trying to do because you end up, you know, having to conform to those platforms, all that kind of stuff. Like one of the things was we we fix our stays at three nights. So again, that was the counterintuitive choice because the wider cabin industry or space, the average nights are 1.8. So it's a lot of one, two-night stays. And all of the all of the wisdom at the time was hey, you you need to offer shorter stays because people need the flexibility in this day and age. And again, you're going to make it harder for people to book, you're adding friction in. But the big conviction with us is that if we actually want to get people off their phones, what we found is when you do that, it takes about a day for the mind to settle down. So the first day you actually feel more anxious. So we need people to be there, not only to get through that, but then also to enjoy the calm that then follows. So yeah, it was a very deliberate product decision. And I think both that and the OTAs did make life more difficult at the start by by not going on the OTAs. But it was just, it was the obvious choice because how do we build a category-defining brand here that that can move society in a different direction? And I think that wasn't towards that um was not only a waste of time, but but but a but a distraction.

SPEAKER_02

So basically, you had a clear differentiation factor, let's face it. I mean, anybody who starts in the SDR, it starts in the SDR business will be challenged to have a clear differentiation factor to actually go after that. So it was, it was not about economics, it was not about control, it was not about customer ownership or brand purity, was just purely the conviction as a whole that basically got you to burn the boats and say that's what we're gonna do. And I think that's important. So it was not just related to one issue that you went for a direct strategy for distribution.

SPEAKER_01

Yeah, the the the other point on that is I think what was really important to us, because again, we want people when they come and stay through three days and actually lock their phones away. And the issue is that if they just see us as another accommodation option, then they're not going to take that seriously. So the other thing that we had to do was we had to completely differentiate ourselves, put ourselves in a different category to all the accommodation out there. I was listening to a podcast a while ago with a um a kind of snack bar in the US and they spoke about how they made the decision to make a product that needed to be refrigerated so that they ended up being in a different part of the supermarket to all the other snack bars. So then they're not competing, they're the only one that's in the fridge, and it's a similar kind of thing where if we want people to actually come and lock their phones away, then we need them to not just think of this as another accommodation. And as soon as you go onto OTAs, it's just it just becomes another accommodation because those platforms that's what they're selling. So really, it's how do we create our own category?

SPEAKER_02

At the end, most of your properties are off the grid anyway because there's no reception as well. So but we'll talk about that later. STR Global unlocked is supported by Breezeway. As guest expectations rise, standards tighten, and operational execution has become a key differentiator in short-term rentals. Breezeway provides technology designed to help professional operators deliver consistent property care, safety, and quality at scale. Thank you to Breezeway for supporting the professional evolution of our industry. And now let's continue. So let's talk about transition and market context, right? So I think the STR market has become super hyper-optimized right now. Revenue management tool, distribution, stacking, performance marketing, yield pressure. And yet Unplugged sits slightly outside that race in a way. And that was fascinating. Are you competing in the STR category, or would you more call it you're actually refining it to in terms of what is available and what is there right now?

SPEAKER_01

Yeah, for sure. So I think we like the goal for us is just not to compete. We're just not interested in playing that game. I think there's a reason all of those things play such a big part in the STR category, and that is because logically they are just great tools for running a business in this space. So I think we definitely do look at those tools. We we implement them, we do some dynamic pricing, not crazy, but some, and we will increasingly over time, because obviously with accommodation or with short-term rentals, you do just have scarcity. You have the scarce product, and your most popular stays at your most popular cabins. There's only a few of those, everyone wants those, so pricing them all makes a ton of sense. But I think again, it it comes back to focus and simplicity, and I think that generally in society is such a fetishization of efficiency and optimization and all this kind of sh. And people just miss the bigger picture, which is like if you can be really right about the nuts and bolts and really focused on that. So the big thing, the big thing for us again, getting people offline for three days, like that is the focus. You know, if we can be really right about that, all the tweaking and optimization, all that kind of stuff, like it can come. But first of all, it's it's it's about really, really building that out. And I think it's it's just this kind of private equity mindset of we need to like squeeze out every penny, all that kind of stuff. And and that often comes at the um sacrifice of brand. And this is a brand play. And it for us, this is all about brand, it's all about how we make people feel, and so we are not just gonna chase every extra dollar if it costs brand, because that is the big play. You know, really the big focus from us is can we keep compounding brand equity? And the big belief is that over time that that will create a huge amount of value.

SPEAKER_02

Yeah, that's amazing. And it's about this flipping door. I saw your LinkedIn post about the flipping door that it breaks all the time and that needs to be fixed. So I totally res uh resonates very strongly, and it's a super interesting play. And let's not knock uh the investment world too hard, because at the end of the day, you probably will need some capital as well. So it's a balance, it's a balancing act at the same time. But I read you and hear you. I mean, I've done uh plenty of private equity-backed um um projects and work, and and it's a balancing act at the end of the day. But we've before we go there talking about financing and the business model in itself, I want to talk about customer ownership. So, following on to the conversation that we just had, the direct brand, a lot of our conversations on STR Global unlocked is about owning customers, right? That's ultimately what builds the value, especially in the future world of AI distribution, where is the content being found, who transacts, who is the merchant of record, and everything else. And clearly you own the guest relationship, you own the data, you own the brand. But the big question in that, to all the points you you talked about, is that really scalable?

SPEAKER_01

Yes, yes, I think it is. Uh, because fundamentally, I think every consumer has a relationship with with the brands they know and the brands they use. And the data is one thing, but there is also how you make people feel and what they think of um when they when they see you and when they hear about you, and you know what what emotional response do you evoke in people? And again, I think it's really um doubling down on that because you know you say is it scalable, but you look at all of the most of the big companies in the world have a very strong brand and they make you feel something and they have that relationship. And so I think for something like this, where for us, as you said, it really is about creating a movement and it's about being talked about and it's about standing out because we're not in the OTAs, as we spoke about. That is where all the traffic is. Like the great thing about being on OTAs is they have all the traffic. And so, to your point, to really scale this, we need to stand out. You know, we need to be interested, we need to be talked about, we need to make people feel something. And I think that is that is the whole game because it's not scalable if you can't be remarkable, you know, if you're just another, just another accommodation that they booked. It's very hard. It's very hard to stay front of mind for people. It's very hard for to make them tell their friends, it's very hard for them to remember you, you know, a year on when they're feeling a bit burnt out and they're trying to decide what to do. So our whole focus as a company and how we make the direct bookings work is we just have to stay front of mind. We have to be relevant and we have to be talked about. And so many of the choices we make across marketing and product is how do we do something that when people see it or they hear about it or they experience it, instead of going away and telling two people, they go away and tell 10 people. So I think that's what it's all about. You know, it's about how do you evoke a strong emotional reaction and even right down to locking the phones away in the first place. If I say to you, you're gonna go and spend three days offline in the cabin, you might feel something, it sounds nice, you might feel that will be peaceful. If I say to you, you're gonna go and spend three days offline in the cabin and we're gonna take your phone off you, you're gonna feel a lot more. You're either gonna be like, no way, that sounds terrible, or you're gonna be like, get me there right now, or a bit of both, but it's gonna make you feel something and it's gonna make, it's gonna make you tell people and it's gonna make you talk. And I think the other really important point there is simplicity and focus and clarity of message, because that is you're then making it easier for people to spread your message. If it's very complicated what we do and we do all these different things, it's very hard for people to talk about. As our current concept, it's very easy for people, you know, in the pub here in London to tell their friends, oh, there's a I went to startup that locks your phone in the box in a cabin in the countryside. Easy, you know, it's an easy message to spread.

SPEAKER_02

Yeah, it's massive.

SPEAKER_01

And that is hard as you scale, because there is so much temptation to launch other product lines, overcomplicate, do all these things. And I just think there's so much value in subtraction rather than addition as you're growing a company because complexity compounds, and the longer you can just keep it incredibly simple for the better. So that that's that's a huge focus as well.

SPEAKER_02

Well, you don't have to convince me, but when I tried to book it, it was all occupied. have to find a window for me and my wife to uh to experiment that product it's it's it's uh just an incredible value proposition at the end of the day that you know is just it's just an incredible i i think very scalable regardless you know keeping a niche as well is also scalable to the points that you've just made as long as you keep true to yourself in terms of what you're offering i think uh that's massive so next one we already alluded to it capital uh this doesn't go without capital so let's talk about honestly how scale unplugged feels intimate but investors typically want to grow and you explained to me when we conversed so it this is in a way so the cabins are actually movable they're built on a leased land so you have the hardware and the infrastructure costs maybe first of all allude a little bit more on what the product is actually is and and how is it being installed and then we talk about scale and cap and yeah for sure so it's it's built off site on yeah on a trailer simple wood cabin solar system all of this kind of stuff installed so off grid we we we like a water connection but everything else is off grid then deliver to side so there is uh there is a toilet and there is a shower as well exactly people want yeah they want to be out in the countryside but they also would like a hot shower so we've got to do that well and then take it to the side drag it into place and the in terms of the infrastructure there it's very simple it's just simple decking some steps and then like so kind of stoned area outside just yeah to to maintain that and increasingly hot tubs, fire pit.

SPEAKER_01

So it's it's very simple. It costs about 5000 pounds.

SPEAKER_02

5000 pounds to actually install one of these to be rented yeah up and running so that's that's guess ready.

SPEAKER_01

We we flip-flop with models over the years we started off owning the assets and then we tried asset light where a third party would fund the asset um and we would just uh run it and they get a revenue share but found that that was one just complicated having a third party involved and two you you just make a lot less from cabin um and actually the unit economics are very good so like a a cabin generates something like a a 40 to 45% return on capital when you don't have a third party. So actually it really just makes sense to to own the upside ourselves and it's it's then a very cash generative business. So we we now own all of the assets work with landowners on a revenue share but uh on the the asset side of things that's all us.

SPEAKER_02

Wow that I mean that's that's a number uh and we'll talk about scaling investor in a second but before we do that one thing that I would love to know is how do you like massive country like the UK how do you select destinations if you want to call them or locations to make this happen identify the landowner and then you need to make leases and how long do they do they last? So can you tell a little bit about the process of you know normally in SDR you like your location location location. It's almost the same for you as well without any infrastructure there. So it's a slightly different process of finding the next homeowner which basically is land first and then lease and then and then infrastructure.

SPEAKER_01

Yeah for sure. So it's location location location as always but I think what's interesting here is what's really important is the aesthetics of the location even more so than the geography. Obviously cabins in London do very well all of that kind of stuff as you can imagine but people will travel very far for the best looking cabins. So you know it's really about getting the most by hours in car. Well in the UK you know four or five hours is is very far and in other countries that that might seem like a drop in the ocean in Switzerland that's half half a lifetime. Yes so yeah people were really good and ironically it's the cabins ironically given what we're doing it's the cabins that look best on social media you know that they always sell themselves the woodland clearings the you know hilltop cabins amazing views anything by water all of these kind of things so so yeah that is very much what we look for in terms of what that looks like in practice it's just seeing a lot of sites so we have a great referral network for new sites. We also get a lot of inbound now especially the more we grow the brand the more the word spreads about us the the more we hear from the tailwind here is that there's a huge need for farm diversification. So all of the landowners in the UK have some sort of farming activity. All the money's going out of farming in the UK so it's really being consolidated with a a few big farmers. So for most of these country estates they're land rich, cash poor looking for other income streams and so actually it's a very appealing proposition for us to come along because you know we we cover most of the the capital outlay because we're owning the assets so it's it's really easy for them to get up and running. So yeah we see a lot of sites a lot of time on the road not myself but a couple of the team and then yeah we we we try and get a geographical spread. So again it's an easy way to test an area is get one cabin up and running, see how popular it is then we can double down on the most popular areas, the most popular sites. But it's also about having a diversity of offering as well because fundamentally it's about being incredibly focused on what we do which is three-day digital detoxes in nature but then having diversity across that so someone might come and stay with us in the forest of Kent and then next time they might want to go to the seaside in West Somerset. So it it's about giving people a different experience whilst they come and do an unplugged day.

SPEAKER_02

And so yeah for us having you know we really think about that that portfolio management and what that looks like so while you decided for all the right reasons potentially that you want to go with a more asset heavy model, you need investors, right? And you need to scale and at the at the same time you want to be true to yourself in terms of what you're about and what you have built in terms of brand identity, uh capital expectations, physical expansion, operational complexity so is Unplug going to remain more a lifestyle business or really a venture scale ambition as well? Because capital, you won't be able to do that with additional capital quickly or scale faster?

SPEAKER_01

Yeah I think we can get to venture scale but not in venture time horizons. So we are not interested in playing the game of you know can we get a billion pound company in the next four to five years? Like it's just not because it is so operationally intense to scale the supply you just end up cutting corners, making sacrifices the classic we work model, you end up signing the leases that the economics don't work and waiting until the music stops. So that being said, I think one way we think about this a bit differently to a lot of the other players in the space is just have a much longer time horizon. Again I think we're still super early in this space and our whole goal as a company is can we move society in a different direction and actually the longer that we can beat the same drum and you know the deeper we can go on this over over a long time period, the bigger impact we can have. So really for us it's well what if we are still running this in 15, 20 years and what becomes possible? And you can then get to a you know a massive size. I mean if we keep compounding for for 20 years then can build a huge business but it does just require a different type of capital because a lot of the funds today are just set up they need to be returning capital in in five years. So so we're not right for those kind of players and we again I mean we'll be we'll be profitable in the next four or five months all being well so really it it just becomes capital for CapEx is the big constraint. And actually it just makes sense to do that with debt. So a resistance will only depreciate and not appreciate because it exactly it sits on a lease you know what's the lifetime of a cabin what do you expect as a lifetime of a cabin well our manufacturer is from the mobile home space they they made mobile homes which last for decades 50 60 years. But the actual asset lasts last much longer than that. Some of earlier cabins know like they just honestly weren't fit for purpose and um didn't use the right manufacturers so there'll be some we have to write off early but yeah the ones we're building now will last for for decades.

SPEAKER_02

Okay. And then you can think about you could also sell that to the landowner as well and then just keep renting them eventually as well.

SPEAKER_01

Yeah for sure I mean there's lots of different structures so moving to more of a a classic opco propco later this year and again who knows who ends up owning the assets in the future but right now we see the the most cash generative approach to to own them ourselves but uh yeah I think the value is is really in the brand and and that customer acquisition and uh the relationship with uh with our customers so so really that's the big focus and as you know better than me like there's many clever ways to to skin it on the uh on the back end side of things.

SPEAKER_02

How long are the leases valid normally?

SPEAKER_01

Uh so we do six years within our option to add another six years.

SPEAKER_02

Is that is that legally bound in the UK or is that just what you decided to do?

SPEAKER_01

Yeah there's there's some complications that come in after seven years where you have to register for the land registry. So we we're assessing it there is an argument for for doing longer leases so it's something we're looking at at the moment. It's very much a relationship game with these kind of landowners so people who own you know country estates that have been in the family for a hundred years like they they tend to work with suppliers for a long time. So really it's just about building strong relationships. We never lost a landowner we had one that um we moved the cabin because they were yeah it was a bit of a problematic first couple of months with them and we didn't yeah I think life's too short to work with the wrong people. Yeah of course but but yeah I think all of our of our landowners we began working with we're still working with today. So yeah there's a big relationship part of that. But yeah obviously obviously want to make sure that we've got the right leases in place to to support that.

SPEAKER_02

You have a massive advantage a hectare against the STR industry. You just pack up your property and send it somewhere else. Exactly a worst case scenario it costs a thousand pounds to move a cabin on the back of a law and in the short term rental industry you just lose an owner you lose an owner right and that means you lose a structure as well. And while we talk about unplugged and detox we need to talk about technology at the same time as well this is sort of the technology paradox while you're selling a disconnection but you're actually powered by technology as well marketing automation, booking infrastructure revenue tools you already alluded to which I found very fascinating especially in your space and I would love to know what your comp set is and maybe time will allow us to talk about your comp set in your revenue management performance and then you have performance tracking so there is a paradox in in a in in a way that you know running that business at the end you still have your own philosophy and how how does that balance within the business and the culture and the team yeah it's it's not about reinventing the wheel everywhere.

SPEAKER_01

So I think we can really innovate in some areas I heard uh something Patrick Collison the Stripe founder said who I'm a big fan of that they fundamentally a lot of the ways they run internally they just borrowed from Google because they're not trying to invent the wheel everywhere and actually there are things that people have figured out elsewhere. And it's the same here which is so much has been figured out in the short-term rental space and there is so much wonderful technology out there that you know we can benefit from all of that and we do benefit from all of that. So really starting to upgrade our stack from this year like we've been on a a system that's outside of the space and and moving now to Muse which I'm excited about and so starting to to build out that stack big muse and news about muse. Muse about muse yeah absolutely yeah yeah so yeah it looks at a lot of people over the years and um was super impressed with them. So uh so yeah and it's about getting more sophisticated with that but I I think the way we think about this is very similar to how I'm thinking about AI now with all the new tools coming out which is I think it also becomes the new procrastination where everyone gets FOMO and feels like they need to spend 40 hours a week playing around with all the new freaking AI tools and just build a lot of shit that they don't need or doesn't work. And I think it can be the same with all of these tools like there's so many exciting things that sell you the dream of next year revenue or whatever it is. Like that there are all these new exciting um tools and I think similar to hiring it's about like implementing stuff when you really need it rather than just like adding the new shiny things so you've got new shiny things. And I think that's kind of how we're thinking about this as well which is we can always add these things later on but trying to be too clever too early you just end up dealing with that you know dealing with the complexity that that brings and again it it's just about that you can always you can always get more sophisticated on these things. And I think as we grow we are so we we know the direction of travel like we'll get much more dynamic with the pricing personalization I think is a huge part of that relationship management with customers. Like you know these are the things but it's about doing it intentionally and mindfully and keeping the main thing the main thing rather than going all in on those things. Because again we have a differentiator like we're never going to be the best short-term rentals business in the world at dynamic pricing. We're never going to be the best short-term rentals business in the world at personalization of emails. We can be good at that but what we can be the best at in the world is getting people to spend three days offline. And so that is the main thing and all of these other things you know we can over time implement and borrow from to help us towards that goal.

SPEAKER_02

Well I don't want to sound cocky uh Hector but this is probably one of the most honest answers I've received in a long time uh in relation to AI and very mature at the same time also considering your age that's uh that's extremely mature and I love it and and and I uh it resonates very strongly in what you just said because I think there's a lot of STR companies out there who are now trying to differentiate themselves with the latest wh bells and whistles from AI and and automate and this and that and a lot of cra doesn't work it's there's still a lot of other things and I think you're you're focusing on your ultimate value proposition in in unplugged and the rest will will sort itself out. You're using a mainstream software solution you be rest assured they will do anything that they will give you the bells and whistles that you need without you having to develop that. And that's that's a different strategy. I'm not saying right or wrong that others were saying hey I'm building my own AI midlayer so I have a source of truth to run my business and everything else which I can gain a lot of understanding from that strategy as well. But I think yours is very clear. They will take care of that. I don't need to worry about that because it will happen regardless. And I need to focus on on the execution of my value proposition to my customers and make sure that that everybody will talk about it which they will because I don't think you probably had one single customer staying with you who said it was the worst experience of their lives because they're they couldn't use the mobile phone, especially in today's world, right? So let's talk about market outlook um a little bit um you know looking at the SDR space a little bit broader you already said it. I mean you call yourself an SDR business the market is evolving so supply pressure is happening regulation is happening mid-market softness is happening mid-market softness is massive because now we're looking at our world and our population in a in a K letter where wealth and uh and and the opposite is becoming tougher and tougher and tougher for everyone. We've seen more luxury resilience in the in the STR space as well. Where does experiential hospitality fit into this next phase? And just asking that question I think the answers is pretty obvious because you can literally circumvent all of these pressures.

SPEAKER_01

100% I I think what you said there is is bang on which is there is this squeeze you don't sit as much at the top end but there is this if there is nothing really setting you aside and like we we've come out of a period where anyone would have like that there's just business for everyone and actually you didn't need to be that great or that special or any of these kind of things. And as you see this squeeze then really all of the results ended up going to a few companies. So again it's the question is like what are you competing on? And some companies will do it by consolidation and you know really trying to own the particular niche they're in. Others will do it by really differentiating. So I think that's what happens in the luxury space which is people can just build something very special in that space and that gets people talking. And I think for those who aren't doing super luxury and maybe are in that squeeze then really I think there's such an advantage of just having some personality and just injection personality into the brand because what happens when the tide goes out and there's less business for everyone it's the ones that stand out and it's the ones that people talk about and it's the ones that aren't just another accommodation provider on the platform that everyone's on. I think experiential hospitality is a way to do that, right? Because you're creating something unique like anyone who's creating an experience is it's gonna have their own flavor on it. It's gonna be something different I think that is in this day and age I mean the other point about AI is the price of everything is going down the price of creating content of doing this and you just end up with all this like very bad stuff. You know AI slop is a phrase that gets thrown around now. So it's very cheap to do all these things but through that the value of doing something really well is massively increasing because that stands out and I think people are sick of just seeing rubbish and so like in this day and age people are looking for these things. People are looking for real experiences people are looking for real content that makes them feel something. And I think that's the opportunity you know it's it's there's always been an opportunity to zig when everyone else is zagging because like that's how you stand out in this world. And I think in this world where I mean obviously no one really knows where it's all going but with the advances happening in AI now it's looking like everything online might just become agents going back and forth and humans just not even playing in that in that realm anymore. So then fundamentally what you're left with is is is how do you get attention in that space and you know how do you become relevant in that space and the only way you can do that is by being different you know by being remarkable. And you you have to be different and right as well. I think if you if you made an accommodation that um is just different but not interesting then you're also not going to be talked about. So so yeah I think to to really stand out in this day and age you've got to have personality have conviction and just go for it as well a lot of what we did different to everyone else is we were all in we had complete conviction that we're all about locking your phones away like lots of hospitality providers spoke about digital detox as an add-on so you come and stay with us and by the way and no one does it no one does it and so I think you need to be brave enough to go all in on something and that's scary especially for people who have been running a business for a few years and there's something that's kind of been working and it's working less now it's scary to like forsake everything you've done and change direction and go all in on on um a certain approach but fortune favors the bold and uh yeah I think I think there's a lot to be said for it.

SPEAKER_02

Yeah that's incredible. I think overall with everything you said and and us seeing what revolution we're going through right now so it's it's it's probably not even about digital detox it's about AI detox and many other things that you you you create reality again and and people will want that very very quickly very very soon. So I think your investment case is very strong and you will have a massive tailwind regardless for people to say hey this is this is a no-brainer that is exactly what the society needs going forward because we are being exposed to fake information all day long very soon we can't even determine what is what is real and what is fake. And and for that reason I think Unplugged is perfectly well positioned to grab that market shift substantially and so the investment case has you know you've already solved that and and I'm sure there's a lot more to come where people just say hey I want to I want to hug a tree again and and I don't want to you know get the get the real stuff out there and I think also looking at my own children seeing where they're coming from what they want I think it's it will get there. So before we finish this one uh last reflection is a founder reflection so I'm sure you have many different stories you can tell but um you've built something distinctive and and definitely a lot of things went wrong as well what was the hardest leadership lesson that that you have learned in building Unplugged where it is today question many many lessons as you say and the hardest one I think to be honest the hardest one is that the founder is the biggest bottleneck in every business and the highest leverage thing I can do is deal with my own sh.

SPEAKER_01

So last year was actually to be honest I I came into the business after the silent retreat just feeling like I'd cracked life and for a year and a half I just felt like I was never going to have any problems again. And then life happened and reality happened and business happened. And um and we had a really challenging time like it yeah I had a challenging time I think personally um what you know obviously the brand was growing lots of stuff to figure out on the back end and then yeah I just just went through a had a lot of health stuff for Two or three years, which turned out to be autoimmune issues, which were compounded by it was it was mold poisoning, but it was also due to suppressed emotions and trauma and all of this just undealt with sh. I think a lot of entrepreneurs, especially what makes someone become an entrepreneur usually is this like chip on the shoulder, this insufficiency, this need to show they're special. And I think I think there's a big part of that. In my story, I I definitely strongly believe in in this change and I'm very passionate about making this change in the world. But yeah, there's there's definitely a need to show I'm special as well. And and I think it's learning to deal with that and let that go. And so last year was a big year of actually just like digging into my just doing therapy and like dealing with all of that stuff, and like that is hard and very confronting. And I think through that I realized like I've always been a bit of a people pleaser and not had hard conversations I need to have. And as a result, some complexity had had grown in the business. And so so last year was a big year of just cleaning house and actually just like having a lot of hard conversations I needed to have, simplifying and uh yeah, and just like really reflecting on where I'm holding things back and like where I haven't been executing I need to be, and like what's yeah, what's behind that. So I think that's been the biggest learning and uh will continue to be that to some extent everything in the business is downstream of what's going on in the head of the person running it. And so that's a good place to start.

SPEAKER_02

Well, thank you for your transparency and your honesty. This means a lot also to our listeners. Incredible story. And yes, at the end, I couldn't agree more. We can't spend enough time to look into the mirror and and think about what is it really about what we do. And it's ourselves. And and one thing that we've learned very early in life through any crisis at the end of the day, your nose is the closest to you, and that's the only person you can change is yourself and and nothing else. And the next and the rest, you need to deal with that. So that was a very strong statement. And thank you, Hector, for for sharing that. Uh, super strong. So thank you very much. Uh Hector. Unplugged is more than cabins. It's a reflection of where modern consumers are heading in the world obsessed with optimization. You build a brand around internet, intentional disconnection, and that tension might be exactly what defines the next generation of hospitality. It was a super great pleasure. Thank you for your openness and candidate feedback. We wish you only the best with Unplugged. I think you're on to something that is very, very, very big. We haven't talked about growth yet, franchise, other countries, but I'm sure you've got plenty of things up your sleeves. And uh, I only wish you and your founders uh best of luck. That was STR Global Unblocked, 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 ajlier.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.