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

039: Hospitality Isn’t Ready for the Future Guest | Jamie Lane

• Powered by AJL Atelier • Season 1 • Episode 39

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AI is changing hospitality, but I believe the bigger question is not just how AI will change our tools, our operations, or our businesses.

The bigger question is: what happens when AI starts changing the customer?

In this episode of STR Global Unlocked, I’m joined by Jamie Lane, Chief Economist at AirDNA and one of the leading voices on travel demand, market trends, and the future of short-term rentals.

Together, we talk about how AI-driven productivity, job shifts, income distribution, and changes in disposable income could reshape travel demand in the years ahead.

Because while many operators are focused on how AI can improve pricing, guest communication, automation, and efficiency, I think we also need to understand what AI could do to the wider economy around our guests.


Which questions are answered in this episode?

  1. What happens when AI starts changing the customer, not just hospitality businesses? 
  2. How could AI-driven productivity, job shifts, and income distribution affect travel demand? 
  3. Why should short-term rental operators pay attention to macroeconomic trends? 
  4. Could changes in disposable income reshape who travels, how often they travel, and where they stay? 
  5. And what can hospitality leaders do today to prepare for the future guest?

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SPEAKER_02

Everyone is talking about how AI will change hospitality. But almost nobody is asking the bigger question. What happens when AI starts changing the customer? If productivity explodes, jobs shift, and disposable income changes, travel demand changes with it. And that could reshape the short-term rental industry more than any single AI tool. In this episode, I'm joined by Jamie Lane, chief economist at AirDNA. And one of the leading voices on travel demand, market trends, and the future of short-term rentals. We talk about AI, productivity, income, distribution, data, demand, and why operators need to understand not just what technology does to their business, but what it does to the economy around their customers. And if this conversation makes you think about how these shifts could impact your own business, you can book a consultation with me through the link in the description. This episode is brought to you by Evivo. I've always believed that strong operations and the right technology foundations are critical if we want to professionalize and elevate the short-term rental industry globally. Evivo supports independent hosts and professional property managers with an all-in-one platform that simplifies complexity and drives growth through automation and AI. Welcome back to SCR Global Unlocked. I'm Simon Lehman, and today I'm joined by nobody less than Jamie Lane, chief economist at AirDNA, and one of the industry leading voices on travel demand, market trends, and the future of short-term rental sector. I recently heard Jamie speak at VRMA Executive in Los Angeles, and what stood out wasn't another discussion about AI tools or automation. Instead, he asked a much bigger question: what happens to hospitality when AI starts changing the economy itself? Jamie, welcome to SAR Global Unblocked. Simon, thanks for having me. It's a great pleasure. You just said you've just been to uh the Airbnb product release uh in San Francisco. Maybe we talk about that later. Before we do that, Jamie, it's great to have you on the show. I I want to start with a rapid fire with you. Are you ready for that? Let's do it. Awesome. One travel trend everyone is talking about that you think is overrated.

SPEAKER_01

Uh AI booking. One trend nobody's talking about enough. Uh personalization. Most misunderstood metric in SDR. Profitability. Occupancy or ADR. ADR. One economic indicator every operator should follow. Income growth.

SPEAKER_02

Luxury, mid-market, or budget. Which segment are you most bullish on?

SPEAKER_01

Luxury.

SPEAKER_02

Biggest threat to SDR demand over the next five years.

SPEAKER_01

Uh regulation. AI overhyped, underhyped. Underhyped.

SPEAKER_02

Will OTAs be more powerful or less powerful in ten years?

SPEAKER_01

More powerful. One word that describes the current STR market. Exciting. You've done exceptionally well.

SPEAKER_02

Any questions? I know that was 10 for you. I I added a few more than I don't usually do for my uh guests, but I know I can stretch Jamie a little bit further. And uh you've managed that exceptionally well. And I love some of your um, you know, we we can measure the speed of some of the answers that you've provided. Uh and it was uh definitely very interesting, and we have plenty of things to talk about. So thank you for that. So let's start, Jamie. What struck me about your VRMA presentation was that you weren't talking about AI from an operator perspective, which was unique, right? And obviously you showed me that deck, and then it's like, what do you think? It's like it's gonna be very provocative, and you were talking about the customer. Why do you think the industry is looking at AI through the wrong lens?

SPEAKER_00

No, and I'll say the lens we're looking through is right, it's near term, it's within your control. Like that is what I is easy to do. Uh it's like something that you can make a plan and you can really tick off that plan and like make uh uh uh uh progress towards uh adopting AI into your business, which everyone should be doing. But and what I wanted to sort of provocatively say at the leadership summit was there's also things outside your control. And there's also things that are gonna be happening over a longer time period. And as leaders in the industry, like it's your job to be thinking about what are those things outside your control and longer term that could be impacting your business. And I think AI and what it's gonna mean for the future of jobs, what it's gonna mean for the future of just travelers in general is one of those big things that we should start trying to understand.

SPEAKER_01

Yeah, that's amazing.

SPEAKER_02

So in in in in I I totally agree with you, and but that's a long way to go, right? So one we have a long way to go, Jamie. And one of your key points was that travel demand is ultimately downstream from productivity and disposable income. So can you just walk us through that logic?

SPEAKER_00

Yeah. So this was and and just thinking about productivity. So it all started the economy is sort of driven by productivity. And you think about and and we weren't around then, uh, industrial revolution, like 1800s, like the travel sector, unless you were a king, queen, or and some and the Rockefellers, like it just didn't exist. I mean, people didn't travel, like uh, and if they did travel, there wasn't a hospitality sector to go to. Like, I'm famously in George Washington when he traveled, he stayed in people's homes. Like that there just wasn't this sector that we all know and love. And what really created it was massive gains in productivity over the 250 years since George Washington was first in traveling around in uh the US and and it was the same thing happening in Europe. And what productivity gave was as it moved people out of the fields and into the factories, it gave people higher incomes. Like that's one of the reasons why workers want to do it. And then people had higher incomes, but then they didn't have the time to consume. And and some of the industrialists, Henry Ford was famous for it, decided he's like, you know what, my workers don't have time to actually use the cars that we're building. Like, let's see what happens if we take them from six days to five days uh of work. And what it did, and that actually and went out throughout the economy, and it started creating the consumer sector. And the time, this combination of the money to spend and the time to spend it, and led to the creation of the modern travel and hospitality sector that we see today. So then the thought exercise is if we think productivity is gonna change pretty substantially over the next five years, and I absolutely believe that. I don't think there's many that would uh disagree with that. Like, do we think the same thing is gonna happen in the past that this is gonna lead to more travel and tourism over the next five years? Or could something else happen? And and that was the sort of point of sort of digging into that.

SPEAKER_02

Yeah, you definitely have my votes on that without a balcony. You know, there's no question. And, you know, that also answers the question why property managers think about or care about labor productivity. But how closely do you think, you know, is is that connected or travel demand is connected and economic productivity historically? Um, like just go a little bit deeper here for me, please.

SPEAKER_00

Yeah. So and prior to joining AirDNA, I spent 10 years at CBRE. Uh and at CBRE, it was my job to forecast the overall travel and tourism sector. And that's how I got introduced to the Air DNA data set because I needed to understand what was happening in this sector. But prior to that, we had, and at CBRE, we had a data set going back to the 1920s where we could see what was having and trap happening in travel and tourism over a full like 100-year uh time period. And what you see is travel demand is highly correlated to GDP output uh and labor. So uh if people have jobs, if people have incomes, uh then they're gonna spend that on travel. Uh and there has been a bit of a disconnect lately uh where GDP has continued to go up. Uh, and at least when you look at hotel demand, it's actually stayed pretty level to pre-pandemic levels. We have seen overall increases in short-term rental demand, cruise demand, other forms of travel. But I mean, there's always, and I think it's still to this day, this tight connection between jobs, income, and people's ability to travel. And as we think about different scenarios going forward, I mean there are wildly different economic scenarios of what might happen because of AI. And there's gonna be significant downstream implications to travel demand as well.

SPEAKER_02

Yeah, so let's move exactly forward from that because as a data scientist, we could fill hours in these models as well. But I want to move on with you, Jamie. Uh, and I I love your observations and obviously your viewpoints as well. But you talked about these um the four AI scenarios, right? And and talking about AI, as you just alluded to, uh, one of the most interesting frameworks you presented was different AI outcomes that could emerge over the next decade. And I found that uh extremely fascinating. So why don't you just walk us through those scenarios from your viewpoint?

SPEAKER_00

Yeah. So uh our friends at Moody's Economics put together these scenarios. So I'm in a in an economics group with their uh chief economist, Mark Zandi, and he explains it as like there's and when there's uncertainty, uh, it's helpful to think in scenarios. And so what they put together is four different potential outcomes for how this plays out over the next few years. Um, and then they assign probabilities to those scenarios, which then help you sort of plan of like, all right, we've got the most likely outcome. And for them, it's AI empowered that essentially we see a bit more of the same. Like we all get a little bit more productive. It does an accumulate to mostly all workers. Uh, and importantly, it leads to income gains for those workers, and short-term rental demand follows. Like we see a four or five percent increase in short-term rental demand over the next few years, and it's that's largely a great scenario. There's also an even better scenario, and that's we're about to enter this productivity boon that we all get 10x more productive, our incomes sort of rise. And you imagine the Simon Lehman scenario, and you're doing 10 podcasts, you're doing all this consulting, you're now being able to do all this with fewer workers, but and all that income sort of comes to you, and and all this you're able to do because AI makes you uh more efficient. Like, but this happens to everyone all at the same time, and this increases GDP across the world. Short-term rental demand accelerates, travel demand in general accelerates pretty uh substantially. Um, and it's it's an incredible scenario for our industry. And then there's two weaker scenarios or downside scenarios. There's one that this whole AI thing, like it falls flat. Uh, and this is like a uh metaphor for like a the bubble-like uh scenario that we saw play out in the in the tech crash in 1999. Uh, so almost all economic growth right now, at least in the US and I think in part of Europe as well, is being driven by AI infrastructure. And the stock market is being driven by all the gains in the Magnificent 7, which are all being driven by AI growth. And if all that just doesn't come to be, like we could see a pretty severe uh uh contraction in the stock market and overall economy over the next one to two years. And then the fourth one is really the one that would be worse for our industry, because AI falls flat. Like that's that's more cyclical, it's not structural. But if we saw uh in the downside job market unheaval scenario, this is where like you get into some of the really sort of dark scenarios of and um we see all these companies investing in AI, they've got a cutback on workers, and we start seeing more and more layoffs, white-collar workers, blue-collar workers, uh, because they're able to replace all these workers with AI. And then you just see all the productivity gains not distribute to everyone, but just to the owners and operators of these companies. It's uh Mark Zuckerberg getting richer, it's uh uh it's Elon Musk and SpaceX being the next $10 trillion company, um, and that it really starts to hollow out uh the consumer economy, uh, which could be uh pretty detrimental to our industry.

SPEAKER_02

So where do you put your money, Jamie?

SPEAKER_00

I I'm definitely an optimist. Um my money goes into the AI empowered to productivity boom. Like I do think I there is a lot of uh uh vectors of growth that will trickle down. Um, and I we've seen this in the past, like not this exact scenario, but I think I you go back and look through history, and it's always sort of the same of like there's gonna be this huge technology that's gonna disrupt everything, and it's gonna leave everyone um and without a job. Like you saw it with computers, like the spreadsheet was gonna put bookkeepers out of business, and largely it did, but then it created this whole new economy of accountants, analysts, consultants that were able to build businesses off of using the spreadsheet. So there's always sort of destruction happened in the economy, but ultimately there's new businesses, new opportunities created off of new technology like this.

SPEAKER_02

Yeah, I think I would put the money on the same number and the same color as you do. Um, I see that already happening without a doubt, right? And and this efficiency gain is just incredible, and especially with the consult with the companies that were consulting in the PMC space right now to see how that shifts. And we said, you know, the human capital is now shifting towards what's driving more value, which is owner relations and growing supply and things like that. And that doesn't mean that that people are being lost. And yesterday we recorded our AI panel with conduits, uh Bestie AI, host buddy, and guestway. And I had four CTOs on a panel. You can imagine it was a struggle for me to manage. Um, you know, and and and talking about that and talking about the efficiency gains and everything else, and and even like I can quote uh Anthony from Guestway, he said, look, up to 200 units, you still need to still need the same um um FTE count to run that, but there's a shift in efficiency, and ultimately you can shift your uh human capital towards where it creates more value. And and in our industry, it's obviously it's obvious where that is, it's in the guest experience and and it's in the in it's in the owner relation. So um what our industry is concerned, I'm definitely with you. Uh, this industry will this this change with AI will help us uh uh gain efficiencies and and add potentially more human capital to the business than it was before uh while we're doing that. And maybe the long tail looks a little bit different, but uh that needs to be seen. So I I I definitely uh agree with you. Um let's go a little bit deeper here. Could travel be become more polarized and and and and give us a little bit of more viewpoint about how exposed is leisure travel to that outcome that we're now seeing? And you know, we've seen presentation from Zach Cass at at Darm, which you and I were there, and and his presentation was like, oh my God, we're all gonna be on holidays and just enjoying ourselves. Um, that's not gonna be the scenario, is it? And how does that impact travel, do you think?

SPEAKER_00

Yeah. And the there the reality of travel is it is a luxury good. Uh, and it's sort of based on us having discretionary income. Uh and travel is one of those first things that starts getting cut when there is a recession. It's also one of those first things that gets brought back, and when things are going well, as we saw during COVID, like, and there's lots of uncertainty, but that first thing you go and start spending on is that trip. But when you think about uncertainty broadly out there, like we saw it last year. Um, we're seeing it now with higher gas prices, with the war in the Middle East. Like, when that does cause people to change their behavior. And and maybe people are still gonna take their annual beach trip, but it's that second or third trip, it's that extra, like, and spontaneous weekend away that you're gonna do with your wife and your kids that I is purely discretionary. Like, and when we don't have, when you do have a little bit more income and you absolutely take that extra trip, like travel and experiences is one of those things that people really do like to splurge on when they have a little bit of extra money in their bank account. But also when they see it dip, like it's the first thing you're like, guys, like, I'm let's go to the park this weekend. Like, we don't need to go up to the mountains. Uh so yeah, it our industry is is so exposed to changes in income uh because of that. And you can see that going back through every cycle that we've seen over time.

SPEAKER_02

So, what does that what does that mean for the property manager out there directly? Like how would you like how does that how does that play into their strategy? Into how do they need to look at the market environment right now and also from now to let's say the next 12 months?

SPEAKER_00

Yeah. And it it is an inherent to understanding booking behavior. Uh so as we're getting now into summer travel season, like this is the time when as long as we're not in recession, uh, people are gonna take that summer trip. We're gonna see a record number of travelers, uh, travel um trips happening this summer. We've got the World Cup, we've got concerts happening all over the world. Like it is, it is gonna be another record summer. But it when there is uncertainty playing out, that's where it can move booking curves. Uh, we are seeing large sections of the industry and seeing the booking curve shorten, uh, and that's off of uh three consecutive years of shortening uh booking curves. So I'm things are changing there. Uh, and then it's also I where do we see the pullback? Because like if we do, and there's a high chance if gas prices stay above $100 a barrel that we could be looking at recession in the back half of the year. Uh, and there's indicators within the data that pop up within travel first. Of people starting to pull back. So it's what would have been a five-day trip is now a three-day trip. What would have been a stay in a mid-stay property is now an economy property. There's shifts in consumer behavior that happen that absolutely begin to show up in your business. And then it's upon you to change the vectors that you have to and continue to and garner guests, making sure you're not overpricing certain periods, given how much overall demand is actually out there. Is that going to accelerate the K-shaped economy as well at the same time? A hundred percent. Across all these different scenarios, like in especially the downside scenarios, like a lot of those scenarios, and especially the labor upheaval one, uh, is not like GDP still keeps going up. It's just like all those GDP and productivity gains are accumulating to the top 1%, the top 10% of income earners. They're gonna keep spending, they're gonna keep traveling, uh, they're spending on luxury goods. Um, actually, the budget sector could turn out okay as well as people trade down. It's the middle uh that starts to get hallowed out of you're not quite luxury, you're not quite a great deal. Uh, and if you do have to cut your rates and to make it a great deal, you've eroded all your profitability.

SPEAKER_02

So that actually brings us to the next point in in relation to you know who wins and who loses, you know, because one thing I keep wondering about is whether AI creates a much bigger divide between winners and losers, losers ultimately. And and I think you just provided me that answer, or or do you want to like what do you think what is more likely in that respect?

SPEAKER_00

And that's what well, and in the rapid fire questions of like and luxury budget, mid-scale, like there's not many scenarios where luxury does not continue to do well. Um, and unless and you get into an oversupply, you get into a an overabundance uh of uh opportunity situations. And and we've seen that. Like you see it in many markets that you just get, and we saw it in the apartment industry over the past three years. Like, there's just too many luxury apartments built to satisfy and limited demand that's out there, and then you get into a situation where I'm everyone's trying to go after the same traveler, and then that traveler I doesn't have to pay as much for the same thing because um I there's there's too much. So there is the risk of people going in, and also the risk, and I think we've talked about in the past over beer of like just because you think you're luxury, I doesn't think and doesn't mean the consumer thinks it's luxury, uh, and that you might not be creating the product that's actually going to get consumed.

SPEAKER_02

So let's go a little bit deeper here. And one thing that resonated very strongly from your presentation at Darm, which is already back six months, when you basically said on stage, six months is a long time in today's world, right? So you were on stage and say, you know, the the the the mid-market, the the bottom has fallen out of the mid-market. So so what is that gonna mean to that? Is do you think of what you just alluded to in terms of the economical impact and and and the travel behavior and and the budgets people can can have, is does that still mean that the middle market is is equally under threat? Because obviously nobody, not everybody can go after the luxury market uh as a property manager, which is one of the fast like the large piece of our audience here. But what happens to the middle market here now?

SPEAKER_00

Yeah, it it's an interesting question and one that I think our industry is just better suited to adapt to, given and the churn that you just see in listings. And our industry has the ability to adapt to consumers better than and exponentially better than the hotel industry, right? Where they've got these boxes, it takes two years to renovate them, like it takes two years to develop them, like it and to adjust to consumer preference is really hard. For short-term rental operators and property managers, when you got a bunch of owners where you can point out, like, hey, this is what's getting rented today. Here are the changes you need to make to your property. Like, owner might not do it, but ultimately it's upon them and and um and it's gonna impact their business. And you do, as a property manager, have the ability to go after and what is what are the type of listings that are gonna get rented in their market? Let's get rid of the ones that aren't. Uh, and where the industry over in a pretty short period of time can sort of adapt to where consumer preference is. And we've absolutely been seeing it with the differentiation between hotels and short-term rentals. Like, actually disagree with this notion that the industries are combining. Like, when you look at inventory, they're diverging more than ever. Like, you see massive growth in inventory and demand in three, four, five, six, ten-bedroom properties. You see a hallowing out of the one or two bedroom and mid-scale properties that maybe more compete with a traditional hotel. And it's those properties that are, and property managers that are really able to differentiate themselves from hotels are the ones that are doing the best.

SPEAKER_01

Yeah. Absolutely makes a ton of sense.

SPEAKER_02

And but not everybody can pivot that quick. It's still a hard conversation with a homeowner, but you're totally right. We deal with individuals and we don't deal with a hotel that takes us two years to adjust the product uh structure and everything else. Um, but what does that mean for the budget side of the business as well? I mean, there's still a budget travel as well, and and that would maybe even get bigger going forward as well. Or do you, you know, I mean, in our industry, while we finally have reached 90% um vertical awareness, we don't need to fight for STR anymore, but there's also budget travel, right? And where is that developing to in your viewpoint, Jamie?

SPEAKER_00

And I I think budget travel as uh operator is one of the toughest to get right, but it's one of the things that I think has the most opportunity with AI helping to automate different aspects of uh property management uh and of operations. As and you think about the luxury to budget curve, like people are willing to pay more when there's more human touch, when there's more human interaction, uh, when you get a better level of service. And I'm on the budget end, and you're willing to pay less, or your your willingness to pay also comes with your willingness to have a less heavy touch on persons. You're willing to talk to a chatbot, you're willing to call someone and get a call center, uh, you're willing to not have someone be able to respond within 24 hours to get to your property if there's something wrong with the oven, like you sort of get what you pay for. And our ability to automate more aspects of the business to continue to serve the budget traveler in a profitable way. I think it's really hard to make budget property management work. And maybe with these AI tools, we are able to serve that customer better because it is a really important piece of our industry. And the one of the number one reasons why people choose a short-term rental is because it's less expensive than the uh and then the hotel nearby. So people are coming to us to find a deal. And in many ways, our ability to provide that deal comes from being able to serve that property efficiently. This episode is brought to you by Evivo.

SPEAKER_02

I've always believed that strong operations and the right technology foundations are critical if we want to professionalize and elevate the short-term rental industry globally. EVivo supports independent hosts and professional property managers with an all-in-one platform that simplifies complexity and drives growth through automation and AI. Great segue to to uh switch the gears and talk about distribution. So we talked about product and we talked about the economy and what impact are we going to see. And and obviously, you know, one of the biggest topics right now with with property managers is everything about distribution and the and the OTA question out there, right? So, you know, that's another fascinating topic uh without a doubt that everybody's thinking about, and there's a lot of debate around it, and you have an enormous amount of visibility uh with the data that you have as well, and how distribution is going to shape out in the future. And a lot of companies are thinking about that and making new demand models, making new distribution mix models. For the last basically 20 years, travel discovery has largely happened through Google and the OTAs, right? And but we're definitely seeing a shift right now. So in in in you from from your viewpoint, what changes um when customers increasingly start a travel journey with an AI assistant? I mean, you know, that's such a basic question in today's world, but we still don't have the answer for it, and I'd love to hear uh your view on that.

SPEAKER_00

Yeah. Uh maybe I'll play out two different scenarios on like where that AI assistant lives. Because I think if you talk to all the OTAs, like they're planning. So Airbnb, Verbo, Booking, Expedia, uh, they're planning on a world where the AI assistant lives on their app. And and most of their traffic's coming direct. A lot of them and pay for a good amount of their traffic, but ultimately they see themselves as the search layer for travel. And that AI is just gonna make that better. And you mentioned at the start that I was at Airbnb's product release, and the my big takeaway coming out from it is like they just released personalized listing pages where every guest, every listing is gonna get and it's gonna have the context of the guest, it's gonna have the context of the host and the listing, and it's gonna try to make that match, and it's gonna try to highlight the things that are most likely to get that guest to convert. And in that might, it might not be the photo that you picked to be your hero. It might not be in the description or the title that you wrote, but they're gonna use their AI to create a listing page that's and gets that customer to convert. And then the other side is like the and ChatGBT, Clauds, Gemini's that, and they think they're gonna be the new entry point for travel planning. Um, and in many ways, like I've been uh taking a trip to Iceland this summer and using Gemini to sort of plan that trip, like it's incredible. Uh, the amount of work that can do to and find the accommodation, find the experiences, find the car, the flight, like, and bring it all together into a single plan. Um, but ultimately, like, they do not own the booking layer. And unless they make that work, which is incredibly hard hard, like this is a similar layer that Google's had, and Google's created an incredible business off of selling those leads to the OTAs. And and one of the things I've learned over the years is like if there's that strong of monetary motivation and to keep something as the status quo, like you better believe that probably, and unless there's a major disruption, the status quo is gonna sit continue. And that's where like I still think that the OTAs are gonna continue to buy the traffic from and the major uh LLM providers, and that ultimately they're gonna still uh and and drive the majority of bookings that happen in the industry.

SPEAKER_02

Yeah, I would I would actually uh agree with you. While you know, we're still seeing a lot more movement on the direct booking side, but I I agree. I mean, that definitely clearly confirms the conversation we had with other with with uh CEOs and and and executives from the OTA world, and they're not gonna let this happen without a fight either. And number one, number two, the LLMs are not becoming the merchants of record either, uh, from a transactional standpoint. I mean, Brian Jesky put it down and said, you know, this is still not a good experience. You don't see pictures and this and that and the other. It's still an emotional purchase, and and the OTAs are trying to uh basically fence that in in their best possible interest. It's and it's interesting how that is going to match. We'll definitely see some direct conversions as well when people search. And and as you just alluded to yourself with your trip to Iceland, and it's pretty impressive what you can get. But ultimately, you you might be better off than just when you found this place you want to stay at, you you booked that through the OTA that you you're ultimately going to find. And by the way, we can take this off the podcast today. But if you need some additional insights in Iceland, I'm more than happy uh to provide them. I have I have a good network in Iceland.

SPEAKER_00

So the the before we go to the next question, the the provocative thing or the question I've been thinking of is if we do move to this like agent preference mode, though, where there's the monetary one, and then there's also the one like ultimately the agent's working for me, and I don't really care how much um I'm uh Jim and I is getting from booking or from Expedia. Like, I want them to find the best deal, and I'm gonna give them the prompt that helps me find the best deal. And you better believe that most people are gonna come up with that way too. So I mean the downside scenario for the OTAs is they get into a like competition of who can provide the lowest price for each stay, is as if the inventory is largely commoditized, and with maybe Airbnb having the only sort of and really unique inventory in the space, like it just becomes who can provide it cheaper. And that could mean some and some compression of fees uh across the OTAs, uh if and changing fees actually can garner share if the LLMs become a significant sort of starting point for uh booking travel.

SPEAKER_02

So on that note, you you mentioned something in your presentation I found particularly interesting, the concept of ancient readability, property data.

SPEAKER_01

Yeah.

SPEAKER_02

What does that actually mean?

SPEAKER_00

Yeah, and I think it just for me, it flips on my head listing optimization. Yeah, listing optimization is such a sort of buzz and word buzz product right now. Like I feel like there's been 50 vibe coded listing optimization tools in the past six months. Uh, and it's all built around optimizing and your hero photo, your listing title, like what is your description that's going to really catch a user? Like, and that's all built around like driving conversion through people looking at your property. And to Brian Chesky's point, like you really need a rich uh environment for someone to review the property, see the location, read the reviews. Like you they want to own that environment. But in a time when the agents are recommending a property, a booking, like they're not gonna care whether the pretty photos, the 50th or the first. It's not gonna care on how pretty you made your title. It's gonna really care about did you check off all the amenities at your property? It's gonna care about do you have a rich description of like what are the type of guests that are gonna book most likely or and enjoy the stay? What are the and things that are gonna be attractive to different types of guests? Um, and like proximity to things, like, and that's where like agent readability could be much more important than traditional sort of guest readability and um uh optimization that we've been working towards today. And I'll tell you, because we look at the listings across that people, property managers that we know that are loading onto Airbnb Virgo booking, like it's some really weak uh uh uh data quality out there of I mean, not filling out your listing description, only taking off five of the amenities that your properties have. Yeah. And where if you're the perfect location in the great spot, like a person, like, oh, they didn't check off that they've got a kitchen. Uh, but if you don't check that off in the agents reading, like, oh, like my guest definitely needs a kitchen, like I'm not gonna uh book them at that place, and it it just becomes a different story.

SPEAKER_02

Isn't that amazing, Jamie? After all these years, we're coming back to basics again, you know, and we're talking about photo quality and things like that, and and and taking the right amenities box, and it's crazy, right? And and it accelerates that because it it just because AI won't tolerate that and just gives a bad result. And and and and I think to that point, I mean it's super valuable what you're you're telling us, and and and that's still the the industry's biggest challenge, right? To get on top of that. And you know, my next question would have been you know, could agents optimize optimization and become the new SEO? But I think you've just delivered that answer and said, you know, if you don't get the basics right, then you don't even need to think about it.

SPEAKER_00

And and I would yeah, I I do think the OTAs are gonna help a lot. Like they can clean the data, they can see the photos, they can, they can know what you should have done, they can rewrite your description, they can they can do a lot of this for us, and I think they're gonna need to uh because and they want their pro our listings to convert through their uh platform. So I think it for them, the scale of we've got 10 million listings, how could we possibly optimize every single one? Now it's like, oh yeah, we could definitely do that, and we could personalize it at the same time. I it it does, and that's one of the reasons why I think OTAs are gonna continue to and gain share, is their ability to adapt in this sort of changing agent environment is just gonna be much quicker than all of us in our our separate direct booking websites and and hoping that we can get our our data in an agent readable way. Like it is gonna take a lot more time.

SPEAKER_02

Excellent. I have some stuff that I want to move towards the closest of your own heart and talk about the data. Uh the data is the new moat, right? And and one thing that you also made another up, like I made another observation after your VRMA presentation that I found extremely compelling. As AI makes analytics easier, data itself becomes more valuable. Why do you think that? And I found that very intriguing.

SPEAKER_00

Yeah. I think this concept um of like we used to pay for the dashboard. And like airDNA, like we're just a series of dashboards. Like, I I fundamentally think like the dashboard is dead. Like it's like I can spin up a dashboard in two seconds now to visualize and view the and the data uh for my property, for my portfolio, like uh and across any metrics, I can blend the data sets. Like that piece is is easy now. Like now the hard part is connecting the data and having clean data feeding into those systems. And it's just like agent readable data. It's all about the cleanliness uh and usefulness of the underlying data. And that's where it gets to be uh, I think, much more difficult. Um, and we've talked at length before about the blending of revenue and expense data uh into getting a holistic view of profitability and and what it's gonna mean. But you think about just like optimizing across channels, understanding your comps, how they're priced at, like there's all this underlying data you need. And then I you've got the AI to ingest it, make decisions off of it. But if you're able to get it in, I think you're able to do anything you could possibly want with it. It's just having Getting that data to your fingertips.

SPEAKER_02

Yeah, I mean, we all heard it. Proof already happened. One of your largest competitors moved dashboard out of its branding as well. So we, you know, everyone can generate dashboards now, everyone can create charts and and everyone can create reports. So where does the competitive advantage really come from? And what separates, and that that's the core for me in this conversation here, um, Jamie, what what separates useful data from noise?

SPEAKER_00

Yeah. I think and specifically for us, like it is the the the cleanliness of the data. Like, and we process a terabyte of data every day, and we're hitting 19 million properties, uh deduping them, and and analyzing publicly available rates, and it's something like two or three hundred million scrapes a day that we're bringing down there. Like the data you need to run your business, the need data you need to run your revenue management, like it hasn't changed. Like what has changed is the ability to get it in in real time uh to the person that needs or the agent that needs to make the decision. Like we have the ability to get access to more data than ever before. Uh, but what we've seen is we've seen all these companies like, oh yeah, like it's easy to get that data. Like we can spin up a scraper, we can and connect uh through via API to that database, but ultimately, like AT APIs take maintenance. Uh, scraping is actually really hard. And unless the company or the and the process you have to collect and maintain that data is solid, like everything like I vibe coded like three months ago is broken. Um, like it takes a lot of effort to maintain these systems uh and keep clean data coming in. Because if you're got your system going off of this data set and now you have bad data coming in, you're gonna have bad outcomes coming out, and you gotta be able to trust what's coming in.

SPEAKER_02

So let's translate that for PMCs. How should property managers think about data with everything that's just talked about?

SPEAKER_00

I mean, yeah, I would understand the data you need to make the right decision. What are the potential sources of that data? What you can collect, what is your own internal data? What is the data you can collect yourself? What is the data you need to get from outside sources, and make a plan on how you're going to build and pipe that data into your system? Because I think the sort of whole notion that I'm just going to rely on my PMS to organize all my data, like that is largely going away. Um, and still I think most people's data lives within their PMS. But if you want to have an intelligent operating system that you're running your property management company off of, like you need to own your data. You need to have uh the um databases where it all lives, and you need to make sure you've got a process for cleaning, maintaining um, and um uh keeping those systems uh live and running.

SPEAKER_02

Now, moving on from that, another topic that is close to your heart, I know, is the is the overall convergence. And I know how deep you are in relation to that. You know, Airbnb is pushing further into hotels, uh, booking keeps uh broadening its offering, Expedia continues building the connected trip. All like in your view, are all these platforms becoming the same thing? Or do you think there is meaningful differences to remain uh over time? Also in relation to our vertical?

SPEAKER_00

Yeah, and it's it's a great question. Um ultimately I mean they're trying to capture two sides of a marketplace, right? Like more and more guests in choosing where they're going to make their booking. Um, and then that they have the supply and the ultimately and hopefully the unique supply that that guest wants. And like I think it's I don't know if I believe it, uh, but I mean it's really interesting when you hear Brian Chesky talk about why they're moving into hotels. And like you look at it on the surface, they're gonna onboard all these independent boutique properties. They're then gonna offer a not even a loyalty program, a cash back system where you get 15% back on what you spent on that hotel to then go spend on a home. Uh like it doesn't take a lot of math to figure out, like, they're not making money now off of these hotel bookings because of then what they're giving back to the guests. Yeah, yeah, of course.

SPEAKER_02

That's the commission.

SPEAKER_00

So, like, and then they're like, well, 55% of those that book a hotel, then go and book a home. I was like, so are you are you just getting in into hotels to drive more bookings into the homes? And you can care less about that hotel business that is, and what booking and expedia have built and largely their businesses on. Uh, so I think, and it's hard to know the motivation there. Um, I think ultimately they still see their core business as homes. Um, and the core guest still books hotels. And how can they turn a hotel guest ultimately into a home booking? I think is an interesting one. And Glenn Fogle and talks about it on the booking.com earning call all the time of like the number of people that start their uh search for a hotel and end up booking a short-term rental, like that's been a huge growth vector for for them, and it's been incredible for our industry. Uh, so I think it's it's really interesting. And then Expedia of like bringing their Virgo inventory onto Expedia, bringing an Expedia condo inventory onto Vir for the right type of stays. Like they're all trying to take the unique aspects of their platforms and sort of expand it to bring in more guests to and and uh connect the right guests to the right property. And I think it's gonna be I I love that there's so much competition. Having three companies fighting for the guest, fighting for the inventory, I think creates a really robust, healthy uh distribution system.

SPEAKER_02

Yeah, I love that. I love that view, Jamie. And but would that mean that in 10 years from now that the guest doesn't even care anymore if he's booking a service department, a hotel, or a or a vacation rental?

SPEAKER_00

Uh I think for uh maybe a service apartment, a hotel, no. But I think for I mean what now is the vast majority of short-term rentals that are unique properties and great locations within themselves, like I think that's where short-term rentals continues to differentiate itself. I think broadly hotels have been very commoditized. And I I love the movement in short-term rentals of moving away from commoditization and and pushing into each home is unique. Uh, each home is, I'm gonna speak to a different guest because ultimately like you've got 365 uh nights, you've got an average stay of four nights. Like it's not that many reservations that you've gotta sort of generate for each home uh to to make it be a profitable business.

SPEAKER_02

Okay, before I let you go, Jamie. I'm sorry to do that to you. Um, you need to talk about data with me. But that's the easiest for you. So let's quickly run through the current state of the market. Um, what are you seeing right now in the US short-term rental demand, occupancy lead times, ADRs, or the classical topics? Give us a quick Jamie Lane rundown.

SPEAKER_00

Yeah. So I'll I'll I'll start with supply. I always like to start with supply. Like we've been seeing overall about 3% increase in overall inventory in the US, and that's the slowest growth we've seen since 2020. Um, and I think and it it's gonna continue. Like with the war in Iran, we've seen interest rates and re-accelerate. Um, my big prediction at the beginning of the year was this was gonna be a year of resurgent supply. Um and unfortunately, and we might have to to wait another year for that. Uh I think fortunately for the industry, though, like and it has been weak because demand has been uh weaker than expected given high gas prices and and and still increased uncertainty um uh around the economy. Uh so uh we've largely seen occupancy flat to slightly negative. Um, it was a really bad winter in the US for uh ski markets. I they saw occupancy down in four or six, and some markets it was 10, 15 percent. Uh so really weak winter. Um and but as we and and fortunately because occupancy is roughly flat, like and and inflation is going up, we actually did see some pricing power. Uh so and it been in a couple years of sort of less than two percent. We're now uh in April and May seeing two consecutive months of above two percent, and which and you heard me say I like ADR more than occupancy. Like I'd much rather sell fewer rooms at a higher rate and and have less turnover, less labor uh associated with generating that uh that revenue. Um, and then and as we look out over the summer, um, we actually see really robust performance uh expectations. And we absolutely have the World Cup, uh, which is driving demand growth in those 16 cities across uh North America. Uh, but it looks to be a big summer across the country. Like it is not just those cities, uh, it is the vacation rental markets, it's the drive-to markets, it's the fly-to markets. Like we're seeing really robust demand really across the country.

SPEAKER_02

Sounds amazing. Do you want to debate who becomes uh the world champion in soccer? Do you want to do that? Or we just leave it at the same time. I mean, you know everything, Jamie, so give us the prediction.

SPEAKER_00

Uh uh given our large presence in Spain and a lot of my uh uh employees uh and teammates and coworkers there, uh I I I'm rooting for the Spanish.

SPEAKER_02

All right. That's a very, very honest answer. I mean, I cannot stop that. Uh my heart is bleeding for Switzerland. And uh let's see how this comes out. I wouldn't put money on the United States, but you didn't have to qualify as a guest country anymore.

SPEAKER_00

So don't get me wrong. I'd love to see the US win. Um it is my job to make predictions, though. And uh I I was in the stadium for the friendlies with Portugal and Belgium, uh, and it it wasn't pretty.

SPEAKER_02

Uh so uh you know, I'm in a very comfortable situation because my wife is half German, half Spanish, and I'm Swiss. So like we have a pretty safe bet on either three countries uh going through the World Cup. So that's Spain uh ultimately pulls it off for us. Listen, before I let you go, um there's a bigger picture, a bigger question I want to ask you when you look at AI and travel and hospitality and everything we talked about, labor markets, productivity and economy. Are you ultimately optimistic or pessimistic about the future and and why?

SPEAKER_00

Yeah. I mean I think it comes down to a question. And when we think about hospitality, um it's if you replace the human, does the value go up or does it go down? And and I I sort of gave the metaphor with um hotels and and luxury, you have way more people, budget, you have way less. And like fundamentally, I do think and hospitality and accommodation, our sector is one where people want to pay for human connection. Uh, and in a world where AI is automating more and more aspects of life, like that they're gonna be more willing to pay for that human connection. And if we're able to provide it, that ultimately we're gonna be one of the major sectors that benefits from the major productivity gains and the shift that happens across the economy. Uh, but I would be I'm remiss not to sort of use this as a warning, too. Like, if you're automating the aspects of your business that people are willing to pay for, like the human aspect of it, like ultimately, what is that major value that you're going to be providing guests on like it's not just the real estate, the location, the building, the box, the brand that someone's paying for. It's that that human touch, that connection, that service that we provide them. Uh, and we can't lose that.

SPEAKER_02

Jamie, I know there's thousands of people out there who love you for that statement. That's been a fantastic conversation, and I could not agree more with you. What I appreciate it most is that we spend very little time talking about AI tools, but a lot of time talking about economic reality. Because, as you just alluded to, ultimately hospitality doesn't create demand. Hospitality serves demand, right? And understanding how technology reshapes consumers, income, productivity that you alluded to at the beginning of our conversation, and spending may be one of the most important strategic questions facing our industry today. So I want to thank you very much for joining STR Global Unlocked today, Jamie.

SPEAKER_00

Yeah, thanks, Simon, for having me. I've been listening to every episode and uh excited to join.

SPEAKER_02

And thank you to everybody for tuning in to another episode of SCR Global Unlocked. If you enjoyed this conversation, please help us grow the community, subscribe on YouTube, follow us on Spotify and Apple Podcasts, leave us rating and reviews, share the episode with friends and colleagues and fellow operators. It generally helps us bring more of the industry's leading founders, CEOs, investors, and economists such as Jamie Lane and Invaders onto the show. You can also follow me, Simon Lehman and AJL Atelier on LinkedIn for more insights, upcoming episodes and the industry analysis. Until next time, um Switzerland becomes the world's champion in soccer. Thank you, Jamie. This conversation with Jamie makes one thing very clear. AI is not just a technology shift, it could change productivity, income, jobs, and ultimately the way people travel. And for the hospitality operators, that means one thing. You cannot only look at tools, you need to understand how your customer, your demand, and your market are changing. But if Jamie gives us the bigger economic picture, the next question is what does this actually mean inside a hospitality company? That is exactly what I discussed with Siddy Mittal, founder of Why Angry. We talked about AI first, operations, why competence is becoming commoditized, why curiosity and judgment become more valuable, and how hospitality becomes and can use AI without losing the human touch. So if you want to understand not just where the market is going, but how to actually adapt your company to it, watch that episode now.