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

040: How to Turn STR Guests Into Loyal Customers | Matthew Orley

• Powered by AJL Atelier • Season 1 • Episode 40

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Most short-term rental operators focus on adding more units, entering new markets, and automating their operations. But what if the strongest competitive advantage is not the size of your portfolio, but the relationship you build with your guests?

In this episode of STR Global Unlocked, I speak with Matthew Orley, CEO of Red Cottage, about how STR operators can build a memorable brand that drives guest loyalty, repeat stays, and direct bookings.

Matthew explains why many property managers do not truly own their guest relationships, how Red Cottage built a successful membership program, and why loyalty needs to offer more than simple discounts. He also shares how a clearly defined target guest, a consistent portfolio, and proactive communication can turn one-time bookings into long-term customer relationships.

Which questions are answered in this episode?

- How can STR operators build a brand guests actively return to?
- Why do many property managers still not truly own their guest relationships?
- What makes a membership and loyalty program work in short-term rentals?
- How can STR brands increase repeat stays and direct bookings without relying on discounts?
- Why are brand consistency, guest communication, and a clearly defined target audience so important?
- How should operators balance AI and automation with high-touch human service?
- And why could the human relationship become the strongest competitive advantage in an increasingly automated STR industry?

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SPEAKER_00

Everyone in short-term rentals is trying to scale their business. More units, more markets, more automation. But if the real advantage is not owning more homes, but owning the guest relationship. In this episode, I'm joined by Matthew Orley, CEO of Red Cottage, to talk about brand, loyalty, membership, direct bookings, and why human communication may become the strongest mode in a world full of AI and automation. And if this conversation makes you rethink your own guest strategy, you can book a consultation with me through the link in the description. It's our global unblog is supported by Breedsway. That's guest expectations, right? Standards are tightened, and operational execution has become a key differentiator in short-term rentals. Breedsway provides technology designed to help professional operators deliver consistent property care, safety, and quality at scale. Thank you to Breedsway for supporting the professional evolution of our industry. Welcome back to STR Global Unlock. I'm Simon Lehman, and today Matt Orley, CEO of Red Cottage, a curated brand of unique stays across the US Northeast. What's different is the order he did it in. Guest first, owner second. We're talking about why brand and owning the guest might be the most underrated moat in this industry. What everyone gets wrong about loyalty and what it takes to stop renting your guests and start owning them. Matt, it's great to have you on the show.

SPEAKER_02

Thanks, Simon. It's great to be here.

SPEAKER_00

Before we kick this off, we do a quick rapid fire together. Are you up for it?

SPEAKER_01

Give us short answers.

SPEAKER_02

Let's do it.

SPEAKER_01

Brand or scale? Brand. Always. Direct book. Direct booking or OTA. Direct booking, of course. More units or higher repeat rate. Higher repeat rate. Buy a brand or build one. It could go either way. The one the one number you'd never let anyone else own.

SPEAKER_02

That I would never let anyone else own in in my business?

SPEAKER_01

Or yeah. A number that is so important to you.

SPEAKER_02

I would say uh recurring revenue, ancillary revenue, everything that is, you know, extra that is not specifically related to the booking itself.

SPEAKER_00

Yeah, that's great. That's already a great segue. I'm sure we'll talk about that as well because that's what people forget while margin are compressing. We need to think about what other products can give us additional margin contribution and therefore uh bottom line profitability. Uh, before we get there, I want to talk to you about the operator context. So you you fell for the product before you ever owned it. Can you take me back? And what did you see as a guest of Red Cottage that made you think I want to own this?

SPEAKER_02

Well, I think the truth would be that I fell for this space before I was in it, which might be a uh a more true way of saying that. I owned a s a portfolio of homes that I had been self-managing, and this was years ago, really felt that there was a lot of momentum in this space, especially as we came through COVID and coming out of COVID. Um my exploration, you know uh showed me that there was a lot of new software that was being built for this space, a lot of businesses that were transacting, and it felt very opportunistic. And I personally, after having built uh, you know, this portfolio of uh of self-managed rentals, ended up looking for a business to buy in this space that would widen my own moat and take me uh further in it. I had been a guest of Red Cottage, that is true. Uh, it was not the first business that I went and sought out, but it was the first business that I ended up purchasing in this space. And even as a guest of the business, I always really felt that this was an incredible brand that had built an enormous amount of goodwill in the region that it was operating and brand awareness. And the homes. They were completely unique, all of them. I think which largely was a function of just building a portfolio outside of New York City, where you benefit from a ton of uh new builds and unique construction, and the original Red Cottage business was able to benefit from that out of the gate. We've just so yeah. Run run with that.

SPEAKER_00

So exactly I wanted to touch on that brand aspect. So what what did you understand about the brand that the previous owners, you know, couldn't see from the inside? Like what was that?

SPEAKER_02

Um, that's a great question. You know, uh brand is something you feel. Brand is creates an emotional connection with you as a guest or you as the customer. And even when I was the guest, I could feel that unique touch and that unique value proposition that I was buying into. And obviously, when you got to the home and you could see how special these properties were, it framed that entire experience. But as we've built this, it it's been about how you lean into that emotional connection with your customers and with your with the community and that that knows who you are and wants to buy into that. And membership, as we'll talk about, is the the most obvious next step there, because you've now engaged these guests and you've engaged all of these people. And you want to take that a step further. You want you want to figure out how to create a more tangible direct connection with them.

SPEAKER_00

So considering the fact that most of my audience is a build by build unit by unit uh type of strategy, but while you understand, while you already had a property management business, you bought a brand, I wouldn't say instead in addition. And why was that the smarter entry thing at that point to think about uh acquiring a brand while others are just focusing entirely building a business unit by unit?

SPEAKER_02

Well, say that when I acquired the business, what was one of the most appealing aspects of it was the brand and the quality of the brand.

SPEAKER_01

Exactly.

SPEAKER_02

There were a number of other elements to it that gave me the sense that this could be a platform for continued acquisitions as it has proven to be, right? We've acquired now uh four um management businesses. They've all folded into the Red Cottage name. And when I think about the name itself and the brand, I I loved that it was geographically uh agnostic in that it could it could be multi-market in a very organic way. It was not red cottage of the Hudson Valley. It was just, you know, red cottage in a way that we could layer that onto different markets without it seeming strange or odd or misaligned. And it didn't feel it didn't feel slick. It felt really, I'll go back and say again, it felt authentic to the space and what people were looking for. And I and I do think that in the vacation rental and short-term rental space, there is a premium that customers place on authenticity and being local to a market and having knowledge about the market that you're serving that is different from maybe how people approach more traditional hotels or other segments of hospitality. And I always felt like the brand and the name lent itself to that, where it had this, you know, the feeling of being authentic and local, even in the multiple markets that we were serving out of the gate.

SPEAKER_00

Yeah. So let's get go deeper a little bit, because I think most operators are quietly underestimating exactly what you bet on. And one thing I want to touch on is the industry problem. Um you know, operators measure themselves uh by unit count, which of course is important regardless. They add doors, top line growth, and margin quietly bleeds. Uh, why is the unit count for the first part of the strategy the wrong scoreboard? Or do you disagree with that and you blend that together?

SPEAKER_02

Is not purely a vanity metric in this space. It it is necessary, especially as the especially especially as the industry becomes more competitive, um, and you see real margin compression, it becomes much harder to operate a portfolio on a smaller scale. And you know, there's rise in costs with software and all the new technology that has flooded into the into the space. Umperationally, it becomes much more challenging. You need scale in order to build out the teams around you that are that any of these businesses need and to utilize any of the you know any any of the software that has come to market that you need to stay competitive. So we're absolutely, you know, chasing scale, but you also want to have you balance that with having an effective portfolio. We want every property in our portfolio to contribute. We actively track the contribution margin of every home that we work with. Every single month, we're reviewing low margin or negative margin homes, and we're working with an owner to see what we can do to improve the economics around their property, both for us and for them. Because ultimately, this benefits them at the end of the day, too. Um we want the portfolio to be as effective and efficient as it can be.

SPEAKER_00

And we're so that's exactly the point I want to touch on here. I mean, yes, we can push back in unicamps and understand that's still an extremely important uh mark, but you already addressed some of the points. I mean, you know, growth is only uh as good as your utilization of your existing suppliers as well. And what you can do with your supply in terms of having positive contribution, glad to hear that. That's something that is totally underestimated. Unit economics on a property level is something that the industry is still not practicing uh in the way it potentially should. Also, maxing out the opportunity that a property can provide in relation to margin uh contribution as well. So it's not about ADR, it's not about occupancy, it's about RefPAR and unit economics, what a property can provide. And until you haven't like scored that to the maximum in a way, then it doesn't help you to add more units. And I think you have a very specific view on that and also looking at auxiliary service, uh expanding on revenue generation so you actually get the maximum out of your existing unicants. So that will then mean that your growth on unicants is actually then becoming second at the second most important piece.

SPEAKER_02

Yeah. And we we try to squeeze as much juice out of every property as we can and to find what differentiated ways to book. Um, who we're selling to, what we're booking with those guests, all of that, you know, is very important and something we're talking about every day.

SPEAKER_00

So one thing I want to go further on is most people you see of us say we own our guest relationship. But let's be honest, we're renting them from other platforms and OTAs like Airbnb, Booking Verbal. And I would love to know from you how fragile is a business that doesn't own its own demand over time?

SPEAKER_02

Yeah, that's a great question. I would go as far to say I I think most businesses in this space don't own any of their guest relationships at all, even if they, you know, even even if they might claim to. And the vast majority of businesses have the most the more obvious uh relationship with the homeowner with whom they are contracted or with whom they have the agreement. But the other side of it completely falls off. They may have repeat guests, but they aren't engaging with them in a way that really understands them and their travel needs and what they're looking for. And um we do. I mean, yeah, not even to speak to the membership program that we do have, which has been incredibly successful and transformative for our business, just in allowing us to more clearly create those guest relationships or create that connection with those guests. But we have a guest sales team that is proactively going out and engaging both members and high-value repeat VIP guests, you know, if they haven't joined our membership, um to ensure that we know exactly what they might want to book, what they might be looking for, uh, and we can place them in a home before they've even, you know, started going to the site and and typing something in and trying to filter through all of the properties themselves. So we we are not reliant, we we are not reactive to the bookings as they come in, um or just waiting for an OTA booking to populate. We we are actually going out with a team and capturing those bookings for the homeowners.

SPEAKER_00

I that's something I really want to go deeper in with you, and because that makes you, in my viewpoint, having been around the block for more than 20 years in this industry, uh, pretty unique, uh Matt, and uh and love to pick your brain on that. I mean, in in all honesty, loyalty and membership in this space, I would call it a graveyard, right? Everyone tries it, almost no one makes it work. Why does it fail for most? And why does it work for you at Rhett Cottage?

SPEAKER_02

I think most people haven't considered who they're selling to and what they're selling and and what they're selling in a really nuanced way. And what we know is who our customer is. They are typically um you know young urban um New Yorkers, you know, people in Boston, Philadelphia who are looking to get out of the city for the weekend very impulsively and are looking for a great weekend away. We know that we've built our entire portfolio across the Northeast around this idea, and we know that every home we launch is something that will ultimately be appealing and accessible to them. And the messaging that we've created is very consistent. We know that in launching a new home, we know who we're selling to and and and what how how we're uh explaining it in such a way where we know that out of the gate it's going to book. We have the built-in customer base, we know that someone comes to us and they look at our portfolio. Every single home in that portfolio and on that map is um something that they might be able to consider booking for themselves. Yeah. Most businesses don't have that in the same way.

SPEAKER_00

So let's go a little bit deeper when we talk about membership. I mean, and loyalty. I love it. I've I've seen so many, and at the end, it ended up just giving discounts. And for you don't need to provide discounts for a working loyalty or membership program at all. I mean, it ends up discounting your own prices, and that's not why you're building that. There's other reasons. And we know airline loyalty programs very successful. We own hotel, we know hotel uh loyalty programs, and and they and and they have a core driver, which is an airline is obviously the global coverage it has with an alliance and its airline itself, so it makes it attractive for a membership program, loyalty program, and hotels uh do the same under the umbrella of all their brands. A loyalty program like a bonvoy and others with hundreds of millions of members all make a ton of sense. In our industry, we are super fragmented. Uh, we're we're there are different ingredients, and I think in relation to Red Cottage, I totally understand where they're coming from. But if you could summarize, Matt, um, and for others, um, what would be the three, or let's say even five, most important key ingredients to be able to build a loyalty slash membership program for your business?

SPEAKER_02

Well, you know, we can compare it to some of the other industries you mentioned, and oftentimes we look and try to try to identify what those best practices are around other much larger uh programs that have been built. The dynamics in the vacation rental space are somewhat different and have changed how we've approached it and thought about it. One I think is having clear geographic specificity. If you're trying to sell, unless unless what you already know to be true is that you want to sell a membership and that is going to be some ancillary revenue for your business, but it's going to be more of a uh a cash grab from the customer who has no intention of using it again, right? We know that we want our members to stay three times with us in a year. And we come very close to achieving that. That's the goal. If if you're building a membership and saying this is good ancillary membership revenue for us, but there's a high likelihood that that person will churn at the end of the year, that I mean that doesn't really do you any good. When we when so for us, when you have the geographic specificity that that we have, that helps to uh that helps the customer understand what you are, why they're coming to you, what you're able to provide to them, um consistency around uh the the portfolio or the assets, making sure that they understand that this is the product that you sell and it's always going to be at this level, right? We everything we do is very high design and very design driven. We don't have any homes that don't qualify under those terms. And our guests know that, and they come to us specifically because the homes that we have on the platform. are unique, are designed, are going to be something that feels meaningfully different than uh what you would find if you just were sifting through the hundred pages of an OTA uh of of the OTA search results. So that's uh that's a big one. A third one um probably just the broader uh the the the perks and the benefits and the way you the the way you package it all together. I think that that is really important because you're recognizing ultimately there's more things that you can give to a guest besides just a discount. You don't want it to be completely discount driven. Ultimately that will impact your brand and it will impact the way that you're viewed. One of the really interesting things about our space, I don't think this happens in the hotel space, we have such a high percentage of inquiries that come in where a with a discount request attached to it. I think because Airbnb has conditioned people to think that they are coming in and dealing with a mom and pop that they can haggle with. I mean the the number of inquiries that we get where it says hey I see that your uh your home is uh $5,000 for the weekend how about how about we agree to three? It's crazy because that just that that doesn't happen you wouldn't walk into the four seasons and say I know it's five I'll give you three for it. It happens every single day in our business in a way that that makes me shake my head um we don't want to and people are very quick to ask for discount discounts and ask for ways in which that we can lower the price for them. It's ongoing and I think again it's because they've been conditioned to think differently about what it means to rent a home versus something else and and this idea of well why wouldn't you take my money? Don't you want to fill this booking?

SPEAKER_00

So we are fill fill fill this house um you know we have a responsibility to our homeowners to hold hold our pricing and um we also have a have a responsibility in building our brand that we don't want it to be associated with discounts and um all of those things are important in in how we craft the membership and the way we talk about the membership and making sure that it is broader than just hey here's a discount for your stay there are other elements to it that uh that elevate it yeah I I think you know as I said earlier you it's totally unique what you've built but I think I totally understand and I think these points make a ton of sense in in short terms I mean first of all to to build a a successful membership program, having the curated content in a specific area that is captive, you have high repeat trades up to three times a year. You have a clearly defined customer persona that comes out of downtown New York who want an escape for the weekend do that more often and this is exactly the product you're offering them and that drives traditional loyalty and your your content that you bring to them is highly curated to their needs. And that's why I believe your loyalty program works and will be a successful driver for your business going forward. For me there's no question. This episode of SDR Global unlocked is supported by Breezeway one theme we turn to often is trust. Trust with guests, trust with owners, trust with regulators. That trust is built on consistent operational standards. Breesway enables short-term rental professionals to systemize property care, document quality and induce operational risk across their portfolios. If we want to raise two standards globally execution matters. And now let's continue. Let's talk about a little bit under the hood or let's talk about when you talk about when when a guest picks Red Cottage over a cheaper identical looking listing what are they actually paying for and one thing I want to get to is obviously AI and the OTAs are about to commoditize discovery even further in that world what still makes a guest book you directly?

SPEAKER_02

Next to the membership program obviously right no no i it it it's the relationships it's the support it's the communication you know I I say all the time that I think we're as much of a communications business as we are um a hospitality business or a property management business. I mean everything that we do comes down to the quality of our communications because we have so many different stakeholders that we are engaging with on any given day be it the homeowners who are actively with us or new homeowners that we're onboarding or who we have in pipeline or guests that are on site or guests that we are helping to book and supporting through the booking process. Or not even to mention our our service providers or housekeeping teams. I mean there are so many different people day to day that need to be attended to that the quality of our communication with any of them is very paramount, especially because for a guest who's coming in, already you're on edge when you arrive at a property where there's no staff and you're not sure if anyone's going to be able to support you if you have a problem and there's always something that someone needs support with you don't have any sense of how far or where someone might be in order to help you if if that is needed. And we want to ensure that every guest we have feels that there is someone right next to them and that they are heard and that they know they're getting the support they need in a way that's very that it's operationally challenging. But it drives everything because the the the the way problems especially in this space become exacerbated are when the guest feels unheard or ignored. And generally no one is ever intending to ignore their guests but if a guest doesn't receive a response for five minutes they feel inherently ignored or they feel they feel that they are left to their own devices to um to solve a problem themselves. We absolutely don't want anyone to ever feel like that. And so we've trained our entire team in communications at a very high level to make sure that they understand that this drives the entire experience everything.

SPEAKER_00

So let me be the devil advocate here Matt and I know you're a very smart operator but I could say this is totally theory what you're telling me here, right? And because at the end of the day I could also argue this is contradictory. And why is this contradictory? Because everybody talks about AI, everybody talks about automation, margin compression we need to automate as much as we can um have more efficiency, you know, reduce our operating expenditure and at the same time you're coming in and saying hey we're we're actually a high touch business and I'd love to learn a little bit more how this looks in cybered college there was nothing I could disagree with you in what you said but how does that look like in reality and I would love to learn more about your thoughts and your balance between AI technology and human capital to make your business successful.

SPEAKER_02

Yeah I don't think those things um I guess AI and using AI in whatever capacity you might use it and having a human touch are uh contradictory to each other we want to ensure that there is someone who can support um at all times for any guest that is on site and we've worked really hard to to do that at the same time there are things that are um within the scope of knowledge that our team has and there are things that are outside the scope of knowledge that that they that they have and AI can be an incredible way of filling in those knowledge gaps and I say that to mean you know it sometimes it feels that we're running a portfolio of hundreds and hundreds of hotels and every hotel has completely different infrastructure different light switches different air conditioning units different hot tubs different there is not one uh consistent feature in any of in any of the properties that that we have right and we get every question under the sun how do you troubleshoot the microwave or how do you troubleshoot how do you troubleshoot the the number of times that we get asked how do you troubleshoot an Apple TV or um or a mini split we know this we know the infrastructure of every property. We know that every room and what kind of units it has and how they you know function at a high level but not everyone's always going to be able to um uh to troubleshoot one of these highly specific um units in in in a more nuanced way we absolutely are are leveraging AI in order to make sure that we're at least providing some uh relatively helpful and more detailed um support where they need it and as they need it and I I I think it's been a phenomenal way for us to uh be able to be engaged with the guest even if there's something that we're not necessarily well versed in but be able to present ourselves as as as as being such is that there's a few questions that are coming out of that is that for you in terms of your adoption of technology and your customer service is that a a differentiator or is it clearly a must have I think it's a must-have I mean how anyone else would be I know what it was like without it and I know what it would what it was like to be asked and have to troubleshoot one of you know anything like that and it's very challenging and a guest doesn't want to you know the guests don't want to feel like you aren't able to help them they want to feel like they're gonna get their answer quick and with the support they're looking for that's something that you're just always up against in this space. And when you're not on site it can create um it can create friction with the guest very quickly and so you're always trying to work against that how does that translate to the culture that you have built within Red Cottage I understand that what you have a brand is also is the foundation of a brand is also its internal culture. And how does that translate in terms of where you want to be towards your staff and the culture of your business and how would you describe that um well we have a phenomenal team and a phenomenal culture and everyone knows that what we are intending to do is provide a very high level of customer service that that that allows us to take care of not only guests but homeowners. I mean our homeowners are are bringing very high value properties to us and most of them you know a lot of our homeowners are in creative fields and have uh staged their homes in such a way where their perspective is is clear clearly reflected they want their home to be continued to be seen in that way even through the guest stays and our promise to them is that we will do that. And so we are incredibly detail oriented and have to be to to be able to service the homes that we do.

SPEAKER_00

And everyone knows that the communication uh style that we have is is arguably the most important thing that that um that that we build around and we want to make sure that that we continue to uphold that so that that how does that resonate within your own organization from a leadership style point from a team cohesiveness standpoint I mean or or or a different question if I would ask anybody of your team describe direct college culture to me how what would they what do what would they reply?

SPEAKER_02

I think that they would say it's um built around transparency where we all are in support of one another and at whatever level you are in the business everyone is needing to have access to information that might help them if they're any one of us could be in a situation where you're needing to navigate between homeowners or guests or third party service providers, whoever it might be. And in those moments you need to be able to understand how we hold ourselves, how we you know speak to anyone and how we and you need to have that information that's specific to the property that you're dealing with or to the guests you're dealing with enough so that you have all of the context going into any of these conversations. And we really try to create a transparent environment where everyone feels like they're able to access that kind of information and um share in it and and improve their own workflows with it.

SPEAKER_00

So let's talk about the balance of technology AI with the human capital to go a little bit deeper here how does that shift how does that transform within Red Cottage because you're still a high touch business you have extremely high standards when it comes to customer service and owner services etc etc you know the fact that you're looking at your business as having hundreds and hundreds of individual hotels I like that aspect because that's what it is ultimately especially with your clientele who is a very sophisticated clientele. So let's be honest here the clientele that you're serving is is probably one of the most sophisticated and very demanding clientele as well also to think about where there are professionals in Manhattan, you know, constant pressure and stress in a large city getting out things need to work and then you need to balance by creating more efficiency adopt AI to help you to push this human capital where it ultimately creates most value for your stakeholders between guests and the homeowners how is that transitioning and and what are the things that you need to be very focused on to max that out?

SPEAKER_02

To max the can you that balance out between technology and gym capital um well I think that the business yeah there will be widespread adoption you and I were just at the the VRMA conference a month ago and the theme very clearly was AI adoption there will be and continue to be widespread adoption in this space of these tools and um most people are building around them. I mean we use um a lot of different tools internally that have supported our work and have made us more efficient in in what we're doing and our operations uh and we're very excited about it. We we want every software partner that we work with to be nimble and um and and to fit into the tech stack that we've now that we've now built for ourselves and we're gonna continue to choose and prioritize partners who who can do that for us. But at the same time the more that we see widespread adoption I think that having that human touch in the service in the engagement and the communication that you have with any of your stakeholders homeowners or guests or whomever uh will be the the mark of a premium and elevated brand and it's very easy as it will be it will continue to be easy if you have a smaller portfolio. You're going to be more reliant on these tools they're gonna they're going to relieve you of a lot of the operational headaches that were if you were a sub 40 unit portfolio that you were taking on yourself. You're it's going to be very easy to pass those off and um and and be reliant on AI in a way that you didn't have access to you know six months ago. For us and as we as we think about scale and as we think about maintaining that kind of guest experience that we're driving towards we believe that maintaining that you know the human capital and the human touch that that we have built into our booking flow and into our experience will help continue to to differentiate us as being that premium elevated brand in the space that people will want to go to and continue to go to multiple times throughout the course of the year because we're able to support and we actually know have these relationships and we know the guests and we know who we know what they want in a very, very nuanced way so what does that mean as you grow?

SPEAKER_00

Does your human count your human uh your your people count, your staff count is that going to grow as your units grow? Or is that not necessarily the case, even maximizing the human touch that you need to have for your stakeholders?

SPEAKER_02

It will absolutely continue to grow. I think that the growth rate will probably slow in terms of how many um people we need to service the number of homes that we are growing into right now.

SPEAKER_00

But we are absolutely hiring we've hired a lot of people lately and even just to be able to manage the different uh tools that we have integrated into our tech stack I mean that requires uh a team that is aware and able to navigate all of these changing technologies and um leverage them for the betterment of the the experience that we're selling how do you hire you just talked about hiring Matt and you know that's becoming the you know more critical in today's AI age as well how do you hire and who do you hire well I mean well what are the personality traits what are the the type of people regardless like customer service facing obviously et cetera et cetera but but things are changing now what is more important in today's world it's you obviously don't need to hire tech nerds right uh we love that you know we we that that that that's that's um I guess uh a characterization that I think would be you know quite quite positive in the business but um we want people who are entrepreneurial who are able to build out lines of business and not just be reliant or not just fall into the day to day operations of what the business is built around.

SPEAKER_02

It's very easy To come in here and just be caught up in servicing a homeowner or caught up in servicing a guest. But we want people who are able to think clearly about how to build tools into the business that are going to improve their own workflows and leverage new technologies and be it AI or or anything that might support them in the work they're doing. I mentioned we have built out a real guest sales team and an event sales team. We've now launched an incredible product, which is uh end-to-end retreat management, which is to say that we're we're we're always trying to identify ways in which we can diversify the nature of the bookings that we're capturing for the homeowners. So it's not just, you know, hey, this is a guest and their family and they're coming to book for the weekend. Um, we're actively booking events of all kinds. And now what we're able to do in a way that is very unique in this space, if not entirely unique, is that we can do uh end-to-end management of a retreat. So if you are a practitioner independently or a teacher of some kind, be it a yoga teacher or um um uh maybe an art therapist, or you if you have a community that you want to engage and you've never had the ability to go out and source a home and and perform the logistics and capture payment and all of that, we can now do all of that for you. So we are actively working with um with wellness professionals to facilitate wellness retreats where you can come to us, we can take care of the entire product end to end, we can sell the individual rooms in the home that you've already reserved to your guests. We can collect payment, we can we can send them all of the information that they might need on the retreat. We can provide you with any products on site. It's a completely different way of approaching what we are able to do as a hospitality partner to the homeowner and as a um as a manager.

SPEAKER_00

That's super interesting. What was what was the key driver towards that? So moving on from you know your the your organization culture, how you're balancing technology with your human capital, uh, hiring. And now we're coming back saying, hey, we're even building new products uh as well. What was the trigger point behind doing something like that? Normally we talk about taking complexity out of our business. It's overwhelming already as it is, you're just adding complexity.

SPEAKER_02

Well, we're able to. And I think that one of the amazing things about, you know, utilizing AI in your business is it helps unlock a lot of some of those blockers that might have existed that maybe impeded you from being able to build in new products that seemed interesting but uh but harder to put into place. And we absolutely have the team here that can do it. We have the drive and the interest in uh in building those products, and and now we're doing it. And it's been great. Uh uh everyone uh feels unleashed, I think I would say, within our business.

SPEAKER_00

Yeah, no, I I mean, don't get me wrong, I love the idea, but let's transform that a little bit further into our listeners and the topic you and I touched earlier in our conversation. You know, for an operator with 150, 200 units, margins squeezed, uh doing everything themselves, what should they do or stop doing immediately while you have the foundation to add more products and and and become very innovative, you have to supply and everything else. What how does that translate for somebody who is actually just going into a different direction? If you're if you have a smaller portfolio and you're in Margin squeezed, you do everything yourself, you don't have to scale.

SPEAKER_02

Yeah, my answer would be entirely different because I think that the reason that we're able to do some of these things is because we have the scale and we have um the reach. And if you don't have that, I would be less inclined to encourage someone to to jump into these different things. What I've said to to managers and and individuals who have smaller portfolios, the most important thing you can do in your business, especially right now, where it has never been easier, I think, to jump into this space and put together a portfolio, a smaller portfolio of short-term or vacation rentals. Um it's never been easier to start and it's never been harder to scale because of all the competition and and the the how low the barrier to entry really is. The most important thing you you need to have is a robust um and clearly delineated homeowner acquisition strategy. That needs to be the backbone of everything you do. If you use AI to help you do it, great. But everything else, I think, is um is secondary. Because you can't for any of those portfolios, you can't be you you don't want to be in a position where you live and die by a homeowner, meaning they they're coming or going, or a homeowner leaving your portfolio. You don't want to be in a position where that could meaningfully affect the economics of the business you're putting together. If you have 20 units, it will. And so you need to be building around a very clear, robust acquisition strategy for how you are going to be out selling to homeowners and marketing to them and pulling them back into your business.

SPEAKER_00

Yeah, thank you for sharing that. Absolutely, Matt. Now that answers it more than ever. I mean, you know, one thing I wanted to get to is also you have now the scale and the platform and everything else to to increase margins with different types of businesses while we're in a competitive environment as well. And I thought also these products that you're now defining are additional reasons in how you can have additional margin contribution to a business that is ultimately under pressure as well, right?

SPEAKER_02

Absolutely.

SPEAKER_00

Yeah, okay. So looking at the time, I would love to talk and hear a little bit about your future outlook. I see you and I know you as a very thoughtful and very strategic person as well. I'm sure you have everything matched out, um uh mapped out, thinking about the future as well. Uh, it's very impressive what you're building, Matt. Uh definitely enjoyed our conversation also in in Los Angeles, uh, going a little bit deeper. And I'm glad that you're on the show today. And hopefully you can share some of your views, how the business and how the industry is looking like. We have a lot of debates uh in our industry. We have we have uh you know uh we have macroeconomical issues on a global basis, we have global warming, um, we have regulatory environments, we have margin compression, we have technology uh that is coming towards us, we have changing consumer and consumer behavior in terms of bookings and everything else, AI is is a is a big wave that coming is coming towards us. How do you let's look at three years from today? What do the and and going towards your specific business model as well, do the branded beloved operators win, or is it a volume game at the end of the day?

SPEAKER_02

And and maybe in between who will disappear I think it depends on how you're capitalized and um what that looks like for your business and what kind of scale you need to or you're trying to achieve. And um, you know, I think of some of the management companies that we've seen that have um pivoted to become OTAs themselves. And uh there's a lot of um evolution in this space as people try to identify where the opportunities are, where the opportunities for scale are. Um management is very hard.

SPEAKER_01

The larger you are, it only becomes harder.

SPEAKER_02

Um and you can see and feel right now, just in terms of those macro factors in this space, that a lot of these larger businesses are still trying to figure out what this evolves into and what the next step is. Um for us, you know, because we are so defined by our by the geography in which we service, one, we think that it allows us to manage at a higher level and continue to manage and offer a offer a management product to a homeowner at a higher level. That's very hard to compete with if you are a national manager, but it also allows us to move into other home services that um only support the homeowner further. And we already sell a lot of in-house services to homeowners. So I think it's analogous to the membership that we sell on the guest side. We have homeowners who sign up for um ongoing services that are unrelated to the guest booking. And that has provided in the same way the in the same way you you capture recurring revenue on the on the guest side, allows us to create those same kinds of revenue streams on the homeowner side. The more that we do there allows us to go deeper in what those services might might be. And in terms of the value proposition that we have for our owners, it's not only that we want to help you make as much money as you can on your home, but we want to be able to help you save on your carrying costs in a more nuanced way than anyone else might be able to. And I think that because we started on the guest side, we can more naturally move into the other side of that, where it would be, it would be much harder in the reverse. If you were offering um uh housekeeping or maintenance or landscape services, it would be much harder to then say, well, now we're gonna help you generate revenue on your house and we're gonna build out concierge teams, and we're gonna build out guest communication and guest sales teams. It strikes me as being far more difficult to do that in the reverse than it is for us, where we can offer in these services and say to an owner, we're gonna make you as much money through the guest bookings as you would be able to earn. And we're also going to be able to reduce all these other third-party services that you are paying for. And that in um those two things collectively, I think make us incredibly unique in what we do and the the service and the product that we're selling.

SPEAKER_00

Also for the future, I'm sure it does. Now, more as a closing question at a personal level, the leap from running a business, and you already alluded to it earlier. Uh a business to leading one, what changed in how you spend your time and what did you stop touching?

SPEAKER_02

Well, it's changed as we've grown.

SPEAKER_00

The lead from running, you run a business when you started. Everybody does. We run a business, and now you're leading one. And what has changed for you in growing that business to that level? Now leading a business from when you run the business.

SPEAKER_02

Yeah, I spend a lot on a day-to-day basis. Um that they have the tools that they need to, again, I used this word earlier, but be unleashed in uh building around building in their roles. And we want people who not only are warm and engaging in the sense that they're able to uphold the the standards of hospitality that we are selling to anyone, but we also want them to be curious and entrepreneurial in how they approach their role and how they think about it in a bigger picture so that we know that they can go and build out products of their own that they might be able to then turn into something that could be meaningful for the business. So supporting them, making sure they feel they have what they need, um, holding them to those standards that we have, all I mean, that defines, you know, everything that I'm I'm working on. And I think it's critical in order to build a really um fast and moving organization.

SPEAKER_00

Well, I can't thank you enough, Matt Orle, for sharing your story about Rick Cottages, your insights and how a business is run, what differentiates it, how to maximize a brand in a captive area amongst your owners and your customers. Uh, very impressive. We talked a lot about hospitality, which makes my heart warm. Uh, that's the industry we are in, and we try to make it better. And you're definitely one of them who is strongly advocating for that, running a professional business for all your stakeholders. It was very impressive. Uh, thank you for joining STR Global Unlock today, Matt. Wishing you all the success with Red Cottage. Hopefully, one day uh I can even be your guest as well.

SPEAKER_02

Thank you, Simon. Great to be here.

SPEAKER_00

I'm Simon Lehman. This was STR Global Unlock. Thank you for listening, and we are looking forward for you to join us on the next show. This conversation makes one thing very clear brand is not just a logo, a name, or a nice website. In short-term rentals, brand is built through trust, communication, consistency, and the ability to create a real relationship with the guest. And in a market where margins are under pressure, platforms control demand, and automation is becoming easier than ever, that relationship might become one of the biggest advantages operators can build. But if this episode showed us why the human connection still matters, the next question is what happens when AI starts entering that guest relationship? That is exactly what I discussed with Arlo from Bestie AI, Anthony from Guestway, Jay from Host Buddy, and Cole from Conduit in another episode. We talked about AI agents, automation, guest communication, operations, reviews, upsell, and where the human touch still matters in an AI powered hospitality world. So if you want to understand how AI will change guest communication and how operators can use it without destroying the experience, watch that episode now.