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If you're a vacational manager with Ken Homes, like you're listening to this and you're like, what the hell am I supposed to do?
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Let's talk about the elephant in the room.
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Search is changing.
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And and you're old enough to remember, that was an incredibly controversial statement.
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I would put my money in the same color and number as you in terms of how this is gonna evolve.
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I think you nailed it with the Europe to North America comparison, but if that's just wild to me, that's a Harvard business study on like monopoly impact on innovation.
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So there is a big question if AI becomes the new top of funnel, is that gonna happen?
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You are listening to STR Global Unlock, brought to you by ATL AfterDate.
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The show where I speak with the leaders taking short and rentals worldwide.
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I have time to even after two decades of find selling and investing to the network that fans content and categories.
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Real conversations, global insight, no PR cloud.
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Let's get started.
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What if the biggest disruption to short-term rentals is not regulation, not supply growth, not even capital compression, but distribution itself?
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What if Google disappears at the top of funnel?
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What if AI agents decide where you get the book?
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And what if the real power in travel was never the brand, but the inventory?
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Today's conversation is about infrastructure control and the next great reshuffle of distribution power.
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Today I'm joined by an old friend and amazing person, John Stewart.
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John has spent decades at the highest levels of travel and technology, from leadership roles inside Expedia and Airbnb, to building self-driving cars at Wimo, to now building infrastructure at stop off.
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What makes this conversation particularly interesting is that Torn is currently working on rebuilding distribution infrastructure in the live event industry.
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An industry that evolved very differently from travel.
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And that contrast gives us powerful insight into what may happen next to children rental and hospitality.
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Good to see you, son, and always uh always appreciate our time together.
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Likewise.
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And you know, you and I were sort of thinking, what are we gonna do together on STR Global Unlocked?
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And and I was like, Sean, we have plenty of things to talk about.
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So, Sean, let's start with rapid fire for you, short answers, Sean.
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Um, AI increases platform power or decreases it.
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You're probably right.
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You probably give it an increase that it that now the source of supply becomes even more important.
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The user experience diminishes, potentially the brand even diminishes, where it's now just who has the best inventory to buy, even regardless.
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So you're right.
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No, I I give that an increase in platform power.
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Will OTAs be stronger in five years?
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I would argue, yeah.
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I think still having the aggregated power of supply means they're they're still very well positioned for this evolution.
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Direct booking strategic or romantic?
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Uh strategic.
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I I I see direct bookings as a dial.
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You're at 1%, what can you do to get to five?
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Doesn't mean that's a bad place to be.
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The goal of direct transactions is always growth.
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You're at 5% now, great.
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How do you get to 7% direct transactions, 8%, 10%?
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You're doing leave behinds.
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Anyone who books from Airbnb is getting an email from you after recommending they sign up for loyalty programs.
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That never to me is a waste of invested time and effort.
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There's always a stronger cost of distribution and cost of relationship ownership coming direct.
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I I think you should always be strategically investing in the power of direct.
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I think you should not romanticize getting to 100%.
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The only time I question people is when they're like, we're going to be 100% direct.
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The Saunder S1 of IPO is like it's going to be 70% direct.
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And we all knew that wasn't realistic, but it's an area that you should be investing in monthly.
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Biggest risk founders are underestimating, and you've been exposed to a lot of founders in your recent career as well.
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Oh man, the plate.
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I'm not a founder.
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I'm not strong enough to be one.
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I come in as an operator and help founders, but the challenges of founders are substantial.
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The number one is um the suspension of disbelief.
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If you want to be a founder, you have to be willing to pause all logic and reason because what you're doing makes no sense.
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What you're doing fails 95% of the time.
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Uh, what you're doing has major obstacles that others have been uncovered and slammed their heads against the wall with.
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I I know founders have built majorly successful companies that have filed for bankruptcy half a dozen times on the path to that.
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The Airbnb story of being rejected by a hundred plus VCs and investors.
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I would have bailed off that train so much earlier in that evolution.
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You want to be a great founder, you have to ignore everybody and believe in yourself and believe in the idea, believe in refuse all the logic that suggests this isn't gonna work.
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And those are the ones that somehow make it work.
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Love that.
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Last one, the one infrastructure layer you would own if you could.
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I'm struggling with which component of it, but it's it's probably not the GDS anymore.
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I it's the CRSs, I think, now are where the power is held.
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That the CRSs have become the GDSs of like the 70s and 80s.
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And so to me, it's it's that those pipes owning the CRS, the reservation systems that are the source of truth.
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I think that's incredibly powerful.
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And this is what I love about you and your background and what you have seen.
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You have so many different facets.
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And I always talk about, you know, here's Sean Stewart started as a bell boy in Australia.
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And seeing the world in all aspects, building self-driving cars.
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And I remember I was at the VRMA in Phoenix and sending you photographs of Waimo standing in the middle of the road and saying, hey, Sean, what's happening here?
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So this is this, I mean, this is absolutely incredible.
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And you've done some of the biggest uh keynotes at ARM conferences and et cetera.
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So I'm so happy to have you episode supported by price labs, a comprehensive revenue management suite for short-term rental operators, dynamic pricing to market dashboards and listing optimization price labs and the tools to make confident uh data-driven decisions across your portfolio.
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If you're managing growth in 2028, revenue intelligence is critical.
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You can find more details in the show notes.
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So, Sean, let's start with something fascinating.
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And you alluded to that already in our early conversation.
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In the 1960s, Cyber was born out of an airline executive sitting next to IBM, right?
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And that decision ultimately built the infrastructure of modern travel distribution.
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But ticketing went a completely different direction.
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Can you walk us through how travel built open infrastructure?
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You bet.
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I love that story.
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Like, because when we were early at Expedia, we opened the New York office out here and started to add hotels to the Expedia platform.
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But before we even had merchant agreements with hotels, you had access to inventory through the GDS.
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You could show GDS inventory, you could secure a 10% agency commission.
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You didn't contract any of the hotels with an integration into one of the three or four major GDSs.
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Expedia offered all of the hotels on the planet on day one.
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So you had this coverage of supply that was still using that agency model back then.
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And then you built the merchant model supply on top of that as you directly contracted with the hotels, you started to layer on this other source of supply at those higher margin levels.
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And so I remember back then being obsessed with like, how did this get built?
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This was 2001.
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It was how does a system already exist globally that you could patch into to have access to every airline, every hotel, every car rental, that Simon can go home tonight and create SimonsHotels.com, connect into a GDS.
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Well, these days we've replaced GDSs with CRSs, but you could have that coverage of supply.
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And so the story, as you mentioned, is a pretty wild one.
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Two executives get on a flight, I think New York to Chicago.
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Both of them have the last name of Smith, bizarrely and ironically.
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CR Smith was the American Airlines executive.
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I can't even remember the first name of the IBM executive.
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He doesn't have the lure as uh as much in the story.
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But they sit next to each other on a flight, and the American Airlines executive back then is complaining about the fact that they have phone agents internally booking flights for people.
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People call in, they have to book a flight uh ticket or inventory for the customer.
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This is within American Airlines.
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And the complaint is that there's no single system of inventory so that any agent can book any seat all at the same time.
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They're using paper records and a bunch of manual tracking of which seat is available.
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And this happenstand sitting next to each other on a flight gives birth to the first project, which was Sabre, where IBM teams up with American with the first intent of just building an internal inventory system that was live, every sales agent could plug into and access ticket volume from there.
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And we all know, if you're in the industry, you all know how this evolved from there.
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Three or four GDSs.
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First, the airlines start building their own one, United builds theirs, and American builds theirs.
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Then they start giving non-employees access to this system.
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They give terminals.
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The travel agent in Tokyo has an American Airlines Sabre terminal, they have a United Airlines terminal, and they're able to switch from one machine to another to book different airline tickets for customers.
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And these agents don't need to contract directly with American or United.
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They're able to earn money as commissions without ever having a direct negotiation with the airline.
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And then from there, they say, wait a sec, the travel agents actually drove the next evolution, which was they said, we're sick of jumping terminals, like put all the airlines on one.
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Like, why do I need five pieces of massive hardware in a travel agency in the 70s?
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And so by the 80s, they start layering on all the airlines.
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Saber now has every airline competitive offerings.
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By the 90s, they add in hotels and car rental into the system.
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And eventually these GDSs become connected to the web kind of 1.0 version of the internet, where suddenly these websites are able to distribute inventory globally to customers, starting with this GDS infrastructure.
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Then the technology evolves into CRSs like Marshall at Marriott, and suddenly the GDSs start to get skipped and the kind of integration goes from CS CRS directly to customer.
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So just an incredible component of the infrastructure and technology and innovation that created the travel industry we have it today.
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And that created yield management at the level of sophistication we have.
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Airline tickets are priced in one of the most complex and sophisticated manners for a perishable product.
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And so I guess what you're alluding to is I'm now in the ticketing space.
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I joined StubHub Q4 last year to help uh work on a project here.
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And I never realized how much I take for granted the GDS and the travel infrastructure that was developed from the 50s onwards, because it makes our industry one of the most sophisticated from a distribution perspective.
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And the comparison to how a ticket is sold to a live event, again perishable, just like a flight or a hotel, but in a far simpler, more interesting, direct path to market, which I think is where we started chatting about the comparisons here.
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Exactly.
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So going deeper into that conversation, uh, where you are at stop up right now, obviously where you're looking at is ticket mask to build a centralized control in terms of ultimately we're going towards short-term rental and we're going towards inventory distribution.
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But maybe you want a little bit further on on where you're coming in with StubHub, what you're looking at in terms of infrastructure environment of selling these tickets, and something very similar happened, you could call it um a GDS in the ticket industry as well, right?
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Yeah, so the the kind of opposite trend happens in ticketing, which is in the 50s and 60s, there isn't as much of this infrastructure development like there is in travel.
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The two era, you know, people didn't meet on an airline with an IBM executive and start designing what ticket distribution could look like.
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And then you get into the early 70s, which is when Ticketmaster gets founded in the US.
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Uh, I think it's 73 or 74.
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And they take a very different path to market, which is over the next couple of decades, they take an approach of taking over the distribution and execution of distribution for an event for a venue.
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We will run your box office.
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Like if you go up to the window at the venue to buy a ticket, that's a ticket master employee.
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When you get to the, you know, the internet and the websites exist, the direct website, that's run by Ticketmaster as well.
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Your pricing, your systems, your back end is all a Ticketmaster solution.
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So almost like an all-encompassing solution.
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But what it did was it took a single path to market versus the travel industry taking this multi-pronged approach to market where anybody can access the inventory.
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They take a very different approach, which is this single exclusive channel to market, and they take away the distribution power and remove the need for a lot of this innovation and skill set to be developed in pricing and how you distribute a ticket around the planet.
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And so the result is a very different outcome.
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And so the comparison to what we were talking about in the airlines, this is like if American Airlines website was run by Expedia, the boarding pass scanner when you get to the airport is owned by Expedia, the pricing and distribution are is controlled by an Expedia system and Expedia backend.
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And there's actually no path where you book directly from American Airlines.
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Everything is actually booking through this third-party distribution solution.
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It just doesn't exist in travel.
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It's mind-boggling to think how that could even evolve to be that type of path to market.
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And so what's happened as a result is with that primary exclusivity, the concept of secondary gets born, which is people reselling tickets after they've their original purchase, where market calibration occurs and pricing where supply and demand actually start to meet, and where global demand finds its source of aggregated supply.
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Instead of having this global distribution infrastructure, it starts to pop up in this too fragmented world.
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You've got secondary selling the kind of the meta view of everything, while the primary is just selling what they own and have control over.
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And so when Subhub approached me, the question was there's starting to be signals that this division is fraying, that the rights holders are no longer satisfied with single channel path to market, exclusive path to market, and they want to open up their distribution network in the same way that flights were doing in the 60s and 70s.
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And that's what's this incredibly exciting evolution happening in the ticketing space that has such analogies and comparisons to what has evolved in travel.
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So summarizing that for our audience, if you sit on today's flight from Sydney to Melbourne or from New York to Chicago with 138 seats, you can be rest assured there's 138 different prices.
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If you go to an edge shearing concert in Central Park, probably everybody paid the same price.
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So, and and now let's build the bridge towards STR and what happens when infrastructure is built differently from the beginning.
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And I think that's where it's exactly going for in your consideration.
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And is this where it becomes relevant for the short-term rental industry as well?
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Yeah, I mean, the vacation rentals went through a similar kind of change in distribution, but mainly because Homeway and VRBO kept them in the listing model, the advertising, right?
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So when I got to Airbnb and we were looking at how do you make vacation rentals instantly bookable like a hotel.
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And you're old enough to remember that was an incredibly controversial statement.
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Like, we're gonna make a vacation rental be as easy to book and transact on as a hotel.
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Live inventory, live availability.
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And the first year at Airbnb, the first 50 meetings I had, people said to me, You are absolutely nuts.
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Like nobody's ever gonna allow this.
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Because vacation rails had a deposit agreement, a safety agreement, a short-term lease.
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They wanted to talk to the person who was going to be staying in the house, ask them about their dog and what how poorly behaved their children are.
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The concept of instant transactions was terrifying.
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But what happened to happen to make that a reality was you had to make the vacation rail industry comfortable with it, but you also had to develop the infrastructure so that there was live available inventory that could be transacted on.
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So we had to go build essentially what hadn't evolved on the GDS landscape because the GDS never consumed vacation rentals.
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It was flights, hotels, cars, but that category never hit there.
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Because of the strength of the homeway and VRBO model meant you could just do a listing for$400 a year, take the transactions yourself, negotiate the terms.
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It was a newspaper model instead of a transaction model.
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And so when we get to Airbnb and we start connecting property management systems, it was the live reses of the world.
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You were going out and connecting all these inventory systems directly into the Airbnb marketplace, which then gave people a little bit more comfort that live transactions was a possibility.
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That if we have the source of truth connected into the marketplace, we can book your home without a double booking, without any consequence.
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But it came back to technology.
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You had to get people comfortable with something new, which that's one feat, one challenge for sure.
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The other piece was the underlying infrastructure of how the inventory was shifted around and distributed.
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I love it.
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And you know, I have a big smile on my face.
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I I basically remember when Brian Sharples came off stage in at FocusRide in 2008 saying we'll never make our inventory bookable because the homeowner wants to decide who's going to stay my property.
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I could have strangled him and said, hey, we're running the largest property management company in Europe already at 24,000 units.
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All our stuff is bookable.
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So short-term rental lacked of that infrastructure that you've just alluded to.
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And I remember this conversation I had with Jeff Boyd from booking or priceline.
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He said to me, Simon, we want this inventory bookable and then we can transact.
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So we moved from a super fragment supply ultimately.
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And we at the time were the first property manager in the world to integrate our entire inventory, 24,000 units, through an XML feed, to booking.com in 2008.
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That's 17 years ago.
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So we had OTA aggregations, then we have PMS concentration, and now we're entering another shift.
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And I think that's what our conversation is about.
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Sean, we don't want to dwell on the past too much.
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We are in the present and we need to look into the future.
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And you and I cannot have a conversation without talking about what does this mean now in terms of top of funnel, where we came from.
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I think we understood how travel is being aggregated through GDSs and other platforms.
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OTAs came about, the aggregated travel, uh, and we've seen the evolution of that, but now we have another phenomena called AI and the new top of funnel.
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And that's the big conversation.
00:19:40.799 --> 00:19:50.160
And with your experience, especially now working at Stub Hub, but seeing the evolution of travel aggregation and distribution, let's talk about the elephant in the room.
00:19:50.319 --> 00:19:51.519
Search is changing.
00:19:52.000 --> 00:19:56.880
Consumers are increasingly asking AI agents instead of Googling.
00:19:57.039 --> 00:20:00.079
I mean, my children, I just said to you, I have five children.
00:20:00.160 --> 00:20:03.519
They they use Google in the past, but now it's like, why do I need Google?
00:20:03.680 --> 00:20:10.880
I do everything on open AI or tools like that in terms of my homework, in terms of my studying, in terms of my research.
00:20:10.960 --> 00:20:17.599
If I have a question and my dad and my mom can't answer, I ask uh open AI or anything similar.
00:20:17.759 --> 00:20:18.960
So there is a big question.
00:20:19.119 --> 00:20:22.960
If AI becomes the new top of funnel, is that gonna happen?
00:20:23.200 --> 00:20:27.119
I see it happening every day, and already that the top of funnel has dramatically altered.
00:20:27.359 --> 00:20:30.160
My wife is planning our spring and break vacation.
00:20:30.240 --> 00:20:33.200
Um, and last night we're watching the Olympics and she is sitting there.
00:20:33.279 --> 00:20:36.240
I'm a ChatGTP service and she's a Gemini person.
00:20:36.559 --> 00:20:38.000
She is that's the difference.
00:20:38.799 --> 00:20:40.240
There's a household debate.
00:20:40.319 --> 00:20:48.480
It's uh I'm a first adopter, I feel loyal to ChatGTP, even though she keeps showing me examples where Gemini has a far more detailed response.
00:20:48.720 --> 00:20:54.880
But she is conversing back and forth with Gemini about planning this trip for spring break through the south of Idley.
00:20:55.440 --> 00:20:59.119
Um, and she's asking what destinations and now look at uh hotels.
00:20:59.279 --> 00:21:00.640
Are there good hotels in this area?
00:21:00.720 --> 00:21:02.079
Should I look at vacation rentals?
00:21:02.240 --> 00:21:03.759
I'm looking for a home for five people.
00:21:04.000 --> 00:21:05.279
Can you find me availability?
00:21:05.440 --> 00:21:12.480
So, what clearly has altered is at no point did my wife Google any of these terms, start with a Google search and start reviewing websites.
00:21:12.640 --> 00:21:14.480
It was straight into an agent.
00:21:14.559 --> 00:21:18.640
And that experience is incredibly conversational, it's incredibly flexible.
00:21:18.880 --> 00:21:23.359
It feels like you are talking to one of the most educated travel agents on the planet.
00:21:23.519 --> 00:21:27.440
They have an answer to every question, down to the restaurant, the airport transfer.
00:21:27.599 --> 00:21:29.039
They can answer all of it.
00:21:29.279 --> 00:21:42.640
And today, in its early kind of design and incarnation, the monetization hasn't played out yet in that model, which is Gemini largely is answering the questions based on its truthful view of what is the best answer to the question.
00:21:43.039 --> 00:21:50.000
Where it has no bias yet, but is driven by click-through rates, impression costs, anything like that.
00:21:50.240 --> 00:21:52.319
But you know that's where this is going, right?
00:21:52.400 --> 00:21:58.799
They unless they're satisfied with purely subscription based monetization of the product, chat GTP, I pay 20 bucks a month.
00:21:58.960 --> 00:21:59.759
Maybe they're satisfied.
00:22:00.400 --> 00:22:02.000
With just taking$20 a month.
00:22:02.160 --> 00:22:03.359
But you know Google isn't.
00:22:03.519 --> 00:22:04.960
Google has seen this book before.
00:22:05.039 --> 00:22:06.480
They know how this evolves.
00:22:06.640 --> 00:22:08.799
This is not going to be a subscription-based solution.
00:22:08.880 --> 00:22:13.440
The monetization on this is the clicks and the impressions and the recommendations.
00:22:13.599 --> 00:22:21.440
So when you ask Chat GTP or Gemini five years from now, hey, what's the best flight from New York to LA on the 4th of July?
00:22:21.680 --> 00:22:30.000
If American Airlines is paying that AI product a little bit more to be recommended, then how does that influence the recommendation side?
00:22:30.160 --> 00:22:36.400
And I think that to me, there's lots of interesting areas of AI, but this top of funnel change 100%.
00:22:36.880 --> 00:22:43.440
It's already, they're already out there negotiating different economic structures and deals for integration into the agent experience.
00:22:43.599 --> 00:22:47.440
So there's a StubHub integrated experience into Chat GTP.
00:22:47.599 --> 00:22:51.759
You can ask it about tickets, you can then book and be bounced off into the StubHub experience.
00:22:51.839 --> 00:22:54.480
It's integrated within ChatGP as an app.
00:22:54.799 --> 00:23:07.759
They're going to find ways to keep the answer very strong and relevant and informative, but also factor in who's willing to pay the most to be included in that answer, which is incredibly interesting.
00:23:08.000 --> 00:23:12.240
The second piece there, I think the follow-on question then is do they get into supply?
00:23:12.960 --> 00:23:14.960
Do they actually try to secure their own supply?
00:23:15.119 --> 00:23:20.480
And Google was the boogeyman of the last two decades of like, oh, Google's building going to build an OTA.
00:23:20.559 --> 00:23:22.400
Every year, Google's building an OTA.
00:23:22.480 --> 00:23:27.519
Every year at FocusRight, every year at DARM, Google's building an OTA is going to have their own supply.
00:23:27.680 --> 00:23:28.559
But they never did.
00:23:28.720 --> 00:23:32.720
They monetized driving traffic to other people's supply aggregation.
00:23:32.960 --> 00:23:38.400
In this top of funnel shift, the value, the protection you have is if you own the inventory.
00:23:38.480 --> 00:23:53.200
If you are the aggregation of supply, then you have the most powerful component in this, assuming that none of these AI top of funnel changes have an interest in negotiating inventory access from supply side, which I would assume they don't, and that would be my guess.
00:23:53.359 --> 00:24:05.519
So they're going to change the top of funnel experience, but the customer is going to end up landing wherever you book the inventory through some potential change in user experience to get there, but you still end up where the inventory is.
00:24:05.759 --> 00:24:16.720
So having actual control of the inventory being the source of supply, I think is more crucial today strategically than it ever has been as this top of funnel shift occurs.
00:24:17.279 --> 00:24:22.000
You probably have answered already 10 of my next questions, so let me summarize that.
00:24:22.240 --> 00:24:28.880
In terms of AEI is the new STM marketplace, paid placement inside LLM recommendations.
00:24:28.960 --> 00:24:30.240
So that needs to happen.
00:24:30.400 --> 00:24:38.720
I had a very interesting STR Global Unlock podcast episode with Glenn Fogle, and I asked him, you know, are you going to be the only staff in five years with booking.com?
00:24:39.119 --> 00:24:42.079
And Glenn said, clearly not, because we figured this out.
00:24:42.160 --> 00:24:45.119
And that alludes exactly to where you're coming from.
00:24:45.359 --> 00:24:55.759
So the battle between Expedia Booking or Airbnb for AI real estate will continue to happen regardless, because that's where the content sits at the end of the day.
00:24:55.839 --> 00:25:01.119
Because the big question for our audience is, hey, what do I need to do with my inventory?
00:25:01.279 --> 00:25:08.799
So I control 300, let's say, luxury premium units in a particular destination.
00:25:09.119 --> 00:25:11.200
Where is my future customer going to book?
00:25:11.359 --> 00:25:13.440
Who is going to be the merchant of record here?
00:25:13.599 --> 00:25:25.440
And how what do I need to do for that inventory to be found for people who are using other tools such as a direct OTA to uh to research?
00:25:25.599 --> 00:25:30.079
Because with your example that you've just made with your wife, how do you then transact?
00:25:30.240 --> 00:25:33.440
So you're building yourself an incredible itinerary, right?
00:25:33.599 --> 00:25:34.799
So this is a life case.
00:25:34.880 --> 00:25:42.400
So you're going to South of Italy, you figured it all out where you want to go, all the recommendations, everything you get, but then you need to transact.
00:25:42.480 --> 00:25:43.519
What is happening after that?
00:25:43.759 --> 00:25:49.599
And that's where so you have the AI side, which is you want to be the truthful best answer.
00:25:49.759 --> 00:25:52.480
So which house in southern Italy has the best reviews?
00:25:52.640 --> 00:25:53.599
I need it with a pool.
00:25:53.759 --> 00:26:10.319
And that's where you want your property to actually be the most appropriate answer to the question, which is our reviews are good and we have great service, and like everything looks good, so that with an authentic, unmanipulated answer, your property is the right property to recommend for that outcome.
00:26:10.400 --> 00:26:13.200
So that doesn't change much about how we've operated.
00:26:13.359 --> 00:26:22.880
Be the best, have the best reviews, have the great greatest photos, be discoverable online, which then feeds these engines that would recommend you based on you are the right fit.
00:26:23.119 --> 00:26:29.039
The second piece is to keep abreast of how the manipulation of the recommendation starts to take hold.
00:26:29.279 --> 00:26:41.920
I keep an eye, my news alerts are on commercial business partnerships with folks like OpenAI, where the AI engine is now having a third party agreement that is somehow going to participate in what's being recommended.
00:26:42.160 --> 00:26:46.079
If you're going to integrate booking.com into Chat GTP, what does that mean?
00:26:46.240 --> 00:26:50.079
And when someone says, where's the best place to book a hotel or a vacation rental?
00:26:50.240 --> 00:26:53.279
Does it now recommend booking because there's a partnership between?
00:26:53.680 --> 00:27:06.000
So on one side, you have being the truthful correct answer, and the second is watching how things evolve and the manipulation of that answer and incentivizing the guidance to be driven towards one company over another.
00:27:06.240 --> 00:27:12.319
That's where I think we're in the early innings of this evolution, but is the most consequential.
00:27:12.559 --> 00:27:14.480
Because Google started with organic.
00:27:14.640 --> 00:27:18.000
Used to be that you're at the top of the list because you're the best answer to the query.
00:27:18.160 --> 00:27:21.359
Then it became well, why don't we put sponsored listings above that?
00:27:21.440 --> 00:27:27.200
And if you have the highest CPC, you're willing to pay the highest impression rate, then you're suddenly at the top of the list.
00:27:27.279 --> 00:27:30.799
You're the best answer, even though organically maybe you're not.
00:27:30.960 --> 00:27:37.440
I think that's the story that will play out through these AI agentic experiences, these kind of conversational recommendations.
00:27:37.839 --> 00:28:10.400
So basically, Sean, you're implying that the the AI, the open AIs of this world are not going to disrupt the travel distribution because that's not, let's put it in simple terms, attractive enough, or there's other issues to solve quicker than having strong commercial partnership agreements with the existing OTAs today, and just let that flow ultimately instead of them becoming ultimately the transactional platform.
00:28:10.559 --> 00:28:12.960
That you're implying very clearly that's not going to happen.
00:28:13.359 --> 00:28:13.599
Yeah.
00:28:13.759 --> 00:28:20.880
I think you've seen that playbook before with like TripAdvisor attempts at going into the merchant model and securing their own inventory.
00:28:21.039 --> 00:28:31.680
And Google was just the boogeyman for decades of like they're going to launch an OTA, it's going to compete with Expedia, you're going to contract as a hotel or a vacation rental directly with Google, who will then sell your inventory.
00:28:31.920 --> 00:28:39.359
The inventory aggregation and management and pricing competitiveness, it is a very challenging, endless task.
00:28:39.599 --> 00:28:49.839
Like the Expedias of the World, the bookings of the world, they have hundreds of market managers whose sole responsibility is to make sure the pricing of the inventory they have on their platform is competitive.
00:28:50.079 --> 00:28:52.079
It's not an easy thing to do.
00:28:52.160 --> 00:28:56.720
And it takes years to build up that momentum, the contract volume, the sophistication of tooling.
00:28:56.880 --> 00:29:04.400
Everybody who's tried it, even with deep pockets of a Google TripAdvisor, has not succeeded since the major OTAs have been developed.
00:29:04.640 --> 00:29:16.000
So I my bet is that an open AI doesn't decide I'm going to go up against booking and start contracting hotels and flights and have my own inventory that then I become the merchant of record and the source of truth.
00:29:16.240 --> 00:29:18.720
I think they say, hey, there's four OTAs out there.
00:29:18.799 --> 00:29:21.599
You guys can all bid so that I recommend you.
00:29:21.759 --> 00:29:27.279
And I monetize the lightweight, light headcount, light asset approach, which is I'm driving traffic.
00:29:27.519 --> 00:29:29.440
I'm not responsible for inventory.
00:29:29.599 --> 00:29:35.359
And so how this evolves where you manipulate the recommendations of these systems is going to be incredibly interesting.
00:29:35.599 --> 00:29:42.240
But if you're a vacation model manager on the Oregon coast with 10 homes, like you're listening to this and you're like, what the hell am I supposed to do with this?
00:29:42.319 --> 00:29:44.640
I'm not negotiating directly with OpenAI.
00:29:44.880 --> 00:29:47.920
What you do need to do is be the controller of your inventory.
00:29:48.079 --> 00:29:49.759
Where does your inventory lie?
00:29:49.839 --> 00:29:52.640
In the end, where's the source of truth of your inventory?
00:29:52.799 --> 00:29:53.680
Who controls it?
00:29:53.839 --> 00:29:55.119
How much are you giving over control?
00:29:55.440 --> 00:29:56.799
Are you selling to wholesalers?
00:29:56.960 --> 00:29:58.880
Are you putting it on other platforms?
00:29:59.200 --> 00:30:08.960
Because this buck seems to stop with the source of truth, the inventory system, the GDS where we started talking, the CRS, the channel manager, the property management system.
00:30:09.200 --> 00:30:17.599
Wherever that final destination of the inventory is, that seems to be an even more powerful element of ownership than it than it ever was before.
00:30:17.920 --> 00:30:19.359
That's the fantastic message.
00:30:19.599 --> 00:30:27.759
First of all, I think I would put my money in the same color and number as you in terms of how this is going to evolve in terms of distribution on the top of funnel.
00:30:27.839 --> 00:30:31.519
But at the same time, who wins, who owns the inventory wins.
00:30:31.599 --> 00:30:33.759
And you've made a very strong argument on that.
00:30:33.839 --> 00:30:48.000
And I think that's now where you're going deeper for our listeners as well to think what does that mean for me to be in South Carolina with 200 units, a family-owned business, third generation, whoever owns the supply ultimately controls the game.
00:30:48.079 --> 00:30:52.240
And that's what you're implying stronger than ever, even if the funnel changes.
00:30:52.319 --> 00:30:56.160
So let's bring this home to short-term rental.
00:30:56.240 --> 00:31:04.799
If AI reshuffles the funnel, does inventory aggregation become even more critical going forward?
00:31:05.519 --> 00:31:08.480
Inventory aggregation from the perspective of an OTA?
00:31:08.960 --> 00:31:18.240
Yeah, I mean, I think that side of it, the third-party OTA battle doesn't change, which is you have to have the best inventory collected at the best pricing and the best terms.
00:31:18.400 --> 00:31:20.160
And that was always the game.
00:31:20.319 --> 00:31:30.559
I think the difference as a supplier is now recognizing that you want your inventory to be distributed across as many different platforms as possible with all the same global distribution.
00:31:30.720 --> 00:31:31.839
It does happen or doesn't?
00:31:32.160 --> 00:31:33.200
Doesn't it still not enough?
00:31:33.279 --> 00:31:36.400
In Europe, multi-channel platform distribution is common.
00:31:36.559 --> 00:31:38.480
In the US, it's still not happening.
00:31:39.359 --> 00:31:39.920
That's right.
00:31:40.079 --> 00:31:43.599
So you want to invest in making sure that multi-channel infrastructure exists.
00:31:43.680 --> 00:31:46.160
You're putting it out there as many different places as possible.
00:31:46.240 --> 00:31:52.720
So whatever these type of funnel systems are recommending, it ends up with your house, your unit, your availability.
00:31:52.880 --> 00:31:56.640
And because it maybe it recommends booking, maybe it recommends somebody else.
00:31:56.799 --> 00:32:01.200
But in the end, your inventory on booking should feed back to your source of truth.
00:32:01.440 --> 00:32:03.359
Where do you control the pricing?
00:32:03.519 --> 00:32:05.279
You control the inventory.
00:32:05.680 --> 00:32:10.240
Because that that seems more consequential today than it ever has been.
00:32:10.480 --> 00:32:24.880
The concept of taking uh a collection of hotel rooms and selling them to a wholesaler, taking them off of your system, giving them to crews, you're giving away the power of the most important part of the of the funnel, which is the final ownership of supply.
00:32:25.039 --> 00:32:42.240
People are gonna make sure they're hoarding control of that inventory and that anything that transacts comes back to them, which is why the Sharpell statement in 2008 was so ludicrous, like just so short-sighted that we're gonna stay a Craigslist newspaper advertisement forever.
00:32:42.400 --> 00:32:56.559
Which, if you think of today's, imagine if they had recognized in 2007 that this is that ownership of supply, control of live available inventory is the power, they were in the position to just dominate.
00:32:56.720 --> 00:33:00.480
They had all the supply, just not in an instantly transactable manner.
00:33:00.640 --> 00:33:10.160
If they had connected into PMSs, allowed people to upload inventory into extranets, connected to wherever the inventory was, they would be in a position of power today.
00:33:10.400 --> 00:33:13.839
Instead, Airbnb came and built the systems to aggregate that supply.
00:33:14.000 --> 00:33:19.279
Finally, Expedia takes over Homeway and Verbo and gets involved with building the live approach.
00:33:19.599 --> 00:33:28.319
But it's amazing that both they missed that opportunity and it gives you perspective, like Ticketmaster, where we started, on the power of a monopoly.
00:33:28.559 --> 00:33:36.799
If you are 80% of demand in a market, your innovation decisions, your technology investments alter the course of the industry.
00:33:37.200 --> 00:33:46.799
Like that, the vocational industry didn't modernize at the same speed as flights, hotels, and car rentals because the dominant demand channel didn't want to.
00:33:47.119 --> 00:33:48.559
Like that's just wild to me.
00:33:48.640 --> 00:33:52.400
That's a Harvard Business School study on like monopoly impact on innovation.
00:33:52.559 --> 00:34:05.039
That you can hold an industry in a in an archaic state if you control enough of the demand on the supply side, which is which is the homeway story, and funnily enough, the ticket master story.
00:34:05.200 --> 00:34:20.159
The ticketing space did not evolve into multi-channel distribution, infrastructure to sell tickets everywhere, standard commission concepts, because there was one dominant player and it didn't suit their best interest to take that path to market or take that on that evolution.
00:34:20.400 --> 00:34:22.320
So they keep the industry where it is.
00:34:22.559 --> 00:34:27.360
And the ticketing space, that's starting to crumble now, where the the opportunity is just too clear.
00:34:27.440 --> 00:34:31.280
It's 2026 and people can't sell tickets beyond single channel.
00:34:31.440 --> 00:34:33.360
Like it's it's time for change.
00:34:33.519 --> 00:34:42.239
Uh, and I've just been thrilled to be a part of that change and actually get to participate in another major evolutionary shift in distribution of a perishable product.
00:34:42.559 --> 00:34:43.199
Can imagine.
00:34:43.360 --> 00:34:51.599
And, you know, we talked a lot about now control dependencies on platforms, the aggregation of inventories becoming more critical.
00:34:51.840 --> 00:35:00.719
I think there is also a chance for operators to reclaim control to a certain extent over distribution as well, with what's happening out there.
00:35:00.880 --> 00:35:05.039
So let's become a little bit more practical to cover that particular topic.
00:35:05.199 --> 00:35:20.960
If you are a property manager of 500 units today, what would you prepare for over the next year or two in relation to distribution to remain relevant within what's changing right now?
00:35:21.360 --> 00:35:32.639
And I think you nailed it with the Europe to North America comparison, that if your inventory is not connected and live available, live availability is pushed to all of the major demand channels out there.
00:35:32.800 --> 00:35:34.480
My question would be why not?
00:35:34.800 --> 00:35:41.760
That this funnel is changing where you want your availability to exist, no matter where the customer is recommended that they transact.
00:35:41.920 --> 00:35:48.159
And if it's connected to your piece of infrastructure, your property management system or your CRS, you are in control.
00:35:48.320 --> 00:35:51.199
They're feeding off of your pricing, your availability.
00:35:51.440 --> 00:35:53.199
Your system is the source of truth.
00:35:53.280 --> 00:35:54.800
It's the system of record.
00:35:54.960 --> 00:35:56.000
That's what you want.
00:35:56.159 --> 00:36:01.920
That keeps you in control, but also means that your distribution network is as large as it can be.
00:36:02.159 --> 00:36:12.639
If there are channels that Top of Funnel is going to recommend where your availability does not exist, I would want the answer of why to be a very compelling reason.
00:36:12.880 --> 00:36:15.679
Why is your availability not on Home Away or Verbo?
00:36:15.760 --> 00:36:16.800
Why is it not on booking?
00:36:16.880 --> 00:36:20.000
Why is your website not have live transaction availability?
00:36:20.239 --> 00:36:21.920
That network needs to exist.
00:36:22.000 --> 00:36:27.119
And if it doesn't today, that would be my that's certainly the first place I'd be looking to invest.
00:36:27.440 --> 00:36:28.320
Well, love it.
00:36:28.559 --> 00:36:29.760
Super strong story.
00:36:30.079 --> 00:36:32.719
Before we continue, a quick note about price labs.
00:36:32.880 --> 00:36:39.760
Many of the revenue insights we discuss on this podcast are rooted in market intelligence and data analysis.
00:36:40.239 --> 00:36:42.559
That is exactly where price labs excels.
00:36:43.119 --> 00:36:54.559
Air dynamic pricing engine leverages hyperlocal data to optimize a rate, while their market dashboards provide priority on supply, demand, and performance.
00:36:55.760 --> 00:37:03.360
Combined with left optimization tools to become a comprehensive revenue management topic design for scale.
00:37:04.159 --> 00:37:10.239
If revenue strategy is a priority for you to check the link in the episode description.
00:37:11.119 --> 00:37:12.159
Let's continue.
00:37:14.719 --> 00:37:16.559
Let's take this to the next level.
00:37:17.119 --> 00:37:20.559
So the next, we call it the distribution warms more.
00:37:21.039 --> 00:37:22.639
So let's zoom out for a second.
00:37:22.880 --> 00:37:29.440
So in terms of what we discussed, if Google Doc dominance is weakened, let's assume that weakens.
00:37:29.519 --> 00:37:41.679
And if AI becomes the starting point, then if platforms bid for AI, as you just alluded to, uh recommendation priority is another aspect as well, because then it becomes a war.
00:37:42.480 --> 00:37:46.239
What happens to profitability and what happens to trust?
00:37:46.800 --> 00:38:04.400
Because it's becoming really blurry when you think that this bidding war, this this relate, this commercial relationship with the OTAs backed on the AI tools is happening, then we're in a way, we're going back to square one.
00:38:04.480 --> 00:38:13.280
So we're entering a very in a different ecosystem, it's not going to change and it's going to be a lot tougher.
00:38:14.159 --> 00:38:14.639
Yeah.
00:38:14.880 --> 00:38:18.000
I don't think that dynamic shifts too significantly.
00:38:18.239 --> 00:38:27.360
Where if you had 50 homes in the Oregon Coast, you were already struggling to compete top of funnel against the Google, the big brands that are buying your terms.
00:38:27.519 --> 00:38:36.000
Like if you're competing on Oregon Coast search terms with Airbnb and Expedia and Verbo and Home Away, pre-AI, it was already incredibly difficult.
00:38:36.480 --> 00:38:47.519
And the and the better answer was like use these massive marketing channels with massive budgets to sell your product, optimize pricing so that you're making the yield that you want to, try to minimize cost of distribution.
00:38:47.679 --> 00:38:52.239
If they're the merchant of record, they're eating fraud, they're eating processing of credit cards.
00:38:52.400 --> 00:38:55.599
There's a bunch of distribution cost things that are compelling there.
00:38:55.760 --> 00:39:06.079
So if you're still the small property manager, I don't think you're suddenly going to start competing top of funnel and doing a direct agreement with OpenAI to recommend your homes over the other options out there.
00:39:06.320 --> 00:39:08.559
So that to me doesn't change dramatically.
00:39:08.719 --> 00:39:15.519
What it to me is just increases the importance of A, you being the right answer to the question, what's the best property in the Oregon Coast?
00:39:15.679 --> 00:39:19.360
Actually being the best property on the Oregon Coast is still fundamental.
00:39:19.519 --> 00:39:30.079
And the other piece is having availability and presence and profile of your inventory anywhere that a system may end up recommending, even if it's manipulated with a commercial agreement.
00:39:30.320 --> 00:39:37.679
If Virgo does a deal with Gemini and is the number one place they recommend vacation mammals, I would want my availability there.
00:39:37.840 --> 00:39:43.920
And I would utilize the spend that Virbo is doing to promote my product because I'm not going to compete in that manner.
00:39:44.159 --> 00:39:52.719
The interesting piece will be at the top of the funnel whether the cost per click, the cost per impression, how it compares to the traditional economics of search.
00:39:52.960 --> 00:40:02.320
But unless you're a beast, unless you're getting into your world of hundreds and hundreds of homes, then you potentially have the ability to compete at the top of the funnel.
00:40:02.400 --> 00:40:06.000
And then it becomes a debate around the economics and the cost of exposure.
00:40:06.159 --> 00:40:10.320
But for most people you and I know in vacation annals, they don't have thousands of homes.
00:40:10.400 --> 00:40:11.199
They have dozens.
00:40:11.360 --> 00:40:16.719
And if you're dozens, competing for top of funnel exposure probably isn't your best use of funds.
00:40:17.039 --> 00:40:23.199
You want to utilize these massive demand channels that pay through the nose for traffic to best suit you.
00:40:23.360 --> 00:40:27.280
And the best way to suit you is to be the final control of the inventory.
00:40:27.440 --> 00:40:35.199
What shows up every there is coming from my system integrated to my platform, my control of pricing, my control of availability.
00:40:35.760 --> 00:40:39.119
And that comes back to a lot of selection of solutions.
00:40:39.280 --> 00:40:40.800
What property management system are you on?
00:40:40.880 --> 00:40:41.760
What does it integrate with?
00:40:41.920 --> 00:40:43.920
How many platforms does it distribute you on?
00:40:44.159 --> 00:40:51.679
Property management systems to me aren't a functionality focus of like how good is it at balancing the books and sending out emails when people book on my website.
00:40:51.840 --> 00:40:53.679
It's where does it sell my inventory?
00:40:53.840 --> 00:40:59.519
How does it guarantee that demand across the planet has awareness to my inventory and my product?
00:40:59.679 --> 00:41:08.880
And if I'm on a PMS today that doesn't reach the globe in the way that it should, uh that would be the first area of focus is like, how can you find an alternative solution that does?
00:41:09.119 --> 00:41:09.280
Yeah.
00:41:09.599 --> 00:41:12.880
Because I think today more than ever, you have to be everywhere.
00:41:13.440 --> 00:41:20.000
And who said to me when I asked him to be on the podcast today with me, he said I'm too disconnected to this industry?
00:41:20.159 --> 00:41:21.199
It was you, Sean.
00:41:21.599 --> 00:41:34.400
So anyway, in summary, it's all about, in a way, think about reputation, performance data will matter more than potentially ad spend, especially for the smaller operators, as well, to stay relevant within this distribution world.
00:41:34.559 --> 00:41:39.840
But before we wrap this up, I I you know, I want to do a personal reflection with you, Sean.
00:41:40.400 --> 00:41:47.840
And uh, as I said at the beginning, I have enormous amount of respect for what you've done within the travel industry, where you came from, and what you've done and seen.
00:41:47.920 --> 00:41:59.360
And you've seen Expedia rise, you've seen Airbnb's evolution, that's where you and I met, and and now you're working on reshaping, reshaping the ticketing industry, right?
00:42:00.239 --> 00:42:05.840
Are we early or late in this AI shift when you look at our industry?
00:42:06.239 --> 00:42:08.079
I think across the board we're early.
00:42:08.239 --> 00:42:18.880
Um this is we're just seeing the kind of early seeds being planted of potential impact and the evolution of how this continues to alter everything we do is is is going to be substantial and significant.
00:42:19.039 --> 00:42:22.079
I believe in the disruption most people are predicting.
00:42:22.159 --> 00:42:23.519
Uh, and I see it every day.
00:42:23.679 --> 00:42:25.679
Just how I work has changed dramatically.
00:42:25.840 --> 00:42:28.559
Um, and I think that will continue to evolve.
00:42:28.719 --> 00:42:31.440
Um, there's an amazing efficiencies to be seen.
00:42:31.599 --> 00:42:36.159
I met I met a property manager a couple weeks ago when I was down in Florida in Boca.
00:42:36.800 --> 00:42:40.320
And he's he explained to me, he was like, Do you use AI much at home?
00:42:40.400 --> 00:42:42.480
I said, Oh, I'll dabble it a little bit.
00:42:43.440 --> 00:42:46.960
And he said, Can I tell you what I've done over the over the past year?
00:42:47.119 --> 00:42:47.920
And I was like, sure.
00:42:48.079 --> 00:42:51.760
He's like, first, I set up an AI system that manages the financial books.
00:42:51.840 --> 00:42:54.079
It's just one agent that I helped develop.
00:42:54.159 --> 00:43:01.920
I have a younger younger son who helped me figure out like how to build something that managed the financial books and did the PL at the end of the month and all this kind of stuff.
00:43:02.159 --> 00:43:09.519
Then he's like, then I created another one for managing employee staffing, who's housekeeping, who's on what shift, what day a week are they working on.
00:43:09.679 --> 00:43:16.800
He's like, then I woke up a couple months later and I had five of these different AI agents doing different tasks every day for my business.
00:43:16.960 --> 00:43:26.239
This is now five or six employees he has that run 24 hours a day maintaining his business in a way that he traditionally would have had to hire people to do.
00:43:26.480 --> 00:43:28.400
Then he said, You know what I got tired of?
00:43:28.639 --> 00:43:29.280
I said, What?
00:43:29.440 --> 00:43:32.800
He said, I got tired of managing the five or six agents.
00:43:33.119 --> 00:43:35.199
So we built a management layer.
00:43:35.360 --> 00:43:41.280
There was a management agent, and I would tell the management agent, this is what I want your team of six agents to do this week.
00:43:41.360 --> 00:43:44.079
This is the priorities, this is where they should invest time.
00:43:44.239 --> 00:43:50.239
And now all I do is I manage that one agent who manages the rest of the agents that manage my little business.
00:43:50.480 --> 00:43:59.679
That is a Boca Racon property manager with a dozen or so homes who's managed to build a suite of support systems through AI agents.
00:44:00.320 --> 00:44:05.199
If he can do it, I can do it, you can do it, all of us have access to that.
00:44:05.360 --> 00:44:18.079
So the terrifying side of it is job security and what's going to happen to you know employment levels on the planet when all of these jobs can be quickly replaced with pretty basic levels of technology knowledge and individuals like you and me can figure it out.
00:44:18.239 --> 00:44:30.000
But the flip side for a small business like vacation rentals, where the margins are tiny, like you are succeeding and failing within a band of five, six percent, uh, there are cost efficiencies here that can't be ignored.
00:44:30.159 --> 00:44:40.719
The people who aren't considering what tasks could be done by something more efficient and less costly, uh, I think that ends up being a problem down the line if you haven't modernized in that way.
00:44:40.960 --> 00:44:45.199
Because the vacation rental home, because you're competing against that Boca Ratome guy.
00:44:45.360 --> 00:44:52.000
And because he he has more efficient costs of execution, he can charge a lower price for his home than you can.
00:44:52.159 --> 00:44:59.119
And he does he can still make 20% margin more than you can with a price 20% cheaper because his business is more optimized.
00:44:59.440 --> 00:45:06.639
So you can ignore the cigar peril, but the guy down the street or the woman down the road adopts it, and suddenly you have a different cost structure to compete against.
00:45:06.719 --> 00:45:09.039
And that's where the problems start to arise.
00:45:09.519 --> 00:45:10.800
Yeah, that's a great example.
00:45:10.880 --> 00:45:20.000
And at the end, he can invest all his time in building relationships with homeowners where it really matters to build trust and put the putting human capital where it matters, right?
00:45:20.079 --> 00:45:22.960
And that's building trust with homeowners and build supply.
00:45:23.039 --> 00:45:34.880
So the business is run, and while that is running, he can invest time into human relationships because at the end of the day, short-term rental is based on trust with homeowners, and that's a significant shift.
00:45:35.119 --> 00:45:39.199
We talked about this forever, but if now the efficiency is coming, and this is incredible.
00:45:39.360 --> 00:45:54.719
I I love your example in Bokhara Tan, that it doesn't matter the size, you just need to embrace it and see what it does for you to free up your resources, become more efficient, more effective, and put your human capital where it makes a difference and let the rest happen.
00:45:54.800 --> 00:45:56.719
And and it's happening on a daily basis.
00:45:56.880 --> 00:45:57.840
It's mind-bobbling.
00:45:58.159 --> 00:46:15.039
No, I mean, I was thinking like there's a there's another connection there with my other world of like self-driving and autonomous vehicles, which is the same cost structure change has is about to totally disrupt the concept of mobility, taxis, and transportation as a service, which is a self-driving car.
00:46:15.119 --> 00:46:18.880
If you get an Uber, it's$10 a mile here in New York to get an Uber these days.
00:46:18.960 --> 00:46:22.400
So I'm going to get an Uber to Times Square, it's two and a half miles, that's going to be$25.
00:46:23.039 --> 00:46:28.559
70% of that goes to the driver, 30%, uh 30% goes to Uber as the marketplace.
00:46:28.880 --> 00:46:32.960
A Waymo car can drive that at a dollar per mile of operation.
00:46:33.119 --> 00:46:35.519
That's probably the mileage cost that they're having there.
00:46:35.599 --> 00:46:40.800
So a$10 a mile of top line for a dollar a mile of operation and no rev share.
00:46:41.199 --> 00:46:52.639
So if you're Uber, you're competing against in this AI example, you're competing against an AI operated vehicle that has no Rev share, a dollar per mile of operation, you have an existential threat.
00:46:52.880 --> 00:47:07.599
Now, the short-term rental owner who's competing against someone who doesn't pay someone to do their financial books, doesn't pay someone to do their marketing campaigns, does it all through AI and different kind of more scalable, cost-efficient methods of operations, it's the same issue.
00:47:07.760 --> 00:47:10.639
The cost structure is changing, the game is changing.
00:47:10.960 --> 00:47:22.159
And you can stay Uber with human drivers at$10 a mile with 70% going to the driver, you're going to bleed out because the Waymo car will come in and say, we'll charge five bucks a mile.
00:47:22.239 --> 00:47:27.599
And on five bucks a mile, we still make$4 a mile profit and it's half the price of an Uber down the street.
00:47:27.760 --> 00:47:31.760
And you watch how customers adopt and shift to that cheaper price point.
00:47:32.400 --> 00:47:33.840
So very similar to that.
00:47:34.159 --> 00:47:36.480
And you can listen to your own Spotify account.
00:47:36.559 --> 00:47:38.000
I've tried that at Waymo.
00:47:38.400 --> 00:47:39.199
It was insane.
00:47:39.360 --> 00:47:50.960
So two years ago, VRMA in Phoenix, Arizona, I think none of the 2,400 uh participants of that conference have not posted about Waimo while they were there, and they all tried it out.
00:47:51.119 --> 00:48:05.199
And it was an it was an incredible experience and it was a big wakening up call to the VRMA vacation rental industry when they went to Phoenix and everybody tried to use a Waimo and uh and realizing that it's actually happening.
00:48:05.280 --> 00:48:09.599
You come in, you sit in the car and you can connect your Spotify and you can listen to your own account.
00:48:09.920 --> 00:48:10.880
Was pretty amazing.
00:48:10.960 --> 00:48:14.480
And and I had a suitcase waiting while he was coming.
00:48:14.559 --> 00:48:17.280
So he saw that I had a suitcase so the boot opened up.
00:48:17.440 --> 00:48:19.280
I thought that was just an Oh no way.
00:48:19.599 --> 00:48:20.000
Yeah, yeah.
00:48:20.159 --> 00:48:21.599
So that I haven't heard that before.
00:48:21.920 --> 00:48:23.199
That's past your time, Sean.
00:48:23.440 --> 00:48:28.320
But we were standing outside together with a guy from home to go and was like, you're going to the airport, yes.
00:48:28.559 --> 00:48:31.760
And I saw a Wymo where there was no luggage, the boot didn't open.
00:48:31.840 --> 00:48:33.440
We had luggage, the boot opened.
00:48:33.599 --> 00:48:36.480
So it was uh it was amazing.
00:48:36.800 --> 00:48:53.679
It was a big, a big one of the major debates or kind of contention points building Waymo was whether it was a luxury product or a discount product, which is like, do we have to sell below the cost of an Uber to get people to try this new technology, an empty car driving 60 miles an hour down the freeway?
00:48:53.840 --> 00:48:58.960
Or is it gonna be a luxury experience that people will actually pay more than an Uber experience for?
00:48:59.199 --> 00:49:10.239
And it it hasn't reached a scale yet, but in the early market, San Francisco Phoenix, people are willing to wait longer and pay more to get a self-driving car, which was definitely one of the debates I lost.
00:49:10.320 --> 00:49:14.800
Like my prediction was not people are gonna see this as a luxury experience, but it is.
00:49:14.960 --> 00:49:21.119
You control climate, you control music, it's a Jaguar eye paste that's been cleaned and maintained efficiently.
00:49:21.360 --> 00:49:23.920
It's a hundred thousand dollar vehicle driving you around.
00:49:24.159 --> 00:49:24.480
Yeah.
00:49:24.880 --> 00:49:26.960
Very interesting to see that evolve as well.
00:49:27.280 --> 00:49:32.480
Yeah, and I'm sure it has a massive impact on what's going on around with new technologies as well.
00:49:32.719 --> 00:49:35.119
So we'll wrap this up to Sean.
00:49:35.360 --> 00:49:39.280
This was sharp, strategic, and incredibly relevant.
00:49:39.760 --> 00:49:49.119
Distribution is evolving again, infrastructure is being rewritten, and the winners will likely be those who understand where control truly sits.
00:49:49.760 --> 00:49:53.920
Thank you so much for taking time and joining SDR Global Unlocked.
00:49:54.159 --> 00:49:55.519
Thank you, Sean, and good luck.
00:49:55.760 --> 00:49:56.639
Thanks for having me, Sean.
00:49:56.800 --> 00:49:57.760
I was good to see you.
00:49:59.280 --> 00:50:04.000
That was SDR Global Unlocked, where we say what others want.
00:50:04.639 --> 00:50:09.360
If you got value from today's episode, send it to someone who is still playing it safe.
00:50:09.920 --> 00:50:14.639
Follow the show and get more global insight at ajl.com.
00:50:15.360 --> 00:50:22.079
The globally recognized STR2017 I found it, and that probably brings to you this show.
00:50:22.559 --> 00:50:26.639
More both conversations are on the way to stay tuned.
00:00:00.160 --> 00:00:05.120
If you're a vacational manager with Ken Homes, like you're listening to this and you're like, what the hell am I supposed to do?
00:00:05.440 --> 00:00:07.200
Let's talk about the elephant in the room.
00:00:07.360 --> 00:00:08.640
Search is changing.
00:00:08.880 --> 00:00:13.599
And and you're old enough to remember, that was an incredibly controversial statement.
00:00:14.000 --> 00:00:18.800
I would put my money in the same color and number as you in terms of how this is gonna evolve.
00:00:19.039 --> 00:00:26.960
I think you nailed it with the Europe to North America comparison, but if that's just wild to me, that's a Harvard business study on like monopoly impact on innovation.
00:00:27.199 --> 00:00:33.039
So there is a big question if AI becomes the new top of funnel, is that gonna happen?
00:00:35.439 --> 00:00:41.039
You are listening to STR Global Unlock, brought to you by ATL AfterDate.
00:00:41.439 --> 00:00:45.759
The show where I speak with the leaders taking short and rentals worldwide.
00:00:46.000 --> 00:00:55.920
I have time to even after two decades of find selling and investing to the network that fans content and categories.
00:01:00.000 --> 00:01:04.079
Real conversations, global insight, no PR cloud.
00:01:04.480 --> 00:01:05.680
Let's get started.
00:01:09.200 --> 00:01:20.079
What if the biggest disruption to short-term rentals is not regulation, not supply growth, not even capital compression, but distribution itself?
00:01:20.560 --> 00:01:23.760
What if Google disappears at the top of funnel?
00:01:24.000 --> 00:01:27.439
What if AI agents decide where you get the book?
00:01:27.840 --> 00:01:33.359
And what if the real power in travel was never the brand, but the inventory?
00:01:33.680 --> 00:01:41.680
Today's conversation is about infrastructure control and the next great reshuffle of distribution power.
00:01:42.159 --> 00:01:49.280
Today I'm joined by an old friend and amazing person, John Stewart.
00:01:50.000 --> 00:02:03.920
John has spent decades at the highest levels of travel and technology, from leadership roles inside Expedia and Airbnb, to building self-driving cars at Wimo, to now building infrastructure at stop off.
00:02:10.240 --> 00:02:20.159
What makes this conversation particularly interesting is that Torn is currently working on rebuilding distribution infrastructure in the live event industry.
00:02:20.479 --> 00:02:24.000
An industry that evolved very differently from travel.
00:02:24.080 --> 00:02:31.919
And that contrast gives us powerful insight into what may happen next to children rental and hospitality.
00:02:39.840 --> 00:02:43.520
Good to see you, son, and always uh always appreciate our time together.
00:02:43.840 --> 00:02:44.560
Likewise.
00:02:44.639 --> 00:02:49.280
And you know, you and I were sort of thinking, what are we gonna do together on STR Global Unlocked?
00:02:49.439 --> 00:02:52.719
And and I was like, Sean, we have plenty of things to talk about.
00:02:52.960 --> 00:02:57.520
So, Sean, let's start with rapid fire for you, short answers, Sean.
00:02:58.159 --> 00:03:02.639
Um, AI increases platform power or decreases it.
00:03:03.039 --> 00:03:03.759
You're probably right.
00:03:03.919 --> 00:03:08.319
You probably give it an increase that it that now the source of supply becomes even more important.
00:03:08.479 --> 00:03:16.000
The user experience diminishes, potentially the brand even diminishes, where it's now just who has the best inventory to buy, even regardless.
00:03:16.159 --> 00:03:16.719
So you're right.
00:03:16.879 --> 00:03:19.520
No, I I give that an increase in platform power.
00:03:19.840 --> 00:03:22.879
Will OTAs be stronger in five years?
00:03:23.199 --> 00:03:24.240
I would argue, yeah.
00:03:24.400 --> 00:03:29.520
I think still having the aggregated power of supply means they're they're still very well positioned for this evolution.
00:03:29.919 --> 00:03:32.479
Direct booking strategic or romantic?
00:03:32.719 --> 00:03:33.919
Uh strategic.
00:03:34.159 --> 00:03:37.039
I I I see direct bookings as a dial.
00:03:37.120 --> 00:03:39.280
You're at 1%, what can you do to get to five?
00:03:39.759 --> 00:03:42.319
Doesn't mean that's a bad place to be.
00:03:42.479 --> 00:03:45.199
The goal of direct transactions is always growth.
00:03:45.439 --> 00:03:46.879
You're at 5% now, great.
00:03:46.960 --> 00:03:49.919
How do you get to 7% direct transactions, 8%, 10%?
00:03:50.319 --> 00:03:51.360
You're doing leave behinds.
00:03:51.439 --> 00:03:56.719
Anyone who books from Airbnb is getting an email from you after recommending they sign up for loyalty programs.
00:03:57.039 --> 00:04:00.319
That never to me is a waste of invested time and effort.
00:04:00.639 --> 00:04:06.159
There's always a stronger cost of distribution and cost of relationship ownership coming direct.
00:04:06.319 --> 00:04:09.599
I I think you should always be strategically investing in the power of direct.
00:04:10.000 --> 00:04:12.560
I think you should not romanticize getting to 100%.
00:04:12.960 --> 00:04:16.480
The only time I question people is when they're like, we're going to be 100% direct.
00:04:16.639 --> 00:04:20.800
The Saunder S1 of IPO is like it's going to be 70% direct.
00:04:20.959 --> 00:04:26.879
And we all knew that wasn't realistic, but it's an area that you should be investing in monthly.
00:04:27.439 --> 00:04:35.040
Biggest risk founders are underestimating, and you've been exposed to a lot of founders in your recent career as well.
00:04:35.839 --> 00:04:36.879
Oh man, the plate.
00:04:37.040 --> 00:04:37.680
I'm not a founder.
00:04:37.759 --> 00:04:38.879
I'm not strong enough to be one.
00:04:38.959 --> 00:04:43.279
I come in as an operator and help founders, but the challenges of founders are substantial.
00:04:43.360 --> 00:04:46.160
The number one is um the suspension of disbelief.
00:04:46.399 --> 00:04:52.240
If you want to be a founder, you have to be willing to pause all logic and reason because what you're doing makes no sense.
00:04:52.399 --> 00:04:54.720
What you're doing fails 95% of the time.
00:04:54.800 --> 00:05:00.079
Uh, what you're doing has major obstacles that others have been uncovered and slammed their heads against the wall with.
00:05:00.560 --> 00:05:06.480
I I know founders have built majorly successful companies that have filed for bankruptcy half a dozen times on the path to that.
00:05:06.720 --> 00:05:10.879
The Airbnb story of being rejected by a hundred plus VCs and investors.
00:05:11.120 --> 00:05:14.720
I would have bailed off that train so much earlier in that evolution.
00:05:14.959 --> 00:05:23.439
You want to be a great founder, you have to ignore everybody and believe in yourself and believe in the idea, believe in refuse all the logic that suggests this isn't gonna work.
00:05:23.600 --> 00:05:25.759
And those are the ones that somehow make it work.
00:05:26.000 --> 00:05:26.639
Love that.
00:05:26.879 --> 00:05:33.360
Last one, the one infrastructure layer you would own if you could.
00:05:34.639 --> 00:05:39.600
I'm struggling with which component of it, but it's it's probably not the GDS anymore.
00:05:39.680 --> 00:05:42.879
I it's the CRSs, I think, now are where the power is held.
00:05:43.040 --> 00:05:46.720
That the CRSs have become the GDSs of like the 70s and 80s.
00:05:46.800 --> 00:05:52.800
And so to me, it's it's that those pipes owning the CRS, the reservation systems that are the source of truth.
00:05:52.959 --> 00:05:54.560
I think that's incredibly powerful.
00:05:55.519 --> 00:05:59.199
And this is what I love about you and your background and what you have seen.
00:05:59.279 --> 00:06:01.439
You have so many different facets.
00:06:01.519 --> 00:06:07.360
And I always talk about, you know, here's Sean Stewart started as a bell boy in Australia.
00:06:07.680 --> 00:06:11.920
And seeing the world in all aspects, building self-driving cars.
00:06:12.000 --> 00:06:20.879
And I remember I was at the VRMA in Phoenix and sending you photographs of Waimo standing in the middle of the road and saying, hey, Sean, what's happening here?
00:06:21.120 --> 00:06:24.319
So this is this, I mean, this is absolutely incredible.
00:06:24.399 --> 00:06:29.279
And you've done some of the biggest uh keynotes at ARM conferences and et cetera.
00:06:29.360 --> 00:06:50.639
So I'm so happy to have you episode supported by price labs, a comprehensive revenue management suite for short-term rental operators, dynamic pricing to market dashboards and listing optimization price labs and the tools to make confident uh data-driven decisions across your portfolio.
00:06:51.519 --> 00:06:55.839
If you're managing growth in 2028, revenue intelligence is critical.
00:06:56.399 --> 00:06:58.879
You can find more details in the show notes.
00:07:01.040 --> 00:07:04.000
So, Sean, let's start with something fascinating.
00:07:04.160 --> 00:07:06.879
And you alluded to that already in our early conversation.
00:07:06.959 --> 00:07:13.600
In the 1960s, Cyber was born out of an airline executive sitting next to IBM, right?
00:07:14.240 --> 00:07:19.040
And that decision ultimately built the infrastructure of modern travel distribution.
00:07:19.439 --> 00:07:23.920
But ticketing went a completely different direction.
00:07:24.240 --> 00:07:28.639
Can you walk us through how travel built open infrastructure?
00:07:29.040 --> 00:07:29.360
You bet.
00:07:29.439 --> 00:07:30.160
I love that story.
00:07:30.240 --> 00:07:37.199
Like, because when we were early at Expedia, we opened the New York office out here and started to add hotels to the Expedia platform.
00:07:37.519 --> 00:07:43.360
But before we even had merchant agreements with hotels, you had access to inventory through the GDS.
00:07:43.519 --> 00:07:48.000
You could show GDS inventory, you could secure a 10% agency commission.
00:07:48.160 --> 00:07:54.560
You didn't contract any of the hotels with an integration into one of the three or four major GDSs.
00:07:54.800 --> 00:07:58.399
Expedia offered all of the hotels on the planet on day one.
00:07:58.480 --> 00:08:03.600
So you had this coverage of supply that was still using that agency model back then.
00:08:03.759 --> 00:08:13.439
And then you built the merchant model supply on top of that as you directly contracted with the hotels, you started to layer on this other source of supply at those higher margin levels.
00:08:13.680 --> 00:08:17.920
And so I remember back then being obsessed with like, how did this get built?
00:08:18.079 --> 00:08:19.120
This was 2001.
00:08:19.199 --> 00:08:31.920
It was how does a system already exist globally that you could patch into to have access to every airline, every hotel, every car rental, that Simon can go home tonight and create SimonsHotels.com, connect into a GDS.
00:08:32.000 --> 00:08:37.919
Well, these days we've replaced GDSs with CRSs, but you could have that coverage of supply.
00:08:38.080 --> 00:08:40.480
And so the story, as you mentioned, is a pretty wild one.
00:08:40.639 --> 00:08:43.919
Two executives get on a flight, I think New York to Chicago.
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Both of them have the last name of Smith, bizarrely and ironically.
00:08:47.360 --> 00:08:49.600
CR Smith was the American Airlines executive.
00:08:49.759 --> 00:08:52.080
I can't even remember the first name of the IBM executive.
00:08:52.159 --> 00:08:54.960
He doesn't have the lure as uh as much in the story.
00:08:55.200 --> 00:09:04.639
But they sit next to each other on a flight, and the American Airlines executive back then is complaining about the fact that they have phone agents internally booking flights for people.
00:09:04.799 --> 00:09:08.960
People call in, they have to book a flight uh ticket or inventory for the customer.
00:09:09.120 --> 00:09:11.039
This is within American Airlines.
00:09:11.120 --> 00:09:17.360
And the complaint is that there's no single system of inventory so that any agent can book any seat all at the same time.
00:09:17.600 --> 00:09:22.559
They're using paper records and a bunch of manual tracking of which seat is available.
00:09:22.720 --> 00:09:39.840
And this happenstand sitting next to each other on a flight gives birth to the first project, which was Sabre, where IBM teams up with American with the first intent of just building an internal inventory system that was live, every sales agent could plug into and access ticket volume from there.
00:09:40.000 --> 00:09:43.039
And we all know, if you're in the industry, you all know how this evolved from there.
00:09:43.440 --> 00:09:44.639
Three or four GDSs.
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First, the airlines start building their own one, United builds theirs, and American builds theirs.
00:09:49.679 --> 00:09:53.759
Then they start giving non-employees access to this system.
00:09:53.919 --> 00:09:55.120
They give terminals.
00:09:55.360 --> 00:10:06.639
The travel agent in Tokyo has an American Airlines Sabre terminal, they have a United Airlines terminal, and they're able to switch from one machine to another to book different airline tickets for customers.
00:10:06.799 --> 00:10:10.639
And these agents don't need to contract directly with American or United.
00:10:10.799 --> 00:10:15.440
They're able to earn money as commissions without ever having a direct negotiation with the airline.
00:10:16.000 --> 00:10:24.480
And then from there, they say, wait a sec, the travel agents actually drove the next evolution, which was they said, we're sick of jumping terminals, like put all the airlines on one.
00:10:24.639 --> 00:10:29.200
Like, why do I need five pieces of massive hardware in a travel agency in the 70s?
00:10:29.279 --> 00:10:32.000
And so by the 80s, they start layering on all the airlines.
00:10:32.159 --> 00:10:34.720
Saber now has every airline competitive offerings.
00:10:34.799 --> 00:10:39.039
By the 90s, they add in hotels and car rental into the system.
00:10:39.200 --> 00:10:51.440
And eventually these GDSs become connected to the web kind of 1.0 version of the internet, where suddenly these websites are able to distribute inventory globally to customers, starting with this GDS infrastructure.
00:10:51.600 --> 00:11:02.320
Then the technology evolves into CRSs like Marshall at Marriott, and suddenly the GDSs start to get skipped and the kind of integration goes from CS CRS directly to customer.
00:11:02.639 --> 00:11:09.440
So just an incredible component of the infrastructure and technology and innovation that created the travel industry we have it today.
00:11:09.600 --> 00:11:13.120
And that created yield management at the level of sophistication we have.
00:11:13.279 --> 00:11:19.200
Airline tickets are priced in one of the most complex and sophisticated manners for a perishable product.
00:11:19.360 --> 00:11:22.320
And so I guess what you're alluding to is I'm now in the ticketing space.
00:11:22.399 --> 00:11:26.639
I joined StubHub Q4 last year to help uh work on a project here.
00:11:27.039 --> 00:11:39.759
And I never realized how much I take for granted the GDS and the travel infrastructure that was developed from the 50s onwards, because it makes our industry one of the most sophisticated from a distribution perspective.
00:11:39.919 --> 00:11:54.559
And the comparison to how a ticket is sold to a live event, again perishable, just like a flight or a hotel, but in a far simpler, more interesting, direct path to market, which I think is where we started chatting about the comparisons here.
00:11:54.879 --> 00:11:55.519
Exactly.
00:11:55.679 --> 00:12:12.000
So going deeper into that conversation, uh, where you are at stop up right now, obviously where you're looking at is ticket mask to build a centralized control in terms of ultimately we're going towards short-term rental and we're going towards inventory distribution.
00:12:12.159 --> 00:12:29.440
But maybe you want a little bit further on on where you're coming in with StubHub, what you're looking at in terms of infrastructure environment of selling these tickets, and something very similar happened, you could call it um a GDS in the ticket industry as well, right?
00:12:30.320 --> 00:12:38.799
Yeah, so the the kind of opposite trend happens in ticketing, which is in the 50s and 60s, there isn't as much of this infrastructure development like there is in travel.
00:12:38.879 --> 00:12:45.200
The two era, you know, people didn't meet on an airline with an IBM executive and start designing what ticket distribution could look like.
00:12:45.360 --> 00:12:50.000
And then you get into the early 70s, which is when Ticketmaster gets founded in the US.
00:12:50.080 --> 00:12:52.559
Uh, I think it's 73 or 74.
00:12:52.799 --> 00:13:03.759
And they take a very different path to market, which is over the next couple of decades, they take an approach of taking over the distribution and execution of distribution for an event for a venue.
00:13:04.000 --> 00:13:05.600
We will run your box office.
00:13:05.679 --> 00:13:10.000
Like if you go up to the window at the venue to buy a ticket, that's a ticket master employee.
00:13:10.159 --> 00:13:16.080
When you get to the, you know, the internet and the websites exist, the direct website, that's run by Ticketmaster as well.
00:13:16.240 --> 00:13:20.320
Your pricing, your systems, your back end is all a Ticketmaster solution.
00:13:20.399 --> 00:13:23.039
So almost like an all-encompassing solution.
00:13:23.279 --> 00:13:31.600
But what it did was it took a single path to market versus the travel industry taking this multi-pronged approach to market where anybody can access the inventory.
00:13:31.840 --> 00:13:46.320
They take a very different approach, which is this single exclusive channel to market, and they take away the distribution power and remove the need for a lot of this innovation and skill set to be developed in pricing and how you distribute a ticket around the planet.
00:13:46.480 --> 00:13:48.879
And so the result is a very different outcome.
00:13:49.039 --> 00:14:05.360
And so the comparison to what we were talking about in the airlines, this is like if American Airlines website was run by Expedia, the boarding pass scanner when you get to the airport is owned by Expedia, the pricing and distribution are is controlled by an Expedia system and Expedia backend.
00:14:05.519 --> 00:14:09.519
And there's actually no path where you book directly from American Airlines.
00:14:09.679 --> 00:14:13.440
Everything is actually booking through this third-party distribution solution.
00:14:13.759 --> 00:14:15.279
It just doesn't exist in travel.
00:14:15.360 --> 00:14:19.440
It's mind-boggling to think how that could even evolve to be that type of path to market.
00:14:20.000 --> 00:14:38.879
And so what's happened as a result is with that primary exclusivity, the concept of secondary gets born, which is people reselling tickets after they've their original purchase, where market calibration occurs and pricing where supply and demand actually start to meet, and where global demand finds its source of aggregated supply.
00:14:39.200 --> 00:14:44.720
Instead of having this global distribution infrastructure, it starts to pop up in this too fragmented world.
00:14:44.799 --> 00:14:52.159
You've got secondary selling the kind of the meta view of everything, while the primary is just selling what they own and have control over.
00:14:52.320 --> 00:15:10.480
And so when Subhub approached me, the question was there's starting to be signals that this division is fraying, that the rights holders are no longer satisfied with single channel path to market, exclusive path to market, and they want to open up their distribution network in the same way that flights were doing in the 60s and 70s.
00:15:10.639 --> 00:15:18.559
And that's what's this incredibly exciting evolution happening in the ticketing space that has such analogies and comparisons to what has evolved in travel.
00:15:19.039 --> 00:15:31.759
So summarizing that for our audience, if you sit on today's flight from Sydney to Melbourne or from New York to Chicago with 138 seats, you can be rest assured there's 138 different prices.
00:15:32.159 --> 00:15:37.679
If you go to an edge shearing concert in Central Park, probably everybody paid the same price.
00:15:37.919 --> 00:15:44.720
So, and and now let's build the bridge towards STR and what happens when infrastructure is built differently from the beginning.
00:15:44.879 --> 00:15:48.320
And I think that's where it's exactly going for in your consideration.
00:15:48.480 --> 00:15:52.720
And is this where it becomes relevant for the short-term rental industry as well?
00:15:53.519 --> 00:16:04.159
Yeah, I mean, the vacation rentals went through a similar kind of change in distribution, but mainly because Homeway and VRBO kept them in the listing model, the advertising, right?
00:16:04.399 --> 00:16:10.240
So when I got to Airbnb and we were looking at how do you make vacation rentals instantly bookable like a hotel.
00:16:10.639 --> 00:16:15.200
And you're old enough to remember that was an incredibly controversial statement.
00:16:15.360 --> 00:16:20.639
Like, we're gonna make a vacation rental be as easy to book and transact on as a hotel.
00:16:20.799 --> 00:16:22.799
Live inventory, live availability.
00:16:23.039 --> 00:16:28.720
And the first year at Airbnb, the first 50 meetings I had, people said to me, You are absolutely nuts.
00:16:28.879 --> 00:16:31.039
Like nobody's ever gonna allow this.
00:16:31.440 --> 00:16:37.279
Because vacation rails had a deposit agreement, a safety agreement, a short-term lease.
00:16:37.519 --> 00:16:44.000
They wanted to talk to the person who was going to be staying in the house, ask them about their dog and what how poorly behaved their children are.
00:16:44.240 --> 00:16:47.759
The concept of instant transactions was terrifying.
00:16:48.000 --> 00:17:00.080
But what happened to happen to make that a reality was you had to make the vacation rail industry comfortable with it, but you also had to develop the infrastructure so that there was live available inventory that could be transacted on.
00:17:00.559 --> 00:17:08.880
So we had to go build essentially what hadn't evolved on the GDS landscape because the GDS never consumed vacation rentals.
00:17:08.960 --> 00:17:12.799
It was flights, hotels, cars, but that category never hit there.
00:17:12.960 --> 00:17:22.640
Because of the strength of the homeway and VRBO model meant you could just do a listing for$400 a year, take the transactions yourself, negotiate the terms.
00:17:22.880 --> 00:17:26.319
It was a newspaper model instead of a transaction model.
00:17:26.640 --> 00:17:32.880
And so when we get to Airbnb and we start connecting property management systems, it was the live reses of the world.
00:17:32.960 --> 00:17:44.559
You were going out and connecting all these inventory systems directly into the Airbnb marketplace, which then gave people a little bit more comfort that live transactions was a possibility.
00:17:44.880 --> 00:17:52.319
That if we have the source of truth connected into the marketplace, we can book your home without a double booking, without any consequence.
00:17:52.559 --> 00:17:54.319
But it came back to technology.
00:17:54.480 --> 00:17:59.519
You had to get people comfortable with something new, which that's one feat, one challenge for sure.
00:17:59.759 --> 00:18:04.960
The other piece was the underlying infrastructure of how the inventory was shifted around and distributed.
00:18:05.920 --> 00:18:06.640
I love it.
00:18:06.720 --> 00:18:08.880
And you know, I have a big smile on my face.
00:18:09.039 --> 00:18:21.039
I I basically remember when Brian Sharples came off stage in at FocusRide in 2008 saying we'll never make our inventory bookable because the homeowner wants to decide who's going to stay my property.
00:18:21.119 --> 00:18:26.960
I could have strangled him and said, hey, we're running the largest property management company in Europe already at 24,000 units.
00:18:27.039 --> 00:18:28.400
All our stuff is bookable.
00:18:28.559 --> 00:18:33.599
So short-term rental lacked of that infrastructure that you've just alluded to.
00:18:33.759 --> 00:18:38.720
And I remember this conversation I had with Jeff Boyd from booking or priceline.
00:18:38.799 --> 00:18:43.039
He said to me, Simon, we want this inventory bookable and then we can transact.
00:18:43.119 --> 00:18:47.680
So we moved from a super fragment supply ultimately.
00:18:47.839 --> 00:18:58.559
And we at the time were the first property manager in the world to integrate our entire inventory, 24,000 units, through an XML feed, to booking.com in 2008.
00:18:58.720 --> 00:19:00.000
That's 17 years ago.
00:19:00.160 --> 00:19:09.519
So we had OTA aggregations, then we have PMS concentration, and now we're entering another shift.
00:19:09.599 --> 00:19:11.599
And I think that's what our conversation is about.
00:19:11.839 --> 00:19:13.839
Sean, we don't want to dwell on the past too much.
00:19:14.000 --> 00:19:16.640
We are in the present and we need to look into the future.
00:19:16.799 --> 00:19:23.039
And you and I cannot have a conversation without talking about what does this mean now in terms of top of funnel, where we came from.
00:19:23.200 --> 00:19:28.640
I think we understood how travel is being aggregated through GDSs and other platforms.
00:19:28.880 --> 00:19:38.960
OTAs came about, the aggregated travel, uh, and we've seen the evolution of that, but now we have another phenomena called AI and the new top of funnel.
00:19:39.039 --> 00:19:40.640
And that's the big conversation.
00:19:40.799 --> 00:19:50.160
And with your experience, especially now working at Stub Hub, but seeing the evolution of travel aggregation and distribution, let's talk about the elephant in the room.
00:19:50.319 --> 00:19:51.519
Search is changing.
00:19:52.000 --> 00:19:56.880
Consumers are increasingly asking AI agents instead of Googling.
00:19:57.039 --> 00:20:00.079
I mean, my children, I just said to you, I have five children.
00:20:00.160 --> 00:20:03.519
They they use Google in the past, but now it's like, why do I need Google?
00:20:03.680 --> 00:20:10.880
I do everything on open AI or tools like that in terms of my homework, in terms of my studying, in terms of my research.
00:20:10.960 --> 00:20:17.599
If I have a question and my dad and my mom can't answer, I ask uh open AI or anything similar.
00:20:17.759 --> 00:20:18.960
So there is a big question.
00:20:19.119 --> 00:20:22.960
If AI becomes the new top of funnel, is that gonna happen?
00:20:23.200 --> 00:20:27.119
I see it happening every day, and already that the top of funnel has dramatically altered.
00:20:27.359 --> 00:20:30.160
My wife is planning our spring and break vacation.
00:20:30.240 --> 00:20:33.200
Um, and last night we're watching the Olympics and she is sitting there.
00:20:33.279 --> 00:20:36.240
I'm a ChatGTP service and she's a Gemini person.
00:20:36.559 --> 00:20:38.000
She is that's the difference.
00:20:38.799 --> 00:20:40.240
There's a household debate.
00:20:40.319 --> 00:20:48.480
It's uh I'm a first adopter, I feel loyal to ChatGTP, even though she keeps showing me examples where Gemini has a far more detailed response.
00:20:48.720 --> 00:20:54.880
But she is conversing back and forth with Gemini about planning this trip for spring break through the south of Idley.
00:20:55.440 --> 00:20:59.119
Um, and she's asking what destinations and now look at uh hotels.
00:20:59.279 --> 00:21:00.640
Are there good hotels in this area?
00:21:00.720 --> 00:21:02.079
Should I look at vacation rentals?
00:21:02.240 --> 00:21:03.759
I'm looking for a home for five people.
00:21:04.000 --> 00:21:05.279
Can you find me availability?
00:21:05.440 --> 00:21:12.480
So, what clearly has altered is at no point did my wife Google any of these terms, start with a Google search and start reviewing websites.
00:21:12.640 --> 00:21:14.480
It was straight into an agent.
00:21:14.559 --> 00:21:18.640
And that experience is incredibly conversational, it's incredibly flexible.
00:21:18.880 --> 00:21:23.359
It feels like you are talking to one of the most educated travel agents on the planet.
00:21:23.519 --> 00:21:27.440
They have an answer to every question, down to the restaurant, the airport transfer.
00:21:27.599 --> 00:21:29.039
They can answer all of it.
00:21:29.279 --> 00:21:42.640
And today, in its early kind of design and incarnation, the monetization hasn't played out yet in that model, which is Gemini largely is answering the questions based on its truthful view of what is the best answer to the question.
00:21:43.039 --> 00:21:50.000
Where it has no bias yet, but is driven by click-through rates, impression costs, anything like that.
00:21:50.240 --> 00:21:52.319
But you know that's where this is going, right?
00:21:52.400 --> 00:21:58.799
They unless they're satisfied with purely subscription based monetization of the product, chat GTP, I pay 20 bucks a month.
00:21:58.960 --> 00:21:59.759
Maybe they're satisfied.
00:22:00.400 --> 00:22:02.000
With just taking$20 a month.
00:22:02.160 --> 00:22:03.359
But you know Google isn't.
00:22:03.519 --> 00:22:04.960
Google has seen this book before.
00:22:05.039 --> 00:22:06.480
They know how this evolves.
00:22:06.640 --> 00:22:08.799
This is not going to be a subscription-based solution.
00:22:08.880 --> 00:22:13.440
The monetization on this is the clicks and the impressions and the recommendations.
00:22:13.599 --> 00:22:21.440
So when you ask Chat GTP or Gemini five years from now, hey, what's the best flight from New York to LA on the 4th of July?
00:22:21.680 --> 00:22:30.000
If American Airlines is paying that AI product a little bit more to be recommended, then how does that influence the recommendation side?
00:22:30.160 --> 00:22:36.400
And I think that to me, there's lots of interesting areas of AI, but this top of funnel change 100%.
00:22:36.880 --> 00:22:43.440
It's already, they're already out there negotiating different economic structures and deals for integration into the agent experience.
00:22:43.599 --> 00:22:47.440
So there's a StubHub integrated experience into Chat GTP.
00:22:47.599 --> 00:22:51.759
You can ask it about tickets, you can then book and be bounced off into the StubHub experience.
00:22:51.839 --> 00:22:54.480
It's integrated within ChatGP as an app.
00:22:54.799 --> 00:23:07.759
They're going to find ways to keep the answer very strong and relevant and informative, but also factor in who's willing to pay the most to be included in that answer, which is incredibly interesting.
00:23:08.000 --> 00:23:12.240
The second piece there, I think the follow-on question then is do they get into supply?
00:23:12.960 --> 00:23:14.960
Do they actually try to secure their own supply?
00:23:15.119 --> 00:23:20.480
And Google was the boogeyman of the last two decades of like, oh, Google's building going to build an OTA.
00:23:20.559 --> 00:23:22.400
Every year, Google's building an OTA.
00:23:22.480 --> 00:23:27.519
Every year at FocusRight, every year at DARM, Google's building an OTA is going to have their own supply.
00:23:27.680 --> 00:23:28.559
But they never did.
00:23:28.720 --> 00:23:32.720
They monetized driving traffic to other people's supply aggregation.
00:23:32.960 --> 00:23:38.400
In this top of funnel shift, the value, the protection you have is if you own the inventory.
00:23:38.480 --> 00:23:53.200
If you are the aggregation of supply, then you have the most powerful component in this, assuming that none of these AI top of funnel changes have an interest in negotiating inventory access from supply side, which I would assume they don't, and that would be my guess.
00:23:53.359 --> 00:24:05.519
So they're going to change the top of funnel experience, but the customer is going to end up landing wherever you book the inventory through some potential change in user experience to get there, but you still end up where the inventory is.
00:24:05.759 --> 00:24:16.720
So having actual control of the inventory being the source of supply, I think is more crucial today strategically than it ever has been as this top of funnel shift occurs.
00:24:17.279 --> 00:24:22.000
You probably have answered already 10 of my next questions, so let me summarize that.
00:24:22.240 --> 00:24:28.880
In terms of AEI is the new STM marketplace, paid placement inside LLM recommendations.
00:24:28.960 --> 00:24:30.240
So that needs to happen.
00:24:30.400 --> 00:24:38.720
I had a very interesting STR Global Unlock podcast episode with Glenn Fogle, and I asked him, you know, are you going to be the only staff in five years with booking.com?
00:24:39.119 --> 00:24:42.079
And Glenn said, clearly not, because we figured this out.
00:24:42.160 --> 00:24:45.119
And that alludes exactly to where you're coming from.
00:24:45.359 --> 00:24:55.759
So the battle between Expedia Booking or Airbnb for AI real estate will continue to happen regardless, because that's where the content sits at the end of the day.
00:24:55.839 --> 00:25:01.119
Because the big question for our audience is, hey, what do I need to do with my inventory?
00:25:01.279 --> 00:25:08.799
So I control 300, let's say, luxury premium units in a particular destination.
00:25:09.119 --> 00:25:11.200
Where is my future customer going to book?
00:25:11.359 --> 00:25:13.440
Who is going to be the merchant of record here?
00:25:13.599 --> 00:25:25.440
And how what do I need to do for that inventory to be found for people who are using other tools such as a direct OTA to uh to research?
00:25:25.599 --> 00:25:30.079
Because with your example that you've just made with your wife, how do you then transact?
00:25:30.240 --> 00:25:33.440
So you're building yourself an incredible itinerary, right?
00:25:33.599 --> 00:25:34.799
So this is a life case.
00:25:34.880 --> 00:25:42.400
So you're going to South of Italy, you figured it all out where you want to go, all the recommendations, everything you get, but then you need to transact.
00:25:42.480 --> 00:25:43.519
What is happening after that?
00:25:43.759 --> 00:25:49.599
And that's where so you have the AI side, which is you want to be the truthful best answer.
00:25:49.759 --> 00:25:52.480
So which house in southern Italy has the best reviews?
00:25:52.640 --> 00:25:53.599
I need it with a pool.
00:25:53.759 --> 00:26:10.319
And that's where you want your property to actually be the most appropriate answer to the question, which is our reviews are good and we have great service, and like everything looks good, so that with an authentic, unmanipulated answer, your property is the right property to recommend for that outcome.
00:26:10.400 --> 00:26:13.200
So that doesn't change much about how we've operated.
00:26:13.359 --> 00:26:22.880
Be the best, have the best reviews, have the great greatest photos, be discoverable online, which then feeds these engines that would recommend you based on you are the right fit.
00:26:23.119 --> 00:26:29.039
The second piece is to keep abreast of how the manipulation of the recommendation starts to take hold.
00:26:29.279 --> 00:26:41.920
I keep an eye, my news alerts are on commercial business partnerships with folks like OpenAI, where the AI engine is now having a third party agreement that is somehow going to participate in what's being recommended.
00:26:42.160 --> 00:26:46.079
If you're going to integrate booking.com into Chat GTP, what does that mean?
00:26:46.240 --> 00:26:50.079
And when someone says, where's the best place to book a hotel or a vacation rental?
00:26:50.240 --> 00:26:53.279
Does it now recommend booking because there's a partnership between?
00:26:53.680 --> 00:27:06.000
So on one side, you have being the truthful correct answer, and the second is watching how things evolve and the manipulation of that answer and incentivizing the guidance to be driven towards one company over another.
00:27:06.240 --> 00:27:12.319
That's where I think we're in the early innings of this evolution, but is the most consequential.
00:27:12.559 --> 00:27:14.480
Because Google started with organic.
00:27:14.640 --> 00:27:18.000
Used to be that you're at the top of the list because you're the best answer to the query.
00:27:18.160 --> 00:27:21.359
Then it became well, why don't we put sponsored listings above that?
00:27:21.440 --> 00:27:27.200
And if you have the highest CPC, you're willing to pay the highest impression rate, then you're suddenly at the top of the list.
00:27:27.279 --> 00:27:30.799
You're the best answer, even though organically maybe you're not.
00:27:30.960 --> 00:27:37.440
I think that's the story that will play out through these AI agentic experiences, these kind of conversational recommendations.
00:27:37.839 --> 00:28:10.400
So basically, Sean, you're implying that the the AI, the open AIs of this world are not going to disrupt the travel distribution because that's not, let's put it in simple terms, attractive enough, or there's other issues to solve quicker than having strong commercial partnership agreements with the existing OTAs today, and just let that flow ultimately instead of them becoming ultimately the transactional platform.
00:28:10.559 --> 00:28:12.960
That you're implying very clearly that's not going to happen.
00:28:13.359 --> 00:28:13.599
Yeah.
00:28:13.759 --> 00:28:20.880
I think you've seen that playbook before with like TripAdvisor attempts at going into the merchant model and securing their own inventory.
00:28:21.039 --> 00:28:31.680
And Google was just the boogeyman for decades of like they're going to launch an OTA, it's going to compete with Expedia, you're going to contract as a hotel or a vacation rental directly with Google, who will then sell your inventory.
00:28:31.920 --> 00:28:39.359
The inventory aggregation and management and pricing competitiveness, it is a very challenging, endless task.
00:28:39.599 --> 00:28:49.839
Like the Expedias of the World, the bookings of the world, they have hundreds of market managers whose sole responsibility is to make sure the pricing of the inventory they have on their platform is competitive.
00:28:50.079 --> 00:28:52.079
It's not an easy thing to do.
00:28:52.160 --> 00:28:56.720
And it takes years to build up that momentum, the contract volume, the sophistication of tooling.
00:28:56.880 --> 00:29:04.400
Everybody who's tried it, even with deep pockets of a Google TripAdvisor, has not succeeded since the major OTAs have been developed.
00:29:04.640 --> 00:29:16.000
So I my bet is that an open AI doesn't decide I'm going to go up against booking and start contracting hotels and flights and have my own inventory that then I become the merchant of record and the source of truth.
00:29:16.240 --> 00:29:18.720
I think they say, hey, there's four OTAs out there.
00:29:18.799 --> 00:29:21.599
You guys can all bid so that I recommend you.
00:29:21.759 --> 00:29:27.279
And I monetize the lightweight, light headcount, light asset approach, which is I'm driving traffic.
00:29:27.519 --> 00:29:29.440
I'm not responsible for inventory.
00:29:29.599 --> 00:29:35.359
And so how this evolves where you manipulate the recommendations of these systems is going to be incredibly interesting.
00:29:35.599 --> 00:29:42.240
But if you're a vacation model manager on the Oregon coast with 10 homes, like you're listening to this and you're like, what the hell am I supposed to do with this?
00:29:42.319 --> 00:29:44.640
I'm not negotiating directly with OpenAI.
00:29:44.880 --> 00:29:47.920
What you do need to do is be the controller of your inventory.
00:29:48.079 --> 00:29:49.759
Where does your inventory lie?
00:29:49.839 --> 00:29:52.640
In the end, where's the source of truth of your inventory?
00:29:52.799 --> 00:29:53.680
Who controls it?
00:29:53.839 --> 00:29:55.119
How much are you giving over control?
00:29:55.440 --> 00:29:56.799
Are you selling to wholesalers?
00:29:56.960 --> 00:29:58.880
Are you putting it on other platforms?
00:29:59.200 --> 00:30:08.960
Because this buck seems to stop with the source of truth, the inventory system, the GDS where we started talking, the CRS, the channel manager, the property management system.
00:30:09.200 --> 00:30:17.599
Wherever that final destination of the inventory is, that seems to be an even more powerful element of ownership than it than it ever was before.
00:30:17.920 --> 00:30:19.359
That's the fantastic message.
00:30:19.599 --> 00:30:27.759
First of all, I think I would put my money in the same color and number as you in terms of how this is going to evolve in terms of distribution on the top of funnel.
00:30:27.839 --> 00:30:31.519
But at the same time, who wins, who owns the inventory wins.
00:30:31.599 --> 00:30:33.759
And you've made a very strong argument on that.
00:30:33.839 --> 00:30:48.000
And I think that's now where you're going deeper for our listeners as well to think what does that mean for me to be in South Carolina with 200 units, a family-owned business, third generation, whoever owns the supply ultimately controls the game.
00:30:48.079 --> 00:30:52.240
And that's what you're implying stronger than ever, even if the funnel changes.
00:30:52.319 --> 00:30:56.160
So let's bring this home to short-term rental.
00:30:56.240 --> 00:31:04.799
If AI reshuffles the funnel, does inventory aggregation become even more critical going forward?
00:31:05.519 --> 00:31:08.480
Inventory aggregation from the perspective of an OTA?
00:31:08.960 --> 00:31:18.240
Yeah, I mean, I think that side of it, the third-party OTA battle doesn't change, which is you have to have the best inventory collected at the best pricing and the best terms.
00:31:18.400 --> 00:31:20.160
And that was always the game.
00:31:20.319 --> 00:31:30.559
I think the difference as a supplier is now recognizing that you want your inventory to be distributed across as many different platforms as possible with all the same global distribution.
00:31:30.720 --> 00:31:31.839
It does happen or doesn't?
00:31:32.160 --> 00:31:33.200
Doesn't it still not enough?
00:31:33.279 --> 00:31:36.400
In Europe, multi-channel platform distribution is common.
00:31:36.559 --> 00:31:38.480
In the US, it's still not happening.
00:31:39.359 --> 00:31:39.920
That's right.
00:31:40.079 --> 00:31:43.599
So you want to invest in making sure that multi-channel infrastructure exists.
00:31:43.680 --> 00:31:46.160
You're putting it out there as many different places as possible.
00:31:46.240 --> 00:31:52.720
So whatever these type of funnel systems are recommending, it ends up with your house, your unit, your availability.
00:31:52.880 --> 00:31:56.640
And because it maybe it recommends booking, maybe it recommends somebody else.
00:31:56.799 --> 00:32:01.200
But in the end, your inventory on booking should feed back to your source of truth.
00:32:01.440 --> 00:32:03.359
Where do you control the pricing?
00:32:03.519 --> 00:32:05.279
You control the inventory.
00:32:05.680 --> 00:32:10.240
Because that that seems more consequential today than it ever has been.
00:32:10.480 --> 00:32:24.880
The concept of taking uh a collection of hotel rooms and selling them to a wholesaler, taking them off of your system, giving them to crews, you're giving away the power of the most important part of the of the funnel, which is the final ownership of supply.
00:32:25.039 --> 00:32:42.240
People are gonna make sure they're hoarding control of that inventory and that anything that transacts comes back to them, which is why the Sharpell statement in 2008 was so ludicrous, like just so short-sighted that we're gonna stay a Craigslist newspaper advertisement forever.
00:32:42.400 --> 00:32:56.559
Which, if you think of today's, imagine if they had recognized in 2007 that this is that ownership of supply, control of live available inventory is the power, they were in the position to just dominate.
00:32:56.720 --> 00:33:00.480
They had all the supply, just not in an instantly transactable manner.
00:33:00.640 --> 00:33:10.160
If they had connected into PMSs, allowed people to upload inventory into extranets, connected to wherever the inventory was, they would be in a position of power today.
00:33:10.400 --> 00:33:13.839
Instead, Airbnb came and built the systems to aggregate that supply.
00:33:14.000 --> 00:33:19.279
Finally, Expedia takes over Homeway and Verbo and gets involved with building the live approach.
00:33:19.599 --> 00:33:28.319
But it's amazing that both they missed that opportunity and it gives you perspective, like Ticketmaster, where we started, on the power of a monopoly.
00:33:28.559 --> 00:33:36.799
If you are 80% of demand in a market, your innovation decisions, your technology investments alter the course of the industry.
00:33:37.200 --> 00:33:46.799
Like that, the vocational industry didn't modernize at the same speed as flights, hotels, and car rentals because the dominant demand channel didn't want to.
00:33:47.119 --> 00:33:48.559
Like that's just wild to me.
00:33:48.640 --> 00:33:52.400
That's a Harvard Business School study on like monopoly impact on innovation.
00:33:52.559 --> 00:34:05.039
That you can hold an industry in a in an archaic state if you control enough of the demand on the supply side, which is which is the homeway story, and funnily enough, the ticket master story.
00:34:05.200 --> 00:34:20.159
The ticketing space did not evolve into multi-channel distribution, infrastructure to sell tickets everywhere, standard commission concepts, because there was one dominant player and it didn't suit their best interest to take that path to market or take that on that evolution.
00:34:20.400 --> 00:34:22.320
So they keep the industry where it is.
00:34:22.559 --> 00:34:27.360
And the ticketing space, that's starting to crumble now, where the the opportunity is just too clear.
00:34:27.440 --> 00:34:31.280
It's 2026 and people can't sell tickets beyond single channel.
00:34:31.440 --> 00:34:33.360
Like it's it's time for change.
00:34:33.519 --> 00:34:42.239
Uh, and I've just been thrilled to be a part of that change and actually get to participate in another major evolutionary shift in distribution of a perishable product.
00:34:42.559 --> 00:34:43.199
Can imagine.
00:34:43.360 --> 00:34:51.599
And, you know, we talked a lot about now control dependencies on platforms, the aggregation of inventories becoming more critical.
00:34:51.840 --> 00:35:00.719
I think there is also a chance for operators to reclaim control to a certain extent over distribution as well, with what's happening out there.
00:35:00.880 --> 00:35:05.039
So let's become a little bit more practical to cover that particular topic.
00:35:05.199 --> 00:35:20.960
If you are a property manager of 500 units today, what would you prepare for over the next year or two in relation to distribution to remain relevant within what's changing right now?
00:35:21.360 --> 00:35:32.639
And I think you nailed it with the Europe to North America comparison, that if your inventory is not connected and live available, live availability is pushed to all of the major demand channels out there.
00:35:32.800 --> 00:35:34.480
My question would be why not?
00:35:34.800 --> 00:35:41.760
That this funnel is changing where you want your availability to exist, no matter where the customer is recommended that they transact.
00:35:41.920 --> 00:35:48.159
And if it's connected to your piece of infrastructure, your property management system or your CRS, you are in control.
00:35:48.320 --> 00:35:51.199
They're feeding off of your pricing, your availability.
00:35:51.440 --> 00:35:53.199
Your system is the source of truth.
00:35:53.280 --> 00:35:54.800
It's the system of record.
00:35:54.960 --> 00:35:56.000
That's what you want.
00:35:56.159 --> 00:36:01.920
That keeps you in control, but also means that your distribution network is as large as it can be.
00:36:02.159 --> 00:36:12.639
If there are channels that Top of Funnel is going to recommend where your availability does not exist, I would want the answer of why to be a very compelling reason.
00:36:12.880 --> 00:36:15.679
Why is your availability not on Home Away or Verbo?
00:36:15.760 --> 00:36:16.800
Why is it not on booking?
00:36:16.880 --> 00:36:20.000
Why is your website not have live transaction availability?
00:36:20.239 --> 00:36:21.920
That network needs to exist.
00:36:22.000 --> 00:36:27.119
And if it doesn't today, that would be my that's certainly the first place I'd be looking to invest.
00:36:27.440 --> 00:36:28.320
Well, love it.
00:36:28.559 --> 00:36:29.760
Super strong story.
00:36:30.079 --> 00:36:32.719
Before we continue, a quick note about price labs.
00:36:32.880 --> 00:36:39.760
Many of the revenue insights we discuss on this podcast are rooted in market intelligence and data analysis.
00:36:40.239 --> 00:36:42.559
That is exactly where price labs excels.
00:36:43.119 --> 00:36:54.559
Air dynamic pricing engine leverages hyperlocal data to optimize a rate, while their market dashboards provide priority on supply, demand, and performance.
00:36:55.760 --> 00:37:03.360
Combined with left optimization tools to become a comprehensive revenue management topic design for scale.
00:37:04.159 --> 00:37:10.239
If revenue strategy is a priority for you to check the link in the episode description.
00:37:11.119 --> 00:37:12.159
Let's continue.
00:37:14.719 --> 00:37:16.559
Let's take this to the next level.
00:37:17.119 --> 00:37:20.559
So the next, we call it the distribution warms more.
00:37:21.039 --> 00:37:22.639
So let's zoom out for a second.
00:37:22.880 --> 00:37:29.440
So in terms of what we discussed, if Google Doc dominance is weakened, let's assume that weakens.
00:37:29.519 --> 00:37:41.679
And if AI becomes the starting point, then if platforms bid for AI, as you just alluded to, uh recommendation priority is another aspect as well, because then it becomes a war.
00:37:42.480 --> 00:37:46.239
What happens to profitability and what happens to trust?
00:37:46.800 --> 00:38:04.400
Because it's becoming really blurry when you think that this bidding war, this this relate, this commercial relationship with the OTAs backed on the AI tools is happening, then we're in a way, we're going back to square one.
00:38:04.480 --> 00:38:13.280
So we're entering a very in a different ecosystem, it's not going to change and it's going to be a lot tougher.
00:38:14.159 --> 00:38:14.639
Yeah.
00:38:14.880 --> 00:38:18.000
I don't think that dynamic shifts too significantly.
00:38:18.239 --> 00:38:27.360
Where if you had 50 homes in the Oregon Coast, you were already struggling to compete top of funnel against the Google, the big brands that are buying your terms.
00:38:27.519 --> 00:38:36.000
Like if you're competing on Oregon Coast search terms with Airbnb and Expedia and Verbo and Home Away, pre-AI, it was already incredibly difficult.
00:38:36.480 --> 00:38:47.519
And the and the better answer was like use these massive marketing channels with massive budgets to sell your product, optimize pricing so that you're making the yield that you want to, try to minimize cost of distribution.
00:38:47.679 --> 00:38:52.239
If they're the merchant of record, they're eating fraud, they're eating processing of credit cards.
00:38:52.400 --> 00:38:55.599
There's a bunch of distribution cost things that are compelling there.
00:38:55.760 --> 00:39:06.079
So if you're still the small property manager, I don't think you're suddenly going to start competing top of funnel and doing a direct agreement with OpenAI to recommend your homes over the other options out there.
00:39:06.320 --> 00:39:08.559
So that to me doesn't change dramatically.
00:39:08.719 --> 00:39:15.519
What it to me is just increases the importance of A, you being the right answer to the question, what's the best property in the Oregon Coast?
00:39:15.679 --> 00:39:19.360
Actually being the best property on the Oregon Coast is still fundamental.
00:39:19.519 --> 00:39:30.079
And the other piece is having availability and presence and profile of your inventory anywhere that a system may end up recommending, even if it's manipulated with a commercial agreement.
00:39:30.320 --> 00:39:37.679
If Virgo does a deal with Gemini and is the number one place they recommend vacation mammals, I would want my availability there.
00:39:37.840 --> 00:39:43.920
And I would utilize the spend that Virbo is doing to promote my product because I'm not going to compete in that manner.
00:39:44.159 --> 00:39:52.719
The interesting piece will be at the top of the funnel whether the cost per click, the cost per impression, how it compares to the traditional economics of search.
00:39:52.960 --> 00:40:02.320
But unless you're a beast, unless you're getting into your world of hundreds and hundreds of homes, then you potentially have the ability to compete at the top of the funnel.
00:40:02.400 --> 00:40:06.000
And then it becomes a debate around the economics and the cost of exposure.
00:40:06.159 --> 00:40:10.320
But for most people you and I know in vacation annals, they don't have thousands of homes.
00:40:10.400 --> 00:40:11.199
They have dozens.
00:40:11.360 --> 00:40:16.719
And if you're dozens, competing for top of funnel exposure probably isn't your best use of funds.
00:40:17.039 --> 00:40:23.199
You want to utilize these massive demand channels that pay through the nose for traffic to best suit you.
00:40:23.360 --> 00:40:27.280
And the best way to suit you is to be the final control of the inventory.
00:40:27.440 --> 00:40:35.199
What shows up every there is coming from my system integrated to my platform, my control of pricing, my control of availability.
00:40:35.760 --> 00:40:39.119
And that comes back to a lot of selection of solutions.
00:40:39.280 --> 00:40:40.800
What property management system are you on?
00:40:40.880 --> 00:40:41.760
What does it integrate with?
00:40:41.920 --> 00:40:43.920
How many platforms does it distribute you on?
00:40:44.159 --> 00:40:51.679
Property management systems to me aren't a functionality focus of like how good is it at balancing the books and sending out emails when people book on my website.
00:40:51.840 --> 00:40:53.679
It's where does it sell my inventory?
00:40:53.840 --> 00:40:59.519
How does it guarantee that demand across the planet has awareness to my inventory and my product?
00:40:59.679 --> 00:41:08.880
And if I'm on a PMS today that doesn't reach the globe in the way that it should, uh that would be the first area of focus is like, how can you find an alternative solution that does?
00:41:09.119 --> 00:41:09.280
Yeah.
00:41:09.599 --> 00:41:12.880
Because I think today more than ever, you have to be everywhere.
00:41:13.440 --> 00:41:20.000
And who said to me when I asked him to be on the podcast today with me, he said I'm too disconnected to this industry?
00:41:20.159 --> 00:41:21.199
It was you, Sean.
00:41:21.599 --> 00:41:34.400
So anyway, in summary, it's all about, in a way, think about reputation, performance data will matter more than potentially ad spend, especially for the smaller operators, as well, to stay relevant within this distribution world.
00:41:34.559 --> 00:41:39.840
But before we wrap this up, I I you know, I want to do a personal reflection with you, Sean.
00:41:40.400 --> 00:41:47.840
And uh, as I said at the beginning, I have enormous amount of respect for what you've done within the travel industry, where you came from, and what you've done and seen.
00:41:47.920 --> 00:41:59.360
And you've seen Expedia rise, you've seen Airbnb's evolution, that's where you and I met, and and now you're working on reshaping, reshaping the ticketing industry, right?
00:42:00.239 --> 00:42:05.840
Are we early or late in this AI shift when you look at our industry?
00:42:06.239 --> 00:42:08.079
I think across the board we're early.
00:42:08.239 --> 00:42:18.880
Um this is we're just seeing the kind of early seeds being planted of potential impact and the evolution of how this continues to alter everything we do is is is going to be substantial and significant.
00:42:19.039 --> 00:42:22.079
I believe in the disruption most people are predicting.
00:42:22.159 --> 00:42:23.519
Uh, and I see it every day.
00:42:23.679 --> 00:42:25.679
Just how I work has changed dramatically.
00:42:25.840 --> 00:42:28.559
Um, and I think that will continue to evolve.
00:42:28.719 --> 00:42:31.440
Um, there's an amazing efficiencies to be seen.
00:42:31.599 --> 00:42:36.159
I met I met a property manager a couple weeks ago when I was down in Florida in Boca.
00:42:36.800 --> 00:42:40.320
And he's he explained to me, he was like, Do you use AI much at home?
00:42:40.400 --> 00:42:42.480
I said, Oh, I'll dabble it a little bit.
00:42:43.440 --> 00:42:46.960
And he said, Can I tell you what I've done over the over the past year?
00:42:47.119 --> 00:42:47.920
And I was like, sure.
00:42:48.079 --> 00:42:51.760
He's like, first, I set up an AI system that manages the financial books.
00:42:51.840 --> 00:42:54.079
It's just one agent that I helped develop.
00:42:54.159 --> 00:43:01.920
I have a younger younger son who helped me figure out like how to build something that managed the financial books and did the PL at the end of the month and all this kind of stuff.
00:43:02.159 --> 00:43:09.519
Then he's like, then I created another one for managing employee staffing, who's housekeeping, who's on what shift, what day a week are they working on.
00:43:09.679 --> 00:43:16.800
He's like, then I woke up a couple months later and I had five of these different AI agents doing different tasks every day for my business.
00:43:16.960 --> 00:43:26.239
This is now five or six employees he has that run 24 hours a day maintaining his business in a way that he traditionally would have had to hire people to do.
00:43:26.480 --> 00:43:28.400
Then he said, You know what I got tired of?
00:43:28.639 --> 00:43:29.280
I said, What?
00:43:29.440 --> 00:43:32.800
He said, I got tired of managing the five or six agents.
00:43:33.119 --> 00:43:35.199
So we built a management layer.
00:43:35.360 --> 00:43:41.280
There was a management agent, and I would tell the management agent, this is what I want your team of six agents to do this week.
00:43:41.360 --> 00:43:44.079
This is the priorities, this is where they should invest time.
00:43:44.239 --> 00:43:50.239
And now all I do is I manage that one agent who manages the rest of the agents that manage my little business.
00:43:50.480 --> 00:43:59.679
That is a Boca Racon property manager with a dozen or so homes who's managed to build a suite of support systems through AI agents.
00:44:00.320 --> 00:44:05.199
If he can do it, I can do it, you can do it, all of us have access to that.
00:44:05.360 --> 00:44:18.079
So the terrifying side of it is job security and what's going to happen to you know employment levels on the planet when all of these jobs can be quickly replaced with pretty basic levels of technology knowledge and individuals like you and me can figure it out.
00:44:18.239 --> 00:44:30.000
But the flip side for a small business like vacation rentals, where the margins are tiny, like you are succeeding and failing within a band of five, six percent, uh, there are cost efficiencies here that can't be ignored.
00:44:30.159 --> 00:44:40.719
The people who aren't considering what tasks could be done by something more efficient and less costly, uh, I think that ends up being a problem down the line if you haven't modernized in that way.
00:44:40.960 --> 00:44:45.199
Because the vacation rental home, because you're competing against that Boca Ratome guy.
00:44:45.360 --> 00:44:52.000
And because he he has more efficient costs of execution, he can charge a lower price for his home than you can.
00:44:52.159 --> 00:44:59.119
And he does he can still make 20% margin more than you can with a price 20% cheaper because his business is more optimized.
00:44:59.440 --> 00:45:06.639
So you can ignore the cigar peril, but the guy down the street or the woman down the road adopts it, and suddenly you have a different cost structure to compete against.
00:45:06.719 --> 00:45:09.039
And that's where the problems start to arise.
00:45:09.519 --> 00:45:10.800
Yeah, that's a great example.
00:45:10.880 --> 00:45:20.000
And at the end, he can invest all his time in building relationships with homeowners where it really matters to build trust and put the putting human capital where it matters, right?
00:45:20.079 --> 00:45:22.960
And that's building trust with homeowners and build supply.
00:45:23.039 --> 00:45:34.880
So the business is run, and while that is running, he can invest time into human relationships because at the end of the day, short-term rental is based on trust with homeowners, and that's a significant shift.
00:45:35.119 --> 00:45:39.199
We talked about this forever, but if now the efficiency is coming, and this is incredible.
00:45:39.360 --> 00:45:54.719
I I love your example in Bokhara Tan, that it doesn't matter the size, you just need to embrace it and see what it does for you to free up your resources, become more efficient, more effective, and put your human capital where it makes a difference and let the rest happen.
00:45:54.800 --> 00:45:56.719
And and it's happening on a daily basis.
00:45:56.880 --> 00:45:57.840
It's mind-bobbling.
00:45:58.159 --> 00:46:15.039
No, I mean, I was thinking like there's a there's another connection there with my other world of like self-driving and autonomous vehicles, which is the same cost structure change has is about to totally disrupt the concept of mobility, taxis, and transportation as a service, which is a self-driving car.
00:46:15.119 --> 00:46:18.880
If you get an Uber, it's$10 a mile here in New York to get an Uber these days.
00:46:18.960 --> 00:46:22.400
So I'm going to get an Uber to Times Square, it's two and a half miles, that's going to be$25.
00:46:23.039 --> 00:46:28.559
70% of that goes to the driver, 30%, uh 30% goes to Uber as the marketplace.
00:46:28.880 --> 00:46:32.960
A Waymo car can drive that at a dollar per mile of operation.
00:46:33.119 --> 00:46:35.519
That's probably the mileage cost that they're having there.
00:46:35.599 --> 00:46:40.800
So a$10 a mile of top line for a dollar a mile of operation and no rev share.
00:46:41.199 --> 00:46:52.639
So if you're Uber, you're competing against in this AI example, you're competing against an AI operated vehicle that has no Rev share, a dollar per mile of operation, you have an existential threat.
00:46:52.880 --> 00:47:07.599
Now, the short-term rental owner who's competing against someone who doesn't pay someone to do their financial books, doesn't pay someone to do their marketing campaigns, does it all through AI and different kind of more scalable, cost-efficient methods of operations, it's the same issue.
00:47:07.760 --> 00:47:10.639
The cost structure is changing, the game is changing.
00:47:10.960 --> 00:47:22.159
And you can stay Uber with human drivers at$10 a mile with 70% going to the driver, you're going to bleed out because the Waymo car will come in and say, we'll charge five bucks a mile.
00:47:22.239 --> 00:47:27.599
And on five bucks a mile, we still make$4 a mile profit and it's half the price of an Uber down the street.
00:47:27.760 --> 00:47:31.760
And you watch how customers adopt and shift to that cheaper price point.
00:47:32.400 --> 00:47:33.840
So very similar to that.
00:47:34.159 --> 00:47:36.480
And you can listen to your own Spotify account.
00:47:36.559 --> 00:47:38.000
I've tried that at Waymo.
00:47:38.400 --> 00:47:39.199
It was insane.
00:47:39.360 --> 00:47:50.960
So two years ago, VRMA in Phoenix, Arizona, I think none of the 2,400 uh participants of that conference have not posted about Waimo while they were there, and they all tried it out.
00:47:51.119 --> 00:48:05.199
And it was an it was an incredible experience and it was a big wakening up call to the VRMA vacation rental industry when they went to Phoenix and everybody tried to use a Waimo and uh and realizing that it's actually happening.
00:48:05.280 --> 00:48:09.599
You come in, you sit in the car and you can connect your Spotify and you can listen to your own account.
00:48:09.920 --> 00:48:10.880
Was pretty amazing.
00:48:10.960 --> 00:48:14.480
And and I had a suitcase waiting while he was coming.
00:48:14.559 --> 00:48:17.280
So he saw that I had a suitcase so the boot opened up.
00:48:17.440 --> 00:48:19.280
I thought that was just an Oh no way.
00:48:19.599 --> 00:48:20.000
Yeah, yeah.
00:48:20.159 --> 00:48:21.599
So that I haven't heard that before.
00:48:21.920 --> 00:48:23.199
That's past your time, Sean.
00:48:23.440 --> 00:48:28.320
But we were standing outside together with a guy from home to go and was like, you're going to the airport, yes.
00:48:28.559 --> 00:48:31.760
And I saw a Wymo where there was no luggage, the boot didn't open.
00:48:31.840 --> 00:48:33.440
We had luggage, the boot opened.
00:48:33.599 --> 00:48:36.480
So it was uh it was amazing.
00:48:36.800 --> 00:48:53.679
It was a big, a big one of the major debates or kind of contention points building Waymo was whether it was a luxury product or a discount product, which is like, do we have to sell below the cost of an Uber to get people to try this new technology, an empty car driving 60 miles an hour down the freeway?
00:48:53.840 --> 00:48:58.960
Or is it gonna be a luxury experience that people will actually pay more than an Uber experience for?
00:48:59.199 --> 00:49:10.239
And it it hasn't reached a scale yet, but in the early market, San Francisco Phoenix, people are willing to wait longer and pay more to get a self-driving car, which was definitely one of the debates I lost.
00:49:10.320 --> 00:49:14.800
Like my prediction was not people are gonna see this as a luxury experience, but it is.
00:49:14.960 --> 00:49:21.119
You control climate, you control music, it's a Jaguar eye paste that's been cleaned and maintained efficiently.
00:49:21.360 --> 00:49:23.920
It's a hundred thousand dollar vehicle driving you around.
00:49:24.159 --> 00:49:24.480
Yeah.
00:49:24.880 --> 00:49:26.960
Very interesting to see that evolve as well.
00:49:27.280 --> 00:49:32.480
Yeah, and I'm sure it has a massive impact on what's going on around with new technologies as well.
00:49:32.719 --> 00:49:35.119
So we'll wrap this up to Sean.
00:49:35.360 --> 00:49:39.280
This was sharp, strategic, and incredibly relevant.
00:49:39.760 --> 00:49:49.119
Distribution is evolving again, infrastructure is being rewritten, and the winners will likely be those who understand where control truly sits.
00:49:49.760 --> 00:49:53.920
Thank you so much for taking time and joining SDR Global Unlocked.
00:49:54.159 --> 00:49:55.519
Thank you, Sean, and good luck.
00:49:55.760 --> 00:49:56.639
Thanks for having me, Sean.
00:49:56.800 --> 00:49:57.760
I was good to see you.
00:49:59.280 --> 00:50:04.000
That was SDR Global Unlocked, where we say what others want.
00:50:04.639 --> 00:50:09.360
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00:50:09.920 --> 00:50:14.639
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00:50:15.360 --> 00:50:22.079
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