HIP E74 Jasper Ribbers - Leaving 40 Percent on the Table

[music] The Hotel Investor Playbook. Your guide to building wealth and freedom through hotel and hospitality ownership. [music] Welcome back to the Hotel Investor Playbook. I am Michael Russell, founder of Malama Capital and your host. On this podcast, we talk story about everything you need to know to make money, investing in hotels and in hospitality assets. Today, I'm sitting down with a guy who manages pricing strategy for over $125 million in annual short-term rental bookings. And he's building a micro-resort brand in Southern California that's absolutely crushing the local market. Jasper Rivers, welcome to the show, man. Michael, thank you. Pleasure to be here. Now, I want to jump right into what you got going on because you and your team, you manage pricing for over $125 million in annual bookings across what thousands of listings will wide. And so that means you're sitting on probably one of the biggest data sets in the short-term rental industry. And I want to start with a question that I think every single person listening is dying to know the answer to, which is, if you could invest anywhere in the world right now based on the actual performance data that you're seeing across your portfolio, where are the best markets? Which markets are generating the strongest returns for operators? Yeah, that's a question that comes up a lot. And Iowa is, Iowa is finding it hard to answer that question because the one thing that I learned from managing now over 3,000 listings, we're growing pretty fast. So I think we just surpassed the one of the 50 million lower milestones of book revenue that we're managing. But the one thing that I learned in the last couple of years is it's not really that there's the best market to invest in because we're everywhere around the world. It's more about the type of experience that you create. You can be very successful in any market really. If you focus on the experience that you're creating with your short-term rental, if you focus on a certain guest avatar, so you're really thinking through like, "Hey, who do I want to serve with this property? Who are the people that are going to be loving to stay here, staying here?" And what do they want and how can I serve them well and really pay attention to all the little details and create an incredible experience for them. That way you can do well in any market because we have markets that are down like 20, 30%. If you look at the broader statistics, but we have clients who are actually doing quite well because they have a niche product in the market and they're very clear about who their client is, who their guest avatar is. I know that's maybe not the answer that you wanted to hear, but that's really what I've learned. It's not so much about finding the perfect market, but it's more about really fine-tuning the experience and really thinking through that. I think that's a great takeaway. I think that's inspiring for a lot of folks that maybe don't have everything aligned perfectly, maybe where they live geographically is they're not in Hawaii like me. I've got a huge head start and so it is inspiring that in today's world now you can really do things. Like you said to separate yourself from the competition, that said, "I don't want to let you off the hook, that easy man. You got data, okay? Come on man, what are some of the demand drivers? Where are places where they're popular but there's less competition? Where are places where perhaps regulation is keeping supply low? No, you're absolutely right. A while back, everyone was talking about regulations and now they didn't want regulations, but now that we see markets, what's that market called on the blanking out of the name? There's this beach market in Texas, Gevinston, I think it's called. Galveston. I think that's a good example where there wasn't a lot of regulations, but as a result, the competition is just crazy out there. So now people are starting to realize, "Hey, maybe regulations are good because it's a barrier to entry, right? It keeps a cap on the amount of inventory that's coming into the market." But I think what I see is that the secondary markets are typically doing quite well. So not the major cities, not necessarily the defecation rental areas, like the beach towns and the mountain towns and things like that, but the towns that you might not think of traveling too necessarily. So really like your second and third tier cities in the states where I see a lot of opportunity. Some of them are regulated. We have clients, for example, in Kansas. I think that market is doing pretty well. But then again, there's a lot of regulations there. So it's not so easy to enter into that market, right? Okay. So why those second and third tier areas? Why do you recommend those? Yeah. Well, what I see is that first of all, real estate is just a lot cheaper in those places, right? Secondly, I think there's a couple trends going on, or not just going on right now, but have been going on for a while, which is that people are more mobile, right? There's more and more digital nomads and people working remotely and all that stuff. COVID kind of boosted that trend quite a bit. And it obviously came down a little bit as well. A lot of people went back to the office and whatnot, but still there's more and more people looking for some type of more flexible lifestyle, right? And so the major cities are just extremely expensive. And so people are starting to look at other town around the US to spend a couple months or to be on the road for a couple months and visit some different places. The places that are really well known, like the fancy places, the tourist destinations, the big cities, those are, if I were to invest now in the states in which we are as free wild, we're always looking for opportunities. I would look at the towns that are not as obvious, right? So think Midwest, smaller towns, think that that's where typically a more opportunity is than the bigger, the larger cities and the more well-known places. But how do you know if you're going to invest and put money on the line, how do you have a hedge and say, you know what, I feel pretty confident that this will work? Yeah, I think, like every city has visitors, right? So obviously you can look at trends like, hey, how many people visited these areas? Is it going up? Is it going down? Is it infantry going up? Is infantry going down? Things like that. I mean, one big demand driver dishie here obviously is the soccer world cup. I don't know if you kind of follow that, but they are expecting like 3 to 4 million foreigners visiting for the World Cup soccer alone. But that in itself could put some places on the map, right? But not on the net. If you think about it, I would just look at a market and look at what type of infantry is there right now. And a market in inventory, can I create that's going to be unique? And that goes along with the trends that we're seeing. There's a wellness trend, right? People love like cold plunges and sauna these days, right? I mean, we were talking about the KDA and California where I lived for a couple of years and you're originally from that area. I mean, down there, if you don't have a cold punch, people are kind of like, wait, you don't do a cold punch. It's become the norm almost, right? And so that's a trend. Obviously the remote working trends been going on for a while. But yeah, I think those are the things that you really want to look at. And typically in these second fruit to your markets, like you don't have as much professional inventory. And many managers that have everything down in their systems and their revenue management or marketing, it's a lot less competitive in general. And so I think it's just easier to stand out. And look, you don't need a lot of travelers to come. You know what I mean? If you buy one Airbnb or if you buy a small boutique hotel, how many people do you realistically need per year to be really profitable? It's only a couple hundred people that you really need. So I think it's better to really hone in on a certain type of traveler and creating an experience that just doesn't exist in the market. And that way you can really stand out. Because the cookie cutter stuff is just not performing, no matter what market you go. If you're the experience that you're bringing is, if there's nothing unique about it, you're going to be struggling in today's market. So they see that all the time. Now, it's not just the experience, it's also your marketing, like a mediocre listing on an OTA, it does not perform right now. Like three years ago did. But right now it doesn't. So I think those are really, those are the things that I think people have to focus on in order to be successful. Yeah. Yeah, that makes sense. Now, let's flip this around a little bit then. I was asking you about which markets maybe stand out to you. But are there any markets that you have identified that are really struggling right now that where you're seeing operators are in trouble? Mm-hmm. Yeah. Some of the beach markets, like Myrtle Beach is an example. There's so much inventory down there and demand is not really growing or maybe even coming off. So I think that's what markets that's very struggling. And I think there's a bunch of markets like that that we're kind of booming and during COVID. Like I mentioned, Galveston. I mean, if you look at the ADR that people are paying now in Galveston compared to a couple years ago, it's pretty bad. And it's just because so much inventory has hit the markets. It just puts it all down. pressure on the Coupacy and ADR. So, I think I would just recommend, probably stay away from those markets. But even in those markets, if you create the right products, you could still be very successful. I know operators that are actually growing year over year in those markets. But when you look at their listings and you look at their product, you understand why, because it just stands out. The listings are beautiful. The way they take the photos is beautiful. You can tell. You can tell it's quality products. And quality product can do well. And even in the market, that's not moving well. Yeah. I mean, I think it take away that might apply for folks that are own hotels or are aspiring to own hotels. Because a lot of what you were referring to here, relate to short rentals. But I think there's overlap here. I've got my hands and all those models. And the takeaway that I've learned recently here, and it just to piggyback on what you're saying, is if you're offering just a commodity product, like not to knock on the holidays or marriots of the world, there's value in what they do. But there's not a lot of unique, there's nothing to distinguish it. So you're just competing on price and many of the cases and location. Two things, price and location. But if you can't afford the location and you want to do more than just compete on price to your point, Jasper, you got to distinguish yourself. I want to kind of shift gears into the revenue management aspect. Because you mentioned you're looking at that data with ADRs and things. And I want to talk about your kind of some of the strategies that you employ in your revenue management business. And how that might be helpful to our audience to kind of understand, well, what are some of the tactics or levers that they can pull specifically from a revenue man perspective to improve, ultimately to drive more income? I've heard you say that 99% of operators are leaving 10 to 40% of the revenue on the table because they just they set up a pricing tool and then they forget about and that's a pretty bold claim. I mean, honestly, it probably describes a lot of people listening to this right now. I mean, myself included. I have price labs and I just at one point, I just kind of said, it's a pricing. I never looked at it for like three or four months. Guilty is charged. Right. But now I know better. Can you break this down for us? Like, what does this set it and forget? It actually look like and why is it costing operators so much money? Yeah, yeah, for sure. Yeah. I mean, look, if you think about how do you maximize revenue, it's it's really all about about pacing. It's really all about like knowing your booking window and knowing how to be competitive throughout the entire booking booking window so that you get booked at the best possible time. Right. And so that requires that requires a lot of fine tuning because if you think about it, let's say you're in the market and the booking window, let's say it's like five months. So that means like five months before the check and date, people the first people are starting to book, right? That's a long time for every property to be focusing on that entire period. Most people, what they do is they only focus on the next couple weeks. They go into their price laps once a week or maybe once every two weeks and then they look at the calendar for the next two weeks or next three or four weeks. And if they see they have a lot of a capacity, they'll they'll drop prices, but they don't really pay too much attention to like, hey, what about like two months out, three months out, four months out? How should I be priced eight months from now? The general philosophy as well, you know, you got so much time like we don't really need to worry about that. We need to worry about next week because I got seven days left to fill my unit. So that's what people focus on. People focus on the last minute stuff. But the thing is people think that price laps or real house or beyond that is a it's a revenue management tool that will automatically maximize your revenue. Right. Because I mean, these tools they kind of market it that way too. It's like, hey, you sign up for price laps and you're you increase your revenue by like 10, 20% or whatever. Well, I can tell you that if you have price laps and you you put the wrong settings in your price laps tool, you're going to get booked at terrible prices. I mean, if I put my base price at $10, I'm going to have a hundred percent of the cupacy and I'm not going to make any money. So obviously the pricing tool is not it's not a smart thing. It's just it's just it has data and you can use that data to tell it what to do. That's really what it really is. Right. And it can automate certain things for you. Right. So you can say like, Hey, you know what? In the last 30 days, knock the price down 1% per day. Right. That's a setting that you can put. But it's just going to do what you tell it to do. So if you tell it to do something bad, then it's going to do something bad. So that's what people have to realize. Like it's it's a tool that you can use and it's a tool that is very useful because it you did automate things and it saves you a lot of time and it can do things that you can't manually really do like the dynamic minimum night stay settings. I mean, that's a lot of work to go into your calendar every single day and start adjusting the minimum night stay settings. Right. It's like get nights and things like that. So it's very useful and I highly recommend that everybody use a pricing tool and price steps is an amazing product. But you have to know how to use it and you still need to go in there every day and make adjustments if you really want to maximize your revenue. It's not going to do it for you. You mean you say every day you need to go into price labs? Yeah. Yeah. Absolutely. Because every day things it's so dynamic. If you get one booking, if you get let's say someone booked four nights during the week in October. Okay. That's probably not very common booking to receive in March. Some random weekdays in October. So that could tell you something. That could tell you maybe I'm maybe I'm priced to low. People booked that far out. Maybe there's an event going on that I'm not aware about. So if you don't pay attention to it every day, I mean, I can give you an example of one of our clients, for example, where there was like a concert announced. And the moment a concert gets announced, like people start booking. If you wait a couple days and you don't look at it, your properties are going to be booked at a little price. And then you're going to find out after the fact like, oh, bummer, I could have I could have booked it as free times the ADR. But like I wasn't paying attention to it. I didn't know this concert was there and now my properties are already booked. So every day it's dynamic. Every day bookings come in. Every single booking has information. I mean, revenue management is a game of incomplete information. Like what defines your revenue? Thousands and thousands of people around the world making booking decisions. They go on an OTA and they they select a certain property. They book it. That's what's happening. There's so many people involved. Those people are using like 20, 30 different factors in their decision making process. Like how on earth can we know what the perfect price is? Like, we don't. It's a game of incomplete information. All we have is we have what do we have? We have our bookings. You know, that tells us something about how we should be priced. We have historical data from our own properties. We have historical data on the market. We have forwarded a capacity data in the market. We have so many information, but it's not enough to be able to calculate what the optimal price should be. So we have to use every single piece of information that we can use. If we look at your prices every day, you're going to miss things. That's going to cost you money. Yeah. I mean, that seems overwhelming to me. What you just described. I mean, I'm running a business. I can't go in there every day and look at price lab. First of all, you mentioned three different tools. Which pricing tool do you guys use for your organization? Yeah. So we love price labs. We use price labs exclusively. There's not to say that the other pricing tools are good. I guess wheelhouse. There's beyond pricing. I think there's a few other ones. But we made a choice to just use one tool and really be a specialist in one tool. And I might be in price labs. It's the most sophisticated tool that's out there and most user friendly. So that's our combination of the two. Maybe. Yeah. We like price labs. So we use it. But I want to get into the weeds a little bit here. Because you mentioned the idea of pacing. And I understand from a high level what you're referring to. But for someone listening to this, that's like, okay, I recognize the importance of monitoring my pricing on a daily basis. What do you mean by pacing? What are the levers or adjustments that you need to make on a regular basis according to pacing? Can you define that strategy? What's it take away someone could learn? Yeah. I mean, look, it's pretty complicated stuff. And it is very overwhelming. So you're absolutely right. It is overwhelming. I mean, you open up price labs. If you haven't looked the price labs before or even if you're not, you know, if it with numbers, it's really difficult. You know, I mean, there's so many numbers and so many graphs. It's definitely overwhelming. But let me explain pacing in maybe an easier way. So let's just hypothetically assume there's this little village and there's only 100 Airbnb's. Let's say that you own 10 of them. And let's just assume that people start booking for let's take the month of July, probably like a really good month in most markets. Let's say it's January 1st when looking at July and we're seeing that 10% of the units in your market are already booked. So that means like 10 people have gone on OTAs. They have looked at all the properties out there and they chose 10 properties and none of them are yours. So what that means is your 10 properties are still empty. But now already 10 people have already booked a property. So why didn't why didn't no one book any of your properties, right? Well, it could be, that could be an indication that you're overpriced. Does that make sense? Yeah, no, totally does. I'm following it. Yeah. But that's why it's important to look at pacing. It essentially tells you like, hey, are people choosing my properties or are people choosing auto people's properties? Now, let's take the opposite end of this example, right? Let's say, every single person booked your home. So your 10 houses are booked up and no one else has houses booked up yet. What does that tell you? Yeah, obviously price too low. Yeah, exactly. So again, pacing has information. It has information that will give you a clue as to like, am I priced correctly or not? Because again, like, we don't know about the optimal prices. We can't predict what other people are going to do. But if you're pacing significantly behind the markets, or if you didn't get your fair share of bookings in a certain time period, and that could be that you're overpriced. And if you getting more bookings than everybody else, then it could mean that you're underpriced. So that gives you a framework to adjust your prices. And generally, what we see is that when you go into high season, so if you expect the market to book out almost book out, let's say, 80, 90%. We find that pacing with the market, so getting about the same amount of bookings as everybody else is getting, is typically where you would maximize revenue. If you're going into like a slower season, let's say you go into shoulder season where my book up like 50, 60%, right? You're generally better off getting a little bit more of the bookings early on, because the prices are going to drop significantly last minute, because not all inventory is going to get booked up. So like, if you're a couple of weeks out, half of the inventory is still available. So people are going to aggressively start dropping their prices. You don't want to participate too much in that part of the booking window. So then the smart play is like, if everyone's priced at 300, a couple months out, well, let's price it a little lower so we can get a bit more bookings now so that we don't have to fill up last minute. Get ahead, start. Right? Yeah. Yeah. There's a lot to juggle there. And there's a lot of data that you have to, it's like a little bit of a science experiment. You got to test this hypothesis, you test the results and then you make changes from there. I've heard the term for a lot of agencies in the industry, not specific to revenue management, but it's a done for you service. It sounds like you provide a little more white club service, a little more interaction and you get better results as part of that. What does this thing cost? Like, what does revenue management cost? Well, actually, hold on, hold that thought. Do you guys do this for hotels? We have clients who have boutico-tells. We don't do traditional hotel revenue management, right? So like my Marriots or like an IG or the hotels like that where you have like big buildings with like very similar inventory, that's a different ballgame. And then the hotel revenue management is very different from short rental revenue management. But there's a gray area in between. Right? So like if you have like a little boutico-tell with eight individual rooms and all the rooms are different, it's really more like a short rental. Yeah. Right? So like it's then you want to price more as short of rentals. So like we do have clients that have you know small boutico-tells. I mean, my crozort. So like you have to rely on? Yeah, I mean exactly. That could be, you know, described as a boutico-tell as well. Right? So there's overlap, but like we wouldn't take on like a huge hotel with like 50 rooms or something that you know, and wouldn't really make sense either because those those bigger companies, they have their in-house revenue management. Yeah. Yeah. That makes sense. Okay. And so what is the price? Like what do you charge a percentage of revenue? It's a percentage. Yeah. And it depends on the size of the portfolio. So the the bigger the portfolio, the lower the percentage. Okay. Can you give me a range from like one to three percent? One to three percent. Okay. So if someone's doing a million dollars, it's like 10 to 30. So it's about a thousand dollars a month. You know, a minimum, minimum. Yeah. Yeah. And our goal our goal is to increase revenue for our clients more than what they pay us in as their service fee. Yeah. All right. So when people apply for our service, we we actually do a revenue report. We go into their price leaps or their real house. We look at their strategy and we give them an estimate of how much we think we can increase their revenue. And sometimes we get people applying for a service who are doing a great job. And we're like, Hey, you know, you probably just want to keep doing what you're doing because you're doing great. And you know, we're probably not going to be able to raise it very much. So yeah. So I'm going to I'm going to challenge you here a little bit because there's an area where I think we should all be fearful. And if we're aware and we're fearful, we'll make adjustments ahead of time. But man, my limited perspective of what you're doing, I'm putting myself in your shoes and I'm going, Oh, wait a second. This seems perfect for AI, right? Like I own short surveillance or a hotel. And you're providing this amazing service. But AI is like perfect for revenue management, like looking at large sources of data and information and making decisions and hypothesis on projecting what leverage you should pull and then tracking those levers. Like it seems like AI is a perfect fit to replace revenue managers. Is that a concern of yours? It's not a concern of me because we have been for a while. We are taking advantage of AI to help us as revenue managers. So our goal is that we can with with the tools that we're building, we're already saving a lot of time. So now we can manage more portfolios per revenue manager. So I think you're absolutely right. I think AR is going to take over a large part of the revenue management. But I do think they're at least for the next few years. I think at least you still need a human that sets the strategy. I think AI can do a lot, but I think there still needs to be some human oversight. But over time, at some point, yeah, maybe at some point AI can take over completely. And obviously as a business as a business owner, we have to adapt very quickly. Because AI is moving fast. It's moving very, very fast. Yeah. Well, I think right now, in this moment right now, if you own short term rentals, it seems very logical that you would use price labs and you would use AI to just come up with your price and strategy. And I think also, I think that this free wild micro-resour, I want to save some time for this because this is something that I think it's not quite a hotel. It's a micro-resort. But it does fall into that category where I think a lot of listeners are like, hey, look, this is something where maybe 10 to 20 units micro-resort, we could apply some of the tools that we're learning about. Can we talk a little bit about free wild for just a minute here? Yeah. Can you tell me a little bit about this? From what I understand, you and your partner Eric, you bought this piece of land in Southern California, Idaho, just outside of LA. I think there were a handful of cabins on it, maybe three or four cabins. And then you built this micro-resort brand called free wild that, I mean, I want to get into the numbers a little bit. Maybe you can talk us about, tell me about this product. What exactly is it? Yeah, sure. So this was really inspired by my business partner Eric, like he was really divisionary behind it. When COVID hits, he went on the road for a while, so he wasn't renting anything at the time. And he was just staying at different Airbnb's. And so what he realized was that he didn't want to be completely disconnected because, you know, we have a business to run. So you need to have, you need to have work. But at the same time, he also wanted to disconnect and just put his devices away. And he was inviting like a lot of his friends to come and stay at these Airbnb's. And what he recognized was the best, we have the best time if everyone puts their phone away. And we're just like sending stories and we're seeing music and playing cards and doing fun stuff without people constantly being, oh, hold on and check your phone. Really the connection that you get when everyone's just really present. It's rare these days. When you go to a restaurant, you look around and like have the people in the restaurant that are staring at the phones. So that's where the idea of free wild came about because Eric was thinking, hey, I want to have this disconnected experience. I want to, I want to not be in my devices. But I don't want to be, I want to be off the grid completely. You can run, you can get like a getaway. I don't know if you're familiar with getaway to brand getaway, but they have cabins that are completely off grid. So you don't have internet. But he didn't want that because if there's a business challenge that comes up, you still need to be able to go here, left up and solve it. Yeah. So when I heard about this, I was like, dude, I was like blown away. This wildbox feature that you guys have, yeah, exactly. People wild mode, whatever, where we call it when you lock their phones in these boxes and then people are forced to just interact like you're describing. That reminds me of that show. Oh gosh. What's that show called recently? Where they stay at that hotel in Thailand? Have you seen that on HBO? You don't know. Yeah. White Lotus. White Lotus, right? Where they're like, no, they're at this wellness. I love that. You guys going nuts, right? And then they all get their phones at the end. I don't want to spoil it. But like the point is that that angst of having your phone taken away. Do people just freak out if you say, hey, we're going to take phones away and people are kind of limp in. They're like, yeah, I'll kind of buy into this. And then they go through withdrawals. Like, what happens to people in this experiment where you take their phones away? Well, here's the thing. So we don't actually take their phones away. So we're not forcing people, we allow people to choose between being free or being able to do whatever you want or to go into wild mode. We live wild. Be free. Live wild. There's our slogan. So we don't force people to do it. We encourage people to do it. And the experience that we create at our free wild property will also inspire you to let you let go of your devices because of we have these wild boxes. And because we also have a lot of things to do without a phone. So we had their stargazing, that's we have conversation starter cards. You know, we have old like record players, music that you can play. So we have a lot of things that people can do. So we want to encourage people and inspire people to put their devices away. But we don't want to force them to do it. Right. So if you want to stay at free wilds and if you want to check your phone every three minutes, we're not going to keep you from doing that. We have why we have very fast Wi-Fi. We have that available. But we want to inspire you and we want to create some awareness around like, Hey, how much time do you spend on your phone? And we want to inspire people. When people are taking some people are taking this back to their families. What percentage of guests do you think actually do this? I think it's a fair amount. You know, if you look at the reviews that we're getting and the people that we're talking to, at most people at least they'll do it for like a few hours. People are not going to do it all day. But at least like most people will do it for few hours where they say, All right, cool. We have a little park around our cabins and okay, let's spend some time and use our conversation starters or just walk around and have some food and leave the phones in the wild box. People are definitely doing it. But our hope is that people are and some people are from what we heard is that people are inspired by the culture of it and bringing it back to their friends and bringing it back to their family. We're like, Hey, let's go let's go Friday night. Let's go into wild modes. Let's put our devices away and spend a couple hours at home without looking at our phones. And it's funny because I used to be, I remember when the iPhone first came out that used to be a thing. You go to a restaurant and I remember people were doing this thing where everyone put their phone on a pile and the first one to look at the phone is paying the bill. People were doing that like 15 years ago and the phones just came out and a lot of people were kind of resistant to it. They were like, Oh God, people looking at the phones, you know, but then over time that kind of went away and now that's like really rare. Now everyone's just on their phones all the time. Yeah, well, I like it, man. I think it's a unique concept. It could be a little bit of a polarizing stance, but I think that part of that guest experience will actually help it. And if that is the intention and your reviews are showing that this is a positive experience, I like it. It's something novel. Try something different. Can you give us a breakdown? Like, what exactly? Walk us through this mic, or like, how many cabins do you currently have? And are these cabins designed for like whole group bookings? Or can you book them individually? Yeah, you can book them individually. They're all unique. So they're four cabins. We did some major renovations after we bought the property. So we have four uniquely designed cabins all have all our themes around something local. So they're all unique, but but you can book the entire village. And a lot of people do. We got a lot of people that booked the entire village with their friends or maybe for like a little workshop that they're doing or even like a micro little micro wedding or something because we have a nice piece of land around the cabins that we turned into a park. We call it well, the work. So yeah, it's a very unique like people people are definitely loving it. Like we're still planning to build additional cabins. That was the original idea. And now when we bought this, this was end of 2021. Yeah, I don't remember, but during COVID, the prices of construction materials and labor, especially in small places in California, we're in kind of through the roof. So so far, we haven't started actually started building YACC. Also, the getting the approvals and stuff is an easiest thing to do in California. So it's a bit of a long term play probably. But you know, this was really our pilot resort, really to see like, hey, people liking this concept. What kind of feedback are we getting? So that was the whole idea behind this was like, hey, let's buy a small project. We work with an investor on that. So it was not too complicated for us to get it off the ground and people are digging it. People are really digging it. And we feel like the pilots succeeded and we're looking to expand the model. Okay. So do you finance this with partnerships? So you got a private investor who helped fund the acquisition of this and the remodeling. Exactly. And then the goal is this is your pilot. This is your prototype and you want to scale this. Let's say in the next five years or so if everything went to plan like how many of these micro resorts would you have? Yeah, I mean, our plan is to purchase one new property per year. So in an ideal world in about five years, we would have about six of them. Okay. And is your goal to raise capital or to continue to just work with this singular investor? No, I mean, eventually we'll have to move on to other investors or maybe do some type of crowd funding or maybe we'll reinvest the money that we're making with the other business with the revenue management side. Right. We can generate the cash flow that we generate with that business. We can also use that to invest into into newer projects for for the host, but that is the side where we're not looking to scale super fast. Like it's for us. It's not about the necessarily for us. It's the fun. What's fun for us is really bringing something unique to the market, meeting the people that stayed there, you know, hearing their stories and really understanding how can we create something unique and something cool for people. It's not our goal to get as many properties as possible. Not at all. Like we're happy to to scale this slowly. Yeah. So there's not like a person need to build this thing and sell it immediately for investor profit to provide the highest return on investment. Did you get bank financing for this first property? No, our investor finance the entire the entire deal. Yeah. That to me seems like my biggest I'm the most uneasy about bank financing, particularly for micro resorts. I know that there's a lot of buzz around them. You know, like micro resorts is the next best thing. If you have short term rentals, there's there's economy of scale. Micro is or is something that you could generate more profits because you have one cleaning grow all the different benefits. But then I'm like, well, how do banks feel about this? Because when I look at a single family home, they know what it is. And even if it's a short term rental, they just know, okay, if it doesn't operate as a short term rental, it operates quite clearly as a residential home and their security. Micro resorts are not hotels. So the banks don't know they know what a hotel is, right? And they can evaluate that and underwrite it correctly. But I'm just like, how to bank underwrite micro resorts anytime you bring a new product into market. That's the biggest question mark is financing. Do you have any input or insights on what the banks are saying about micro resorts? Yeah, I think you're absolutely right. It's not easy to get financing for these things. You know, I think from the people that I've seen doing this who are successful, who are successful at getting loans, it's usually to have a really good relationship with the bank that've usually done hard deals with the bank already. More like a single family home or something that the banks are familiar with. So once you have that relationship, I've also seen instances where the previous owner had a bank loan and then the person who purchased it just took over that loan, right? So that's another way. But yeah, I mean, for us, we've also fought about like getting bank loan, but you know, it seemed like it wasn't going to be easy. And then our investors are like, well, what if I find his the entire deal? And we're like, okay, yeah, that's going to be much, that's going to be fresh. So I wish you all the best of luck in the world. Again, I appreciate Jasper coming on this show. Anything else you want to share before we hop off for our listeners? Yeah, I would say if you're interested in review management, as I mentioned, we work with operators that do at least a million dollars in bookings, but we do three revenue reports. So you can find that at freewaltfoundry.com and freewalt is with a Y, nothing I so you YLD. Our revenue management inside is called freewalt Foundry. You can get a free report on the website where we go in and we use Lollaei for that, by the way, we go in and actually connect to your price apps account and pull all of that out and we can create a report and really show you like where the opportunities are to improve your revenue. And if it seems like a win win for us to work together then we'll let you know as well. So freewaltfoundry.com/report is where you can get the free report. Excellent. All right, well folks, listen, if you got value from this episode, do me a favor. Share it with someone who needs to hear it. Also, go and give us a five-star review, like Pronto ASAP, like in, well Jasper, you're in Spain. So Adorita, right? Give us a five-star review. This helps us continue to track high quality guests like Jasper to the show. So for your listening pleasure and enjoyment. So let's go everyone. Appreciate you listening. That is a wrap on the pod. We'll catch you again next week. Loha.