Navigating National Property Management Challenges in Hospitality | Ep. 30

Hi, I'm Rachel Alde and this is the hospitality break room recorded weekly in our actual break room at the of both Luxury Rentals offices in Park City, Utah. This season on the podcast, the founder and CEO of Inhaven, Ashley Chang, and her teammate Megan Myers will be joining me for the 10 full episodes. Our theme this season is "Certainty Served Weekly Within Inhaven". This is your inside look at how local property managers are setting new standards and vacation rentals. Each week we unpack the real challenges behind the bed, bath, kitchen and beyond, offering practical solutions, myth-busting truths and tips from the field. Whether you're a seasoned property manager, vendor, owner or just curious about getting into the vacation rental space, this series shares the real life tools and stories that bring more consistency to every stay. Powered by a boat luxury rentals in Inhaven, built for those who want to do things better. Hi, I'm Rachel Alde and welcome back to the hospitality break room. Today was going to be our last episode of our series, our season of "Certainty Served Weekly Within Inhaven". We will do one more episode after this because we have so much to talk about, which I feel like we knew from the very beginning, that this was going to need even more than 10 episodes. Today's theme is, I think probably, I don't know, can I say it's my favorite from the whole season. I did like all of these episodes so much. This one is just like something that's definitely on my mind mostly because of Ashley and Megan. I love talking about it, but today Ashley is going to do both of the talking and she has got so much to share with us. We're going to be talking about historically how it's looked with national vacation rental property management operations and why potentially looking at some factual historical evidence, why that may not have worked so far and how it may look potentially if it does work out. Ashley, do you want to take it away? Yeah, thanks Rachel. If you guys were one of the few that were falling along as I was posting about the CASA, we know that on December 30th, so the end of last year, 2024, the CASA had announced its proposed sale to the consortium that included Casago and a bunch of different private equity companies, Silver Lake Riverhead, level equity. This unexpectedly triggered a very interesting bidding war as David's encounter, the CASA's largest lender who also owned a significant equity position and had two board seats, opposed the sale of the CASA go consortium and decided to submit a competing bid. And I think everyone was following weekly on the updates. Totally. Yes. So I covered this fascinating bidding war from January to its resolution in April with the CASA go consortium eventually winning. And so as part of the CASA's publicly regulated filings, we gained significant insights into the CASA business and through these board presentations and pages and pages of meeting minutes and additional financial disclosures. So the sale I think of the CASA really serves as a bookend to an incredible story of a company that started out managing just one property in Portland, Oregon in March 2010 and then experience explosive growth resulting in this multi-billion dollar IPO and then culminating in a distress sale as the company was running out cash at the end of last year. And so while I found this story of the CASA to be fascinating, what's even more interesting is the parallel story of another hospitality company called Ambridge. Have you guys heard of Ambridge? You probably not have now. Well, I've heard of Ambridge because of you, but before you told me about it, I'd never heard of it. So Ambridge is the largest independent hotel management company in the world and it manages over 1,500 hotels. So Ambridge is essentially the Bacasa of the hotel industry. And what's really interesting is three weeks after Bacasa announced its proposed sale to the CASA Go consortium, Ambridge announced its out of court bankruptcy restructuring that basically wiped out all of the equity of its private equity investor, Advent International and they had to write down over $1 billion in debt causing really significant losses for their equity and debt holders. So super significant in the hotel side. So as we were watching the Bacasa story unfold and the hotel industry, they were watching the Ambridge story unfold. And is Ambridge the biggest, the hotel, sorry, is Ambridge the property management company within hotels that is, that has the most hotels under management. Okay. They had the most. So they were, they're managing more. Yeah, they're no anymore. Yeah. Well, yeah. Has there been a revolution there or a resolution there? Ashley with Ambridge? They're just kind of right now. They're going through the restructuring coming out of bankruptcy. Got it. Okay. Like all the hotels they manage are going to have to find other management companies. No, but they're just making significant changes. Okay. Right now. So what's really interesting is while both the Casa and Ambridge who both started in 2010 or around 2010 started with super organic and moderate growth, right? They then at the same time saw significant growth through M&A and then they saw, you know, significant growth through large M&A deals and then through those large M&A deals, you know, disaster started to happen and there was a lot of churn and they both, you know, went into financial distress around the same time. So it's just fascinating and at the verma executive summit, we'll put the timelines up side by side. So everyone can see and we'll share this out. Yeah, just to clarify, Ashley is going to have a session that's like a fireside chat. It'll be like a smaller session during the executive summit, which is next week. And so this will be released on Monday when the executive summit will start the next one day. So it's the 28th through the 30th, I believe of May and it's taking place in Miami. And so Ashley will be talking about this topic there in case anyone who's listening is going to be there, watch for her session timing. Yep. So just to give you a little bit more detail into the Vakasa history and then we'll kind of go into a bridge a little bit more so you can kind of understand the side by side. So we really have five phases of the Casa. So starting in 2010, they started again with one property in Portland and they grew moderately to about 1200 units in a four year time period. So by 2014, they had 1200 units. And so we really look at that phase as the organic growth phase. And in 2015, this is where we saw a phase two star, which is really where you see a lot of private equity backed M&A. So they were able to do this through different capital raises. So in December 15th or December 2015, they raised 35 million in a series A led by level equity. And then in 2017, they raised an additional 104 million in a series. So this gave them the capital to go out and purchase over 90 different companies of 2015 to 2018. And this is all over the US at this point, right? I believe so. I think this is just yet in the US. And so this took their listings from 1200 units in 2014 to just under 11,000 units in 2018. I mean, I remember this happening. I was like, it was totally freaking me out. I didn't know. I didn't know what it meant. And I was just like, what are they doing? I don't get it. Yeah. Then we can. And then they kind of moved on to the next phase, which started in 2019, which we call the large merger and acquisition deal period. And in 2019, they raised an additional 319 million in a series C led by silver lake. And in July of 2020, they raised an additional 108 million. So a lot of money that were both raised by silver lake, a series C and series C. And this capital went into what I call elephant hunting. They acquired wind them vacation rentals in 2019, which included over 9,000 properties for 162 million. And then in March of 21, they acquired turnkey vacation rentals. Oh, yeah. Yeah. Okay. I remember this. Yeah. And so their unit growth from 2018 went from like around 11,000 units all the way up to 44,000 in 2022. Oh, significant. Yeah. So then in 2022, we really start the phase of charm. So this is really after reaching the 44,000 units, Vakasa started to turn. I mean, in reasons we all talk about today, one, there was a lot of homeowner to satisfaction, there was a lot of satisfaction. The industry was slowing down. And so they saw a pretty significant decline around 18% by the time by 2024. They were down to about 36,500 units. Well, yeah. So and then all this came to a head when they were basically running out of money, which we call on phase five, the distress sale phase, where they were able to submit to ink this deal with the Casa del Consortium at a share price that was 97% below its IPO. Well, yeah. So you know, they, it's incredible to see sort of this significant growth all of that, you know, this sort of catastrophic decline. And we think about those five phases and we look at Ambridge, very similar story here. Sorry for all the numbers you guys following me. Yeah. Yeah. But so, and was Ambridge around longer or is it started in a similar time? We're at the same time around. - Oh, it's been around a little bit longer, but it had the same phases. - I think that Ambridge was like a distribution company for I got that wrong. Okay, see, this is like the one. - No, I'm serious, because I thought Ambridge was the company that hotels were buying that was like setting the standards. - Oh, again. - A vendra. - A vendra, see you guys, I keep getting this wrong. Okay, so Ambridge. - I can make sure up to, it's the A's. - It's so many A's. Okay, so Ambridge is strictly a property management company in the hotel space. - No, I mean, I feel like what you just reiterate right now, just 'cause most people listen to every single one of our episodes from start to finish and then listen to it one more time, 'cause there's so much good information. But in case everyone hasn't heard every episode, then the concept of just the fact that hotels are owned by someone and managed by what is called a property management company that is not necessarily the brand, like if it's a Hyatt, it's owned by someone, not Hyatt, it's managed by some property management company that manages hotels, and then it has the Hyatt brand. And I think it's like for all, just to let all of our listeners know, in case people don't know that, I think that's not all that commonly known. And so we sort of talked about that in the beginning of this, but just again, Ambridge is a property management company, just like a boat or just like Vakasa or Kassago, but it's in the hotel space. - Exactly, and no one, it really a lot of people don't know this, you never go to a hotel or Weston or Hyatt and say, wow, it had a great Ambridge experience. - Right, yeah. - The walk-sure is very different than the vacation rental space. So yeah, Ambridge is a hotel property manager, just like any property management company in the vacation rental space. And they are the largest. And so they went through these, and to clarify Megan, they were founded in 2003. - Right. - And in 2003, really all the way up to 2010, there was a very moderate growth, and we call that phase again, or that phase one of organic growth. So in 2010, they had roughly 70 hotels, and then by the time 2012 came around, they hit about 77. So super moderate growth. - Mm-hmm. Okay. - Like hotels were these, Ashley, it could be like a Hyatt, Hilton. - Okay. - So just kind of all over the board. - Okay. - And then what they did is they, so then in phase two, at the same time that Vecasa reached phase two, which is what we're calling the private equity backed, M&A, Ambridge reached this time period. And so they did a couple capital raises to field their acquisition. So they did a big raise in 2013 and 2015. And through this time period, they acquired a new hotel management company every year. So that started with evolution hospitality in 2015, 2016, they acquired pillar hospitality, which are at 178 hotels, then they inquired TMI hospitality and one hospitality. And so this allowed them to grow from 77 hotels in 2012 to 800 hotels in 2018. - Okay. - Re-significant, right? - Yeah. - Then they went into phase three, which is the large M&A deal phase, that Vecasa also went through. Advent International actually bought Ambridge in 2019 to basically give them the capital to acquire interstate. Interstate was the number two property manager in the US. - Wow. Okay. So that was their elephant hunting. That was their elephant hunting phase. Great. And so that gave them an additional 600 hotels. - Wow. - That time period that Vecasa bought wind of vacation rentals. And I really, it's just fascinating to me. I cannot make these timelines up. They're all happening at the same time. It was, it's not bizarre how close these phases fell in the types of deals they were doing. So after reaching its peak peak of 1500 hotels, they started to experience churn at the same time to cost the start to experience churn. And for the very same reasons of dissatisfaction. And so they went from 1500 hotels to 1100 in 2024. And this really came to a hat in 2025 at the same time Vecasa was going through its distress sale. Ambridge announced an out-of-court-backer seat restructuring. So that resulted as I said earlier in a complete write-off of all of Advent's equity from its purchase and a write-down of over $1 billion in debt. - Wow. - So really a, you know, a crazy fall. - Mm-hmm. So, you know, I think people will say, oh, well, maybe these are just two isolated events, right? Like Vecasa and Ambridge, but it's really not. So as part of our research, we went back even further all the way to 1998 and found really a lot more examples of scaled national hotel and the case of mental management failures that went through that same phase. You know, they all went through those same phases again. So I often say, you know, history doesn't repeat itself, but it often rhymes. And so if we look back to 1998 and 1998 in 2003, this was really an era of standalone public companies. So in the hotel management industry, there was Interstate, which at the time managed 160 hotels and they conducted an IPO and eventually saw a 40% decline in share price. - Whoa, so they did an IPO and they got all this funding and then had a 40% decline. And Maristar, which is another property management company, they managed about 277 hotels at the time. They also conducted an IPO and saw a 60% decline in a share price. - I mean, so what are the reasons? Is there like-- - How is the sale of $172? - Oh, well, we need to come, we need to, I knew it. I knew you were gonna say that. - That's our next episode. - So, - Yes. - Okay. - So I love it. - So from, so we were just talking about the hotel standalone public companies at the same time in the vacation rental industry, ResortQuest was a public company. And it managed about 18,000 vacation rentals and it saw a 51% decline in its share price, from its IPO date. So, you know, again, these public companies just, you know, just seeing super significant declines from IPO. And then we have the second phase of these, of these national companies that we looked at from 2000, really around 2003 to 2009, where there's a bunch of public mergers. So essentially, they wanted to address the substantial shareholder destruction that they experienced in phase one as we just discussed. So, interstate hotels and the hotel space merge with Maristar to create even a larger hotel management company. They, at the time, were managing about 411 properties. And despite its kind of increased scale, which people had said, "Oh, we're gonna see a lot of cost savings and synergies and economies of scale here, the stock declined in additional 51%. - Okay, wait, so it's like these companies, and we're talking about hotels right now, these hotel management companies, they grow to a certain point, they take on, is this like saying they take on private equity when you say IPO, I mean, they get external funding from the public, that's public funding. And then quickly their share price drops drastically. And then the next step is that they then merge with another big company that's in the same situation. - Yeah, to really try to bail out. - It's a bailout. They're trying to address some of the substantial destruction. And they're like, don't address it internally. They just try to get even bigger. - It thought the mergers would fix things. And the same thing happened in the vacation rental sector. Resort request was required by Gaylord Entertainment, which is actually a hotel operator. And this acquisition helped Resort request grow to over 20,000 properties. - Okay. - But eventually all of these different property management companies were sold off in pieces, and there was a loss of 48% from their purchase price. - Wow. - Yep. - It's like all I could think about is, you know, the homeowners that are involved in this, that gets screwed, or like the people that own the hotels. - And honestly employees too, because it's-- - Oh my gosh. - And we employees. - And there's a lot of layoffs oftentimes and things happen. - And then so those were sort of like, if we look at earlier examples, and then we have the most recent example, which is phase three, which we just went through of Cambridge and Picasso from, you know, 2012 until today. So, you know, what our case study will address is, really looking back, not just at the last, you know, 15 years, but the last 25 years, if we continue to see sort of the same playbook fail over and over and over again. And so, you know, through our research, we hear from people and they say, well, you know, there's three made reasons on why these scaled national property management companies didn't work. People blame one executive leadership. They say, oh, it was private equity, private equity were in these companies. And then another-- - Very, very-- - First is what, like private equity, it should have been what-- - First, it's at a private equity. - It would have been public then. - You know, the contrary to private equity is going public. But the IBS did it work either, right? - Exactly. - Okay. - Yeah. - So there's a big thing-- - In the first two again, 'cause I know I jumped in. - So the three most popular rationals for why these national management companies were unsuccessful, were for one executive leadership, two, it was a private equity that killed them, and then three external events. And so I want to go through. and kind of dispel these three myths, which will then lead into what we're going to present next week at Executive Summit. So the first, you know, we heard over and over again, well, it was the leadership team. It was a leadership team. But if you look back from 1998 until today, there have been 15 different CEOs and executive teams that have tried to make these national property management companies successful. So in my opinion, this is not due to a single person or a leadership team, you know, many have tried and they've all failed. Yeah, there was something structurally wrong here. It cannot be solved by people. So I don't believe that the reason for national property management companies failing is because of the people. The second reason to your point earlier, Rachel, is just, okay, it was brought people blame private equity. But you blame private equity, then you would have to be successful in a public equity realm. And in both cases, both private, private environments and public both have failed. So Vikasa was public, interstate was public, resort, quest was public, they all failed. So really, it's not, you know, private equity really cannot be blamed here. And then the third reason people, you know, discuss the failure is these sort of exogenous events that have occurred over time, like, like 11, like COVID, like the global financial crisis. And yes, these were extremely traumatic events, but many other survived during this time. So, you know, with that backdrop, we have created this case study and to create this case study, we spoke to dozens and dozens of executives across both scaled and regional management companies, including you Rachel and Rob. And we really, we spoke to a bunch of people across all three hospitality sectors. So looking at the hotel sector, the restaurant and the vacation rectal. And these conversations were with so many different types of people from private equity investors to public shareholders to investment bankers. We spoke to homeowners, to customers, to consultants and employees. And what will be presenting at the VIRMA executive summit or really what, what didn't work for these national public companies. And they're really, they fail that six key principles that we're going to talk about. So we're going to be, what are these six key principles? We're going to look at how scaled and regional management companies have gotten all six key principles correct in our wildly successful today and how national property management companies have not gotten them correct. And we believe have led to the failure. So this is what we'll present on Wednesday. And then we'll also have a podcast on this next week to discuss it altogether. I love it. Like, I really need to know the six principles. Okay, I also need to know my mind right now. Can I text you some Ashley and then you can, you know, just can, okay, so are there in the hotel space? Are there any property management companies that have scale as large as the one we're talking about that I'm going to say the name wrong, because I'm going to try a bridge that have been successful. Or Abrids was the biggest and they're not. Or is there another one that worked out? Good. That's that. It depends on how you define success. Well, Ambridge was not successful. There was a large. And he acquired Interstate, which also wasn't successful. We really, and this is kind of all coming out next week. You really can't go above 300 hotels. That's pretty much sure. No, above 300 has like been able to be successful, whether it's with holding their share price or profitability or whatever. Okay. Yeah. Okay. See, that's so interesting to me. Like this stuff, I love this. I hope that people listening, like can understand what we're talking about. And I feel like when Ashley, when you present at execs, I'm it that I know you'll have like some visuals. And I think that does help. I know for me, like sometimes listening to stuff like this can be confusing. But I also feel like this topic is so interesting because we're at this point. I mean, we really have been for a while, but like we're at this point of the vacation, right? The industry where there's growth and there's consolidation. And it's very much like what's going to happen next. And so being able to look at the hotel industry is really helpful. But still feels really confusing. And then once you guys put this kind of reporting together and like looking at it from these different angles with more data. To me, it's like it literally can help me sleep at night because it takes away. I mean, there's so much uncertainty in the world in general, but like in my job and in my career and in my industry. And I feel like that's a lot of the people listening. There's so many people listening. But a lot of them, you know, I feel like that they could probably understand that, right? It's like the world is a crazy place, vacation rentals as an industry is a crazy place. But being able to have someone who does the work to put the data together and then analyze it with like a background understanding, you know, a comparative industry really can help like create a sense of understanding of the world that we're in for this industry, which like I don't think we've ever had before. Yeah, and I think, you know, it's fascinating when we go through these six key principles, how they are very much relevant to any hospitality industry. And it's something that, you know, you can really study in your business and across the hotel and restaurants as well. So it's just fascinating to find these findings. And there it is. And it's, you know, we really see success if you follow these principles which will release next week. Yeah, I mean, I feel like Ashley and her husband, Mike, you guys both like you do this, this work that, you know, I couldn't do. Like I want to know what you guys are figuring out with your studies. And I, I totally would put the work in if I would know the way, like the data that I needed to get who I could get it from and which way that I could analyze it in order to get something out of that data that would help me understand, like the bigger picture. And I just don't have that ability, like that's the kind of brain I have or whatever. And so to me, it's just like, that's why I get so excited about what in Haven's doing. And especially when you guys are reporting on this stuff and kind of doing these studies, well, if you, even when you asked like Robin, I'd have a conversation with you guys about it. I was so excited. You know, this I was like, can we have five more conversations on this? Because to me, it's just like, I know that I'm not able to synthesize this kind of information and then come up with something that makes sense from that data. And to me, it's I just feel so grateful that there are people that have that kind of a brain that have that kind of background and that ability. And then they're willing to put that towards our industry in such an in-depth way that like can help all of us. So I know I was like really adamant. I really wanted Ashley to talk at executive summit for Viera May coming up in a few days. And some of the people that are involved in the committee like at first weren't exactly sure. Like, well, I don't get what she's talking about. And I was like, you know, I want to explain it better, but I can't because like, I don't have that brain and I don't have that understanding. And I can only like explain it in a little certain ways. Maybe aren't as helpful. But I think more people, the more people that can have access to the kind of information that Ashley, you and your husband, Mike, have put together the better off we are as an industry at understanding where we're at and where we're going. And that just like goes into, I mean, you guys have incredible operations, right? Like you are, when I think about top operators, I mean, what you and Rob have built aren't as amazing. And so I think the collection of, and that's what the community that we're building really in Haven and Megan's really taking the lead on this is this community of like-minded professionals that want to learn from each other and share, you know, best practices and interesting things. And so I think this is really the beginning of what we're building at in Haven. I love it. So come change in the next sniffling you guys. Sorry, I'm like sitting here, have a cold, the embarrassing. I was trying not to stifle, but I'm like, what's worse? Better now the next week. At exactly. I know, right? I know I'm like all over all the night, well, and day, well, I'm like, have to knock this out. Toronto. Okay. Okay. So I feel like this is very obviously pertinent, valuable, information, but really clearly there's some important parts of this that you're going to wait and share at executive summit. And then I don't know if everyone caught this, but just to reiterate, because clearly that's what I like to do. Ashley will be discussing those six points that she left out on this episode. And really just like sharing the details from what's going to be presented at executive summit. She'll also be sharing that on our next episode. So this episode that we're recording right now will be coming out on wait, what day will this be? It's going to be Monday, the 27. Okay, Monday, the 27. So Monday, Monday, the 26th, it's probably, I wait, let's see, the 26, 26, yeah. Monday, the 20th, Monday, Monday, May 26th is when everyone who's listening right now is listening, because I know what you're doing. I know that you just like go to bed at night. And you're just Sunday night waiting for Monday morning. That's right. Sunday night, you go to sleep, and you're just like how many more hours until they drop the next episode. So on Monday, May 26th, you're probably listening to this like right when it drops. I know what my mom does just kidding. I don't think my mom even listens to my mother. My mother is long does. So, okay, what's her name? Suzy. Hi, Suzy, thanks for listening. Okay, so anyway, this one's going to be Monday, the 26th, but then the next episode, which will come out on June 2nd, will be where Ashley will be sharing the six points, and wait, they're the six points of what to be again, only the six principles that we found that these regional and scale companies follow that have made them successful. And these principles that these national companies failed to me turn to achieve. And that we feel the reason for their failure. Okay. And like because all of this is happening within the envelope of the Huffffality Raker podcast where we originally sought to provide nuggets and secret sauce, I mean, you could say that the six principles are like the secret sauce to like a scalable and successful vacation rental property management company. And so that is impressive. And not just coming from like someone's opinion, like, you know, I have a back value. Yeah. This is like after a massive study. I think this is really, really valuable and interesting. I'm excited. I know. We're laying it all out. So this is like the teaser. But also there's a lot of good information that we just shared right here. And this is the shortest episode that ever happened. On the Huffffality Raker, I think maybe it's not the royal day for the list. You're right. They're listening. I'm a moral day. Yes. They probably have to rewind a couple times to say, what did you just say? What year was it? It might take you to. Yeah. I think if we can like really hammer home to to people in our industry and vacation rentals, like the similarity of the concept of property management and vacation rentals, as it relates to this, you know, industry that's been around longer and has gone through more ups and downs, which is hotels. I think that's a huge point. And then once you apply on top of that, you know, some of the data based on once investment gets involved in how that can actually work out, I think there's no way that this isn't helpful because there's no one in this industry. Honestly, I've met so many people in this industry in the last few years. And I don't think there's anyone that isn't at least considering the impact of all this investment within our industry. Even if you're not looking to sell your business, even if you already did do an exit, like there's no way that you're not wondering what does all this mean? What will it come to? And so having this kind of data, I feel like it's just so, I don't know, for me, it's comforting. It's like, okay, okay, like here's some concrete evidence on like some ways this can go. So it doesn't feel so open ended. So anyway, I hope everyone got a lot out of this. Really will help you kind of control your own destiny. Totally. Like that. Just you feel more empowered to make better business decisions. Totally. A million, a million percent. Yes. Thank you. Actually, I can't wait. Thank you so much. Yes. Okay. So thanks for listening. And hopefully, I'll come back on the next episode, which if you're listening on the 26th, the next one will be on June 2nd. And that's where the six principles that will blow your mind will be shared. And until then, have a great afternoon evening. And I wonder from Memorial Day. Yeah. Unless you're listening on like Tuesday, in which case you already had a great Memorial Day and we're happy for you. Okay. Megan, you were closing out with that B word you love. Bye.