Tim Rosolio on SNADs, quality, and fastest way to be de-ranked!

Hey, welcome to Keynotes. My name is Steve Schwab. I'm here today with Tim Rosolio, the VP of Acacia Rental Partnerships at the Expedia Group. Tim, welcome to the show. Great CSD. Always a pleasure. Steve always gives me a new idea and it's typically something about how we drive more quality and consistency and performance in Acacia Rinals, which is like my favorite thing to talk about. So good to see you. You know, I'm always so appreciative of the conversations that you get to have with you and Larry and a lot of the team of yours. You're always looking for partnership and especially in the transition we've been having over this past year. I can't tell you how refreshing has been to be able to work with the Expedia Group and VRBO in this transition. You've been real partners in the entire experience and thank you for that. Yeah, I mean, well, and thank you for the Q&A collaboration. We recognize our partners, our customers too. There's only so many great houses on the beach and there's only so many great houses on the ski mountain and perhaps more importantly, there's only so many operators. So when we can five partners that have those houses and know how to do it, right, it is extremely important that we make it a two-way dialogue. Yeah, it's obvious in the way that you and your entire team treat us. You know, something that I've always found fascinating about you is you're not just on one side of this equation. Not only are you VP of occasional partnerships for Expedia and VRBO, but you're also a host yourself. And I think that would be a big difference in how you see the world. Maybe you could tell me a little bit about that. That's funny. It's great to participate in the joy of having a vacation rental or in all the reasons that we know it's great. You make some money. It's an appreciating asset and you get to use it yourself. So that's all great, but I would say that the best thing for me is just how much I've learned by doing. To a certain extent in order to understand my property manager partners, you need to understand how do you do it to turn over or what are the tools that would help you do that good turnover or how do you handle challenging guests or what are the things that you need to do to continue to drive the reoccurring performance? It's really the number one reason I still do it is because I learned so much and I understand the tools. It's been a really cool experience and certainly gives me a great appreciation for what property manager still. I always felt like if you haven't been there as hard to judge what's happening on the outside. So having that first-hand experience, it plays well to the enfranchised model that those who are actually on the ground know what's really happening. Bring them back to leadership. There's a lot of noise going on right now in the industry. Just to break it down, what are you really building across the marketplace right now? Yeah, I think a lot of people understand that we've been really changing our technology stacker over the past few years. We certainly did so one step back to hopefully take three or four steps forward and we see it happening right now. People traditionally have of course just thought of Verbo as Verbo and all of this work we've done has enabled us to expose a lot more of our inventory to really the depth and breadth of expedient demand, which includes expedio, which is going exceptionally well and the B2B network, which is I think the next frontier that's going to be really exciting. Many people probably saw that we're going to be powering hotel supply for Uber and we're going to be powering the occasional supply for Uber later this year. And that's just the tip of the iceberg of the things that we're going to be able to do with B2B. That's the first thing, the expedia demand, everything that is within that network. The second thing is capabilities. So traditionally within the hotel world, there's been a extremely robust set of promotional tools that partners could use. In the old world, we would have needed to rebuild all that for Verbo. Based upon the fact that we were able to be on one similar common tech stack, that was a lot easier. And many of our partners be exposed to those promotions and have really had a lot of success that which we're extremely excited about. And then the third thing that I think is going on in the industry is focus on quality. Every study that we do indicates the challenge that travelers have with vacation rentals is just all the anxiety about, like is this all going to work out? All these things that you don't necessarily have to worry about with hotels. It's like, and it canceled on last minute. The place going to look like it does in the pictures. What's my correspondence and communication going to be with the partner going to look like? And because of that, we've really had a pretty dramatic pivot to focusing on quality. And because of that, like that's why I don't talk much about the count of properties that we have. The key metric in my mind is like, how do I, while having compelling amount of selection, how are my delivering consistent experiences? Because those consistent experiences are going to be good for us and they're going to be good for our industries. It's going to keep the travelers coming back. So that's really where our head is because it's expedient demand, new capabilities, and it's trust. Yeah. You know, you and I've said this before, but trustability is bookability. It's a trust transaction, right? They're putting their money down for someone that they haven't seen in real life and have to have faith that both the channel, the VRBO and the host are going to loop up to what's been promised. It's right. And I think during the pandemic, there was a lot of supply and a lot of operators that came in the market that didn't get it. And I think what you're seeing now with all that supply in the market is there is a flight to quality. And the partners, massive in the data, partners that deliver the consistent experiences are the ones that are growing and winning. What kind of shift are you seeing to quality? And over the past, say, two years, as you're seeing those who are providing quality stays consistent service, winning, are you seeing a larger percentage of the industry shifting the direction? Or is it those who are doing that or just winning more? I'd say it's probably a little bit of both. The ones that are doing that are certainly winning more. We changed our premier partner program to be a little bit more focused on quality. And those partners are getting more of the bookings. We also are being much more discreet about good vat and ugly surrounding partners. So like on our property details pages, you can see the cancellation rate. So just based on that, you're seeing a change in mixed shift. And then I also think just in the industry, if you look at, listen, there's constantly companies that are surviving. And there's also companies that frankly are going out of business or individual owners that are selling to go to the long term, or a happy path for all of us is individual owner that realizes it's offered and says, I'm going to sign up for my local Costco franchise. Like you're seeing people that can't deliver the goods blow out of the marketplace because it's just not a profitable endeavor for them anymore. Sure. Yeah. It's really changed. I do think that when people talk about the supply that's happened, it doesn't really affect that top 20%. That top 20% is insulated by the service, by the quality of the property, by the demand that they're generating. There could be four times as much inventory. They're going to have the same sort of bookings because they're not competing in that red ocean, right? They're driving demand by a factor of who they are and what they've are providing at that. And I think that's making the difference right now. They have trust signals, right? I mean, so you have a lot of inventory within the Costco network that has a gazillion five star reviews. But then beyond that, what's cool is when a franchise reaches out to try to sign up a new owner, you can tell a story of, you're going to get off to a fast start because we know what we're doing. And we have the halo effect of Costco's one of the best in the biz. We have a playbook to make you successful. So I think it's a variety of trust signals. And it's a trust signal that if you're with the right property manager, very good things can happen. And so the right property manager is picking the right homeowner partners. Yeah, more so than ever these days, like as you know, I think you and I have probably had interesting dialogues before about some of these homes or some of these owners, it's actually just not worth it, right? If you want your brand to stand for something, then you need that homeowner to be on the bus about delivering a great experience. We those owners aren't keeping our calendars up to date. And that's causing cancellations for you. That's a problem. If that homeowner is totally reluctant to refresh a tired home, that's also bad for you. So I don't know how much work you're doing on what we referred to as the purge. You probably should think the homeowner is the product owner. We're the service provider and VRBO is the marketplace. And if there is an alignment across those three players, the ecosystem distruples. So let's talk a little bit about VRBO care. There's a lot of operators that hear standards and think about friction. Were they getting a wrong? I mean, the places they're getting it wrong are, I mean, the most obvious ones, the cancellation got to have your two rates and calendars up to date. The second one probably is what we call it's this SNAD, S-N-A-D, which is significantly not as described. So that's picture doesn't equal what you actually see when you get there. The most painful one is denied entry. That is, that's actually worse than a cancellation. That's when the traveler gets to the lot box, they can't get in, they can't contact anybody, and then they sleep on the porch. That sounds awesome, doesn't it, Shrabby? There's a variety of ways that this thing can go wrong. We really say like, if something bad happens, we got you. And it's my vision with VRBO care that we, if something goes wrong, we have your back, we delight you. And actually what we find is when that happens to a traveler, they keep coming back to VRBO, despite the fact that they have this bad experience, it is a demonstration that VRBO care is heading in the right direction. So, we're excited about it. And you guys are really looking with VRBO care at like booking protection, property accuracy, the safety and assistance, like you're on 24/7, then protection against fraud and then timelines for two, right? All of those things are included. We have a dedicated team of our very best agents that help you find the next place and we'll find you a place that is at least as good as the place you wanted initially. And in some cases, a place that's actually quite a bit better. Now, we all know that in Maui on the 4th of July, it's going to be a little harder to find that. So, sometimes we might need to put you into a hotel for a night and then we'll get to the great vacation rental. but I think the results we've seen indicate, we're doing what we want here. We're creating a sort of stickier experience. A hotel for the nice, they're the front porch for the night that you talked to. Yeah. Yeah. And by any part of the studio, we have access to some pretty nice hotels. How does the quality directly affect the algorithms of Verbo? Like when we're thinking about that, what are the signals as a property manager or a homeowner? I should be thinking about, here's the quality signals that I need to make sure that I'm hitting every single time that's going to either make me a hero or a zero in the algorithms of Verbo. I mean, the main ones are going to be acceptance rate for people that are on book near-quest, cancellation rate, and then reviews. Now, the way I would say that in terms of the algorithm is we show all of that stuff to the traveler. If you're good at all that stuff, you get specific badges like from your partner and look by guest. If you're not so good at those, we also show that too. And all of that drives conversion. And everyone knows that sort is largely driven by conversion. So properties that within that price class, that if you always book, it's in our best interest to put you in flower. Revenue per visit, right? Is a big factor. That's sort of the name of the game for us. I mean, what we're doing is we're spending money on marketing to bring people to the site. And we make money when there's bookings that we don't, when people are pleased with what they've owned. So it's a conversion-based sort. Yeah, quality signals, drive conversion. And then, you know, another thing worth mentioning is, I think we're getting smarter about trying to understand lifetime value of the traveler, because if we can, like, say, for example, one way or another, there was a totally new property where one way or another was going to convert well. But we were really worried about the experience. That's probably not one that we want at the top of sort. We want to understand what's the very best new property that we're not worried about. Somebody who's updated their pricing, has their calendar up to date. Their calendars cross-listed across the other platforms, make sure that they don't get a double booking. And when we have that confidence, has not only we're driving conversion, but ideally we're really driving customer lifetime value, which is even better for us, because that way we don't need to re-acquire them via Google or VR ads. They hopefully actually during the experience, they download the Verbo app. And the next time they want to go on vacation, they come right to the app and book again. If Verbo's concerned about revenue per visit because that's the business model, how do I, as a homeowner, say, okay, I'm going to make the highest revenue per visit for Verbo possible so that I just kill it. And I'm right 12 in my own business, and my own property does well. What should I be thinking about as a property owner? The three metrics I talked about, very basic of acceptance rate, honor rate, reviews, then a lot of our premium partners, they deliver the goods in terms of hospitality. And you and I have talked about this before, like you are always reaching out and saying, like, tell me what this trips for. And I don't know, maybe you find out just for somebody's birthday. Because this for somebody's birthday, you're gonna set out that perfect welcome gift. Driving those emotive feelings makes very good things happen for all of us. So it just comes down to hospitality in my mind, to the extent that the economics work well for everybody. If it works for you, hiring exceptional professional property manager, maybe there's things I need to make sure the property itself has, do the colors matter. I've got this home, but I just really want to convert well. Yeah, volume of photos, you know, you want to make sure you have picture of every bedroom. I think that there's also specific amenities that are very important. Some of them are, I would say in the category of things that you already have, like Wi-Fi, well, make sure that it's disclosed that you Wi-Fi, make sure you check the box. Then there's the other introspective, expensive big things that we know can work. Fools, hot tubs, fireplaces, like, we know that that is a total differentiator. But then also there's this sort of this hospitality piece that is really important, really great property manager once told me everything anybody touches needs to be of quality. So if you have lousy towels, but the love of God gets some new ones. Another good one is the appliances in the kitchen. Like, we ran this test once that we started showing high quality appliances in the kitchen that were all like Kitchenator, a better brand, not the whatever with it you get at Target or Walmart, like a nice mixer from KitchenAid. And all of the appliances were all KitchenAid. Like, it was a significant conversion pop. So there's lots of small things that you can buy that can be quite powerful for conversion and are a lot cheaper than a pullier backyard. Yeah. It's the haptics of luxury or the haptics of hospitality, right? Like, we pick up something and it feels solid or luxurious or when you see something that feels like it's not just what you see, but how it feels like the glass models or the KitchenAid appliances is signaled at a different level of maybe care by the owner. So they guess things. They must have pride in the ownership of this property. It must be a good stay, right? And they give a, you know what about hospitality? Yeah, like I don't think of like, just overware. There's a whole gamut of silverware. You should probably get, I mean, you don't need to get, you don't need to get super expensive China. But, you know, get some nice forks. Yeah. Get the KitchenAid mixer, get some nice towels. Like it really matters. You can feel it when you have that cheap fork in your hand, can't you? I mean, it feels like a downgrade. Oh, you know what's another good one? Is a beach chair. Like, rather than janky beach chairs, that's some nice 30 beach chairs. It's interesting. The psychology that goes along with it, right? When you think about distribution and how it's shifted, which operators be thinking about the shift in distribution, especially with everything happening in the world right now? I mean, Expedia group, the way we're thinking about it is multiple legs of the stool. So, you know, Verbo is going to be for your very traditional, very often drive to vacation family. I think Expedia is going to be for, you know, you're going to access a really broad network of travelers, many of which is, it's probably just a little more diverse. Like, they have families, but they also have couples and singles and people that are interested in going on vacation. So, probably going to book a little bit more of your one and two bedroom units on Expedia. And we've had some success about it. Again, some great things are coming, like, within Expedia, they're known as the one-stop-shot. So, we're going to enable people to book their flight with their vacation rental on a package rate. And that's going to come later this year. And then, B to B, I would think that is like, what very often is hard to reach audiences. So, there are great travelers that work with Chase or American Express, like Beezer. These are partners that Expedia has B to B relationships with. The most recent one is Uber. And then also, that sort of expands globally. So, you know, we will distribute to banking institutions and airlines and even OTAs that really operate in other countries. And you can imagine if somebody books an American vacation rental on Travoloca, which is a Indonesian OTA, well, if you fly it all way to America, you're probably prepared to stay for a while and spend some money. So, I think there's an opportunity for the hard to reach audiences. And that's so much more than what Gerbao used to be. Now, obviously, also now, with everything that's going on in the world. We're certainly seeing a bit more of a flight to domestic. But if you recall even during the pandemic, it actually was, despite the global tragedy, kind of a good thing for the vacation rental industry. Like, what's it like calm down? Everybody was like, I still want to go down, go to vacation at the beach. And that quick drive to trip was good for all of us. The industry did really well. It's just what part or what destinations in the industry shifted, right? Like the international destinations, not so great. The drive to mountain destinations killed it. Absolutely. The southeast killed it. Well, I was rough. The exact presence that you'd think, you know? So, yeah, those are pretty wild times. I remember from IVR, like, I'd have like a Monday and Tuesday night open. And then we get booked at Rack Rates. And I'm like, this isn't gonna last sharper to take it while you can't. Yeah. But with the AI noise going on right now, and everybody talking about it, for where do you sit? What's real and what's just noise? We have implemented a variety of things that are then really successful with the AI. The very first thing that we did several years ago, really, was it's largely in the service space, chatbots, like how do I service things really easily and really efficiently? Then sort of the second layer that we really leaned into is within the, really the shopping experience where we have property Q&A that's automatically generated. We have review summaries for people that don't want to reach 300 reviews. It's just here's the summary of what you need to know from the reviews. We are later this year coming out with natural language search, so that we're sort of taking away some of that structured way that people would say, I'm looking for three bedrooms in this market for these dates. People are going to tighten whatever they want, say that they want pet friendly, they can say that they want near the X, Y, or Z. And that's going to really, I think, transform some of the shopping experience. I think that's really interesting. When you start to decouple the structure of what's traditionally been the queries for search and now plug that into a natural language search, how should property managers and homeowners be thinking about the restructuring of the data that we really give to you to make sure that we're found in the top of the engines, right? Top of the search. - I don't think you're going to need to do anything all that much different, other than make sure that you have a really strong description as well, because that will feed into the search process. And for what it's worth, like natural language search is going to be optional. Many of our joint travelers are of a certain age and certain demographic that I think there to be perfectly comfortable doing what they've been doing for years. but we are going to have the option for national search as well. Adoptional. a little slower than technology. For certain cohorts, I think that's right. Very enough. What do you think the impact of AI is going to be on the short-term mental industry as a whole with the next five years? I think the big thing is actually going to be, it's not going to be the service thing, it's not going to be purely just the website thing, it's going to be where are people going to shop? And as you can imagine, we are trying to be at the very cutting edge of that VR partnerships with herplexity and all the other major AI players to make sure that as people over time likely shift from a traditional Google search to an AI-based search that verbo properties are extremely prominent in that space. Still a small base, but it's growing. What percentage of the traffic is low and through there? So it's critical that if you want to book, you're really focused there. So as a full disclosure, I ordered my first humanoid robot, the Neo1x. I mean, if that would make sense that you're on the cutting edge of this day. I'm trying to get them delivered early so I can put it into one of our vacation models and have a clean in between stays and in the evenings with the disclosure to the guest of getting to try AI. I was keeping for the first time ever. There's a certain demographic that's going to think that's awesome and there's a certain demographic that's going to find that not awesome. Totally for fun to see what happened and we were going to have, I was thinking about, there's going to have to be a lot of disclosure because now AI is not only knowing what you booked and what you booked it, but it's going to know like that you left your plates out, right? Yeah, right. God forbid something else, right? So whatever that might be. Well, keep it PJ, but you and I have been in this industry for a while and, you know, we've seen things. Devolved up stories, evolved up the stories and a little bit of trouble to go along with it. Yeah, what do you think is working right now that you feel confident in and what is verbose still trying to figure out? You know, I think promotions have been an absolute home run. That's something we're super excited about. I think that the quality stuff and the verb out care stuff is heading the right direction, but there's an opportunity for so much more. How can we truly eradicate that experiences and how it going to be even more above and beyond when those experiences happen? I think that there is an opportunity for us to provide additional levers for property managers. For example, later this year, we're going to charbrie and sponsor listings, which I believe KasaGo and Kasa have been doing some of the pilots with and the results are pretty promising. So we are super eager to start to have that lever so that when there are partners that say, I'm doing all the things you ask in terms of promotions. I know that I deliver quality. What's the one thing I can do that truly will guarantee me more invisibility? We can say, well, we got this product and I think that we're all really excited about that. We're kind of wrapping down here. Let me ask you a question of what do you think the operators are missing today? Where are operators misunderstanding the system and making them underperform to what they could be doing? You know what I would say? Like you're not an example of this, but there's definitely certain property managers that I think that OTAs are the big bad wolf and that everything should be moving towards the book direct movement. But obviously I'm biased, but like the way I think of it is, we are not just providing you a traveler. We are adding a traveler to your CRM. I'm going to remark into that traveler too. But if they have a great experience and you do a nice job of disclosing the brand that you offer, like you should remark it to them too. You know, all the OTAs over time sort of hand hold and give you less information like right at your fingertips and that's for obvious reasons. But you have your own ways of getting that information. And I would think about it as if I do an exceptional job, this is not just a traveler once, but it's an opportunity to bring a traveler back again and again, sometimes that traveler will come back to the OTA, sometimes they'll come back to you direct. And I kind of view that as part of the partnership. Make no mistake. I wish all the bookings came back through me, but at the same time, property managers have their ways of getting contact of their nation and doing direct marketing. Like that's kind of part of the deal for me. Tim, one last question. It's the exact opposite of everything we've talked about. What's the number one way for an operator to lose their ratings and position on Verbal? - Can't fillation, especially if it's last minute. - Good to know. - Tim, thanks so much for coming on. I appreciate the time with you always looking forward to hanging out with you again at all the different conferences and maybe playing some golf soon. - Sounds like a plan. Pleasure to see you, my man.