US: STRz speaks to Tim and Candice Speicher, co-founders of Buoy, a revenue management tool for the global vacation rental industry, about launching their business as a husband-and-wife duo, how the Covid-19 pandemic has affected how short-term rentals are priced, and their predictions for the future of AI and automation in the sector.
- Please introduce yourselves, your start-up Buoy and what role it will play in the growth of the short-term rental industry.
TS: “I’m Tim, the CEO of Buoy. Our revenue management software for property owners and managers uses the first algorithm of its kind in the short-term rental industry. It replaces a generic ‘base rate’ with a dynamic and market-based index of millions of vacation rentals and hotels around the world.”
CS: “I’m Candice, the chief creative officer [CCO] of Buoy. Our mission at Buoy is to make smart, data-informed decision-making accessible to the industry. Currently that’s hard to find. The best analogy for Buoy is the weather – we want the industry to have the ease of accessing and complete understanding of their booking environment from Buoy just like you would have from checking the forecast on a weather app.”
- How did the idea for Buoy come about and how did you go about launching the business?
TS: “The idea for Buoy came about in 2015 when I was a short-term rental host and then I became a revenue manager. I was really frustrated by the tools that were on the market. I spent years using and deep-diving into them myself and working with other people to use them too.”
CS: “Tim wondered why people weren’t approaching revenue management the way he was and then thought that perhaps he could make his processes automated. One day, we spoke about this to our friends who encouraged us to try creating the software. That was the first time I thought: “Wait, could we actually do this?”
“I then contacted my network to see who could actually make our idea a reality and that was how we found our CTO, Szabolcs Pasztor. At the time, he was just someone who had met us in a speakeasy in LA! We ended up sitting down with him, looking at the competition in the industry and some sketches for the overall idea of Buoy. He said: “Yes, this could totally be built and I could build it”. Buoy was really founded on that day and it then kept going.
“Buoy is like having 1,000 of Tim – an efficient revenue manager – at your disposal. I was going to just do the logo for the company but ended up designing how the platform looks and how you interact with it too.”
TS: “Now we’re going through the Techstars accelerator programme and have launched Buoy for real. We spent a number of years building the case for the methodology, designing it and doing tons of testing. The SaaS version of the company was launched in May but the work that went into writing the new algorithm and writing a whole new revenue management methodology has been happening for several years.”
- What impact did working as a husband-and-wife duo have creating Buoy?
CS: “I love nautical puns because we’re Buoy, but Tim and I really are in the same boat. We have a synergy that enables us to bounce ideas off each other and I feel like we really understand one another as we’ve been building Buoy. In a relationship – as well as a business – everything revolves around open and honest communication and Tim and I practise this daily. It means I have clarity in what I’m doing more so than ever in my work, and it’s nice to be on a team with someone who truly has your back. Buoy is our business and our hobby together. It’s awesome.”
TS: “We have really different skillsets and really different areas of responsibility, but will each support the other in all of these things. For example, I can sketch something I want but Candice is the one who can actually design it. We’re both equally invested and working really hard towards the same thing, along with the rest of the Buoy team. Our family is just focused on building Buoy right now. It’s long hours but that will always be true for anything you love doing!”
- Why should property owners and managers be using Buoy as their revenue management software?
TS: “Essentially, if you’re really comfortable with the amount of money you’re making on your short-term rentals and you’re 100 per cent sure that you are making the maximum you can get, then you don’t need Buoy. Keep doing what you’re doing. But, and this is more likely, if you think there is a gap between your current and potential revenue and you want to know what the market will bear for your listing, then Buoy is absolutely the right revenue management software for you.”
CS: “As one of our users once said, it’s so easy it feels like cheating!”
- Has pandemic had any lasting impact on how short-term rentals are priced? How can Buoy help solve any challenges arising from this?
TS: “Yes, you used to be able to heavily rely on historical data in terms of the value of the room and property nights. That’s a lot harder to do now because the environment has changed and is continuing to change so much. Now, the current state of the market should be a more prominent portion of your algorithm rather than your historicals. That doesn’t mean you ignore historicals altogether, though it means that you look at purchasing behaviour and guest decision-making as opposed to the value of any one night because the market is skewed so much.”
CS: “That’s why Buoy’s algorithm is based on market conditions. We’re checking what’s currently happening, not what happened in the past, though we can of course reference that. We’ve made the first true, dynamic algorithm of its kind.
“Feeding into this is hotel data that predicts demand. Hotels know what’s coming to their local area [often they will have contracts with events and venues] whilst vacation rentals generally are slow at trying to figure out what’s going on. Hotels will already be raising their rates for the 2022 Super Bowl for example, but vacation rentals probably haven’t. So we take that data into account and then also check how other similar vacation rentals in your area are priced by sourcing data from the likes of Airbnb, Booking.com and Expedia. Everything we’re basing on is flexible in your current market.”
TS: “These conditions change every single day and your guests will be looking at potential short-term rentals every day, so it’s important the algorithm you use has a data feed that is updated daily too. The best way to do that is through automation.”
CS: “Covid has changed everything. Buoy is flexible and changes with the times and that’s why we can help our users.”
- Tell us about the design of your dashboard and timeline and how you’ve designed it for property owners and managers.
TS: “In a sense, the dashboard wasn’t invented by us, it was born from the hundreds of conversations we’ve had with people in the short-term rental industry over the years. When I first started as a revenue manager, I was presenting 75, 80 single different graphs to people in a report and hoping they would understand what I was trying to tell them. One day I thought: “Why aren’t these graphs layered on top of each other?” When we did this and showed it to people, they went: “Aha! I get it!”. That was how our dashboard was created.
“What was also interesting was that the property managers I spoke to were also using very tactile language to describe the maths involved in revenue management, like “I wish I could nudge those rates up” or “I wish I could push the rates up higher”.”
CS: “Tim then got some string, rulers and pencils out and used these to show me how the graphs should be able to move for users based on what they wanted to do. When we actually had it sketched out, I then used simplicity and colour as my design principles for the dashboard. I wanted to make revenue management buoyant, light and airy and not at all daunting in any way.”
TS: “What I found in all those conversations with property managers was that they really just want one critical piece of information – how am I doing compared to the listings that are most similar to mine? How am I priced compared to them and are my reservations worth more money than theirs? Buoy’s dashboard helps you understand that instantly. Ultimately, the dashboard was derived from users and my methodology, then was simplified by Candice and made by Szabolcs.
- Automation and AI are two buzzwords we keep seeing again and again in the short-term rentals industry. What’s your take on this and your predictions for the future?
TS: “Automation is now. Everybody is automating the hell out of everything – and it’s about time! People spend way too much time and energy trying to be machines when they don’t have to be. Things like recurring guest messages, scheduling, cleaning, reporting, it should all be automated and revenue management is no exception – especially when we know pricing and reporting is one of the biggest pain points for property managers.”
CS: “On the other hand, I feel that AI is getting a bad rep recently, with people saying they don’t trust it or know what it is. Perhaps we’re not sure if we’re ready for it yet, but it’s coming. When it does, it will simply be integrated into our existing softwares and all of a sudden, it’s going to feel like everything works much better.”
TS: “Really what you’re saying is “entrust this part of your business to something you don’t understand”. That’s too much of a leap for where we are right now but we all trust automation because we can choose the software to do this ourselves. I think that AI will be instrumental in a guest experience revolution in the industry when it does happen. If a company can understand and respond quickly to a request, it will feel like a human being did it and that is the hospitality touch that the short-term rental industry is continually striving towards.”
Buoy is a revenue management startup and Techstars backed company, which officially launched in the vacation rental market in May 2021. The SaaS company is the brainchild of husband-and-wife duo Tim and Candice Speicher – the former an experienced revenue manager and the latter a visual storyteller – together with software engineer Szabolcs Pasztor.