Avalara’s Rob Stephens on the home-sharing / hotel convergence

US: ShortTermRentalz spoke to Avalara MyLodgeTax general manager Rob Stephens about the firm’s partnership with the VRMA and the convergence between home-sharing accommodations and the traditional hotel industry.

• Introduce who you are and what your background is in the vacation rental industry.

I’m a vacation rental owner myself, having bought a second home in Vale and I’m based in Colorado. In 1999, I couldn’t afford to buy a second home without a mortgage and getting income to pay for the costs. Then, someone told me about this website called VRBO, which is now Vrbo. I put it on there and got tons of bookings, which was working incredibly well. It was at a really nominal cost and it was an amazing experience for us operating this condo in Vale. It was then when we realised we needed rental agreements, we had to check in the guests, keys, cleaning etc, licensing, taxes etc – and how complicated this all was .

After a couple of years, we went about solving that and making it easier for hosts and homeowners to comply with the taxes, going back to 2003 when we started the company. We then sold it to Avalara in 2015. The vacation rental industry is still our primary segment but we’ve grown a lot and now support HotelTonight, Expedia and Extended Stays USA as well as other large platforms like Lyric and Sonder. We have grown to support a lot of property managers and some of the bigger travel platforms in the space.

Late last year, we started discussions with VRMA. I think it’s indicative of a lot of our partners where we talking about having issues with tax rates in the US. The VRMA understood as they were getting enquiries about taxes and so it was natural for us to partner with them and provide our tax information resources to help educate and inform their audience. They’re the leading professional association in the US and it’s a great partnership as well.

• Why do you think Marriott is now looking to expand its home-sharing activities at this moment in time and how can it make more inroads in the industry than other hotel firms that have tried previously, such as AccorHotels, Hilton and Hyatt?

From my corner of the world, it has become much much bigger over the last 20 years. We always knew there were lots of opportunities and platforms having over a million listings was outside our ability to conceive. The industry has become very successful and it’s very hot now.

When I got involved, the vacation rental industry was still very niche. When I was renting my property from 2005-2010, booking could be difficult as there were a lot of phone calls, emails and offline communication, while some people would send cheques. HomeAway was the first company to really aggregate all the leading platforms in the US and other markets and start to professionalise and invest in the industry. I think the industry has now really become mainstream and the big driver is people and groups wanting to find value when they travel. It’s a phenomenal option for people and traveller demand is therefore very high.

The big platforms like HomeAway and Airbnb have invested and aggregated huge amounts of properties and made it easier for people to do it. Back in the day, HomeAway used to do traveller surveys where awareness was very low of the segment but now everyone understands Airbnb and short-term rentals are out there and that connects back to Marriott’s world. They must be thinking this is a big part of the travel world and it’s something they feel compelled to participate in to supplement their industry without sitting on the sidelines.

How will hotel operators operate and have success? The thing I’m seeing is the professionalisation of the industry and a lot of multi-family option operators like Sonder and Lyric are trying to target a high-end product. I think hotels think that is something they can also deliver in terms of guest experience, mechanics, concierge, good cleaning services, furniture, amnesties etc. Travellers may have a certain kind of expectation of Marriott that they don’t have from just some guy renting out his home in San Francisco. I think it can perform very well.

• What role has Airbnb played in the convergence between vacation rental platforms and the hotel industry, particularly considering its recent acquisition of booking service HotelTonight?

HomeAway were the clear leader in 2005 and then they went public around 2011 when it was still very niche. Airbnb hit the mark though and added a whole other spin in the urban markets where they still are very successful. They’ve driven the industry to a new level and Airbnb is now a household name to the extent that they’ve brought awareness to the industry.

It ties back to travellers thinking about this option and Airbnb has huge volumes of inventory that is very easy to book and this drives more people to the space. If HomeAway or Vrbo has lots of traffic why not offer those travellers a new option? Let’s meet all the needs of our travellers especially if you’ve got the traveller demand for different types of lodging! For years and years, they’ve been focused on their short-term rental space and obviously they’ve now matured and become very successful and profitable. Their resources are just now spreading into different areas.

• How do you think these key ventures and trends will impact on the short-term rental industry in the short and long term?

That’s an interesting question and it’s something we’ve been talking about for a while as we’re deeply involved in the industry. What we’re seeing is an industry that is continuing to grow and mature. The market has changed significantly from 15 years ago. You now need to be on multiple platforms, guest demands are going up and the level is being raised because competition is intense. In my market in Vale, there is about 1500 listings. As a homeowner or host, you need to be able to operate in professional way so you must have the basics like quality photos, clean linens, plenty of amenities, broadband / free Wifi, nice furnishings etc. You also need to be responsive to guests and have a decent terms and conditions.

Travellers are used to experiences where they go to travel sites, click a button and book something that’s like what they want for hotels. I think that as these traditional, entrenched hospitality players like Marriott enter the space, the level of services is being raised. It’s going to be more challenging for people opportunistically renting out their flat in san Francisco for example. The market will go on to favour people that do have quality standards, good linens and furnishings, and are responsive to phone and email support.

It’s going to be very interesting to see because we’re seeing lots of multi-family operators bringing quality inventory into the market that they can control to create a quality guest experience. It’s certainly good for travellers but it’s going to get more complicated for the opportunistic hosts. You need to pay more attention to what’s going on, leverage technology and make sure to list on multiple platforms. You have to create a good experience for them.

• What challenges are companies like Marriott going to face in terms of regulations to comply with as they venture further into the vacation rental space?

Regulation is something the whole industry has to face and we deal with it intimately in our role as we register for a licence and then pay tax for a high volume of vacation rentals around the United States. Certainly, the environment is changing and it’s getting more difficult. Cities are putting more regulations and restrictions and I don’t know if I would differentiate the challenges of a Marriott compared to an Airbnb, at least in that segment. The more the big brands come in, and I think there’s a bit of a misconception in our industry at times, the industry becomes increasingly well understood and respected. I’m still of the opinion that we’re still in the early stages of a kind of regulation fight in the US. By and large, we will figure it out and companies like Marriott will help to bolster and legitimise the vacation rental industry. There will be lots of challenges but travellers love it and we will figure out the right mix to find something successful.

For more information, visit the Avalara website here.