Prior to last week’s VRMA show, we interviewed Steve Trover. Steve has been astute to realize that rather than having his primary concern be fighting over the 4-5% of the lodging market that goes to professional vacation rental managers or the 1-2% of the lodging market that goes to the rent by owner market, he is concerned with the 94% of the lodging market that isn’t going to vacation rentals at all. Imagine if vacation rentals share of the lodging market grew to just 10-12% of the lodging market - wouldn’t we all be better off?
Trent Blizzard’s presentation on smart Internet marketing repeatedly highlighted Trover’s All Star Vacations when he was giving examples of effective rental marketing. It’s been our observation that many of the presentations, such as Trent’s, focused on what is referred to in marketing parlance as top-of-the-funnel (click here for a visual & illustration of the “funnel”). While the top-of-the-funnel (i.e., early in the buying process) is important, a manager’s ability to maximize the look-to-book ratio is paramount. A higher look-to-book ratio enables your business to spend more to be in top spots on Google, for example. If you convert lookers to bookers more effectively, you can spend more than your competition.
We met another member of “Red Sox Nation” during VRMA that happens to help deliver the “secret ingredient” for All Star - Tracy Lotz.. This is the first time Tracy has publicly shared what he’s been up to with his company LiveRez.


Q: So how did you end up in the vacation rental arena, Tracy?
Tracy Lotz: The short version of the story is I concluded that a vacation rental web directory would be a meaningful business, but not so big that Bill Gates (my hero) would one day come in and squash me. I also wanted a business I could do from anywhere and I ended up moving it to Sun Valley, Idaho from Los Angeles. I launched 1st Choice Vacation Rentals (www.choice1.com) that went on to win several awards such as Forbes Best of the Web.


Q: Fast forward to today. How did you go from doing just a web directory to launching LiveRez and powering All Star Vacation Homes management systems and booking engine?
Tracy Lotz: All Star had been a web directory customer of ours. They grew with us when we got into the web development business. We’d been doing their website for several years when Steve reached an inflection point in his business.
Steve Trover: It was a few years ago when I realized that I wanted to build more than another lifestyle business. We felt that fighting over the 5% of the market that vacation rental managers get from the vacation lodging market wasn’t nearly as compelling as trying to get some of the nearly 95% of the market that still uses hotels for their vacation lodging. Whether the business is railroads or online auctions, I’ve seen other companies too narrowly define the market they are in and they give up the larger opportunity. I’m determined not to let that happen. Thus, I realized we were actually in the “hospitality industry”, not just the “vacation rental industry”.


Q: What did you see as the key differences between the “vacation rental” and “hospitality” businesses?
Steve Trover: In addition to the things we all know are advantages of vacation rentals such as more room to relax and have fun, the biggest difference is how hard we make it to book our properties. When we compared the process to book a hotel room versus one of our properties, we had to admit that we were far more difficult to book than our hotel competitors. Expedia, Travelocity et al have trained our guests that the booking process should be easily done and we realized the process of property research, email inquiries going back and forth and so on was so painful that many would abandon part way through and we’d lose them. Undoubtedly, this meant we were losing lots of business to them even though we had a superior offering. Duplicating what the hotel industry is doing right was not enough. We needed better content to make clear what our offering was along with a clean, user friendly booking engine.


Q: What did you do with that epiphany?
Steve Trover: We set guiding principles of what we needed to deliver to our guests both offline and online. I figured we could just buy our online solution off-the-shelf. With all due respect to the software vendors in our business, I didn’t find their packages met the guiding principles we wanted to achieve. To fill the gaps, we would have had to do a lot of custom development and dealt with a lot of complexity not to mention a lot of expense. Not being in the software business, I decided to give Tracy a call and see what they could do.
Tracy Lotz: Steve’s timing was fortuitous. Just as we’d realized we needed to get into the web development business to meet our customers’ needs, we were evaluating what was next. Around this time, we were also getting calls about buying the 1st Choice Vacation Rentals business. While those overtures were attractive, I had a gut instinct that there was more to this business and that we could add some unique value and that we were in it for the long haul and not just out to cash out and check out.


Q: We often hear from vacation rental managers “we have to talk to travelers before we’ll let them book our properties” as they often have unique properties and/or they say consumers want to talk with someone before they book a property. It sounds like you have a different view.
Steve Trover: To the concern about travelers wanting to talk with a human before booking, we are always available to them via phone and will continue to monitor and improve our service there, however travelers have proven more ready than we expected. From day one when we enabled direct online bookings, we received over 30% of our business through direct online bookings and that percentage steadily continues to increase. In other words, we’ve found travelers are far more ready to book travel this way when we provided them with easy online tools and an easily navigable website.


Q: Tell me more about the guiding principles you mentioned. What were you looking for that you didn’t find?
Steve Trover: The biggest thing that we found is that the vendors’ interests and ours were not necessarily aligned. Not only did we want a modern system, we wanted a system that would allow us to provide what our customers were looking for. We live in an age when companies like Salesforce.com and Google dominate as they are more tightly aligned with their customers than the legacy companies they compete with. I believe we should apply what’s worked for their customers in our industry.


Q: We’ve talked a lot about building travelers’ confidence in vacation rentals. Does a reservation and property management system have a role to play in that?
Steve Trover: Absolutely. If you look at our website, you can see what we’ve done to help that. Detailed descriptions, lots of pictures, side by side comparison features and more. Providing the customer with all of the information they desire in an easy to get to manner shows that you are professional and are looking to meet their needs. We also have some exciting things in the works to help raise the awareness of the vacation rental accommodation through the newly launched Discover Vacation Homes public relations group. Increasing market share for the industry is our sole focus. We are hoping FlipKey and LiveRez can help us on that front. Stay tuned.


Q: Any parting thoughts?
Tracy Lotz: We’re out of stealth mode and would love to chat with anyone looking to have the kind of success All Star has had in producing revenue online. We view our relationship with vacation rental managers as a partnership and hope to work with more organizations of the caliber of All Star Vacation Homes. As word has spread that one can get access to what All Star has been using to gain competitive advantage, we’ve been forging many similar arrangements to what we have with Steve’s organization. You can email me at tlotz -at—liverez [dot] - com.
Steve Trover: “Go Sox!”

This entry was posted on Thursday, November 1st, 2007 at 11:20 am and is filed under Interviews. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.