93 Maximising vacation rental revenue

[Richard Bexon]

Good morning, Carolina. How are you doing?

[Carolina Jimenez]

Hi, Richard. I'm great. How are you doing?

[Richard Bexon]

Very, very good. I appreciate you taking time out of what I know is a very busy day to chat with us here on the podcast.

[Carolina Jimenez]

I'm more than happy to. Excited to be here.

[Richard Bexon]

Awesome. Awesome. Well, let's get straight into it.

I mean, Carolina, I know you've been in property management for quite a while here in Costa Rica, but I mean, are there any trends that you've recently seen that have surprised you?

[Carolina Jimenez]

Well, yeah, I think that we've been through a couple of maybe abnormal years. And I would say that for one, the trend that surprised me the most is how the North Guanacaste market has behaved. We were a very marked seasonal market.

We were used to having more high season or low season. And since 2021, that's changed. For example, if we take Tamarindo as a market, and now that May just closed, May is usually like our second worst month of the year.

We actually closed with a 75% occupancy rate, which is incredible compared to last year's. So I would say that's the main trends that we're not that seasonal anymore. And I would say that's aligned with the fact that people now can work remotely so they can make more, you know, work with leisure so they can stay longer stays and come year round.

So pretty, pretty good occupancy. Yeah.

[Richard Bexon]

Carolina, just to put May into perspective at 75%, I mean, how would you typically, how was January, February, March, April compared to May? Because as you said there, you know, our seasonal drop off there is we have a great January, February, March, you know, they're really solid. April after Easter, we see a drop off.

May gets really quiet. June picks up a little bit. July again is like another high season.

The first two weeks of August are good. And then it like really teeters off. September and October is like dead, like sometimes 20, 30% sometimes.

And then it picks up in November a little bit. And then December, of course, we're off into the high season again. But how does May really compare this year to those previous first months?

[Carolina Jimenez]

Yeah, so like you've said, like, this year, we were expecting that dip after January, February, March. And it wasn't that drastic. So for January, February, March, we were in more than 90% occupancy.

Like, of course, it depends on the market. But for example, it was fully booked. And then having this 75%, when usually in May we have 40%, 50%, like you were saying, it's incredible.

Yeah. I have condos in Tamarindo with like two days free in the whole of May.

[Richard Bexon]

And how is the rest of the year looking? I mean, what is your prediction for what the rest of the year is going to look like?

[Carolina Jimenez]

I think it's going to be very good, a very good year. Like we've already done 80% of what we did in 2021. Wow.

And we're, yeah, we're in month five, let's say. Of course, that we need to consider that 2021 was still like, during COVID, we're still, I mean, COVID isn't over, but we kind of like already think it is. So but it is, it's doing pretty good.

Yeah. Okay.

[Richard Bexon]

How's the pace at which Vacasa has signed up new vacation rentals in Costa Rica kind of increased? Is it steady? Is it decreasing?

And why do you think this is?

[Carolina Jimenez]

Yeah, well, it's increasing. And I think it's aligned with that in the fact that the vacation market is growing, not just in Costa Rica international. So there's a lot of opportunity there.

And so having that, I think Vacasa, we saw that and we really strengthened and created a sales team that could target to the right clients, the right homes and the right market. So we're investing a lot in having that good sales team. This year, we brought 45 units so far, new units into our portfolio.

And we're really careful of thinking that we're bringing the right owners and the right homes to make sure that you're a successful business. Yeah.

[Richard Bexon]

Yeah. I mean, I've always said that, like, again, you know, because people always ask me, because I know quite a lot of the property management companies out there, like, Rich, which one's the best? And I think I'm like, it depends on the owner, and what the owner's goals are, meaning that different, you know, property management companies have different goals.

Some people are great at managing the property and not so strong on the vacation rental side, the revenue side, you know, and there are other people who are completely opposite. And then every so often, you have the unicorn that's very good at both. It's really, really strong at both.

You know, that's like being in a business being stronger, sales and marketing and operations, you know, when you get to, you know, just it's, it's, it's lightning, things start to flow. But I mean, let's just talk revenue, you know, because there's a lot of this is a topic that a lot of people want to talk about here. But I mean, you know, what are the best performing vacation rentals that you guys manage having in common?

[Carolina Jimenez]

Yeah. And so of course, location, making sure it's very central. And I think that's very important.

I say that to homeowners when they are looking to buy a property. Costa Rica, as you know, is a very unique market. Sometimes we look at the map and we see something that's five minutes away from Tamarindo and we think it's very central, but it can be way up high in the mountains, very complicated to access.

So making sure that you're, you're central. And then another thing that's really important is having the master bedrooms. So I think that's changed.

There's a lot of condos that are thought for, let's say, mom and dad and two, three kids. And we're not getting to different opportunities, like people that travel with friends and family, extended family, a, you know, yours, mines and ours, my kids, your kids, our kids. So making sure that you have, you can fit different people in a different home.

And then what's most important is making sure that you have unique spaces to share experiences. So our homes that make the most revenue in a year are those kinds of homes that have an open kitchen, they have a pool, they have, you know, a quiet deck, something that photographs really well and that people can actually see themselves like creating memories there in when they they're planning their holidays.

[Richard Bexon]

Yeah. It's incredible. You know, I mean, just investing in great photos just returns, you know, multiple times.

And, you know, it's just sometimes I see photos where I'm like, oh my God, like somebody just, you know, whipped out their old camera and started taking their old Nokia camera and started taking photos here, but like bringing a professional in and spending a thousand dollars to get good photos. But a quick question, do you guys provide that as a service to your, to people that rent with you guys?

[Carolina Jimenez]

Yes, we have our in-house photographer and that's including in part of our service. And the other thing that we also provide is our 3D virtual tours. So all of our homes, you can see we use this Matterport technology and you can see the 360 degrees of the home.

So it's not like I see two really cool pictures, but then it maybe has, it's much smaller than it looks in pictures. It's you're getting what you're looking at. You can see the whole tour and that's also a great value add for our homeowners, right?

Because they can then market their home if they ever think about selling their home. And it's a great thing for potential buyers.

[Richard Bexon]

Okay. I mean, again, a lot of people listening to the podcast are looking to, you know, increase their vacation revenue. I mean, their vacation rental revenue.

I mean, what advice would you give them on how they could do that beyond of course, joining up with Varkasa, but like with better pictures, I mean, what would be your advice to them?

[Carolina Jimenez]

Yeah. So definitely what you said about better pictures and thinking about a picture in a way that you can see the experience that you're going to have in the home just through the pictures, because you can write a really cool description, but as you know, not everybody reads it. So about having that Instagrammable picture where people are going to be now that it's, we're all about social media, when people can picture themselves taking that cool picture in a swing or something like that, a nice view that sells really good.

Another thing that, which is key is working with dynamic pricing. Still, there's a lot of homeowners out there. And even if you're self-managing that you have fixed prices or maybe a fixed price for high season and a fixed price for low season, work with dynamic pricing, make sure that you have maybe weekends a bit higher than Monday, Tuesday.

So you can get longer stays and diversify how you're attracting bookings. So it's not all about Airbnb, but how can you use more channels? How can you maybe partner with tour operators and booking agents and all those channels available?

Airbnb was like our single source of a short-term rentals. And that's been changing. We've seen other pages as well, our own Vacasa website and other pages that are now increasing and getting more rentals.

So it's important to be out there in all the channels. And then another thing that I think it's very important is just really thinking about what makes your home unique, what's going to make it stand out, especially if you own a condo where you have neighbors with a similar style and structure, what makes your different? What's maybe the cool design or artwork or anything that you can add that makes it yours and you can showcase that on your listings?

[Richard Bexon]

Yeah. I mean, I think that that's great advice. I mean, you really, you have to understand that you're competing with other properties and how do you make yours stand out?

Going back to your thing, just about the swing. I remember doing that like six years ago at our villa. I was like, I'm putting a swing up here and my business partner said, Rich, why are you putting a swing up here?

That just makes no sense. And then after it, once all these Instagram pictures kept coming up of brides and everything on these swings and people on the swing, he was like, Rich, I can't believe that was like the best $500 we invested just for advertising.

[Carolina Jimenez]

Yeah, I agree. I agree. And you and we recognize it's a great marketing.

We recognize certain places and homes or vacation spots just by looking at that picture that people take in that place, you know, like the famous bridge in Avellanas where everybody takes that picture or the swing in Catalinas. It's a trademark.

[Richard Bexon]

Yeah, we have a I think the one up in the Central Valley is, oh God, it's a hand that goes out. It's like a hand and people keep taking pictures.

[Carolina Jimenez]

Yeah.

[Richard Bexon]

Yeah. Yeah. Yeah.

It's amazing how those things, I mean, again, it's free marketing because people tag your property and tag your location. So, you know, it's probably the best $500 or $1,000 you'll ever spend.

[Carolina Jimenez]

Yes, I agree.

[Richard Bexon]

I mean, a lot of people are building rentals at the moment, you know, they're looking to build or actually in the process of building. I mean, what advice would you come what advice would you give them if you guys were kind of part of the journey to begin with regards to layout, size, that kind of stuff?

[Carolina Jimenez]

Yeah, well, I think some of the basics we just talked about. So thinking about how are you going to how is your home catering to maybe different types of just the aside from the typical family. So something that's very important there is just thinking about the number of rooms like we do see a difference in the occupancy that we have over two bedrooms versus three or even four.

There's not that many four bedrooms out there making sure that their master bedroom so that they have their own bathroom and they're like sort of the same size, not the classical huge master bedroom. And then the others are really small and everybody then is fighting for who gets what and who pays what then because now we all we're we used to travel like everybody has we don't travel only with mom and dad. We travel with friends and then we divide the bill.

So making sure that it's it's fair for everybody. And about that, I think what I said in I always think about like my holiday and what I like to have in a home when I travel in. And for example, last time we traveled in a big group before I think it was 2019 probably saw a long time ago to to the mountains in Colorado.

We were a group of about like 15 people and the home had two washing machines. And I mean, everybody continues to talk about the great idea of having two washing machines when you have to make breakfast for such a good group, such a large group. And then and then you have the dishwasher that's loading.

So you then have a pile of dishes that you can put in. So it was amazing. And everybody like just enjoyed that so much and made it so practical.

So small things like that sometimes make a really good difference. And I'm sure that if we ever went back on that skiing trip, we would again book that house with the two washing machines. So thinking about those things that are important to you and thinking about the experience that people are really going to have in your home.

So when people book homes, they are they want to spend time in the home. So if you're here at the beach, definitely have a pool, you know, definitely maybe have something different places where people can spend time together and not just the pool, but then maybe a shaded area or a barbecue or all those kinds of small things, I think are not small, but details, I would say, really make the difference.

[Richard Bexon]

Let's just jump on bedrooms a sec because you mentioned something there. I mean, a four bedroom, a three bedroom, a four bedroom home is always going to do better than a three or five bedroom home. Sounds like it's always going to do better than a four.

Am I correct in saying that?

[Carolina Jimenez]

I'm not sure. I think that also depends on occupancy, but definitely you're definitely correct in saying that we do see a home, a three bedroom, a four bedroom home doing much better than a three bedroom home because there's not that much availability. Of course, we also need to factor in the location of the home.

[Richard Bexon]

Of course. Of course. Yeah.

And I mean, with regards to the size of those four bedrooms, I mean, if someone's thinking about squeezing a fifth bedroom, kind of a smaller office stroke bedroom in, I mean, what would be your advice on that?

[Carolina Jimenez]

I mean, I would do it even if it's smaller. Like you said, it works as an office space. I have owners right now that are building a fourth bedroom and making what used to be a TV room, open space into a fourth bedroom that could be used as a guest bedroom, but also as an office because they travel with young kids and they also work at the same time.

So they say, I need my private space to work during the day. So having an office right now is also a great amenity.

[Richard Bexon]

Yeah. Where do you believe the gap in the vacation rental market is at the moment, Carolina, with the viewpoint, with the view that you have at the market?

[Carolina Jimenez]

Yeah. Well, talking about the structure of the homes, what we just mentioned, the having four bedrooms or more, there's not that much a portfolio out there. Also, I think something simple where I see a gap is in just having what I call cool amenities, especially when you want to differentiate yourself from those cookie cutter models.

How am I going to be different from my neighbors when my investment, let's say, is in a building with 50 units or something like that? And we have those cases. We manage multiple condos in the same complex.

And I see owners that are doing much, much better because they recognize that and they, for example, they buy a bunch of boogie boards, they buy beach toys, they allow pets, which is something that in the mindset of most owners is they think that pets are going to tear their place apart. We charge a pet fee. So we're going to make sure that your place is not going to think you're going to, people are going to, and we have rules for that.

But we've seen that places that allow pets can rent up to 30% more. Wow. That's important.

Yeah. That's an amazing, that's an amazing stat. Yeah.

And because there's not many places that allow them and there's a lot of people that they wanted to follow with their pets. So it's something important to consider. And for example, this owner, when he realized he was allowing pets and was doing much better than his neighbors, because of that, he took advantage of it and now has like even toys for the pets.

He bought a lot of like squeaky, squeaky, squeaky toys and everything. And that gives him a great guest review. People are really happy and they're going to continue repeating going to their condo.

Right.

[Richard Bexon]

Carolina, is there a particular location that has a lot of demand that doesn't have tons of vacation rentals that comes to your mind? Where you would like, I wish we had more vacation rentals there.

[Carolina Jimenez]

I wish we had more vacation rentals that are front beach.

[Richard Bexon]

Beachfront.

[Carolina Jimenez]

Okay. Yeah. Beachfront.

But I think that's not, that's kind of complicated because of our infrastructure rules and everything.

[Richard Bexon]

But it's possible.

[Carolina Jimenez]

Yeah, it's possible. I also wish we had more developments of buildings that have, you know, great common areas, like with a playground and a gym and stuff like that. I feel that in the Tamarindo, Potrero, Grande area, we don't have that developments.

We have big homes, standalone homes or big condos, but we don't have like that place where you could spend more time as a community with the family, especially for people that work and travel and spend longer stays.

[Richard Bexon]

Okay. I mean, I think that's great. I mean, that's great.

I'm actually looking at a piece of beachfront land at the moment in Juntial, but maybe that's a little too off the beaten track.

[Carolina Jimenez]

But yeah, but eventually I think we're all moving towards that area.

[Richard Bexon]

Yeah. Yeah. I think so Marbella, Juntial, Negra, you know, Avellanas, all those kind of areas.

[Carolina Jimenez]

Yeah. And now that you mentioned that we are doing, we're like tapping into the Avellanas market. We have a new homes that are coming along.

We're doing really well. The important thing is to also see development there of homes alongside with community. So having restaurants, having supermarkets, and Avellanas is like getting on board with that.

So I think Avellanas is going to continue developing as a nice niche market.

[Richard Bexon]

I agree. I agree. Well, in my opinion, I think I'd mentioned it there, but you can feel free to scoot this opinion because nobody wants to say, you know, what their company needs to get better at, but there are two types of property management companies.

You know, they're ones that are great at taking care of your property, you know, where it's like kind of like, well, you know, I'd like it to cover its costs, but really I want it maintained very well. And they're the ones that are really good at selling it and filling it up. You know, you know, everyone's always stronger, you know, it's like left side, right side, you can't be great at both.

You can't be a great scientist. It's also great at artists. You know, usually you are stronger at one.

I mean, what is Vacasa and what do you think makes Vacasa different than other property management companies?

[Carolina Jimenez]

Yeah. I think that you as an individual can't be stronger at both. Like we all have, or we're either good at sales and bringing people on board and getting renters up, or we're good at the operations, like you mentioned.

So I think what's important is having the right team, making sure that you have people, a mix group that is going to be good and we're going to be able to complement each other so that we do everything right. I believe Vacasa and other property management companies in the area are, well, nobody's perfect, but we're good at having both areas strong. If you have a good team, like a one man show, it's very hard to be able to do both things right.

So it's more about the teamwork on how you can do this well. And like you mentioned, I think it's also about what's the priority for the owner. So making sure that we have the right owners that are aligned with our strategy.

So in the case of Vacasa, our strategy can be summarized in making sure that our homeowners earn more and worry less. So as part of the sales team, we're focused on making sure that we bring the right homeowners to our team. We focus on making sure that your home is getting the right return, a good return on investment, meaning that it's going to be occupied as much as we can.

And we're going to be able to play with dynamic pricing and we're going to be able to be accountable for anything that needs to be fixed and damaged and that was damaged in the home, either by renters or us. And I think we spoke about this as well in our past conversations, like I prefer, because there might be homeowners out there that prefer to have a home that is pristine, that's locked up and maybe not so many people entering the home and renting it like four times a year at a very exuberant price. I understand that, but being really honest, I don't think that's the client for Vacasa and I would be straight up with that person.

So I think it's focusing on the right owners.

[Richard Bexon]

You guys have a great sales and marketing machine, meaning that, like, I mean, I think when you say the right owners, it's owners that want to have returns, meaning if you just want to lock your house up and only rent it a couple of times a year, Vacasa is not for you. But if you want to maximize your returns on your property, Vacasa is definitely because it probably has a wider reach than any other company out there, because you guys are international and you're also a public company as well.

[Carolina Jimenez]

Exactly. Yeah. We're a public company and we're really investing in our marketing and booking strategy.

So I would say that the part of marketing and booking, we have it locked down. Like, of course, there's always minor improvements that we can do that we're working on, but I would say it's our biggest strength. Yes.

[Richard Bexon]

Well, Carolina, my last question for you that I love to ask everyone, as I know that you're busy, if you inherited $500,000 and had to invest it into a business or real estate in Costa Rica, what would you invest it in and why?

[Carolina Jimenez]

I think that's a hard question because I see it both ways. Like, if I think me personally and my personal...

[Richard Bexon]

You personally, yeah. Yeah.

[Carolina Jimenez]

Yeah. I would buy a lot and build my own home because as a Costa Rican and how the market is doing, if I think about prices going up as crazy, would I ever get the chance to have my own piece of land in Guanacaste and have my home? Yeah.

So I'd buy my home and I wouldn't sell it. And I would be happy there with my investments. As an investor, of course, like right now, that's the smart thing to do.

And if you have the time and the contacts for construction, build and sell.

[Richard Bexon]

Yeah. I mean, that's what we're doing all over the country at the moment and sometimes for some clients as well. So, I mean, the market is still strong.

I mean, just to give you an idea of one of my next podcasts that we have coming, we're interviewing someone which is really like where the state of the market is at the moment and whether they're seeing a slowdown in the real estate market. So that's going to be an interesting one to get that viewpoint on, but it's still strong at the moment. There's still people buying and building as well.

[Carolina Jimenez]

Yeah, I agree. And I mean, I say that, but I'm also from the mindset that everything sells at the right price. Correct.

So if you give me those 500,000, I build my home and then somebody comes knocking on my door, I would probably sell if it's for a great price, right?

[Richard Bexon]

I agree. I mean, I think that's the best way. I mean, I had someone in our business that had a home down in Uvita.

Someone came along, knocked on the door and offered him a crazy amount for it. And they were like, OK, but like I need you to lease it back to me for six months to six to nine months so I can go and get my other house and build my next house. So, yeah, that's, yeah.

[Carolina Jimenez]

That you mentioned is the thing to consider because the market is so crazy and supplies hard that let's say I sell my home tomorrow and where would I go? Like it's not that easy right now to find an option of where to live. So it's also something you need to consider, like what can you do with that money right now?

[Richard Bexon]

Yeah, I mean, I think, Wacos, Villarreal area needs like a condo development. And I say like a horizontal, not a condo building where homes are like 250 to 350,000. There are three, four bedroom homes, not massive.

I'm talking anywhere from 160 to 220 square meters just because there is nowhere for people to live affordably. That's nice. It's comfortable.

[Carolina Jimenez]

Yeah, I really agree. I hear there are some projects coming along over there. So looking forward to seeing what's going to happen in Wacos, Villarreal.

Exactly.

[Richard Bexon]

Well, Carolina, thanks again for your time. So early in the morning. Anyone that wants to contact Carolina or Vacas, all of their contact details will be in the description and really appreciate you coming on the podcast, Carolina.

[Carolina Jimenez]

Thank you very much. I really enjoyed it and would be happy to come anytime.

[Richard Bexon]

Thanks very much, Carolina.

[Carolina Jimenez]

You too. Bye.