Blueground and Placemakr CEOs on Emerging Trends: Full Video

The evolution of blended leisure and business travel has been an enormous boon for businesses in all sectors of the travel industry, including short-term rentals. The rise in demand for short-term rentals can be attributed in the part to the surge in blended travelers.

Three travel executives — Blueground co-founder and CEO Alex Chatzieleftheriou; Placemakr co-founder and CEO Jason Fudin; and Travel + Leisure Co Senior Vice President of Global Rental Operations Heena Patel — addressed several issues regarding the sector at the recent Skift Short-Term Rental Summit in New York. They touched on a wide range of topics, including emerging trends in short-term rental demand, timeshares and the potential for extended-stay brands.

Watch the full video of the discussion with Skift Short-Term Rental Reporter Srividya Kalyanaraman and read the transcript below.

Session Transcript

Srividya Kalyanaraman: All right. Thank you everyone for joining us. We have an eclectic panel today. So, Heena from Travel + Leisure, Alex from Blueground, and Jason from Placemakr. And I think it’s really symbolic of the competitions that’s heating up in extended stays, I would say. Let’s start with you, Alex. I know you had some news, you acquired Nestpick. You’ve typically been in Bluegrounds in 30-plus stays furnished rentals. So what was the reasoning behind, well, the partner network, but also specifically Nestpick?

Alex Chatzieleftheriou: Sure. So, Blueground is a global network of move-in ready homes for stays of a month or more, right?

Kalyanaraman: Right.

Chatzieleftheriou: That’s we’ve been building this for the past 10 years. We now operate with what we call our core model, about 15,000 apartments in 30 cities. The core model means that we work with landlords to either lease or have revenue sharing agreements or management agreements with them. We set up the units and then we lease them back to individuals or corporations. So, that’s been a great model for us, but we’ve seen a lot of demand coming up and we wanted to extend the options of supply. So, that’s where the Nestpick acquisition comes in. We acquired Nestpick with the intention of … Nestpick is a platform, again, for 30 days stays and has actually millions of listings from different operators around the world and with the team that’s been very experienced in that sector, will help us launch the partner network. So, partner network is effectively adding other operators in the space, high-quality vetted operators-

Kalyanaraman: Including Placemakr?

Chatzieleftheriou: Exactly. Jason and Placemakr is one of our first operators to be added in the network, and basically, we’ll list in addition to our core supply Jason’s and Placemakr’s supply, and we have lined up about 50,000 additional apartments to be listed over the next year. And that is we think a win-win-win. Win for our clients so they can find more options and they can also choose more cities, more buildings. For us, obviously we can offer that option to our clients. And then for Jason, they get access to the demand. We work with large companies, including the likes of Google, Apple, have individuals coming to us because they know we have a high quality supply for 30-day plus. And that’s kind of like helps us scale the sector, scale our business, but also scale demand for others.

Kalyanaraman: Is that an easier way to tap into also the short-term stay demand without actually having that as a product? Is that the idea?

Chatzieleftheriou: So, even the partner network will be 30-day plus.

Kalyanaraman: OK.

Chatzieleftheriou: So, everything’s going to be monthly. We’re staying true to that. This is really about people moving into any city and either it is for work or for other reasons. So, an average stay is actually about four months. We don’t expect that to be very different for the partner network as it’s still going to be the same demand.

Kalyanaraman: OK. I want to bring you into the conversation, Heena. So we were speaking earlier about the vacation rental aspect within timeshares, right?

Chatzieleftheriou: Yeah.

Kalyanaraman: And you said the length of stays usually a week or so-

Chatzieleftheriou: Yeah

Kalyanaraman: … but what are the trends that you’re seeing in terms of the demand, in terms of customers wanting longer term stays and how do you adapt to that?

Heena Patel: Yeah, I think most of our customer base is within that week to 14-day stay. They’re less than 30, they’re ones that are adding trips together with normal work trips, trying to stay a little bit longer than they would for a normal work trip. But typically it’s anywhere between five days and 14 days.

Kalyanaraman: So, what is it like to adapt to the extended stays?

Patel: I think our business model is a lot different. There’s a lot of different regulations when it comes to full month stay models versus less than a month stay model. We typically play in licensing around the hotel space and being a nightly provider as well as a weekly provider. I think adapting to that is really about making sure that the customer knows the flexibility of being able to stay in all the destinations you want to stay when you’re traveling for a hotel, but getting the space and the amenities of being in a vacation rental for a shorter period of time than a month or two months.

Kalyanaraman: So, behind the scenes, is there a lot of loopholes around licensing, how you go about that? It-

Patel: No, I don’t think so. I think when you think about any product that you register, and I know the regulators were on earlier today, I was listening intently. But I think it’s making sure that you know what the guidelines are in every state and every city and every jurisdiction. And sometimes it takes more work to be licensed as a hotel type product or a lodge type product. But we do the work and we make sure that that happens so that the cities and the communities that we’re in, they respond to us in a pleasant way versus us being something that would be not a great partner in their community.

Kalyanaraman: And condo hotels is the play where Placemakr is really good at. And I know that you appreciate the flexibility between short and longer term stays, so talk to us a little bit about that?

Jason Fudin: Yeah, we’re do everything as everyone does. We have a different belief system, which is you should be able to vary the length of stay and the level of furnishing to push cash flow. So, part of Covid, our average length of stay was three to four months and we had an occupancy between 85 percent and 90 percent, spring of (2021) in Miami when there wasn’t any Covid, our average length of stay was two nights dead on and that’s the business that was there.

So, we believe in optimizing free cash flow for the real estate and that means that we have to have a consumer product that serves 30-day plus days, that’s maybe 25 percent of our business today, transient stays, the weekend business, the (business-to-business) midweek business, we look to tackle all of it. The reason we exist is financially engineering better real estate. And so we’re all about how do you make real estate more valuable and then being able to deliver a set of consumer products. So we have to deliver more than one consumer product, but that allows the real estate to increase its cashflow by 50 percent, 100 percent, 300 percent. And it’s worth clarifying, we have one condo hotel project, but everything else we have just over 2000 units are conventional multifamily buildings or hotels of apartments that we then run.

Kalyanaraman: OK. I don’t know, but I imagine there might be some kind of flip side to being flexible in terms of say branding or how you stand out to the end customer. Is that something you worry about or think about in terms of strategies?

Fudin: We don’t really worry about it.

Kalyanaraman: OK.

Fudin: Our rate penetration is north of a hundred in all the markets, so we’re beating the hotels and our (operating expenditure) margin is dramatically lower than the hotels and our quality is higher than individual operators and we make a lot of money for our owners. So no, it hasn’t been an issue and I don’t think it will be.

Kalyanaraman: OK. And in terms of getting around the regulation aspect-

Fudin: So, we don’t believe in getting around the regulation-

Kalyanaraman: Or working with?

Fudin: So, we are by the book people. Our team came from institutional real estate, we ran a couple billion dollars in development, we’re very by the book. That means we read the book and we see where there’s areas, whether it’s around building code, and falling into different, categories or zoning, generally…

So, we run temporary apartment hotels or the vacancy during a lease-up called a WhyHotel. It’s a pop-up hotel. On that, we’ll pull (short-term rental review) permits or hotel permits, whatever makes sense. On all of our permanent stuff, we pull hotel permits. So, we fall under the same regulatory regime as traditional hotels. And that’s really important if you want to own those buildings long-term because the local jurisdiction can change the rules if you have two bifurcated regulatory regimes.

Kalyanaraman: And for extended stays, there are 30-plus days, you don’t work with the same kind of stipulations do you, Alex?

Chatzieleftheriou: In terms of regulations?

Kalyanaraman: Yeah, in terms of-

Fudin: Alex can do anything?

Chatzieleftheriou: So, the thing is that’s typically the cutoff, right after 30 days, it moves more residential real estate and it’s really about people that are kind of moving into that city, it’s not about leisure stays. So, our vision is to build that global network and continue building on that, and we follow different strategies, but it’s only always about 30-day plus. So, for people moving to the city, and this is the vast majority of cities where that’s the kind of point

Kalyanaraman: And the conversation, I know that you’re all three companies are pursuing partnerships of some kind, either it’s with Nestpick and I know with your recent round of funding, you mentioned that you wanted to get into partnerships.

Fudin: Yeah, so of our couple thousand units, about two-thirds of it are other people’s buildings, we run one here in New York, down in (the Financial District), and the other third we buy. So, we’re like, “Oh, there’s an embedded value here.” We bought over 300 million in real estate in the last 24 months, and then we just put it on the platform, and then we make money on the real estate, and then we make money on the (operating company). And so, we’re hands on a lot of pies. But yeah, we believe the value can be created both in an operating company much like what Alex was doing and in a property investment vehicle.

Kalyanaraman: So, how important is that aspect to actually being spread out? I don’t want to say spread out thin, but to make sure that your hands are in many pies?

Fudin: I feel like the terrible capitalist here. There’s a lot of money to be made on the real estate-

Kalyanaraman: OK. I think it’s the right thing to say that too.

Fudin: … and on the operated company, so we’re in the business of doing that.

Kalyanaraman: OK.

Fudin: And I think that what you’ll see over time is the pricing of certain home-style inventory move to reflect its embedded hospitality value that hasn’t happened in a lot of major cities today. So, we see that as an opportunity. We buy with private equity, hedge funds, fit large family offices and if pricing moves. If there’s not an opportunity there, we won’t spend time on it, but today, there’s a dollar opportunity there.

Kalyanaraman: OK. And Heena, I think when we spoke last time, there’s something interesting to ask you about the partnerships that Travel + Leisure’s pursuing with MyKey, and Airbnb, Vrbo, can you elaborate a little bit?

Patel: Yeah, so we have our own marketplaces that we distribute our product on just like these guys do, but we also know the value of strong partnerships and strong distribution alliances. So we work with Airbnb, Booking.com, Vrbo, we have great connections with them that make it easier for us to put our product on there.

But we also work with brands like Wyndham Hotel Group, and Allegiant Airlines, and a bunch of other brands. And it’s really just about how do we give more people access to our products so that they can better understand the ecosystem that Travel + Leisure lives in.

Kalyanaraman: How big is the vacation rental aspect within Travel + Leisure? Because usually it’s synonymous with timeshares-

Patel: Yes

Kalyanaraman: … and I know that you’re trying to make that distinction-

Patel: Yeah

Kalyanaraman: … so what goes into that?

Patel: So our primary businesses are the timeshare business and the exchange business. So, we have timeshares like Club Wyndham and WorldMark and Margaritaville, and we also have the RCI exchange business. The benefit of having a vacation rental product that lives between these two is when owners aren’t traveling, when owners want to list their products for rent, or when we don’t have an exchanger using their inventory, or we have a closed group that wants to use different inventory, that gives us the flexibility of being able to use that inventory and monetize it. And whether you’re monetizing it back for the owners or for the (homeowners association), you’re giving them a benefit back to the unused space.

Kalyanaraman: And do you find that it is challenging to make sure that the reputation of timeshares doesn’t kind of trail back or negatively impact this new category that you’re working on?

Patel: Yeah, I think we’re distinctly trying to change the impression of timeshare because it’s always been one of those weird words that people think timeshare as it’s that week in Myrtle Beach that I go to every single year and it’s a one bedroom. And really, timeshare has evolved from that. It’s a points space system. You have the flexibility of going all over the world. You have the flexibility of exchanging into product that’s outside of the brands that you’re in, and being able to get people in on the front end to experience it and then see the benefit of growth and ownership is the key.

Kalyanaraman: Yeah, yeah. And I think you bring up a great point and which kind of teases into my next question about business models. So, when you think about extended stays and when you think about business models, especially when you’re trying to add that as a product, how do you adapt to that? Is that just an extension of what you already work on or do you conceptualize it to be something else for Blueground or Placemakr or-

Chatzieleftheriou: Yeah, I think, for us specifically, the vision has always been to build this global network of moving ready homes for 30-day plus. It came actually out of my own experience as a consultant, actually, was my first job, and I lived in 15 different cities. There was not enough furnished supply there. So, the vision was like how can you make it easier for people to move from one place to the next, finding a move-in ready home. So we started in the beginning because there was no furnished supply, we set that up with the Landers as I mentioned before, and then we’re thinking towards that the same direction, what else can we do? So, that was the first strategy.

The second strategy is the partner network I’ve mentioned before. So, getting everyone that has this beautifully designed 30-day plus homes in the same platform for people to find it easier. And then, we also have a third strategy we launched, which is what we call the on-demand. And then again, this is a situation where there are companies or individuals that want furnished rentals for monthly stays in areas where there are none, and then we do that on demand for their need. We set up apartments, let’s say for six months, for three months. We actually acquired a company called Travelers Haven, which has been working on this for the past 20 years, great company, been very successful, profitable, more than 100 million revenue. And with them, we can actually do that very effectively. So there’s a third strategy.

And the fourth strategy, which we’re very excited we launched recently is we’re now actually in 30 cities. We want to go to a hundred cities plus in the world and we partner what we call the strategic partnerships or franchising agreements with other real estate groups in other markets, entrepreneurs, where we want to bring blue ground to their markets. And how we do that? We bring the know-how, we bring the tech, and they give us the operation expertise and the local presence. But all of those strategies is four of them. The core, we have the partner network, the on demand, and also the franchising works towards the same direction, which is that global network. We stay true to that original vision and direction we have.

Kalyanaraman: And I know that that is an overarching idea and I want to know your thoughts on this Jason. So the competition is heating up. We just heard from Marriott that they’re going to enter the market. So, how can the first movers maintain that advantage or who wins rather?

Fudin: I mean, there’s a lot of homes in the world. Marriott might have a million and a half keys of hotels across the world, and I don’t know how many homes are there in the world, a billion homes, 2 billion homes. And so, we have a different view of how the world will evolve. So, we think that today where you see in cities high rise apartment buildings going up or hotels, if you build real estate you know that what you do is you figure out what the land is worth by how much money can I make on a hotel or apartment. And what we expect to have happen over time is the highest and best use to build is going to be blended apartment style hotels. And so, you’re not going to see conventional multifamily buildings go up or Marriott’s conventional products. So I think what you’re going to see is groups like Marriott, and Hilton, and IHG, and Hyatt, and everybody else is they’re publicly traded, the analysts are like, “What is your unit growth?”

And if their unit growth comes from development and then development evolves to a different product type, I think you’re seeing the very early sprouts of what’s about to be a major shift for them over the next eight to 15 years, which sounds like a long time, but it takes you two to three years to build a building and a year or two to entitle it. So, it’s not all that long. And in terms of first mover advantage, we expect to win. So we’re tech-enabled. We’re a younger company. Most of our leadership team, I mean there’s people from Marriott or otherwise, we came from large organizations, we’re spending our life’s work going to build a modern version of optimized hospitality and home. And they’re just people, and we’re just people, and we expect to beat them.

Kalyanaraman: I mean, I know you make it sound easy and I know there are a billion homes in the world. But obviously, I mean I’m sure you think about the risks of, or the rewards of being in one place versus the other. So, how does that thought process work?

Fudin: Yeah, so we’re like unit economic fundamentalists. I’m like a broken record, it’s about making money. So, we look at what the value we can create in the real estate is, we look at the value we can deliver to customers is, we look at the demand profiles across short stay term housing, long-term furnished housing. We also run unfurnished housing with hospitality services. So, we look across the whole spectrum, we see where there’s an opportunity and then we chase after it very intently. And that’s kind of the game. You create the product that’s needed in that space and you focus on where there’s the biggest upside today. I don’t know. So, that’s the business.

Patel: Well, true to what Jason’s saying too, mixed-use product isn’t new, right?

Fudin: Right. Right.

Patel: It’s been around. Most of the existing timeshare businesses were tied to a hotel brand for many, many decades before they spun off to be their own independent products. But that’s still value of a mixed use product. Getting the best out of the real estate that you have is the key for everyone that’s coming into this market.

Fudin: I think the really important point to make is real estate is very different than a marketplace. And so, there can only be one Google and then Bing and everyone else, and there can only be one Facebook and then until they buy other. But that’s not the case with real estate. A family can own a building on this corner in Manhattan and it’d be worth a ton of money and create value for that family for the next 100 years and never flag it, or Marriott and Hilton could flag that and do well on it. And so, real estate’s not a winner-take-all market, it is very local. And so, if you’re really good at that location or you’re really good in that market, you get to win in that market. So I think, it’s not a winner-take-all market. In fact, if you go to Europe, something like 80 percent of the hotels are independent. So, we’ve had this thing in America, bigger is better. The biggest is always going to win. But that’s not the reality of real estate.

Kalyanaraman: Yeah. And I think, I want to flag this audience question, which is relevant. What is your take? I don’t know whose take, but I guess anyone can take this question on two large brands entering the midscale relocation space. How do you compete and what are your advantages over branded distribution?

Chatzieleftheriou: Yeah. I can, just on the point of competition and market size, I think, so again, everyone has a bit of a different space. So, I’m going to say it again, just so we cannot confuse you, we’re monthly furnished rentals. So, if you look at the residential supply, right now, about 3 percent of the residential real estate supply is furnished. So, we think that will go up to 15 percent. And not just us, real estate companies-

Kalyanaraman: You mean that globally?

Chatzieleftheriou: Globally, globally.

Kalyanaraman: OK.

Chatzieleftheriou: So, it will be different from urban centers, suburbs, et cetera. But even the biggest real estate players that we work with, the rates of the world, they expect that to be much larger, so reach at 15 percent. And it’s a little bit of a chicken and egg problem because if you don’t have the supply then you cannot rent furnished. Let’s say you go out of college, you want to rent a furnished apartment because you want to be in New York City for maybe a year, six months. But there’s none, so you have to actually, you’re going to go buy your own furniture. So then, you move into a more of a, “I own my furniture, I move to the next. I didn’t want to own my furniture, but I have to because there’s no supply.”

So I think that we’ve seen the supply growing, and then from the 3 percent going to the 15 percent is an really significant growth is going to happen over the next few years.

In our case, about 50 percent of our revenue is really stays over six months or more, which is really, we’re not competing. We’re actually taking the unfurnished apartments and upgrading them. So, it’s just a different option and people opt for that option, it didn’t exist before. So, it’s not really about competition, it’s about in many cases just improving the products out there. And it’s better for the real estate players because they’re able to offer an upgraded product. Obviously, for the clients that are able… They can move in and out much faster. So yeah, it’s kind of an upgrading of the market as well. So that’s how we see the evolution going forward.

Fudin: I think everyone thinks the grass is greener on the other side. I think that’s what you’re saying. So the multifamily folks are like, “Ah, we want to be hospitality.” And now the hospitality folks, “We’d love to have pretty stable income streams.” And I just think that’s just kind of the cyclical nature of, obviously, extended state products have existed forever. All the new stuff is going to target the same traveling nurses, folks on construction jobs, all this stuff that’s always existed. These aren’t new jobs in the United States and it’s not new forms of cashflow.

So, I think, it’s just like, what’s the flavor of the week? Everyone seems to always run in a pack. I think that the pack today decides, “Hey, it’s kind of a lot of work to have these highly staffed hotels that are high touch people are expensive, inflation has made people more expensive. The cost of people is probably, and other expenses probably outpace (revenue per available room) growth. And so it seems kind of nice to be able to go run stuff that kind of just pays for itself. But I think it’s just the flavor of the week. I mean Marriott has what, 33 brands? And they’re in every space.

Kalyanaraman: And I think this is to your point earlier that we were discussing backstage, which is nobody’s contrarian. Everybody is trying to follow the trend. Yeah.

Fudin: I mean, everyone’s contrarian in their own mind, but we’re all doing the exact same thing.

Kalyanaraman: OK.

Fudin: Yeah, there’s money to be made there. There’s money to be made in extended stay-type product. What’s really funny is in the cities you’re seeing people look at converting hotels to apartments, and then in the exurbs and tertiary markets you’re looking at the other way around, because in hospitality there’s a lot of opportunity, and then it’ll flip again, and then it’ll flip again. To me, I think actually the biggest thing that we don’t talk about here or haven’t talked about here is work, it’s overlooked. When you’re not… So, weirdly, the multifamily folks, they don’t even know that there’s a thing called (New York University), the hotel folks, they don’t even know what (National Multifamily Housing Council) is, which is the biggest conference of the year. The office folks, they’re kind of screwed right now and they don’t know about any of the other stuff.

And so no one really follows what’s going on. But it turns out as people, we spend our life moving through all these spaces, and I think what you’re going to see, which is the biggest in all of this, is the way that that work changes. So if you think about it, where you work, how much you get paid for work, and how you get to work and forms all of this, and no one ever talks about it. So, I think, what you’re going to see happen is the extended stay mid-product in these markets. If that’s where the jobs are, then it’s going to do really well. If all the 20-year olds move to Mexico City because they have remote jobs, that’s going to have some serious pressure on some of the multifamily stuff. But it would probably help the hotels because they got to come back for their trainings. So where people work is probably one of the biggest factors in all of this. And we’re all kind of heads down in our own space.

Kalyanaraman: And I think that is pretty interesting when it comes to Travel + Leisure, because when you think what you associate with that is vacation. So how is that blended travel working out logistically at Traveling + Leisure?

Patel: I think it’s unique. So pre-Covid, we would be a purely leisure product. And I think, Covid taught us that you didn’t just have to vacation when you wanted to vacation, you could vacation all the times, and work could come with you, and your family could come with you. And our product became a little bit more attractive in that space because you get the benefits of being at a resort with the great pools and all these other things. But you also get the benefit of having a home away from home, a full house. And we’re in communities and markets that people are working in. And so, the idea of being able to take your stay from four days to seven days by adding on a couple of days for your family, it’s what happened across the entire platform that people wanted to mix work and play a little bit more.

Kalyanaraman: And so far we’ve talked mostly about supply and product. I want to kind of bring some attention to the consumer. The consumer is changing blended travel, it’s a leisure traveler, and all that. But ideally, when you visualize, who do you want to pursue more or who do you want, they pursue you more, how does that work? Who’s that ideal audience in your head and what is the cost of acquiring that customer?

Chatzieleftheriou: Yeah, so I can go. For us, the fundamental guest is we have two segments, the businesses and the individuals. So, the businesses is, they’re looking for quality, they’re looking have specific specs when they work with a company like Blueground or others. So there, it’s really … we have an approach of directly selling to them and servicing them, so they have different needs. For example, we work with Google, Apple directly. They have a different type of requirements than what an individual or someone that’s kind of working remotely. So, there it’s a whole different system because you have to have staff teams, you have to be able to have service them 24/7. So it’s a lot of things that you have to do there. So that’s definitely a big segment for us (that) we’ll continue to pursue.

On the individual side, I would say currently we have people that are relocating, moving into a new city. I have people working remotely. Well, actually, that grew five times post-pandemic, from five to 25 percent of our clients, and they have different needs. They ask for more office space in the unit. So, these things are changing. For us, let’s say, the holy grail if you want, is getting more people to live at Blueground. So, having people that-

Kalyanaraman: So, you want to be the landlord?

Chatzieleftheriou: Again, not the landlord exactly. Because we see it as upgrading from unfurnished to furnished, right?

Kalyanaraman: Right, right, right.

Chatzieleftheriou: It happens that I’ve been doing this for many years as well for the past six years. So, again, moving from one place to another and the way, for example, I think that’s very beneficial for people that are not just staying put in one place for the year. It’s actually adds flexibility, but also it can be economical. So for example, I live in New York City, in two weeks I’m going to go to Greece, I’m going to stay there for a month and a half. I’m going to give my apartment back because I’m a Blueground paying customer, I’m not going to be paying for that duration. I’m going to be over there. So, at that point I don’t have to pay both for the rent that I have in New York, but also pay for another apartment over there. So it’s actually, I see. So I save money, but I’m also more flexible.

Kalyanaraman: So you’re swapping within the Blueground network?

Chatzieleftheriou: We’re swapping… Yeah, exactly. But if you had a normal rental apartment, then you have to pay your apartment where you’re staying in New York City and you have to pay an apartment in Athens where I’m going for a month and a half. So, that is kind of, for us, you said, what are the clients we’re going after, so that is one of the segments that we see growing and we think there will be more people between the ages between 25, 35 that they’re able to have that lifestyle, whether it’s moving to another location, whether it’s visiting parents for a month. And that’s kind of something that we’re really pursuing and we think it’s going to grow in the future.

Kalyanaraman: So, what is the cost of acquiring that ideal customer?

Chatzieleftheriou: What is the cost? So, it actually happens naturally because some of our guests that love the product are actually developing into that customer. We have a product that we’re going to launch very soon actually, we go live at Blueground, where basically, we give better rates and give the option for people to give that gap and have that gap to return these units back. So that cost is probably like a thousand dollars if all the gaps that we give, but we think the lifetime value of the client will actually surpass the cost that we, so that’s kind of an area that we’re really focusing on.

Fudin: So we have four customers. I’ll start on the unfurnished end. So we have unfurnished folks, 12 month leases with hospitality services. Those are renters by choice. And so we can compete against regular apartments. But if you live in one of our buildings, you can opt into linen service, cleaning service, someone will wash your dog, whatever.

And so for a lot of folks that are busy with their life, they get to have a more productive life because they’re not having to go do all of those mundane administrative things. Then you move into the furnished, we have our call it three to 12-month stay, much like Alex, that is a turnkey home. Oftentimes, someone’s business is paying for that and we’re competing against other turnkey homes. And that’s pretty straightforward. One of the biggest differentiators is we have a 24/7 on site staff. And so when you live there, it’s convenient to have hospitality infrastructure while living there.

Kalyanaraman: Right.

Fudin: Next up is interim housing so I think reload business doctors on residency, that whole space, that’s the worst serve set of customers today because it’s kind of shitty to live in an extended stay hotel for six weeks. But it is way too short to go rent an apartment. So in that group we compete against vacation rental product, some corporate housing, but the same thing, you have a 24/7 onsite staff. It just makes the experience better when things don’t go as planned. And then lastly is transient. And we go head-to-head with the hotels and vacation rentals. And I think in that space, the way you win is you make it a better experience.

In our case, there’s two big levers for better experience. One is the physical space. You have three times the space. You have a kitchen, you have a washer dryer. If you go for a run, you don’t just hang your nasty clothes in your hotel for the next day, wash them, or you can have leftover food. It’s more of a lifestyle thing. And then the second is to do it in a tech enabled way. Something like 80 percent of our arrivals are contact lists. Obviously, the large hotels are trying to get to that, but we’re new. So we can do that out of the gate. All communications happen via text, email, phone calls through a single (customer relationship management). But we have the onsite folks for the edge cases.

And so, I can’t even imagine today having to call a cab company and then wait 45 minutes to 60 minutes depending on when the person showed up to maybe get ahold of me. That’s how old school hotel feels when you show up and you wait in line to go check in, or something doesn’t go your way and you have to call someone even though you would clearly be able to text if that was a thing. And so, we think that between the better space and the better customer experience, that’s where we differentiate. Our net promoter score is about the same as Ritz-Carlton with a third of the staff. So that tells you that there’s a set of customers that really value that kind of high-tech experience.

Kalyanaraman: Right. Heena, yeah.

Patel: Yeah, our philosophy is that we pull the world on vacation and the customer dictates how we put the product in front of them. So customers who are transient and are just looking for that extended stays exposure, they’re going to get the product that they want. And customers that are looking for a long-term relationship with us, they’re going to get the product that they want. And we’re going to look at customers individually based on their personal needs and whether it’s, we talk about millennials, and we talk about Gen Zs, and we talk about families, but the uniqueness of all of our products in this room is that we appeal to each one of those customer types and you go to where they’re at.

And so acquisition is, yes, it’s digital. But yes, it’s also my mom has owned a timeshare for 20-plus years and I love going and staying at that same location. I want that feel with my family. So I think it’s a little bit unique in our space and that customer acquisition becomes about personalization and we’ll pay what we need to make sure that the right customers get paired with the right product.

Kalyanaraman: Awesome. Well thank you so much. This was a fascinating conversation, and thank you. That’s all we have time for.

Chatzieleftheriou: Nice. Thank you.