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Deidre Woollard: Hello. I'm Deidre Woollard, an editor at Millionacres. Thank you so much for tuning into the Millionacres Podcast. Today I'm here with Jim Netska, he's the Director of Sales at PointCentral which is a wholly-owned subsidiary of Alarm.com. He's in charge of leading the short-term rental markets. He's the sales leader with a law and background of working with companies like Verizon, Cablevision, was recently VP of Sales at Charter Communications. Welcome, Jim.
Jim Netska: Thank you, Deidre. Appreciate it. I'm glad to be here. Thanks very much.
Deidre Woollard: Well let's start talk about short-term rentals because I feel like there are more and more popular, certainly had downturn during COVID but short-term rental market is bigger than ever. What is your companies seeing in terms of adoption?
Jim Netska: Well, that's very true. For years, we've known that Smarthome technology in short-term rentals was needed. Over the last two years or so, we see the short-term rental market really exploding. These property managers have been super busy. Of course, once COVID hit, everybody wanted to get out of the city, get out of their small apartment and work remotely so that really, really exploded. Property managers were looking for ways to serve these customers with less labor and that's still the case today as we know because of what's going on in trying to get staffing, etc. Really, we're looking for a contactless way to engage with their guests so our business has exploded as well. It's been great for the STR industry and it's been great for us in the Smarthome business as well.
Deidre Woollard: Contactless is something we've heard a lot about. What exactly does PointCentral do?
Jim Netska: What do we do? Points Central, you mentioned, we're a subsidiary of Alarm.com. Alarm.com is the trading on the Nasdaq where a $4.5 billion company, the world's largest smart home software and hardware company. We're a subsidiary that services only the property management industry, whether it'd be the short-term industry, the MDU industry, the long-term RPM industry. We serve all of those. I run the short-term rental vertical, if you will. What we do is we provide an enterprise Smarthome solution to property managers that manage anywhere from 25 homes to 80,000 homes. We have customers in the small end and the large end and our solution provides the property manager with operational efficiency that enables them to do a lot more and handle and service a lot more units than they would if they didn't use Smarthome. Our product protects the assets in that home, including the HVAC system, and also improves the guest experience which is very important to property managers. There was recently a study done by Phocuswright that looked at US travelers, people who travel and who considered a short-term rental but didn't, and shows a hotel instead. A very high percentage, I believe it was 27 percent of those surveyed. The one of the reasons they chose the hotel was they liked the hotel like amenities and safety and security was very important to them. Those two things alone is something that companies hire us to implement our Smarthome devices which helps solve those problems, gives them those amenities, provides safety and security when people rent, show up at the home and they have a secure lock and they're not wondering how many keys are floating around and who's been in this house or unit prior to them and gives them a feeling of safety and security. At a high level, that's what PointCentral does.
Deidre Woollard: Interesting that you mentioned that safety and security factor because I think that is something that certainly in the beginning days of short-term rentals with Airbnb, there was a concern about that. Do you feel like that's something that's gone away a little bit partly because of the technology aspect?
Jim Netska: I think there's still a little bit of that out there with the public. But I know that the property management companies that we deal with are very concerned about that. They're starting to take it very seriously. Obviously, there's still property managers out there that are still using keys and they're very aware of our solution and why a lot of property managers are using our solution and they get it. It's a matter of funding it, getting their owners to pay for the hardware, etc. But clearly, safety and security is a big issue and property managers are aware that they are competing against the hotel industry and the hotel industry mix. Prospective guests feel secure and the industry now is focusing on that to make sure that we provide guests with that same level of safety. Recently, the industry is really looking also to get rid of any negative publicity. I recall, I think it may have been a year ago there was a famous actress out in California who stayed at a single-family home with their family, a short-term rental and there was a CO_2 carbon monoxide issue in the home. There were six of them in the home and everybody passed out from it. One of them woke up and realized what was going on and saved everyone else. But I think that's an example of news reports that the industry hates and they're very focused now on doing everything that they can to make sure that that type of publicity does not occur. They are definitely focused on safety and security more than ever.
Deidre Woollard: That makes a lot of sense. You've said enterprise is PointCentral. It's just for enterprise, not for individual operators?
Jim Netska: That's correct. In other words, our software solution is really an enterprise-level solution. This is not the products that you can purchase at Home Depot, this isn't a residential doorbell that you have to download an app for. Of course, we have an app but you can look at our software from anywhere in the world. But it's a software that's built for an enterprise-level solution. Property managers can slice and dice their portfolio by neighborhood, by street, by resort type. However, they want to slice and dice it, they can do that using our software and see whether the property is vacant, whether the property is occupied, what state is it in, they'll know when a guest left, they'll get notification when a guest left the property. The cleaning crew can be automatically notified to immediately go in and have their own door code, to go in and do the cleaning to get it ready for the next guest. Once they are done, the property manager can be notified that that process is complete. If they do an inspection, the inspector can go and they'll know that the inspection was complete. They can make additional revenue by doing early check-in if in fact that property is ready earlier than they thought, they can sell early check-in. It really gives the property manager complete visibility into what's going on at that property. Yes, enterprise-level, not the stuff you buy at Home Depot, definitely not.
Deidre Woollard: You mentioned keyless entry and you said some property managers still use keys. What I've seen in the industry is a lot of people using both. I was recently touring a new building and they were using a software solution for keyless entry. But they also had keys, traditional physical keys installed. Are you thinking that people use that as a backup plan? Are there some downsides to using keyless entry?
Jim Netska: Well, yes and no. Let me answer that this way. We've heard stories about property managers and keyless entry. The story where the family arrives at the unit at two o'clock in the morning and they go to the door code and their door code doesn't work and the families sleeping in the car, they can't reach their property manager or stories about 15 percent of the time, the codes aren't getting to the locks or the property manager having to validate that the door codes are working prior to guests showing up. Those types of things are really the horror stories but I believe that if the property manager chooses, does their due diligence, and chooses a reliable solution, that is got the proper software or not bad software. They chose the right partner, the right technology. They really don't have to worry about those issues any longer, the technology has come a long way. Those problems are few and far between if in fact they chose the right partner with the right software and the right hardware.
Deidre Woollard: That make sense. Another thing I'm covering is the idea of, we had these two buckets, short-term rental, long-term rental. People I'm talking to lately is talking about the flexible renting. Is that something that you're seeing that some of your operators are engaged in maybe, one month or longer or something like that, middle of the road?
Jim Netska: Yes, absolutely true. Ever again, since COVID hit, these short-term property managers have even to this day still. I just was that a large trade show a week or two ago and there were 1700 property managers there. They all were talking about how busy they are, they have very high occupancy rates. They have not seen a low even with seasonality, they have not seen that low. I think everybody attribute that to a lot of different things. But again, one of them is COVID and the ability for people to want to get out of their apartments, get out of the cities, and spend more time with their loved ones in a place that makes them feel more at home that has a kitchen and amenities that they can use. Clearly, we're hearing a lot of that from property managers. Sometimes the property managers have been so busy, they want our solution but they've got to find time and the resources to get it installed, et cetera, in light of the fact that they're so busy with guests today.
Deidre Woollard: You were in a room with 1700 property managers, that fascinates me. What did you learn from that? Any new trends that are happening?
Jim Netska: Yeah, that was a three-day event. There was lots of learnings, lots of classes, presentations made, I learned a lot. I think my takeaway from that event was the industry is maturing. They are getting smarter, they are organizing to deal with the legislatures around the country and how they deal and make laws that deal with the short-term rental industry. I learned that they're all very busy, they are all struggling to get staffing. They're having a problem staffing and recruiting and hiring labor, which I think the whole country is experiencing. They're looking to automate because they're busy, because they're struggling to get staff, and of course that makes me very happy. I think off the top of my head those were a couple of key learnings that I took away from that event, yes.
Deidre Woollard: Yeah, definitely. I think everyone is really busy and labor shortage for hearing that all across the country too. Another thing I'm hearing because people are staying in places longer, everybody is asking about the Wi-Fi. Wi-Fi and connectivity are like the things that people asked for in a rental and short-term rental or long-term rental now, probably more than anything. Does that impact your business in any way?
Jim Netska: It does, and I'm smiling because you did your homework, Deidre. Absolutely, that is a very important to guests renting these properties. A lot of the listing services now give the property manager the ability to talk about the speed that the unit has as far as Wi-Fi goes and so on. That is absolutely very very important to guests that are renting. Of course, people want to bring their Netflix account, they want to bring their TV accounts when they're there. Again, Wi-Fi really important to them. The way it affects my business is it really doesn't, and the reason is, a lot of smart home companies use Wi-Fi to control those devices. That goes back to the question you asked earlier about, is there problems with keyless entry and does it work? We use a 100 percent cellular solution, we do not use Wi-Fi because of the inherent problems with Wi-Fi with 15 percent of the time. If you have a couple of 100 units, you could have Wi-Fi down, it requires the property manager to go out and reset things, et cetera. We use a cellular hub. The cellular hub uses less bandwidth than sending a text message, we give the property manager the ability to use to ride either the AT&T or Verizon wireless network. It is very rare whether we're in a city, whether we're in the mountains of Tennessee, the panhandle of Florida, we rarely ever have a problem with connectivity. If the cellular network goes down its self-healing it fixes itself pretty quickly. Cellular is what we use and anybody who's looking to do this, I will personally highly recommend you choose a company that uses cellular, not Bluetooth technology, not Wi-Fi. Really, that's how it affects point central which it really why we don't use Wi-Fi.
Deidre Woollard: Well, that's an important distinction because I think that is one of the concerns that people have about technology like this is like, "Oh, if the Wi-Fi goes down, everything is broken." What you're saying is, in order for it not to work, you'd have to have the cellular networks go down which really does not happen, and those networks are very very reliable. It sounds like that way you have very few outages, is that right?
Jim Netska: That is true, very true, very rare that we have an outage. You also have to remember that we integrate with the property managers property management software. When you're a guest, your reservation is due to start Sunday at 11:00 AM, right before your reservation is when we send the code to that particular door lock. That code isn't there until your reservation is ready to begin, and that code expires when your reservation ends. There's your safety and security feature. Once the code hits the lock, if into the third day of your vacation, there's some cellular network problem. You can still gain access to that door lock because that codes in there for the duration of your vacation anyway. It's very rare that property managers have issues getting guests in and out of those smart locks, very rare.
Deidre Woollard: Much better than those hotel keys which always seem to have problems.
Jim Netska: That's for sure.
Deidre Woollard: Let's take a quick break here.
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Deidre Woollard: Back with Jim Netska. We're talking about short-term rentals and short-term rental technology. One of the things I'm fascinated about right now is, sensors and larger buildings for things like air quality. Certainly, I learned more about HVAC during the pandemic then, and I think we all did. Is that something that matters in short-term rentals too where you are looking at different sensors for things like water leaks, air-quality, that thing?
Jim Netska: Yes, we sell a lot of sensors to property managers. We don't have an air quality sensors that's more on the HVAC side of things, but we do sell a lot of sensors, like you mentioned, water sensors. That's an inexpensive device that a lot of property managers use. They put this device behind the washing machine, in the pan of the hot water heater for an example. It detects any level of moisture, sends an alert to the property manager, and if the property manager wanted to, they could even buy a device that would then automatically shut off. It connects to the water main to the home and could shut off the water to the entire house. You would imagine if a washing machine hose blue and ran for a few hours, the extensive damage that could cause and the people are on vacation, that's obviously a big problem. The water sensors work really well, and property managers love getting those alerts and so on. We also have sensors built into our smart thermostat, and that smart thermostat can detect mold and avoid expensive mold remediation project if the home is in a warm climate so that really works well. That thermostat, by the way, property managers use to set high and low temperature limits so that guests can come into the unit, abuse the system, if you will. We also have door and window sensors that link to that thermostat. You can imagine they walk into the home and what's the first thing families do? They walk in and they are on the beach and they crank the air conditioner down to 60 and they open that beautiful sliding glass door and the oceans right there and the AC unit is running all day long and potentially freezing up. Those sensors also worked that way where the property manager can program the sensors so that after 15, 20 minutes, whatever they decide, if that's sliding glass door is left open, it shuts down the AC unit and we have little stickers that go on the door window to let the guests know that that will occur. There's sensors that work that way. Then also the other sensor we're working on deploying now is a noise sensor which also is very important as you would imagine. You've seen articles about local communities not happy with a short-term rental in the neighborhood because of parties and noise and so on. Again, that's a concern of property managers today and they want devices and tools that enable them to be able to control that so it doesn't cost them fines, etc, at disturbing the peace in the neighborhood and things like that. Those are some of the sensors that property managers are buying from us today that they love.
Deidre Woollard: Yeah, it definitely makes sense. It brings up the point of the way that sometimes people treat short-term rentals. In the beginning, I think that the short-term rentals, people tend to treat them like houses but now that the line between the hotels and short-term rentals is blurred, you get more people treating short-term rentals like a hotel room and maybe not as respectfully as they showed. I had a question about the noise sensors because that's a huge issue. Like you said, the party houses and things like that. Does that work within multifamily short-term rentals where you could have individual noise sensors for each unit?
Jim Netska: Correct, that's exactly how it would work. Yes.
Deidre Woollard: Then you could see perhaps if one unit was maybe being too loud and perhaps disturbing the peace of other guests and cut that off before it becomes an issue?
Jim Netska: Exactly. There would be a unit putting each unit in an MDU environment and it detects noise decibel. If the noise decibel is too loud, the property manager will be notified and then your property manager would make a phone call to that guest and talk about what's going on and in the agreement you weren't allowed to have X number of people, that type of thing, explain the local ordinances in town and work to shut that down or charge the person money if they refuse to do so. There's a lot of different ways that property managers handle that. But it absolutely is something that they are very concerned about and want to take action on.
Deidre Woollard: This is fascinating to me because it does dovetail into privacy concerns that there has been a lot of talk lately about cameras in short-term rentals to make sure that everything is safe but then the people are worried about privacy. It's this really tough thing to balance. I feel like sensors maybe are in a different area because they're not necessarily monitoring the people, they're more monitoring the behavior. How is your company thinking about that issue right now?
Deidre Woollard: I think the other thing about the cameras too is someone always has to be monitoring them. That isn't necessarily the best solution, whereas sensors will tell you when something's wrong whereas cameras, you have to sit in front of them. Is there any machine learning, artificial intelligence that could be connected to that? Is that a direction that things could go?
Jim Netska: I haven't heard any discussion about that. Although we do use machine learning, artificial intelligence. We have through Alarm.com, we have seven million thermostats around the world. Through machine learning, we're able to tell that thermostat is able to very accurately tell a property manager whether the HVAC system needs maintenance or servicing before it breaks down and causes a bad review and guest aggravation. Because of all these data points, we know the temperature outside, we know the temperature inside, we know what the setpoint was, we know how long it takes to get to the setpoint, and based on a lot of other factors which I can't talk about, we're pretty accurately able to tell the property manager that unit needs service. Maybe the AC filter hasn't been changed in a year or two or other issues that they really do like which allows them to get an HB person out there during the next guest turn to take a look at it before things break down, before it costs the owner thousands of dollars for a new system. Just another piece of technology that the property managers love, that helps the industry to continue to move forward without problems.
Deidre Woollard: Excellent. I think one of the things too is a seasonality. One of the things I've been seeing lately is people are staying at properties more year-round than it used to be certain properties. You get your ski houses in the winter and your beach houses in the summer. Now, from what I'm hearing from some property managers is that that has been shifting. Is that something that your property managers are also noticing?
Jim Netska: Yes. I hear that all the time as well. It depends on the market, but in many places, the property managers are saying exactly the same thing. There is no seasonality anymore. Their occupancy rates have been high all year long. Again, I just heard it two weeks ago, I was at the VRMA International event, that's the name of the event I was at. The Vacation Rental Managers Association International event that was in San Antonio two weeks ago, and I heard that very thing a lot, that they are very busy, there's no seasonality and they are loving it. Then why is that? I would be speculating. I have my opinion. I hear what the property managers are saying and it's a combination of the industry. People are more familiar with the industry and short-term rentals. As time goes on, it's continuing to grow. Of course, the COVID effect. The more people stay in short-term rentals, the more they want to go back to them. I just think it's really taking off, and we're seeing less and less of a seasonal change, absolutely.
Deidre Woollard: Which of course then leads to more of that need for labor in certain markets. Are there any parts of short-term rentals that haven't been automated that connect to labor that maybe could be automated?
Jim Netska: There's a lot of vendors that are doing a lot of different things today, new vendors that are getting into the industry in order to help property managers to automate things. There's a company now that's doing a good job with guest communication and all automated so that the property managers assistant doesn't have to answer the same five questions that they get from every guest, every time a new guest enters the property, those type of things. There's a lot of technologies out there. My view is I think that there's a need for a more sophisticated CRM tool that will automate the customer touchpoints as the customer goes through their lifecycle. I think that's an opportunity today that would really help property managers. Two examples are the ability for property managers to capture all the email addresses from the guests of the guests that rented the unit. The fact that all those people loved the unit and the property managers want to market to them and we got to find easier ways to make that happen. Or gap day notification is another example, where the software knows that there's nobody renting this unit for the next five days, property manager might want to tell the existing guests, "Hey, there's nobody in this unit for the next four days, we'll give you a discount if you want to stay longer," those types of things. I think there's an opportunity there and I'm sure we'll see that sophistication grow as time goes on. It's grown definitely over the last year and a half or two, that's for sure.
Deidre Woollard: Yeah. I think you brought up a good point there, which is one of the things that's interesting. I know you and your company connect to a lot of the different property management software. But sometimes, there seems to be that's an issue for different types of software. You mentioned CRMs to connect with other scheduling software so that you know who stayed where and how you can do follow up because I think that's a part of the short-term rental industry that's lacking, is there's a lot of marketing on the front end, but then there's not a lot of follow-up to try to get repeat business, which is interesting because that's something the hotel industry does really well, but maybe not something that the short-term rental industry does really well quite yet.
Jim Netska: Agreed.
Deidre Woollard: Well, last question for you, how do you think the short-term rental market will change over the next decade?
Jim Netska: Tough question. In the next 10 years, how do I think it'll change? I think two ways. My guess, based on what I'm seeing today, I think there's going to be continued consolidation by large companies that have a lot of venture capital money behind them and are buying up lots of these smaller property management company. These property managers out there today that are managing 200, 300, 500 doors, it seems like they're being bought by these large companies. These large companies, they have their way of running their business and they bring these additional units in and bring them into the fold. It's growing very fast today. I think in 10 years they'll be a handful of very large players in the vacation industry. Then number two, I think in 10 years, I think that we'll see more state and local government regulation on the industry, especially as it grows in the hotel industry. Lobbies for their benefit versus the short-term vacation industries benefit. I think we'll see more of that legislation. I clearly see the short-term industry now organizing to lobby these government officials on the benefits of short-term rental. As we move forward, I think the property managers will do more to ensure that their vacation rentals adhere to state and local government guidelines and they run the business in a way that people are safe and secure and they're not annoying the neighbors and they follow rules and police the industry themselves before government has to step in and do that for them. That's my view on how I think things will change over the next 10 years. I also think it's going to continue to grow. I'll end with what I think is a little crazy story. I have four children and they are 20-30 years old today. My older children used to go away with their friends and so on, and they would go to a hotel. As my younger children started to do that, college years and further, they chose a short-term rental and not a hotel. I see my son, he's a student at Florida State today, and him and his friends always travel and they're always staying in a short-term rental. His name is James, I said, "Why is that? Why do you choose the short-term rental?" He said, "That's easy, dad, because we want to go away and when we get there, there's a nice kitchen and we can have breakfast, lunch, and dinner and enjoy the resort and the community we are in without having the money to spend at restaurants on breakfast, lunch, and dinner." I think that by him experiencing short-term rentals, some of them very nice and really enjoying them, as he continues to get older and his career takes off, he will continue to choose a short-term rental before he thinks about a hotel. Just my thoughts based on my four kids today.
Deidre Woollard: That is a really interesting point and I think you're absolutely right. That's a great example of why this industry is just going to continue to grow because you're absolutely right, what you grow up with and what feels normal for you determines your behavior going forward. Well, thank you so much for your time today, Jim. Minded listeners, you can learn more at pointcentral.com. Stay well and stay invested.
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