In The Big Chair - T.J. Clark of TurnKey Vacation Rentals

T.J. Clark, CEO

T.J. Clark co-founded the company in 2013 to provide vacation rental homeowners and guests a consistent, high-end experience similar to a fine hotel. It now has 400 employees and more than 3,500 properties under management.

In March, TurnKey Vacation Rentals secured $31 million, bringing its total funding to date to $72 million.

Prior to co-founding TurnKey Vacation Rentals in 2013, you had been CEO of Limos.com. What led you to turn your attention from car services to the vacation rental industry?

With my background in e-commerce, I felt like the vacation rentals sector was one of the last, great frontiers to join the mainstream of e-commerce travel. But I also believe in vacation rentals. They have been around for over a hundred years, helped towns and cities grow when traditional accommodations were insufficient, helped people fund their retirement and helped families and groups create one-of-a-kind vacation memories.

We’ve built TurnKey into a company focused on enhancing the lives of vacation rental homeowners and travelers by providing greater service and value, and the peace of mind that comes with a consistent, reliable experience.

The vacation rental industry is an enormous market with a pronounced trend in US traveler preference. As you’ve reported, nearly one in three US travelers used private accommodations in 2015, up from just one in 10 a few years prior. The big guest sites did a great job innovating the search and book functions of the customer journey, but what happened after taking the reservation was like the Wild West, totally inconsistent.

My co-founder, John Banczak, and I felt like there was a tremendous opportunity to develop a supplier brand in the vacation rental space that addressed this need for consistency, reliability and quality, just like we’ve seen in the hotel space. This is what we’ve created with TurnKey.

How is TurnKey different than other property management companies?

What differentiates TurnKey is our belief that owners and guests deserve a better, more convenient service at a lower cost. We also believe that vacation rental management should be done responsibly, with the best interests of travelers, homeowners and neighbors in mind.

We achieve this is by developing smart technologies that integrate with local, personal service and effectively scale our high-quality hospitality experience. We call this approach the smarter way to vacation rental.

This has led us to develop our own proprietary, smart technologies to integrate the different stages of the vacation rental experience, for both guests and homeowners. For guests, our digital locks provide easy, secure access, while our comprehensive housekeeping system has resulted in more than 90% guest satisfaction of the home’s cleanliness upon check-in. Booking with TurnKey becomes a smarter choice, because they know they’ll have a reliable, fine hotel-like experience across every home, every stay, every time.

Developing our smart vacation rental technology has led to massive efficiencies across every step of vacation rental property management and guest service.

T.J. Clark - TurnKey Vacation Rentals

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For homeowners, we market their property across more than 50 listing sites and integrate their booking calendar with automated digital-lock code generation and housekeeping scheduling to provide a seamless property management experience. While providing peace of mind that their home is taken care of, this process also drives more bookings and revenue for our homeowners.

And then how does the use of this smart technology impact the commissions you charge?

Developing our smart vacation rental technology has led to massive efficiencies across every step of vacation rental property management and guest service. Operating at scale across 55 markets - and growing - our technology speeds up communications between our local teams and guests and homeowners and facilitates cost-effective interactions with our vendors and guests. Our technology-enabled guest screening and identification processes also limit our exposure to fraudulent bookings. 

When it comes to servicing homes, our technology allows us to automatically schedule and validate housekeeping jobs - through photo verification - and then improve our vendor pool through guest reviews. This increases brand loyalty, generates better property reviews and decreases costs for re-cleaning homes.

Through efficiencies like these, we’re able to offer a higher-quality guest experience and greater transparency and control for homeowners, all while charging an industry-low commission rate, typically half the industry averages ranging from 35 to 50%.

You now manage more than 3,500 vacation homes in 55 markets. Tell us about your growth strategy.

From day one, our growth strategy has always centered around organic growth, where homeowners work with us and refer us to their friends because they like our service.

We are not focused on large acquisitions, or even numerous smaller acquisitions. We’ve seen acquisition models like ResortQuest fail to produce sustainable, growing businesses without continued, expensive acquisitions. That’s why we’ve focused on in-market strategies to spread word of mouth about our smarter vacation rental management solution.

The goal of our growth strategy is to become the largest vacation rental property manager in the US, while emerging as the vacation rental hospitality brand of choice for travelers. So while we are certainly focused on scaling to new markets and more homeowners, we continue to emphasize the technology and service standards that differentiates our brand, and which will help us achieve the sustained growth that our industry hasn’t seen before.

TurnKey had a substantial Series D funding round in March - $31 million. What will you be using that capital for?

We secured this latest funding round with an aim to expand into new markets, develop new vacation rental technologies and enhance our services and positioning as a leading vacation rental hospitality brand in the US.

What was truly special about this funding round is that we’re seeing the continued support of our existing investors. Among our investment partners, there’s a true commitment to our model, and their belief in our mission to create a smarter way to vacation rental.

To be honest, we could have raised more during this round, but we have a very capital-efficient business model. We’ve doubled our revenue growth each of the past five years, and our technology is reaching and attracting new markets of vacation rental owners each year. We’re creating a company that’s built to last and structured to perform at the highest levels, year after year.

In April, you acquired a small management company in the Coachella Valley - Gilbert Avriette Vacation Rentals. What do you look for in potential acquisitions, and will there be more in the coming year?

As I mentioned earlier, our growth model is organic. We focus on first establishing our local team, and then signing up homeowners. When we deliver on our industry-leading service, while charging a fair price, our in-market growth takes off and our existing homeowner clients become strong ambassadors for our brand. That being said, we will do small acquisitions where it makes sense, and often where we are being pursued.

We’re a great fit for property managers interested in joining a winning team. Property managers looking to exit the business, but who want their owners to have the best management going forward at a reasonable cost, also do well with TurnKey.

But what makes TurnKey different in acquisitions is that it’s not simply a transaction for us. These involve people’s homes, families and financial futures. No matter the size of the acquisition, we never overlook the interests of the homeowner. We focus on high-touch communications throughout the process, ensuring a smooth and positive transition, and focused on establishing long-term relationships.

There’s been a lot of activity in the vacation rental space lately, with Airbnb expanding its offerings and companies such as Booking.com growing this segment of its business. What are your predictions for the future for this sector of accommodations?

We’re seeing a consolidation within the distribution side of the industry. Three key players have now emerged in the US with HomeAway/Expedia, Airbnb and Booking.com. Despite this consolidation, the supplier side of the vacation rental industry remains hyper-fragmented. There are tens of thousands of FRBO (For Rent By Owner) properties and thousands of small property managers without a strong brand to differentiate them.

Private accommodations are becoming more mainstream in e-commerce travel - and will continue to do so - and we’re going to see top brands emerge on the supplier side. We believe we’re well on our way to doing this as a hospitality brand.

From booking through checkout, consumers now expect their vacation rental experiences to have the consistency and reliability of staying at a fine hotel. This is where TurnKey has positioned itself to grow with market demand and customer preferences.

Is there a sense that eventually the large intermediaries - HomeAway, Airbnb, et al. - will either develop their own services similar to yours, or snap up the existing providers in the market?

Well, there’s already evidence of verticalization underway in this market. Airbnb acquired Luxury Retreats, Accor acquired OneFineStay, and Marriott is now partnering with Hostmaker to test offering homes in London. Airbnb is even due to offer rental apartments under its brand. So I expect this kind of verticalization to continue, but I also expect private home offerings will become more professionalized.

Some industry insiders - who I agree with - say we’re entering a new phase of the vacation rental industry, where larger, established industry players are finally jumping into the space, validating the promise we always knew was there. It’s kind of like, if you can’t beat them … join them.

Say you're a property owner in the rental sector - how should you weigh up the challenges and opportunities of working with multiple distribution channels?

The opportunity of leveraging multiple distribution channels is massive. It’s something we’ve believed in from the very beginning and is a hallmark of what we do for our homeowners. We currently manage all aspects of our homeowners’ properties across more than 50 channels each.

If you’re serious about renting out your property, you’ll want to be on multiple channels to maximize demand and close more bookings. But as you mention, there can be significant challenges to doing this. From writing different listings to appeal to platform-specific audiences, to managing your reviews on each site, to syncing your booking calendar to ensure double bookings don’t occur, managing your presence on multiple listing sites can take a lot of time and energy.

Some industry insiders say we’re entering a new phase of the vacation rental industry, where larger, established industry players are finally jumping into the space, validating the promise we always knew was there.

T.J. Clark -TurnKey Vacation Rentals

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The good news for homeowners who want to manage this themselves is that options for going multichannel are getting better, and technologies are emerging to make this easier.

If connectivity, channel and guest management is the current strategic goal for the sector as a whole, what will be the major discussion points in, say, two years down the road?

These are definitely big goals for the sector, but I think hospitality is missing from that list. And that in itself is telling about our industry. As a property manager, if you’re not talking about hospitality now, then you’re already missing the boat.

For us, hospitality means that guests know they’re going to get a consistent, reliable, fine hotel-like experience every time they book a home with TurnKey Vacation Rentals. As a vacation rental guest, you should expect it will be easy and secure to access the property, that it’s clean and appliances are working and that if you need help you can get it.

Those are the minimum table stakes that are right now completely unpredictable in the majority of the market. This is why hospitality should be a current strategic goal for the sector and a continual point of discussion for years to come.

If we could talk to one of your 400 employees, how do you hope they would describe you as a leader?

I’d hope they describe me as a leader who sets the right company vision and helps me (the employee) contribute to us getting there. I strive to employ a servant-leadership mentality - what some call an upside-down management style -where the majority of my time is spent helping employees understand their role in the strategic goals of the company, how they can make a direct impact and how I can get impediments out of their way.

I can’t overstate the importance of positive reinforcement, whether we’re facing challenges or winning at every turn. Ultimately I’m striving to be as positive as Steve Kerr.

What is something you are hoping to learn more about in the next year?

I’m constantly listening to our customers - our guests and our homeowners -searching for more information about their preferences. So I’d like to learn more about our customers’ wants and needs as they evolve over time.

What is your advice to other entrepreneurs?

My advice for entrepreneurs is to get whatever you want to do or create in this world into the hands of your potential customers. Do this as fast as possible, and then gather feedback and iterate.

In short: Get started. Don’t delay.