David Litwak:
Hello everyone and welcome to how I got here mosey on focus wires weekly podcast about travel and transportation and the innovators in those two industries. Today we’re joined by Brent handler, the founder and CEO of inspirada, one of the world’s leading private, luxury destination clubs. Brent is actually a pioneer of the entire industry, the destination club industry, having founded exclusive resorts in 2002, along with his brother Brad handler, before founding esperado in 2010. So Brent, we like to start every podcast out the same way, which is to ask you how you got here. Well, happy to answer that. And thanks, guys for having me on. Appreciate it a good opportunity to tell the story that hopefully everybody finds interesting. So I guess I’ll start by saying I’m 51 years old, so I’m a little older than, you know, a lot of the entrepreneurs and older than you and so probably have a little bit more backstory than most but I started my career. not really doing anything terribly interesting. I sold copiers for Xerox back when they had a direct sales force that was back in 1991, and then sold the copier to a company that was in the computer training business. Believe it or not, people didn’t know how to use computers, way back when you were probably in elementary school, so I did that for a little bit. So that company, and then sort of did a whole bunch of nothing during the original.com bust, and kind of found myself a little bit down on my luck. I always describe it as in between careers, but it was more aptly unemployed. And I heard about a business that had this idea where you could, instead of buying a vacation home, you could actually join a club and go to Lots of homes instead of just one. And that really intrigued me the name of that company was private retreats. And the day I read that article was April 1 in the Denver Post, which is where I live and where the companies are headquartered in 2000. And it was 2001. Actually, no 2002 sorry. And so, that just struck my interest that maybe there were a lot more people like me, I had a couple of young kids at the time and hotel rooms. Remember this is way before Airbnb way before VR. VO so people didn’t really think about today what we would call the vacation rental industry that wasn’t so much of a thing, vacation rentals. You know, back then were completely different. It was only in Europe or maybe in the Caribbean. And they were super expensive and it was a whole different situation, you know, in 2002 and I thought If you could combine the benefits of house with the benefits of resort experience staying at Hotel which my wife and I really like to do, you could kind of come up with something interesting. And this company called private retreats was in the Denver Post on April 1 2002. And that business has since gone through a couple of name changes and failed many years ago, maybe over. Boy maybe 13 years ago or so that business went bankrupt. But I had the idea and I shared it with my brother. And you know, at that time, I
Brent Handler:
I just thought, you know, there has to be a better way. So we came up with this concept. And that concept was exclusive resorts which was the first company that we started and exclusive resorts was a traditional destination club. It cost many hundreds of thousands of dollars to join. The club used that money 80% of that money got used for purchasing real estate 20% was essentially a transfer fee, a fee that the club used to cover operations. And then there were annual dues and annual dues covered a set number of days. And that business, by the way, is still in existence today exclusive resorts. And it took us, you know, all of 2002 into 2003 to come up with that concept we launched. And it was a pretty good idea. People liked it, it was obviously just quite expensive. And there were a lot of kind of restrictions around that sort of travel. And then early in 2003, I might date myself, I might have a day or two wrong here. I got a I got a lead off of the internet from somebody named Steve Case, who was founder of AOL, which was actually a really big deal in 2000 and two, but nonetheless, I called him back. He ended up becoming our partner. We grew exclusively To be quite a pretty big business, kind of the original pioneer of this destination club industry. And then the great recession hit and that was a whole different avenue remember exclusive resorts owned all of the real estate. And so when the Great Recession came in 2008 2009 that you know, model obviously was not as powerful anymore. And then I kind of looked at the opportunity that we had at the time and sort of where that was going and what my role was within the business not being the majority control. And then I decided to leave at the end of 2009 and start what today is a you know, much larger, much, you know, bigger platform, which is our current company called inspirada. So sold out of exclusive resorts and started inspirado and what I learned in that period of starting exclusive resorts was that people really did love this notion of, you know, the size and convenience of a private home with services and amenities of a luxury hotel, just didn’t want to have to put a huge upfront capital commitment into the equation. And then also, you know, really realize that there were a lot of availability challenges, when every day is worth the same. It’s no different than a timeshare structure. I consider that sort of a closed end system, where everybody’s kind of fighting for the exact same inventory and the most valuable things get booked. First, that’s not a great high net worth, you know, kind of shopping experience and both of these companies cater towards the, you know, top two or 3% of the population, primarily US population. And so this was really meant to be a replacement for two rooms that are luxury five star hotel. So that gets us to 2010. So I had a one year period that it took to, you know, kind of go from having nothing to creating a new platform in Serato. And in 2010, we had to come up with a different way a better way of being able to provide this experience to high net worth travelers. And what we decided was, instead of buying the homes we were going to long term lease the homes don’t get that confused with what Airbnb and vrb o do don’t don’t confuse internet brokerage, which everybody would be familiar with today. Again, they weren’t so familiar back in 2010. But we view this much more like a hotel operating company. We’re a lot more like four seasons than we are Airbnb. Because what we would do is we would take control of particular assets and that could be in Tuscany. It could be in Vail, it could be in Grand Cayman And the owners of those homes would give complete control up to us, we would be responsible for the furnishings we would be responsible for, you know, adding the OSAP, we would put individual concierge at every one of these residences that actually worked for us full time. And then we would manage the experience that a guest would have in these homes, the same way for seasons or a Ritz Carlton manages a guest experience at one of their hotels, we were able to do it though, with people spending $20,000 to join instead of $400,000 to join. And instead of everyday being the same instead of exclusive resorts where you buy a set number of days for a set price, like for example, buying 30 days for 1500 dollars a night, you’d spend $45,000 and then you would just just use, you know, day by day by day, we decided to combine traditional revenue management with a club structure. So all of the inspirado inventory was priced. on a per night basis, revenue manager revenue manage not terribly dissimilar to how hotels revenue manage, so less price for longer stays seasonal changes in rate. And then, you know, could have variances for example, with weekend rate versus weekday rate. So we launched in Serato, 2000, and January 1 2011. And, you know, kind of grew pretty quickly on a relative basis and captured some high name, investment, attention from the likes of Kleiner Perkins and institutional venture partners. And then by the time we got through 11, and into 12, you know, obviously, we really started to, to grow, so I guess, probably we should fast forward to that February 29 2020. Because there’s a whole other chapter that’s like I have three chapters in my career. One of them is only whatever it is March, April, April, May me and one of them’s three months old. One of them was call it eight years, and then the other one was 10 years. So, if you fast forward all the way to two February, we had roughly 15,000 customers with two products, we have a different product now that I’ll talk about a subscription product, but I’ll talk about that in a moment. And we had over 600 employees, we were growing at over 30% and we were on track to do nearly 300 million in revenue. So lots of things kind of moving up and to the right. And then obviously, travel is a you know, heavily impacted business throughout, you know, when there is a pandemic and at some point I’d be happy to share with you how we fared through all of this. uncertainty and disruption around COVID because we’ve actually, I believe, really fared much better than any other travel cohort. So as a long winded answer to a very short question, but hopefully that gives you a construct of you know exactly what you’re asking for. I think how I got here
David Litwak:
absolutely no, that’s amazing. I I you give a lot of a lot of ammo there in terms of business models and one thing that you know stood out to me is you almost seem to shift maybe a little like you shift from ownership to renting you you shifted I you know, to something that was a lot more light lighter touch and I think there’s been a lot of the in the luxury market have been trying to figure out that what that model is you had one fine stay that you know, decided to do some kind of something similar with having a lot more high touch in a certain small amount of cities. As compared to Airbnb. How did you think about what that line was? Where did you need to have a concierge living on sight and the level of service versus scalability?
Brent Handler:
Well, our whole business and more so now than ever before, is predicated on subscription. So if you really think about at a high level, if you think about big categories, big categories, economic categories in industry, and you think about how in hospitality, you know, subscription has been disruptive. We very early learned that having our customers which we call members, pay an annual fee for traditional membership was super important because that kept the lights on. It’s a high margin component of travel, and it allowed us to have certainty and buy in from our customer base, and I think what a lot of the Not I think I know what the large marketplaces suffer from is loyalty, right? I mean, how loyal are you to the rbo? Really? how loyal are you to Airbnb? Every Airbnb is just a it’s just a, it’s just a way to go get to different property managers or owners to have very differentiate very different and kind of non consistent experiences. That’s just true. And so we felt early on that we had to have a membership component. And you know, that business alone, just annual dues, which are 30 $700 a year, you know, grew to an annual recurring revenue of over $50 million a year. So dues became really important to us and is a complete differentiator visa v. You know, luxury retreats one fine stay Airbnb or vrbo, homeaway. All of them are marketplaces we refer to them as like an internet broker. Basically. Because they are brokering one person’s property through a, basically through an exchange in Serato isn’t like that at all, we have about 350 homes that we control. We do a lot more by the way, we have events for members and we do take people to the masters and we charter entire cruise, you know, luxury cruise ships and do members only events, but the homes are kind of the, you know, the mainstay of the business and for, you know, for those homes, you know, obviously, we’re able to just provide a very differentiated experience that is completely branded, not dissimilar in one iota compared to if you walked into a montage hotel or a four seasons or any other branded hotel. So that’s been a big differentiator for us. So you actually touched on something I was about to ask about I I’ve heard the term float around several times as community as a moat and you I knew you had done A lot of these kind of events and you know, renting a boat and stuff like that and actually tried to curate some of the community and your communities uses a buzzword by a lot of people. I think Airbnb would use it a hill all the time. But clearly you you guys actually really invest in it. Could you elaborate a little bit more on that?
Brent Handler:
Certainly, I mean, we have, like I said, around, you know, give or take 15,000 customers, I, I refer to it as a paid loyalty program. So, uh, you know, a hotel will invest, you know, billions of dollars to gain loyalty and the way that they’re gaining loyalty is by customers using their service, whereas we’re a paid loyalty program our customers pay us in order to get access to our portfolio in our service. So especially now in a COVID environment. When you think about, you know, what do people really really want, they want safety and they want service. They want cleanliness. And you know, the inspirado brand really stands for service and certainty. And that’s why we exist. And, you know, well remember we’re talking about the wealthy call it two 3% of the, of the base of North American travelers. So this isn’t obviously for everybody, because we’re spending, we have daily housekeeping, for example, as a standard. We spend hundreds of thousands of dollars on homes just to make sure that they get up to par and we put our own money into these homes to make sure that they’re at our standard. So it’s a whole different level of Traveler with the average nightly rate is close to 1500 dollars a night just to put some perspective into it. But for that traveler that does not want to stay in a 600 square foot hotel room, wants to stay in a house with the kitchen, but still wants the service and certainty of a five star hotel inspirado really does that and so from a community standpoint, people feel a passion Have something when they pay an initiation fee, or they pay a subscription, and they pay their, you know, they pay their annual dues. So that’s been, you know, it’s obviously this journey is a little over 10 years with inspirado. And it’s, you know, it’s not for everybody, obviously. But for our customer base, we have very high retention, historical retention is in the high 80% range. You know, people really like it, and especially now in a kind of environment where you crave safety, you know, and certainty in service more than anything. We obviously were set up for that.
Kevin May:
Hi, Kevin, thanks so much for joining us, Brent. And if you could take us back a little bit. I mean, anyone that some that the word pioneer is often associated with their name means that they’ve created something new and that’s great. I mean, you know, the exclusive results with something that you pioneered that model Whenever when anything is pioneered, they’re often either things that go wrong along the way, or people don’t like what you are pioneering if you could take us back to 2002 and give us a kind of a taste of the kind of the market reaction to what you were doing with the creation of exclusive resorts First of all,
Brent Handler:
well, I think the best example say remember in 2002, there’s no Airbnb and there’s no homeaway so those don’t exist. So you got to like scrap that out of your mind because it’s part of the you know, it’s part of popular culture today vacation rental. Yeah, just everywhere, but so forget about that. So those don’t exist. So then start to think about Okay, well, who were we really encroaching upon? Who’s you know, who’s whose lunch were we trying to eat? And it was really a five star.
Kevin May:
I’m sorry. Even timeshare as well, I suppose is something kind of similar. Certainly here. Yeah, timeshare was a massive thing in the in the 80s.
Brent Handler:
Yep, really expensive timeshares. In the early 2000s were called fractions, if you remember that term. Yeah, but it’s a really small market fractions were a tiny market. I mean, exclusive resorts would sell more fractions and inspirado would sell more memberships in a month, then the whole fractional industry would sell in a year. So it was a small industry. But really, it’s the hotel. So really what’s happening is you have wealthy people who have kids, they get two rooms that have four seasons, two rooms at a Ritz Carlton. And, you know, that’s how it always was. And so we were trying to encroach upon that, and where there became conflict and where it became challenging for us was when a residential product was within a resort community. So if and if an exclusive resorts home was inside of a, you know, Ritz Carlton development, which is true today, right? We With exclusive resorts, we built a bunch of homes inside the Ritz Carlton community in Grand Cayman, for example, that those there was a lot of tension between brands, who sort of were like, We don’t need any innovation. We don’t need any new ways for people to travel, people love staying in hotels, what’s wrong with you? And I’d say that was, you know, probably the biggest point of contention. And then obviously, once we got to, you know, 2012 1314 15, you know, inspirada was going up into the right at a very nice growth rate. But with you know, with a, obviously a segmented market, and air before that br Bo was absolutely crushing it and becoming big and I think, sold to Expedia for three or $4 billion. And then Airbnb just because of their infinite scalability, you know, became this massive platform that I think what we’re finding now That, you know, what comes up must come down. And when you don’t have the ability to control service in any way, shape or form, and you don’t have the ability to institute brand standards in any way, shape or form, you know, when you have millions upon millions upon millions of little, I mean really individual hotels, right little independent lodging units, it becomes pretty hard to manage. That’s an amazing business always going to be a multi billion dollar business. It’s a it’s a behemoth, one of the greatest success stories in my lifetime, but it doesn’t play to the luxury consumer. And it just it just doesn’t and so vacation rental for the luxury consumer outside of inspirado really is a whole different level of risk.
Kevin May:
Just it’s interesting you say you know, that the example that you gave Brent about the you know, you you’ve built some, you had some properties that were within a hotel, kind of residential. Complex or within a complex there, which caused conflicts with the hotels. I mean, this is your 2002. This is your first foray into the travel tourism and hospitality industry. I mean, how did you, as an entrepreneur, kind of resolve those issues? I think that’s quite interesting for many of the kind of the entrepreneurs that are tuning in, you know, early conflict with the status quo is something that many startups come up against.
Brent Handler:
Yeah, I mean, I’m definitely a big believer in young entrepreneurs, much more so than old, old entrepreneurs like me, I mean, I have a son that’s 22 Super entrepreneurial, coming up with different ideas, reading and listening to podcasts, and, you know, constantly thinking and innovating. So the first thing is that I think you just have to be, it’s a young man’s game, in my opinion, to be, you know, taking on all these challenges, but your specific question is, how did how did we sort of know what to do going into a new industry And the answer is we didn’t. And that was the biggest blessing of all. Because what happens is people get handcuffed by their experience and the sacred cow. And it’s always been done this way. So it has to be done this way. And we just sort of rolled in back in 2002, when I was, you know, young enough to, to do that 30 to 33 years old, and basically said, Wait a second, why does it have to be that way? We could do it this way. And so it never really dawned on us that, you know, we were breaking so many of the traditional hospitality rules, and that was a bad thing. We just thought there was a better consumer experience that this high net worth traveler could have. And so we, you know, started upon this journey to to build it both both from a sales and marketing perspective, but also from an operational perspective. I remember. Very, very, very, very famous CEO of a luxury travel company, sat my brother and I down and said you will never be successful ever, this is going to fail, and it’s going to fail miserably. And there’s going to be a lot of very unhappy people. And we said, well, why is it going to fail? And he said, it’s going to fail, because you’ll never be able to provide a service level or an experience similar to a five star hotels that has let’s call it 100 rooms, when you’re one house at a time. And it turns out that he was wrong. It’s just really expensive to do that. And nobody believed that the consumer would pay an extra, you know, four or $500 a night for daily housekeeping plus concierge service, plus upgraded facilities, but they actually Well, if you’re able to, you know, provide an exceptional experience.
Kevin May:
Now there’s there’s really nothing more kind of motivating for any kind of person in business than somebody telling them what they’re about to do is going to fail. So I can see why that would be incredibly motivating. So you mentioned him in your answer just then Brenton knows your brother Brad and And an equally fascinating history, his backstory as well. But you’ve both worked together for almost 20 years now across these two businesses. I think that’s fascinating Anyway, you know, working with a family member in something, which is a high pressure kind of business, whether it’s in the travel industry, or whether it’s an entrepreneurial type of setup. Give me give us a sense of how your relationship with your brother actually works. And, you know, without going into too much personal details, but I think I just think it’s an interesting dynamic that is, is fairly rare. And I’m curious to know how it works and how it’s how it’s kind of grown through your childhood into your kind of business years.
Brent Handler:
Yeah, sure. I mean, I think most family businesses are generational family businesses, you know, and most people think you work with your sibling, it’s, you know, your dad started the company or something like that. So, you know, obviously, that’s not the case. You know, Brad and I were very different growing up. He’s only he’s only 15 I’m older than me. But he went away to school he went to. He went to Penn. And then he went to UVA law school and he basically never came back. So from time he left Denver, he went back used to school and then he moved out to the Bay Area. And he was a lawyer at Cooley godward and got a recruiter call from a company nobody had heard of called auction web at the time, which grew up to be eBay. So he by the time I had this unemployment moment back in 2002, was already, you know, very financially successful. So it was never like for him that he had to, you know, run a business or be the CEO or really sort of drive the growth in the operations. It was never like the business was going to be, you know, headquartered in California was always meant to be headquartered in Denver. So since he didn’t live here, this is you got to think back right? actually used to go to offices every day and like work with other people before COVID. So I mean, it was actually like a thing, where we would have hundreds and hundreds and hundreds of employees. And, you know, Brad was in California. So he’s the chairman and does very Chairman like things, so financings and big structural, you know, sorts of things, strategic things. And then, you know, as the CEO, I just have very different role within the company. And so, you know, we’ve never, we’ve just always been able to get along as business partners. It’s really never been an issue like not even for overnight like, I mean, we argument about something here and there, but I mean, never even lasted over one night and almost 20 years. So we’re, we’re very lucky in that regard. We’re good compliments, you know, for each other and we talked about, I don’t know, two or three times a day by phone and just, you know, keep pushing this peanut forward. It’s a it’s a challenge. I mean, it’s, uh, you know, every, every, you know, we’re pretty old for people think of us as being like an innovative, you know, company and I want to talk about how we just launched this new subscription product called pass. But, you know, really, at the end of the day, we’re, you know, we’ve been doing this over 10 years, just this company alone. So, you know, it’s a, it’s not like, you know, we’re still trying to figure every single thing out, every now and then we, you know, take one on the chin like everybody else. COVID being the, you know, being the best example.
David Litwak:
That’s you, you started two businesses and they don’t say the exact same industry, right, like
they’re in the exact same industry, but obviously, very different companies based on business model. What Why did you have the desire to go back into this and just, you know, kind of Wade back in Why didn’t you want to go into different industry? Clearly, there was something
Brent Handler:
Well, I mean, for starters, you know, luxury vacations for rich people is not a bad is not a bad place to hang your hat. I got to hang out. A lot of really, really wealthy smart people, you know, much wealthier and smarter than me and had great perks and benefits and being around awesome vacation homes. And you know, it’s it’s been it’s been charmed it’s been unbelievable and I’m a real I guess I’m a real fan of this notion that for people to find ultimate happiness professionally and not everyone has the luxury of being able to to do this, which I understand but for people who do if you can spend enough time trying to really isolate what your giftedness is, what are you really really good at? And for me, my giftedness, which I’ve now learned over a long period of time, I’ve learned that my giftedness is early stage startup an early stage product development and the earlier the better like one two people sitting in a you know in a conference room with a whiteboard trying to figure things out and everywhere every every step away from the idea to getting it going to coming up with the marketing and the product positioning into like being a highly operational and trying to improve efficiency. You know, I become less valuable in the equation I tell that to our senior team all the time. So my giftedness is product development, and marketing and understanding this consumer and my passion has always been luxury real estate even when I was a kid and I did not grow up living in luxury real estate, I can promise you, but I always coveted the people who did. I always knew those neighborhoods in town, I would ride my bike over and look at those houses and it always motivated me that like one day I could, you know, I could have had Like that, or I could be part of a business that had, you know, access to homes, I can remember being on vacation in my 20s. And you know, staying at Sheridan’s and picking up real estate pamphlets for multimillion dollar houses and my wife at the time was like, What are you doing? What is it nothing to do with us? Why are we Why are we going and looking at $3 million houses in Hawaii when we can afford a $300,000 house in Denver, Colorado, but you know, I had a real passion for it. So I think where passion and giftedness cross, if you can sort of hang out in that intersection, you have a very high degree of success, but you have a higher degree of, you know, kind of work happiness. So when I left, you know, exclusive resorts and it was not I wouldn’t say it was voluntary. I didn’t get into all the details of it. But suffice it to say that I had a difference of opinions with a billionaire that had majority control. And then that’s just the way But that all worked out. So I was highly motivated to, you know, prove to myself that there was unfinished business. And there was a, you know, bigger and better way to provide this customer base a great experience. So that’s kind of how I think about, you know, where people should focus their energy. And for me, it was just really easy. I never even really thought after I left that I would go you know, do something that wasn’t luxury hospitality related, coming up, figuring out how to do it coming up with the name and working through like having to start over from total scratch and raising capital, like every other entrepreneur. It was, it was clearly difficult. But you know, having spent seven years prior learning a lot, it was easier than had I just come up with the idea for the very first time.
David Litwak:
Well, damn well Wanted to segue the discussion a little bit into kind of a real estate and business strategy and kind of address something that previously was a really big story until COVID elapsed, which was we work in your real estate model. And there’s, you know, a lot of I, I’d say controversy about using venture dollars for real estate, if not acquisition but long term leases that locked in or and, and capital expenditures on the lease. And I know that there’s a lot of CO living startups and a lot of kind of other people tinkering in this world right now that are raising venture money, but then the raising separate real estate funds basically, from hospitality groups or normal real estate investors. And I’m curious, you know, just your two part question one, did you use VC money for for real estate? And two, you know, how do you think about the the play between physical assets and quote unquote, tech scalability in this day and age?
Brent Handler:
Well, that’s a good question. My was a really, really good question. So we were the first, we were the first on this, like, we’re going to lease luxury homes. And it was very unpopular with the investment community. I mean, obviously, we were able to get some blue chip investors early on but as we began to scale, even when we were you know, doing 100 million dollars people had, you know, it was asset medium was an asset light Airbnb wasn’t asset heavy on owning a building, right or owning the hotel. It was kind of asset medium and I’d say we definitely took some lumps for that and continue to, but I view it like, there is no perfect so the older you get, the more you realize that anybody who says they have the perfect solution is either uneducated or lying about anything. And Airbnb was perfect, right up until that point when it wasn’t. And now Airbnb is right Really scrambling to try to figure out how can they inspirado eyes, right service and certainty, this massive platform that they were able to build. So I think, in general, I am not long on the the businesses that that sign long term, our average lease is four years. And every property is one individual property. So we’re heavily diversified. I am not a fan of the businesses that take on 50 apartments and signed 10 year leases, in hopes that they’re going to squeeze out, you know, 20% gross profit. I think those businesses are the hospitality version of wework. And I think they’re going to struggle like forever. I think they’re going to struggle. I think that that model is very, very difficult. if not impossible, inspirada remember has You know, pre COVID had well over 100 million dollars of arr annual recurring revenue, we had over 100 million dollars of customers who were paying us on a subscription, very, very different, then, you know, everything having to be transactional, like being being long on risk and short on commitment is not the great place you want to be in superato is call it medium. Medium on risk, but we’re very, we’re very, very positive on commitment from our customers. It’s hard for people to walk away from pain and initiation fee, or paying annual dues, they feel part of something. And you know, it’s very different than just being transactional and going on Airbnb and trying to say, is this apartment building less money or more money? You know, to stay in a one bedroom? I think that’s a tough, that’s a tough road. Can I ask a quick clarifying question there? So like, I know A lot of these guys also, we’ve interviewed Sondra on here before and in a few others I know they’re basically they started out acquiring those 10 1520 year leases. And they tried to switch eventually over to what they called HMA Hospitality Management agreements where they actually didn’t own the lease. And they basically tried to shift to more of an asset light operator model. Did you guys ever consider that? I know I’m getting a little nerdy here. But I do think it’s a topical question, considering there’s a lot of people innovating in this this kind of Venn diagram these days. I know and we have, I mean, there’s buildings on them that say inspirada with American Express. We’ve done licensing agreements, we have many, many of our
Brent Handler:
many of our homes in our portfolio today. We don’t have to lease it all. They bring them to us and say, manage it for us. Here’s our guarantee to you. It looks much more like a hotel management contract than it does a lease, you know, and it’s a very high percentage and that percentage is growing but it took 10 years of building our brand You know, for that to be able to happen and people understand the fact that anybody who’s going to who’s going to travel with us is non transient. You know, it’s very hard, I think for an owner of an asset to let transient usage into their platform without them at least getting the brand benefit of it being them. Right, you’re giving that up, right? We’re not we’re not doing that. So it’s very, you know, it’s, it’s different. Like, like I said, I mean, the models like you mentioned, have grown really, really fast. And obviously, the bear market is really really big. Because it’s as low as what 60 bucks a night to go stay in a place and wherever. So it’s really really big. But you know, we like we really like in Serato strategic position in the market. We have zero competition by the way, there is not a single company that does anything remotely close to what we do. There is no luxury company that charges a fee. There’s no luxury subscription company. There’s no one who controls rent, there’s exclusive resorts, which is now much, you know, much smaller than us and a different model. But outside of the two companies that Brad and I founded, there’s really nothing. And I think that’s a testament to how hard this is.
Kevin May:
And that’s kind of your last your last sentence, there was what I was going to follow up with the next you know, and is it because it is so hard that you haven’t managed to accrue any substantial competitors? Do you sense that is something that would continue and nobody is just got the guts to do it? Or is it just the right timing, and perhaps it’s perhaps a company from a completely different geography with different kind of funding that would be able to give you a run for your money almost.
Brent Handler:
I think it’s really hard. Well, let me put it this way. We had there were probably 70 named companies that attended tempted to compete with exclusive resorts and inspirada that have failed. So the number of burned investors, angel investors out there who were part of you pick the name is massive. The only two standing are exclusive resorts and inspirado. And so I think it’s incredibly hard. You have to both be an operator, right? You’re an operator just like a hotel. But we’re also a distributor like Expedia. And you have to be incredibly technical. And that leads me just to share I’m sure you guys have read about this, but we launched a subscription travel product called inspirado Pass, which is endless travel 20 $500 a month, no nightly rates, taxes and fees. And we built an algorithm that gives people access to north of 150,000 trip options, they pick what they want, they pay nothing, they check out and they book their next reservation. And we built that business into over a $75 million business in about eight months. So that was really the growth engine prior to COVID. And it’s just now starting to come back. But if you if you ask me like what am I the moat and we’ve got patents on that, that’s highly highly, highly technical and innovative how it actually works right. The further out you book, the more value that we provide the algorithm chooses based upon how far your booking in advance from various room categories or various home categories, how many days the trip is based upon the day of week, etc. and inspir autopass really opened the door to us around this idea of subscription travel, which is really where we’re headed and post COVID visa v. I think any other travel company, I’m comfortable saying virtually any other travel company in Serato held up not just better, but significantly better, because we have recurring revenue and loyal customers that continue to pay their dues and continue to pay their subscriptions, even during the downturn. And because we’re asset light, with leases, we were able to enact force majeure, if we would have owned those homes, we would have been the ones paying for them. So we had kind of a benefit over the hotel companies in the pandemic, and a huge benefit over the internet brokers or the booking engines because their revenues just basically went flat, right? Just went to zero. So this subscription is really where the growth is going to come from, you know, from inspirada
Kevin May:
and some maximum perspective on the kind of the present and the looking forward. And last question really from us, if we if we may make you said and you talks about a multi billionaire owner that you had a disagreement with at the end of at the end of the 2000s. I just wondered what it was like dealing with somebody like Steve Case when you sold? I think it was a majority of the business to him in 2004. I mean, he was going through a fairly interesting time post Time Warner AOL merger at that point. Anyway, that was all starting to unravel. And we’ve just that that process of having to sell the business at that time to someone knows high profile as him what was that like?
Brent Handler:
Uh, you know, I, I think it actually has nothing to do with Steve at all. I think Steve’s a really smart guy. Obviously, he’s was really successful in being both an entrepreneur as well as philanthropist as well as venture capitalist. So, you know, he’s been, he’s been quite successful. I think, you know, I am just a raging asshole. As an important it’s just, you know, my, my DNA is not to work for someone else, period. So You know that that was sort of destined to fail before? before it ever happened, we were sort of enthralled with the idea. the crazy part is he only put in $5 million to get 50% of exclusive resorts. So it wasn’t like, it wasn’t like a lot of money. But it was at the time, right when we didn’t have it when we didn’t have money and he was a billionaire. So, you know, I mean, I think that the, I think at the end of the day, it could have been anybody it could have been Steve, john, Fred Sue, Jesse didn’t matter. You know, I didn’t I don’t really have a good personality for you know, being an employee. And so, you know, it just, it just didn’t, you know, didn’t didn’t work out as, as well as I would have thought also, we were under serious duress with, you know, financial crisis and we had different goals. His goals were different than mine, and I feel really good about the way it turned out for inspirado. And, you know, obviously, you know, we inspirado is an undisputed leader in this kind of luxury residential travel component, and there really is not even a close second. So it’s all kind of worked out in the end it just the only way to make any perspective of it is to look backwards. Yeah,
Kevin May:
great. Okay.
David Litwak:
Well, I can certainly sympathize, but not being built for being an employee, Brian. Thank you for joining us. I think we’re gonna we’re gonna wrap things up here. We’ve come to the end of our time, but for everyone listening, this has been how I got here. mosey on focus is a weekly podcast with Kevin may from focus wire and myself, David Litwak from mozia. And thanks for joining. We’ll see you next time. Thank you. Thanks, guys. Appreciate it. Thank you.
Transcribed by https://otter.ai
