Points of Interest: Remapping With Short-Term Rentals | WIRED Brand Lab

All right.

Well, we are here to talk about the short-term rental market

and the short-term rental economy.

Obviously, you know, short-term rentals were

a huge player in building the sharing economy.

And today, they are the focus

of policy discussions around the world,

so I'm sure a lot of you know,

you know, that New York recently banned,

effectively banned short-term rentals.

Cities like Paris and Amsterdam are sharply limiting them.

So what does the future

of the short-term rental market look like?

How can technology make it better in the next 30 years?

We're gonna talk about all of that and more

with Jon Gieselman, who is president

of Expedia Brands at Expedia Group.

Jon, come join us.

[audience clapping]

Hello, there.

Hello. Thanks for having me.

Thank you for being here. So why don't you start?

When I think about Expedia,

I will admit I don't automatically think short-term rentals.

Explain Expedia to me.

I think about sort of booking trips, booking travel,

but tell us a little bit, sort of about Expedia Group.

So Expedia Group is a collection

of 21 different travel businesses around the world.

It's first started with Expedia,

which is probably the most well known here in the US

that was actually born outta Microsoft 27 years ago.

And it's largely a collection of web-based businesses,

many of which were created at the start of the internet age.

And oddly enough, I worked for our chairman 27 years ago

and he started acquiring all of these businesses.

So I've been around them for a long time indirectly,

but just not until recently.

I've only been inside the company for two and a half years.

So really what we've set out to do

in the last couple of years is take these 27 businesses

that all ran on their own stacks.

Nothing was integrated.

It was really like an operating company really

where the businesses actually competed with one another.

And we have been rebuilding the stack

all on one common architecture

so that everything was integrated.

So we were talking about it before,

think of it like acquiring 20 businesses at once

and then integrating them, you know,

all into your existing stack at once.

It's a pretty big lift and a pretty big swing.

We frankly probably wouldn't have done it

if it had not been for COVID,

because COVID kind of provided the cover to do it,

'cause when your business goes to zero,

it's time for you to start thinking big.

So it kind of afforded us the cover

to make this huge technology investment.

Fascinating.

And, you know, in 2014, WIRED magazine,

well before I was there,

they published this great cover story

All about the sharing economy.

The idea that sharing your home or your car

with somebody else was sort of meaningfully contributing

to increased trust among Americans.

It was a really smart thesis, it was a really smart piece.

When you think about trust, sort of what kinds of decisions

have you made with Vrbo, which is your sort of

short-term rental home sharing platform

to allow consumers, you know,

to really trust the properties that they are renting,

to trust the owners that are listed on the platform?

Okay, well, Vrbo has been around for 30 years.

You may remember it as Vrbo,

somebody before me cleverly renamed it Vrbo,

so I can't take credit for that.

You know, there's primarily two players in the industry.

Vrbo and then another one I won't mention

that I might reference throughout, you know, this vaguely.

And the key difference between the two is

think of us as kind of the adult in the room.

These are large private homes where

you can go with your family, your friends, your coworkers,

your roommates from college, whatever but it's all private.

And they are predominantly in think beach, mountains,

you know, out in the country.

It's not city and they are not shared spaces.

So we don't have that dynamic where

you'll show up at a up at a place

and, you know, you've got half of the refrigerator

to yourself, or you open a drawer in the bathroom

and there's a bunch of weird stuff in there you can't unsee.

You know, these are all private homes that we have.

So that's how we're different.

That engenders trust.

And we've set the marketplace up in such a way

where hosts who are people that own private homes,

either you know their second home

or they've bought it as a business that they wanna run.

We align everybody's objectives where hosts will...

If they treat our customers right and well,

they will be successful in the marketplace.

If they do things like cancel on people at the last minute

or don't make their home available, there's limited supply,

those kinds of actions will be penalized,

and they will not be as successful.

So, you know, the way we've set up the marketplace

is to encourage hosts to be successful,

to treat our customers the way any of you

would wanna be treated.

Great.

Well, let's sort of shift gears a little bit

and talk about, you know, the impact of short-term rentals

on housing and the housing market.

Obviously, a subject of great controversy

and sort of one of the reasons for some of these

new policies and regulations and restrictions.

Can you sort of talk about, you know,

how you think about that impact at Expedia Group?

Well, first of all,

the impact is different all over the world.

I mean, as you can imagine, local governments

or city governments, they tend to live on the extremes.

Either, you know, do one thing to the excess

or completely shut something down.

And a lot of local governments struggle with that.

You know, should we open up our marketplace

or our city to, you know, more short-term rentals

or should we shut the whole thing down?

And, you know, that makes for great headlines

if you're trying to get elected,

but it's not very practical.

So we tend to take the approach, you know,

again, trying to be the adult in the room of,

it's just like anything else, it's about balance.

I mean, you can find a place where you have

a material amount of short-term rental supply

in a marketplace, but you don't let it go crazy

to the point where it's causing disruption.

You know, your neighbors hate you.

People are complaining, you know,

so cities, local governments are all struggling

with this right now.

They tend to take an extreme position on either end

and, you know, we're happy to actually work with them.

You know, we're in favor of regulation,

but you try and find the middle ground.

And some markets have done this successfully.

San Diego is one where they've chosen to...

They've decided that roughly 1% of the housing

is gonna be dedicated to short-term rentals.

And there are a bunch of stipulations with that

which encourage, you know, good behavior.

And we've helped them with data to settle on that opinion.

Seattle is another one that has done a good job.

They, you know, something different

that they limit the number of licenses per homeowner.

You can only have two short-term rentals.

We're giving Europe all of our data and their learnings.

They're tending to take a common approach across the EU

from a data standpoint.

But what makes it challenging from a tech standpoint

is then within Europe,

cities are taking different approaches.

So then, you know, we have to come up with custom solutions

for each market based on, you know,

what they decide to regulate.

But you know, our competitors have in the past

taken the approach of more supply is better

and really haven't paid attention

to the consequences of that.

But it can create, you know, real problems

if you've got too much.

So it's all about finding the right balance,

just like it is with anything.

You talked a little bit about sort of the data

that you're sharing with governments or municipalities.

Can you tell us anything else about what that entails?

And sort of what kind of data a government might look at

when they're trying to make decisions

about this kind of regulation?

Well, I mean, I won't get into what exactly we share,

but you know, it's just like, you know,

a market that's successful has a balanced amount

of supply and demand and, you know,

you wanna strike that balance,

because you have home homeowners that have second homes.

You know, they want to be able to monetize them.

That drives tax revenue for, you know, the local government.

It also encourages tourism.

You know, many people won't travel

unless they have a private home they can stay into.

They don't wanna stay in a hotel.

So, you know, you want to find that right balance.

That's why shutting it down doesn't really make sense.

You know, and some cities have taken that approach.

Like New York, they've taken a pretty aggressive approach.

It hasn't really impacted us because as I said,

our private homes, excuse me, are predominantly out

in rural areas on the beach.

They're not really in the city.

Way we compete in cities is with hotels.com or Expedia.

So, you know, our spaces in cities tend to be in hotels.

So it's, you know, it's had a big impact on our competition.

But again, you know, we've tried to work with New York

to find a balanced approach just like we would anywhere.

And as sort of the adults in the room.

Your phrase, not mine, although I like it.

Is there sort of any other feedback that you would offer

to your competitors in the industry about course correction?

You talked about balance and sort of,

there's no extreme version of this either way

that will be ultimately successful.

But would there be sort of any other guidance

that you would offer to the industry writ large?

Well, if it's kind of growth at all costs

and it doesn't really...

The consequences don't matter,

eventually, you're gonna get regulated

and the solutions are gonna be thrust upon you

rather than being a part of this solution.

So, you know, it's always better to be part

of those decisions and try and influence them

rather than buck up against them.

Yeah. Sure, sure.

Well, let's talk about technology,

which we haven't done enough of so far.

So obviously, you know, the travel industry

has embraced tech in a big way in the last few years.

Biometric check-ins, robotics in customer lounges.

So you are betting, you know, big

on something called the Expedia One Key program.

Can you tell us a little bit about that?

Yeah, so part of taking over the, you know,

all these businesses two and a half years ago,

I think, I'm probably gonna get some of these numbers wrong,

but I think we had 17 different CRM stacks,

seven loyalty programs, five credit cards.

Somehow, we had 32 CMS systems.

I don't even know how that was possible,

but it was a mess and nothing talked to one another.

So it sort of became obvious to me from week one

that we literally need to rebuild

the whole damn thing on one common stack,

and get everything talking to one another.

Because the opportunity for us as a business,

if you've got 21 brands, think about it,

you're trying to drive downloads in the app stores,

you know, around the world,

across all these different brands.

You're diluting your capital investment

across all these different businesses.

So the way to be efficient is to

fix the architecture problem.

So we did that.

And as part of that, the other big opportunity

was nobody knew these brands were related.

I mean, I'm sure there's people here in the room,

they're hearing for the first time,

oh, I didn't know Vrbo, and hotels.com, and Travelocity,

and Orbitz, and Expedia were all part of the same company.

Why would you know they all competed with one another?

That was the model, you know, for many, many years,

which was successful but, you know,

eventually just ran outta gas

because as the cost of media increases every year,

it's basically an arbitrage business where you're trying to,

you know, buy traffic for X and monetize it for Y,

it's difficult to become more and more efficient.

There's no leverage in that model.

So, you know, we turn the whole thing sideways

and you know, and now we're managing it like so many...

I call it like subscription-like businesses

where you're managing customers for LTV, acquire them once,

drive them cross shopping within your portfolio of brands

rather than acquiring on Expedia,

then acquiring them on Vrbo, then acquiring them on Hotels.

Like, that's just stupid.

So part of that was we took all

the disparate loyalty programs we have

and turned it into one.

So now, you know, Vrbo is...

We were talking about Vrbo,

but Vrbo is the only one in the industry

that now has a loyalty program.

So if, you know, you go and you rent a Vrbo for a week,

and some of them are super expensive, you know,

15, 20 grand, you'll get 2% back on that,

and you can use that cash, we call it One Key Cash.

It's cash that sits in your Hotels, Expedia, Vrbo account.

You can use it for, you know, a hotel on Expedia,

or a hotel on hotels.com, or a car, you know, at Expedia.

Whatever. It's just cash.

And then the intent of it was to really do two things,

make it clear in consumer's minds, traveler's minds

that all these brands are related

and part of one ecosystem,

and then encourage that cross shopping,

you know, between the brands.

So basically acquire 'em once

and then manage customer lifecycle, you know, going forward.

So it was both a technology challenge,

but it really had a strategic intent behind it

to encourage people and reward people for their business,

you know, keeping them in the ecosystem.

And have you sort of observed anything about,

you know, consumer behavior using this new program

that's kind of stands out to you?

Yeah, it's only four months old, but it's working.

You know, we're seeing customers cross shop between brands

and most importantly, we're seeing them shop incrementally

so their repeat rates are increasing,

and that was the whole design of it.

So it's performing as intended. It's very early.

I mean, you know, a loyalty program,

for anybody that works on one or has launched one

or been around one, it's not like a hockey stick.

I mean, it doesn't just like instantly double the business.

It's a long build but it was designed in such a way...

You know, I was at Apple before this

and I just kind of approached it of like,

what would Apple have done with a loyalty program?

It's just like, make it simple, make it easy to understand,

you know, and yet we actually want people

to, you know, redeem their rewards.

It's not like most rewards programs.

I mean, I remember when my team was first iterating on it,

they would come to me with, you know, a spreadsheet,

you know, this is how the product should work.

And I was like, How do you design a loyalty program

with a fucking spreadsheet?

I mean, you know, it's not about breakage.

It's about encouraging people

to actually use it so that they come back.

You know, it's not about penalizing them in a clever way.

And I think a lot of loyalty programs are designed that way.

So I kind of call it the unloyalty program

because it is just very different

than most programs are constructed.

Got it, and you know, it's sort of been

the theme of the year, generative AI.

It's something we've talked a lot about at WIRED.

It's something we're talking a lot about today.

You know, are you, at Expedia group, using Gen AI tools?

How do you sort of see them

fitting into the future of travel?

Short-term rentals? The whole thing?

Many of you may not believe this,

but I mean, we were talking about it before.

I think a big part of our transformation is

I used to call us a 27-year-old technology company,

and we're trying to turn ourselves into a tech company.

And I think those things are very different,

but we are pretty sophisticated.

I mean, there's 10,000 engineers in the company.

I mean, you know, it's a big business, pretty sophisticated.

Travel is soul crushingly complex.

The problems that can arise, you know,

on any given trip are limitless.

The number of SKUs that we have in our store,

we have more SKUs than Amazon.

So it's a very, very complex business.

As a result, AI is not new to us.

You know, we've been leveraging it for three or four years,

very advanced from a machine learning standpoint.

You know, we were the first to integrate with open AI.

You know, we use AI a lot of different ways for Vrbo.

You know, one way is we have a trust and safety group.

We can identify if somebody's booking a house for a party

and just shut it down immediately.

We shut down more than 500 of 'em last year.

And that engenders trust in the platform.

You know, we're using it to identify,

help customers understand more features, you know,

inside of a house or amenities in and around the area.

So we're kind of all in on it and have been for a bit

maybe, you know, a little bit further ahead

than some others, but, you know,

it's amazing to see the advancement.

And it's just kinda every quarter,

there's something even more amazing

that we can take advantage of.

It's pretty remarkable.

[Interviewer] How do you talk about it sort of internally

and sort of think about it?

Do you have task forces?

Like, how do you grapple with the pace of the change

in the generative AI space, and sort of what it can do

for your company?

Yeah, I think culturally inside of our company,

it's been one that's been based on optimization,

which is fine and great.

I wouldn't say it's been a terribly creative company

from an innovation standpoint.

So trying to inject that into our culture

has been, for me, really fun

because, you know, it's not...

You know, creativity is a broad term.

I don't think of it just in terms of creative,

like from a marketing standpoint, developing in,

you know, creative campaign.

Creativity can be applied across the organization,

whether you're in finance, or HR,

or engineering, whatever it is, you know?

Finding creative solutions to solve real problems,

and there's plenty of real problems in travel.

You know, I think the holy grail for us is to use AI

to start to predict and solve those problems

before customers even understand

that they're about to happen.

Well, let me ask you this then.

We have just a few more minutes.

But thinking 10, 20, maybe even 30 years out,

what does someone's travel experience

with Expedia look like?

What changes? What's sort of your utopia?

Yeah, I mean, 30 years, I have no idea.

But, you know, I would say in five

and, you know, we're working on this now

with some pretty sophisticated partners.

It's what I just said.

It's identifying problems and pain points

before they actually happen and solving them proactively

for our customers, for our travelers.

And then creating surprise and delight moments,

you know, for all of us, while we're traveling.

Our businesses have largely been transactional.

You know, book a flight, book a hotel, book a Vrbo,

book a car, and then go do your thing.

And we hope everything goes okay,

but if something happens, call us,

and hopefully, it's not too bad,

and we can solve it with our partners.

We don't control any of the flights or hotels or anything.

You know, but we've taken the money, you know,

so we gotta solve it for people.

Imagine a place where, you know, right now, today,

I think the worst part of travel is the travel part.

It just sucks usually.

You know, imagine if those pain points just didn't exist

and they were proactively solved for you,

and you were like, Wow, those people had my back.

I'm gonna go back to them and how clever of them

that they were able to fix something

before I even knew it happened.

Yeah, sounds much better

than my experience getting here, I will tell you.

And last question, in case anyone is planning a vacation,

do you have a favorite Vrbo that you have stayed in

or one that you have your eye on in your marketplace?

Is there a really cool tree house somewhere

that we should all be booking?

You know, I won't say one property,

but I will point out, you know, one more difference

of us versus our competition.

Our competition tends to talk about, you know,

the tree house or the Yes, they do.

You know, the hot dog house or the spaceship house.

The really cool trailer. Yeah.

You know, like I would encourage everybody,

like, go stay in the house with a pool,

and a nice grill, and a hot tub.

[Interviewer] Really good air conditioning.

Maybe a plunge pool, yeah, maybe it has air conditioning.

It's not like this ridiculous stupid thing

that you're like, Why the hell did I do this?

You know, that's the big difference.

But, you know, if that's what you're into, spaceships.

You know, we've got a campaign coming out next year,

which will, you know, clearly portray the differences

between the two of them.

But it kind of comes down to the idea of, you know,

yeah, you can go stay in the space ship

or you can stay in amazing property

and, you know, gaze of the stars all night.

That's the differences between the two things.

And if you like discovering that weird shit

in the bathrooms and stuff, go with the other guys.

[laughs] Well, on that note,

thank you so much for being here, that was fantastic.

Thanks for having me.

[audience clapping]