Worried about your competitors? Here’s why you shouldn’t be
Teamstar Holiday Rentals and Amartio managing director, Jack Cheshire, discusses how short-term rental property managers should not be worrying about their competitors in the short-term rental industry and instead see it as an opportunity t0 enhance their own business.
Recently, I assessed my business’ place and position as a short-term rental manager in our local market using data from AirDNA. The results I found confirmed what I already thought; we were performing head and shoulders above our closest competition on a multitude of key performance indicators. I had this amazing set of data — now what should I do with it?
Naturally, I wanted to shout about it, but there was some resistance from my team. Did we want our competitors to know how well we were doing? What if they tried to imitate us?
And of course, the same can often affect you in reverse. As a business owner in the short-term rental market, it’s sometimes hard to not get bogged down by worries of your competition; what are they doing? Are they using the same softwares as you? How are they innovating?
But I’m here to argue why you shouldn’t worry either way. Competition is a blessing to you and your business and it’s time to embrace your competitors.
Look at the marketplace
It’s certainly a benefit to be aware of your competition, I’m not arguing otherwise. That’s part of the reason my business uses software like AirDNA.
Using data, you can understand your position within the wider local marketplace and who your competitors are. Whether you’re in a smaller market like the Costa del Sol, or a huge market like London, often you’ll find that when you drill down into it, the short-term rental market is so over saturated with small-scale rental managers that the majority will never pose serious competition. These businesses are typically lifestyle businesses, where the owners are fixed on survival, not growth or innovation.
Even if your competitors are focused on growth, or are perhaps a larger venture capital backed business, this isn’t a disadvantage to you, and if you continue to read on you will understand why.
Your competition will never be you
Nobody can perfectly replicate one’s innovation, and that is to your advantage. For example, if your business has three key points of innovation, the chances are your competitor might only be able to mimic your actions and improvements to an effective degree of say 90 per cent [because it’s really unlikely they have the inside track on your secret sauce, prohibiting them to really nail each one]. If you multiply this 90 per cent ability to copy each area, total innovation will sum to a degree of accuracy of 72.9 per cent. Any copycats out there will get progressively worse each time you innovate, and in this scenario, your competition will be c.30 per cent worse than your total innovation. This coefficient decreases further with the addition of each innovation function.
Meaning that for each innovation your team or company make, you are creating a moat of defensibility around your product and service. Taking this to the extremities, if you innovate on 100 different points, any copycat will recreate your business to a degree of success of 0.0027 per cent [100×0.9¹⁰⁰]; the concept compounds. If your business focuses on innovation and constantly adapts and improves, your competitor will never be able to catch up. Even if one of your competitors can replicate one part of your innovation perfectly or perhaps better than you, within the short-term rental business there are so many moving parts and opportunities for innovation that it is impossible for your competitor to perfectly replicate you on each one.
In my opinion, if you have the confidence in your innovation ability, it does no harm to share news of your successes with your competitors, because by the time you do, you’re already on to the next innovation.
Healthy competition increases your drive to innovate
You might be concerned that once you share information or innovations, you’re creating a stronger competition. And the chances are you will be! This is a great thing, as a better competitor increases the likelihood that you yourself will improve. A healthy competition means you’re unlikely to be complacent with your business.
You want your competitors to do well because it means you will do better, and if, as noted in the previous point, you have confidence in the innovation ability of your business and team, you will also know that you are not only innovating further and faster than they are, but also that your business model is impossible to replicate.
And of course, it works both ways — if you have a serious competitor you can learn from them through osmosis, but try not to focus on them too much, because…
If you focus on your competition too much, you can take your eye off the ball elsewhere
If you focus on your competitors, thinking or discussing what they’re doing, trying to replicate their innovation, ultimately you will end up trailing behind them because your time is wasted instead of used valuably by focusing on your own unique innovation and investing in your team. You’ll always end up chasing and replicating, but never innovating yourself [exhibit A from point ‘Your competition will never be you’– we’ve now gone full circle!].
Moreover, I have a strong belief that keeping your team focused on themselves, the business they work for, the innovation they are acting on is so much healthier and more positive than focusing on what your competitors are doing. Focusing too much on the competition when working with your employees creates a negative working environment and at the end of the day, we want our staff to enjoy their jobs, feel positive about the business and look forward to coming to the office each day.
Ultimately, competition creates a healthy market and improves the guest experience
If you really do have serious competition, this isn’t a bad thing because competition creates an efficient marketplace, and ultimately creates a better guest experience for the guest. If every guest has a great time on their holiday, whether it be with you or your competitor, the chances are it will create a desire for guests to return to the area, increasing the size of the market. If your competitor is offering a product or service that is just as good as yours, they are creating demand with you, and it becomes an additive experience, not a zero-sum game.
Based on the Costa del Sol, Jack Cheshire is managing director of Team Property Group, which encompasses short-term rental businesses, Teamstar Holiday Rentals and Amartio, as well as sales businesses, Team España and Chestertons Costa del Sol.
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