Rented.com CEO Andrew McConnell appeared on the Peak Performers podcast with host Thor Conklin in order to discuss his background and the vacation rental industry. It was a lively and informative conversation between two knowledgeable entrepreneurs. Here’s an interesting excerpt:

 

Conklin: So you’re just doing like an arbitrage between…

McConnell: Exactly. Lease arbitrage. We buy long-term and then we rent it short-term.

Conklin: Interesting. So if you have some sort of global downturn or something your risk could be huge. How do you mitigate that risk?

McConnell: Obviously it’s going to be different the next time around, but the interesting thing about our space is, if you look at ‘08, ‘09, and forward, that’s when the space took off. Occupancy rates went up. Average daily rates went down a little bit, but occupancy went up. Because people don’t stop traveling in a downturn. They don’t fly to Hawaii. They drive to Destin. They don’t fly to Bali. They drive to Hilton Head. And that’s why we’re very deliberately focused on this globally balanced portfolio in more drive-to markets where, in a downturn, the data shows they actually perform incredibly well. Because you still want to take your family on that summer vacation you just have to do it more economically. So you’re not getting two hotel rooms or three hotel rooms and trying to keep everybody. You’re getting one house for the price. I got back from my tenth wedding anniversary with my wife. We brought our daughter along and we brought my in-laws. We were in Italy, and each place we went to (Bologna, Florence, Rome) we would get dead center on the Trevi Fountain, on the Ponte Vecchio, penthouse, three-bedroom, huge apartments that were perfect for all of us for the same price as a good hotel. And we have had to have two or three hotel rooms to get that kind of space. And that’s in an up economy when people are more flush and willing to spend. In a down economy they actually go more to vacation rentals and these alternative accommodations like Airbnb.

You can listen to the entire episode of Peak Performers here.

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