We’ve just released a new episode of The Secret Sauce of Property Managers Podcast. In the episode, Vanessa de Souza Lage, Co-Founder and CMO of Rentals United interviews T.J. Clark, President and Co-Founder of Turnkey Vacation Rentals, a large property management company managing over 6,000 units in the USA.

Ranked number 12 in the top 50 property managers in the world, TurnKey Vacation Rentals is a full-service vacation rental property management company for luxury homes in 80 popular destinations across the USA. 

With 6,000 properties under management and 470 employees, Turnkey Vacation Rentals is an industry leader and a high-growth, tech-enabled company. Let’s dive into the interview, where T.J. Clark reveals the company’s secret sauce for strategy, operations, technology and distribution.

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Vanessa: T.J., let’s find out who you are, what you do in the company and what you were doing before the adventure with Turnkey. 

T.J.: I am T.J. Clark, I’m the President and Co-Founder of Turnkey. We founded the company with my co-founder, John Banczak, back in 2012. John and I had worked together as colleagues at the Hotwire.com startup team where I also met my wife. After about four years of operations, we ended up selling that business to IAC.

We both stayed on for a time after . I stayed there for several years. John and I reconnected when he was conceiving the Turnkey business model.

I loved the idea that we would be helping homeowners put their homes into the short-term rental economy.

Big innovators like Vrbo and Airbnb were making it much easier for homeowners to do that. And could really monetise because they were sitting on what is usually their most valuable asset, oftentimes a second home.

So the whole idea was very intriguing: to try to help the homeowner with the logistics and the hospitality side of the business, which hadn’t been as evolved. We thought it had a big opportunity to benefit from technology, to make the hospitality provision more efficient, more reliable, and a higher quality for the guests. And, to be a great value opportunity for the homeowner by using technology to drive costs out of the process and then pass those savings along to the homeowner. 

Tell us a bit more about the Turnkey brand. What does it stand for? Not just from the property manager’s side but also from the guest’s side.

Our typical client is a homeowner that has a second home in a place like Lake Tahoe somewhere in the US, usually a leisure destination on the beach, a ski town or mountain area. They usually want to use their home a couple of weeks a year. And when they’re not there, they would like it to be rented short-term. We go after homes that are above average in quality, where the homeowners care about the condition of the property.

Our main value proposition and brand promise to the homeowner is delivering peace of mind and greater returns on their second home investment. 

On the guest side, we want to deliver a unique private home that’s upscale with the quality of hospitality that you’d find in a fine hotel. We want to bring a lot of the conveniences of a hotel to the vacation rental renter in terms of the ease of making a booking securely online with their credit card. 

The dates and availability and rates are all up-to-date and accurate. We give an app so that it makes it easy for them to see all their booking information. They get robust pre-arrival communications. The app takes them right to the door of their rental where they can check in with a digital lock. It’s a digital lock that we manufacture, and it issues a unique code for every stay that’s date and time-limited. It’s secure for that guest: there’s no codes or keys floating around that are not unique to their stay. 

When open the door, we want there to be no surprises. We want to be as it was advertised. And if need help, they can get it twenty-four hours a day. At the end of their stay, we’re not asking them to clean or take out the garbage. I don’t know where those ideas came from, but we don’t think those fit. That’s not what a hotel-trained customer wants. So we take that part off their hands.

Since you’re in the process of scaling your business, I’m curious to know what you’re doing to get more bookings, and, on the other side, to get more property owners. Six thousand properties is a big amount – how did you get there? And what does the future hold in terms of scaling further?

The first property we brought into Turnkey in 2012, I rented myself to move to Austin to help start the business with John. So our first revenue dollar was actually on my own credit card. And we quickly realised that’s not a scalable business model. We were going to have to get more homeowners. So, the value proposition for the homeowner was that we could bring a technology platform and smart rental home features to this rental space, do it in a very sophisticated way and raise the level of hospitality that we could provide while lowering the cost that they were paying.

Our commission rates are very competitive – not always the absolute lowest, but we’re on the lower end of the range. And we really focus on distributing the home through all of the key distribution channels like Vrbo. We were one of the first major PMs to integrate directly with Airbnb. We were the US launch partner for Homes and Villas by Marriott. We’ve adopted a direct connection to Google’s VR and hotel search product. So we want to be on the front line of getting owners onto the and getting them a good ranking there. 

We started in Austin and learned how to operate there. Once we got to about 70 owners in Austin, we branched out to the Texas coast, and we branched out to Santa Barbara, which was a big stretch. So one near market, one far market. We learned how to operate the business remotely and set up local teams in those markets to do home care physically. Our Turnkey employees live in a market like Santa Barbara and they go check on homes themselves and coordinate vendors. 

From there, we started adding more markets. At one point we added twenty-four new US markets in one year.

And now we operate in 80 destinations in the US. We have about 50 local salespeople that live in those destinations, and they help us meet quality homeowners and grow our inventory base.

Now, we add hundreds of homes a month and intend to keep growing in the US where there are many millions of homes. It’s a tremendous market.

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You said 24 new markets. Is that the biggest mistake you’ve ever made?!

Possibly! There were days. It was hard, for sure. We didn’t get everything right and we learned a lot as we went along.

Our philosophy is to try to make incremental improvements every single day.

We learned from our mistakes and made sure to decrease the chances of that ever happening again.

In the end, when you’re delivering hospitality in a vacation rental, a lot of things can go wrong. It could be the weather, the cleaning, the lock, you name it. You have to deliver a hundred things correctly to have a successful rental. So we focus our technology on helping reduce the chances of an error. Eliminating the bad helps you work your way into better review and averages. So we enjoy about a 4.7-star average.

Looking at cleaning, how did that evolve last year, and what did you put in place with 6,000 rentals in so many markets?

Cleaning is probably the hardest thing that we do as a property manager. I know some of our colleagues in property management would probably agree. 

We work with some fantastic third-party cleaning teams that are located in our local markets. And, we’ve built some technology to help us with the cleaning process. It’s an Android app on a tablet that physically stays in the vacation rental. When a booking comes into our system, it issues a job request to a cleaner. If it doesn’t work with their schedule and they reject it, it will go to the next cleaner. If accepts it, it issues a lock code for them and gives them a schedule in their mobile interface where they have their list of jobs. 

When gets to the home, the first thing they have to do is check in on the tablet. We want to know whether they made it into the unit in time to successfully clean the home, especially if we have back-to-back bookings. This has all been made a lot more acutely important because of Covid and distancing to keep our guests, staff and cleaners safe.

Our cleaners get a series of standards by which we want the property cleaned. We ask them to take a photograph that they are using CDC-approved cleaning products. At the end of the cleaning, the cleaner literally takes the tablet and goes around the property. At the top of the screen, there’s a photograph of every key room, and they need to take a photo that matches the control photo. 

All the photos get reviewed by a human within five minutes, while the cleaner is still there. This happens twenty-four hours a day. If there’s a problem, flags the photos. Then the cleaner can go fix those photos and resubmit, and be paid within 48 hours by direct deposit.

When a guest checks in, they get an Uber-style request to rate the cleaning on a five-star scale. More than half of our guests rate the cleaning and we have a 97% success rate. The system then allocates more jobs to the better-rated cleaners and removes cleaners who receive low ratings.

It all runs in a highly automated way with very little human intervention from Turnkey. We processed over 250,000 cleans this way.

If we hadn’t already implemented this technology before Covid, I don’t think we could have adapted to the new standards as quickly as we’ve been able to.

It creates a higher-quality experience for the guest and it helps us pass on savings to the homeowner. 

What else have you created in terms of technology?

We think that safety and security is a big deal, that’s why we have an online identification process so that we know each guest is who they say there are.

We also have noise monitors in each home.

So the screening doesn’t stop at the point where you book: when you’re in the home.

As we operate in neighbourhoods, we think it’s important to be good neighbours and owners. We like to go to parties, but we don’t like parties happening in our rentals and neither do the neighbours and owners! So we want guests that are going to be respectful. The noise monitor notifies us if the decibel level is getting too high. That allows us to step in and work with the guests to resolve . 

In 98% of cases, the guests do quieten down and are respectful. So it works really very well. Plus, it helps reduce our incidence of damages in homes to less than 3 in 1000 stays. Meaning we can avoid getting citations and we can keep that owner’s rental permit intact. It’s a win-win for us, owners, neighbours and guests!  

Did you build your own property management system?

No, we didn’t. We use Escapia as our core PMS, but we have augmented it with a lot of other services and tech. Basically, we built on top of the Sscapia PMS.

How do you choose the channels that you work with? Do you work with any niche or local ones? And what does that process look like?

At Turnkey, we are trying to be more selective with who we partner with. We have really enjoyed our partnership with Homes and Villas by Marriott. They’re an outstanding partner and are very collaborative. I think are going after a void in the market. Bringing their Bonvoy membership, earn and burn points from the world’s largest points program to pre-screened homes that are extremely high quality and delivered really well. I believe that is unique to the market.

In terms of our partners, our relationships with Vrbo, Google and Airbnb are also very strong. We are in constant contact and they are very collaborative. 

We look for quality over quantity in a partnership, where we get to work with that partner to improve volumes and improve our respective businesses. 

What’s the percentage of direct bookings?

I don’t want to disclose the exact percentage, but it is growing! Comparing the percentages of other major hospitality brands direct bookings report, we are definitely getting there…. after eight years!

Finally, we are getting to where we feel like we’re within close grasp of the industry standard.

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How do you market to your owners and how do you get new owners on board?

In the beginning, no one knew us. So it was very door-to-door, one-on-one sales outreach.  Luckily, since then, we have built a little bit of a brand for ourselves in these markets.

Our homeowners refer other owners to us which is great and we love that. 

We also have an active local salesperson in a market and they go to their local homeowner’s association meetings. 

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What are your thoughts on the future? Keeping in mind that we can’t really predict anything at this stage.

I am hoping to see other travel segments to recover, the airlines, hotels, rental car companies and the OTAs. I think it’s no secret at this point that the vacation rental segment did quite well through Covid. But it wasn’t evident that it was going to be happening in the spring. It was extremely scary.

But, luckily, it did come back. Staying in private accommodation, where you might have a pool, you’re not interacting with a lot of other people became a very popular way for people to escape the four walls of their homes over the spring and summer. When schools didn’t return, bookings surged throughout autumn.

It was especially focused on leisure markets. The metros didn’t fare as well. If you can’t drive to the market, it didn’t fare as well. And so we still have some markets that are behind where they were. Hawaii, for example, had very serious restrictions. California had a lot of restrictions. And metros, unfortunately, like Nashville, just didn’t fare as well because a lot of the fun things to do in Nashville were not available to do.

But, you know, we feel extremely fortunate that we are where we are. We were able to keep our entire team. Last year was a good year and I feel energised going into this year.

Editor’s note: This interview has been edited for brevity and clarity.

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