The Secret Sauce of Happy Holiday Homes

Vanessa: Please tell us about you and Happy Holiday Homes, please can you tell me a little bit about—in fact let’s start with you. Who are you—what were you doing just before Happy Rentals and what is your position now at Happy Rentals?

Harold: I left Holland some 30 years ago and went to live in Italy, I studied for Technical Business Administration.  So, I went to work in chemicals, something completely different. Lived in Milan 12 years, working in chemicals. After Milan left to England three years, lived in Belgium three years and then thought we had to take our life back in hand because otherwise the expat life would take over.

We have a seaside family house in Italy and I started to rent it out six years ago before we came back to Italy. I found out it that it rented like crazy. But, the property management part of it was very difficult so I thought to myself, property management is something that actually many people must struggle with. Owners with a second home don’t want to go there for a weekend because going a weekend means working for a weekend or going there for a week even means working for a week.

I started to think about opening a company to property manage houses actually for owners. Just owners who could afford a second house and needing someone to take care of it. In England property management existed but in Italy in 2006 it didn’t. 

By pure chance, we started in Lake Como, when Clooney came to live there. We call it the “Clooney effect” as it started a big wave of investments. People actually buying homes—the villas, apartments, to make them their second homes. They invested in it big time so now abandoned forgotten place became really beautiful again. 2007 we started the company, we started property managing actually in Lake Como and our rental company Happy Holiday Homes is headquartered in Lugano.

We also started to be quite good in real estate sales because with rentals ultimately sales comes in the picture with owners wanting to re-sell or actually wanting to buy another one because it goes very well. Or guests coming in and wanting to buy a house because you manage it properly and they enjoy it. We also did the refurbishing for owners because it can be a real nightmare to refurbish at a distance. And lastly we also launched an experience program for guests.

So that was our start in Lake Como and then we extended the business to Lugano city and originally I thought—that would never work because it’s not a touristy area. But actually it’s a mix of tourism and business: summer time holidays and in the winter time and off season there’s actually more people coming for business or for hospital, schools, American schools, there’s all kinds of stuff going on here, conferences as well. It’s actually a very good city for us.

BUILDING TECH & OPENING OFFICES

Then we thought about enlarging to new areas and started building our own property management system because in 2007 there was nothing on the shelf to buy. Our lead programmer has been 12 years with us developing our system, and he manages a team of 4.

To scale to different regions we started thinking about the franchise model but we felt we needed to open our own offices to be able to see what’s good for franchisees and what’s not good franchisees? We opened 10 offices ourselves in 2017, actually property management offices in different areas.

In 2017 we also opened a back office in India. We have our own office in India, our own company in India with about 5 people working for the automation, software programmers there, for payments as well. There’s a lot of as you know, back and forth with the payments. People pay us, we have to pay owners and we have to pay also the data entry people because not everything is programmable yet. Whatever’s not programmable, we have actually people putting it in their entry systems. 

We opened various locations in Italy and around Lake Maggiore in Switzerland and Chamonix in France. It turned out to be the best opening actually, Chamonix is a very interesting location because it has two seasons. Actually summer is more busy than the winter time so that’s Chamonix.

We open offices with 2 people and they gather good homes and put them in our system. We also have a photographer working for us to take good photos.

FINDING MARKETS WITH A SCARCITY OF PROPERTY MANAGERS

Vanessa: How do you research the locations in which to open offices?

Harold: Unfortunately or fortunately we did not do much research, it actually was more gut feeling on where to open, that’s the fact. We knew Lake Como was working very well. We knew Lugano was working very well. We had actually a franchisee since a long time in Livigno. We had a feeling of okay, wherever we work we are actually able to get traction, to get owners in.

The strange thing in Italy is that actually there is still not much available in terms of property management in the touristic areas. Because people are keen to sell and manage condominium but managing inside the house and do the property management and the rentals on a professional level, it’s very rare. Some owners of course as you know go to Airbnb and do it themselves and we also find some real estate agents who do the seasonal rental that we find.

LEGISLATIONS A REAL BOTTLE NECK WITHOUT AUTOMATION IN PLACE

We find some couples here and there who actually have maybe 10 houses, and then they start to manage their neighbor’s house as well. They end up with approximately 20 houses and then they get overwhelmed by legislations. There’s more and more legislations now. For example, in Italy you have to actually register your house for rentals, you also have to pay tourist tax for all your guests which seems to be very simple thing but hard to organise.

Every guest coming in you have to declare to the police office at 12 o’clock the next day. That’s something which is easy if you have automate it but it’s very hard work if you don’t automate it. And if you just don’t do it, you take a big risk. Of course you have to hire cleaners or a cleaning company, you have to hire bed linen, you have to hire the warehouse, you have to actually start get organized.

If you have 20 homes, you go completely crazy, when the season starts it’s like maybe 20 hours’ work a day. There are people always buying but we don’t find organizations who do our job. Except of course in Chamonix, where property management is existing because the Brits have been going there forever.

But also there there were not many big property management companies. The biggest one has about 80 homes which is quite surprising. There’s many small and also very many who don’t want to do our job. They actually do it because they want to sell homes and to sell a home, you also have to offer our services – property management and rental. Otherwise people don’t want to buy the house because you can imagine British people don’t buy a house if there’s no property management and the rentals in place because it’s not the second home, it’s the fifth or sixth or seventh home they have. So they don’t want trouble with it.

Vanessa: So you have an offering for the real estate agents as well, you partner with them?

Harold: We try to partner with real estate agents. It’s not always very easy because they are normally very jealous about the owners although they don’t do our job they still are jealous about it. We took off quite a good package of owners from two real estate agents that actually didn’t want our job. They were doing it in a very unprofessional way by all means. They are very nice people but that they had the guests from before cleaning for the next one.

In Chamonix, two and a half years down the line, we have 240 homes right now which are running really well and have long seasons. For us Chamonix is a really good area.

Vanessa: Nice one. How many properties do you have in total now that you manage?

Harold: We have about 1500 properties right now.

HOW TO OPEN A VACATION RENTAL PROPERTY MANAGEMENT FRANCHISE

Vanessa: You mentioned franchise, this is a big word at the moment in the industry… Many people are saying this is one of the way to grow and we are going to see more and more of it. I have met a property manager who has done franchise in the past and he wasn’t successful at it. So I was hoping that you’re going to tell me a different story and that you are actually successful with franchising. How many franchises do you have today?

Harold: I started to think about franchise about five to six years ago…. To be able to franchise, you have to have a really good model. If you walk into a McDonald’s which is franchised or an owned McDonald’s you should not notice the difference. So the first three or four franchisees we had, they did the wrong thing.

They just did whatever they wanted. One was selling homes, the other one has a ski school. If you don’t define it properly, it just won’t work. You have to really define it properly. For us it was actually important to do our own offices to see how it works, to make copy and paste models. 

Now we are we able to do that. We’re starting three new ones at the moment. One in Alba, a little old village in the Piedmont area. It’s not a very touristy area but an upcoming market. We are opening two in Spain as well. It is a very nice way forward, in my opinion it’s a dream for the property manager because someone else brings you the guests. You can focus on your units, on your area and not get involved in the bookings, in the payments, in the marketing and all the systems.

We offer this to people who actually have maybe 20 homes and are going crazy. Now they are able to go on holiday and lead a normal life. The whole business doesn’t collapse because they’re not there… they now have a company behind them. 

Their jobs is to get the homes, organise them and clean them and make sure they’re in good order for the next guests. At the end, if you automate that load, it’s a pretty easy job.

Vanessa: I imagine your franchises have a quota on how many homes they need to bring? Is there a target? 

Harold: That’s right. We’re looking for good franchise partners. People who are interested in doing a real good job in property management, get many homes on board and really be very local so that we can do all the rest for them. We tend to have a 200 – 250 – 300 homes per office. That’s our target. But, it depends of course where you are.

Vanessa: You go and visit them a lot? or do you hold their hands for a number of months and then you leave them to it? How does it work? 

Harold: We actually have a system with the franchisees where they also help us in training others. There’s a rotation between them. An obligatory rotation between them so they have to visit—two weeks a year they have to visit our offices and two weeks a year they have to accept also other people as an exchange. We now have a concept manager. This concept manager actually makes sure everything in the concept works the same in every office.

So, there is a bit of MacDonald’s as I said before. You shouldn’t notice the difference if you are in our office or in the franchise office. And if you are in our office in Chamonix or our office in Allasio, there should actually be same concept, and same way of working and the same welcome back, and so on. And that is very important to me.

A TECH OFFICE IN INDIA & A HIGHLY COMPLEX EXTRANET

Vanessa: Let’s talk about technology. You said you build your PMS since 2007, do you have 5 programmers in-house in Lugano or is your tech team completely based in India?

Harold: Our original programmer is a partner and a great guy. He’s actually based remote in Malaga. And in India, we have four people working with him. The manager of our India office is is hiring the right people and getting them motivated.

Vanessa: The PMS you said you build yourself because at the time, in 2007, there was nothing around. So, tell me about maybe a few features that you are very proud of that helps you run your property management company. 

Harold: I’m most proud of how accessible our platform is. We have our employees that need to use it, agents, guests and our owners too, to see their bookings and make payments.

They are able to click on “pay me now” which is a very little nice button they love to click : ) We only allow them every second month to actually click on it otherwise my financials would be ticking twice a day I guess : )

In the owner portal they can book their own house, they can change their own bookings again, they can ask if they want bed linens or not, and they can ask many questions within the system. We have little contact with the owners because of the system.

We have agents using the system too and book houses directly online without talking to the booking team. We have booking team as well having their own access.

There are a lot of features about all the financial parts as well. As you know when bookings come in, it has to be divided between booking fees, cleaning fees, bed linen… it has to go to the local offices, it has to go to the owner, and lots of things happening there. So we’ve built in a whole financial system into our system as well. 

It is a very complete system actually. We’re still developing because things always change and because we want to improve it.

Guests use the system to get directions and when they do that they have to put in their personal data which then goes automatically to the police office.

In Italy since two years ago we actually have to pay taxes on behalf of owners. So, your owner gets an income of let’s say 10,000 Euros a year we have to pay about 2,100 Euros of that to the tax offices. So new legislations like these are actually a nightmare one side, because you think “oh, shoot! Not again something new!”. But on the other hand it helps us because the more legislations we have to adapt to, the more of an advantage we have over the others who actually don’t have the automation. And without automation you really can’t do it.

OCCUPANCY RULES. WHERE THE BOOKING COMES FROM IS IRRELEVANT.

Vanessa: So, it gives you a competitive advantage having built your own tech, correct?

Harold: Yes.

Vanessa: What have you not built? One thing I imagine, distribution. Do you connect to the big OTAs directly? 

Harold: In deed we connect to the big ones, to all of them actually. We connect automatically, calendar is updated automatically, prices are updated automatically, but not always texts and features of the homes. When not, we do it manually via India.

There’s more and more parties out there, big ones, the big four, the big five, they take the biggest part of the market. But it’s also very interesting to be with the niche ones certainly, and it is also interesting to have smaller local agents to book with us. We have some really good agents who book with us and why not enlarge that circle? So, to get visibility for us is important, we don’t really care where the booking comes from, we just want the houses to be full and booked. 

Price optimization is also very important now, we have our own yield management system. Prices have to be variable and we change the prices every day now. We have different discount schemes that allow us to fill the houses because occupancy is the most important thing. It doesn’t matter to me where the booking comes from, that’s completely irrelevant.