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. Steve: Today we are with Chad Rowe and Rowdy Stovall from 3rdHome, and
they're going to be explaining how to become affiliates of 3rdHome through
Cosago, what are the advantages and homeowner acquisition strategies
and how to get your homeowners.
On the program to make them more sticky and give them the benefits
of this really cool offering.
We have so welcome guys.
Thank you.
Thanks.
How you doing Steve?
Doing great.
Glad to have you guys here.
Chad, you're the SVP of business development.
Is that right?
That's correct.
Can you tell me a little bit about your role there?
Rowdy: Sure.
Yeah.
Within the business development department my job is essentially B2B
relationship building and partnership acquisition, if that, that rings a bell.
So whereby there's a different division that handles our
organic growth within third home.
The affiliate and business development division focuses on B2B relationships
whereby major hotel brands, such as.
Ritz Carlton, Four Seasons, Au Baird, Rosewood development companies globally.
To the obvious one here in short term vacation rental managers right
on down to individual real estate.
Companies and real estate agencies.
We work with them all.
Steve: Yeah.
And Rowdy, you're the director of business development.
Nick: That's right.
Yeah, I basically was brought on this last year.
I was working on a resort development lease last year.
That's where I was introduced to chat in the 3rd home.
And then when I left that project, I came over and basically is Director of
business development supporting what basically what Chad just mentioned and
kind of focused on real estate developers brokers VRMs, such as you guys and
just supporting him in those efforts.
Steve: Now, Chad, I understand you started with natural retreats.
Rowdy: Yeah, literally right about the time when third home came out of
the ground 2010 I brought a British brand called natural assets and its
sister company, its operating company called natural retreats over here
to the U S and launched it in my hometown of Charlottesville, Virginia.
So I, made myself employee number one and grew that brand from zero
to the stance that it's in today.
. , Steve: it's a great brand and some really nice people over there.
Sarah Frazen was there for a long time and just a whole group
of great people over there.
Yeah.
Good talent.
Good talent on that team for sure.
. And Rowdy, you were on 90210.
Whoa, hold on.
Nick: No, that's wrong.
No, you don't have it wrong, but that was many years ago.
Yeah, I got a, when I left Texas and moved out to elevate in the mid
nineties, I was in the film industry for about 20 years and first few jobs
were acting jobs and my, one of my first roles was, The bartender at
the peach pit after dark on 90210.
This was in like 97 or something.
So yeah that, that is a fact that
Steve: So tell me about third home.
And how our partners are able to leverage it and maybe just start
with what exactly does it do?
Sure.
Yeah.
Rowdy: The idea of luxury home exchange, which is the industry that we're in
specifically, not a new concept been around for decades, but much like the
short term vacation rental industry, it really didn't organize itself
and, professionally balance itself.
Yeah.
Here in the U.
S.
and elsewhere until around 2010.
The idea of exchanging time in one's home certainly overlapped with the timeshare
theory, which this is certainly not.
It instead pairs very well with the luxury realm of second home usage.
Whereby, whether a person rents their home or not they might feel as
comfortable or more comfortable if a club member, a fellow club member of
a vetted organization, so to speak,
. Steve: Chad, tell me, . How exactly does it work?
Rowdy: Well, third home essentially is a keys for time program.
It's an indirect option versus a direct option.
So it's not.
Two individuals exchanging weeks in their own homes.
It's guaranteed time in one second homeowner's property for credits or
keys that then are used like currency to exchange in another homeowner's home.
Does that make sense?
Steve: Yeah, it makes perfect sense.
Rowdy: That's correct.
Yeah.
There, there are some competitors.
We're not in this industry alone that, that do a direct model where it's
quite literally two homeowners acting as travel agents and coordinating
with each other to share time and in that property on a literal.
Week for week exchange.
We're not that model.
We followed more closely the Marriott Bonvoy model, whereby a points driven
system and already accepted and proven system meshes exceptionally well and
also rewards the higher end properties and the higher end times of year for
the deposited weeks in those properties.
Steve: And so the way I understand it is you provide a currency called
keys and these keys are how you decide what the credit is for like each
week that you put into your property.
How do you earn a key?
And maybe explain what a key is.
Rowdy: Sure.
So keys again are the currency of third home.
They're formulated by two metrics really.
One is the literal market value, the real estate market value
of the property in question.
So we set a base key value based on that market value.
If it's half a million to a million, it's a one key.
Base key value.
If it's a $5 million home and up, we base that as a five key base value.
And then we apply a metric of desirability based on seasonality
of the time deposited in that home.
So if you had a $1 million home and it was a one key property you put that
same property in during peak season, you'd get a two x multiple of that and
it would be a two key week deposit.
Same in a super peak prime holiday weeks.
For example, would get you a three and sometimes four X multiple providing
more keys that then you could use to exchange in the other homes elsewhere.
So you rewarded by guaranteeing time and the more valuable properties
you own or represent, and then exchanging desirable times in that
property for others to exchange into.
Steve: So it's by the value of the property.
Multiplied by the value of the time that you offer to the third home in order to
create an exchange for the keys, right?
That's correct.
And what's the cost for homeowners on the affiliate program?
We have a special deal through Costco.
How does the franchisees, how did the partners explain that to the,
each homeowner as they're talking
Nick: about it?
So when they joined through, through Costco you were able to
waive those join initiation fees.
It's usually a 2, 500 initiation fee by joining through Costco.
You gift them that membership where they don't have to pay the initiation fee.
And also you gift them five keys and five keys.
Like Chad was saying earlier, that's basically on a non peak week.
You're looking at like a 5 million property.
So it's a joining by joining through Costco.
It's a huge value add and a great benefit to the new members
by joining through you guys.
Steve: Now that's great.
And then do the partners also earn keys when somebody signs up?
How does that benefit them?
Rowdy: That's right.
The the partners benefit greatly and really it breaks down to the frequency
for which and the productivity for which they introduce their
homeowner clients to third home.
As a, an owned home enters third home by way of that affiliation the Costco
will earn keys themselves into a master account and those keys can be used for
travel just like a homeowning member.
Of the club, that's the one anomaly to these affiliations is that you
do not have to own a home if you're an affiliate partner to travel as
briskly as you wish within the club using those keys that you earn.
Steve: Is third home integrated with streamline or do they do the
homeowners need to block the units separately in streamline as compared
to the software system in third home?
Rowdy: Really good question.
Third home works on fixed weeks, right?
So we're a bit old school in that regard.
We do have a robust tech stack behind our back office, but
we don't require a direct A.
P.
I.
In fact, we don't encourage.
A direct API with our affiliate partners, because we know exactly the times of
the year that are being deposited.
They're typically deposited all at once and then potentially
updated throughout the year.
And they're, they follow the pattern of an owner's usage block.
So the same manner for which Steve, your.
Franchisees would block times on their booking calendar for
owner stays third home weeks would fall into the same pattern.
So there's no question whether you can double book that property and
whether or not there's somebody already staying in that property
their time off the market, so to speak for a third home member to join.
Nick: Yeah.
And one, one really cool thing, Steve, is that when people put their
weeks in, When they look at the calendar, we'll send them a PDF.
They'll look and, choose their weeks.
They'll see on that file on the PDF file, what weeks are peak season, then.
So they'll make that choice.
And then once they deposit those weeks, they get their keys to travel, right.
Then they do not have to wait for anyone to book their property.
And that, that's another differentiator between us and, there's several
differentiators, but that's one of the big ones between us and other travel clubs.
So they don't have to wait for anyone to book their property.
They can go ahead and travel.
Steve: Benefit of the indirect model.
That's correct.
And how many keys does a affiliate or, one of our partners, get per property
or do they get it just by joining?
How does that work out?
Rowdy: So, an affiliate would typically earn Well, a franchisee
under Costco, let's put it that way.
Every individual owner that enters the program through that Costco
franchisee the master account for Costco would earn one key on the front end.
So when that member joins and joining it equates to the time for which
they've entered the onboarding process and made their qualifying deposits
to become active within the club.
As soon as that happens the franchise E is delivered and they have a
master account has delivered one key.
Regardless of what the key value of the home that enters is now
there's a second key that comes in and an ever evolving and evergreen.
Pattern for them.
So, the real flow of revenue for third home and for this partnership
success is in the booking and travel of these properties once
they're activated on our site.
Not too dissimilar to an OTA or another travel site.
If a deposit that occurs through one of the franchisees books
then the franchisee another key.
So every time a deposit occurs and every time another member
books that deposit, we incentivize that franchisee with another key.
So their pot of keys continues to grow as the activity grows with each
of their owners within Third Home.
Steve: Have you seen a lot of short term rental operators use this to for
business development with homeowners?
And if you have, how's the success been?
And then as a second and follow up question does it have you seen or do you
have any data on how being with 3rd home or, an operator using 3rd home makes
properties more sticky in their inventory?
Rowdy: Sure.
Yeah, absolutely.
We're we currently have over 40 vacation rental.
Partnerships within our organization, and that's on a global scale.
There's close to 200 affiliate partnerships globally include, everywhere
from yacht brokerages to hotelers, the developers, you name it in the VRM space.
It's a fantastic fit for a lot of different reasons, but for two it's
guilt free and risk free, right?
You're leveraging an asset.
You're the owners under management are leveraging an asset that they already own.
So it's not a, an ask by your your franchisees.
It's a gift.
It's an add on to their current package of services that they have the right.
As an affiliate to offer at no cost.
No cost to the franchisee and no cost to the homeowner.
Once they're in, trust me, these owners of homes are going to love it
because they're not paying rent to use these properties and they're paying
a very low booking fee to 3rd home to ensure that trip is both there.
The homes are clean and ready to roll, but we're also ensure those stays with
that with the revenue that fee produces the real flexibility is in the increase
in travel flexibility for that homeowner.
And let's say a franchisee you have is managing 50 to 100 homes.
Well, the good percentage of those homeowners likely for a
good percent of those homeowners, that home might be one of one.
It might be one of two second homes they own, but they continue to utilize that
destination and that property because they fell in love with it at some point.
It's an emotional asset for them.
Third home adds to that.
It doesn't decrease that, but allows them the flexibility to take time that
they would have used themselves For owner block travel to that property and exchange
it into properties all over the world.
Anytime of the year, they wish as often during the year as they wish, as long
as they have enough keys to do so.
Right.
So there's definitely a recruiting positive here for your franchisees.
They're offering an add on to their property management agreement that says,
join us, we're different from others.
We have an incredible incentive for you to take advantage of from the day one
that you join our management services.
It's also a great retention tool for those already under management because
this can simply be gifted to those homeowners right off the bat as a one off.
for staying with us.
Thank you for, being part of the Costco family.
Here's a membership by a third home through the affiliate partnership
that we've just negotiated.
Steve: So, Roddy, tell me about how our partners signed up for the service.
Rowdy: Essentially Costco International your master account as a brand will have
already has a master account set up and with that master account, we have set
up a custom URL, a landing page, if you will, excuse me, that allows recruitment
to occur directly in and through our back office for you for Costco.
You're helping us recruit franchisees within your your family here and
offering this to them to then improve their recruitment and retention model
wherever that destination may be.
They'll simply follow the same methodology and take an introduction through you
and be introduced to my team one on one.
That can be done through that landing page or with a simple
email or telephone introduction.
Once that affiliate or excuse me, once that franchisee has had
an introductory call we'll take a hard look at their business.
Where is the destination?
Do we find it desirable?
Do our members find it desirable?
And as we survey our members often, we know very well where the need
for additional inventory should be.
And then we take a look at the inventory, we want to know that the invitation out to
homeowners under management is going to be well received that inventory is fitting.
And if there are properties within that inventory that may not fit the
mold in terms of a luxury home exchange we'll work with that franchisee to
kind of trim down that list so that we're only going after folks that
both sides don't have to say no to.
Nobody wants to be put in that circumstance, but it's a very
simple introduction can be done.
Electronically can be done.
Personally.
We prefer personally once they're in.
We simply on board those folks with their own affiliate partnership agreement.
We lay out the incentive plans that have been negotiated by the home office
at Costco, and we get them started.
We provide a marketing outline and timeline.
We provide at no cost that franchisee all the marketing materials and
template messages, both print and digital that they can use.
And we're going to provide them with an individual URL and landing page that
they can embed in any message that's relevant to their brand and the way they
speak to their homeowners as an offer.
A gift to those homeowners in any way they wish to offer it.
Those homeowners can literally follow that link and be directed directly
to a, a personal member experience team member on our end, and they'll
individually then onboard each home within that franchise portfolio.
Back of house you may not realize, we're, we have a very robust personal
team and in place and in Brentwood, Tennessee, there's about 50 strong
that do nothing but individual client servicing and relationship management.
We have a similar size office in Marbella, Spain that handles our
European business and another office in the UK that does the same.
So very well equipped both personally and in a technical fashion to receive
and manage your clientele very well.
. Can I insert something real quick?
One of the, one of the most important pieces of, the why third home for a
franchisee is not just the recruitment and retention of homeowners under
management, but something we've really found success in over the past six
or seven years with our partners is recruitment and retention of employees.
Okay.
At my, 14 years with Natural Retreats, we ran into the same issues.
Hiring and retaining quality employees and team members is one of the most
difficult pieces of the vacation rental industry, just like any other
company and industry that backs it.
So to have the ability.
For that master account that we talked about and by destination
each of the franchisees master accounts, they're earning keys, right?
They're earning the ability to travel as members.
And as those keys compile in that account, they have the right to gift.
Those keys out in any manner.
They feel they should to incentivize their employees.
And as long as someone is employed directly under that brand destination,
you can reward your best salesperson for the month with a week long venture to Cabo
or wherever it may be of choice to you.
And you could do it as often as your key count allows.
So there's a fantastic benefit.
Fantastic.
Retention and recruitment tool for your own business strength and your own team
strength that I would highlight as well.
Steve: Yeah, that's a fantastic way to use those keys, isn't it?
Rowdy: We think so.
Steve: So is there a email that we can give them?
. Rowdy: You're more than welcome to reach us via email at
chad, C H A D at thirdhome.
com or rowdy.
stovall S T O V A L at thirdhome.
com.
And we can start the process right there.
You'll speak to one of us on the front end from a franchisee level, and we'll
be happy to, proceed with you from there.
Nick: Steve, I was muted for a minute.
If anyone wants to jump on a phone call or send a text and like, wants
to talk to someone right now and ask, ask questions absolutely.
They can give us a call.
My phone number is 5 1 2 7 8 5 6 6 8 9.
If someone wants to pick up the call, pick up the phone and call or send a text, I'm
happy to answer any questions people have.
Yep.
Rowdy: Same here.
434 996 8543.
I'm happy to take your call anytime.
Steve: All right.
Well, make sure to reach out to Rowdy and chat and get on that third home program.
Make sure to benefit your staff members, homeowners, and even your guests.
So thanks for coming on guys.
Thanks a lot.
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