From Zero to 100 Vacation Rental Units with Franklin Dusserre, Co-Founder of French Cowboys

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What does it take to build a vacation rental management company from scratch? Franklin Dusserre walks us through his journey building French Cowboys Management. What began as helping a few friends manage their Airbnb listings turned into a leading vacation rental management company in Austin, TX.

In this interview, we dive into the Golden Age of Airbnb, the changing regulatory landscape, and the tactics and learnings that have helped Franklin navigate scaling an operationally intensive business.

Some takeaways:

* Golden Age is over. There was a period during 2021-2022 that Franklin refers to as the “Golden Age” of Airbnb. Rates were relatively low, travel was at all-time highs, and there was a shortage of inventory across the U.S. This attracted many “passive investors” and operators into the space. However, the past few years have shown many that there’s no such thing as easy money. Rates have increased, more hotel taxes and regulations are being introduced, and travel has come down.

* Operating on a revenue share model. Similar to property management, the space operates on a revenue share model. The market is around 25%, but can range from as low as 20% and as high as 30%. That is on room’s revenue, net of housekeeping fees (which are passed to the guest) and taxes. Any one-off or ongoing maintenance is billed directly to the landlord, such as landscaping, HVAC work, etc.

* It costs a homeowner $1500-$2500 to go live. Franklin suggests budgeting $1.5K - $2.5K before going live. The lions share of this is for high quality photography. The rest covers investments like smart locks and professional linens. For investors who recently acquired a unit, French Cowboys will front that initial investment and deduct it from future revenue. That’s how important photography is to a successful listing.

* The online travel agencies (OTAs) like Vrbo and Airbnb require pricing parity. While you’re not allowed to offer discounts for direct bookings, you can offer perks like early check-in, upgrades, etc. Franklin does this so that they can save on the 20% platform fees, streamline operations, and build a relationship direct to the customer (the OTAs make it hard to access underlying customer PII).

* Housekeeping can make or break your business (and your customer’s). Originally, Franklin ran housekeeping at a loss. Over time, those losses became significant. Now they target a 20% margin on housekeeping and are transparent about this with their clients. Why? It allows them to cover software costs, back office labor to manage the housekeepers, and some margin for when things go awry. Franklin flagged that housekeeping is how some vacation rental management companies can take advantage of rental owners. The management company keeps 100% of the margin from housekeeping. If they want to be shady, they can hike the cleaning fees (which are passed off to the customer). This can lead to lower bookings rates, as the effective nightly rate for customers is higher. Franklin prefers to bake in a 20% margin and be upfront about it.

* The market will stay fragmented, despite efforts to roll-up mom-and-pop operators. Big players like Vacasa tried national rollups but failed due to poor local execution. Franklin sees more promise in franchising models like CasaGo and believes local trust will keep mom-and-pop operators competitive.

Where to find Franklin and French Cowboys:

* LinkedIn: https://www.linkedin.com/in/franklin-dusserre-90026656/

* Website: https://www.fcmrentals.com/

* Instagram: https://www.instagram.com/fcm.homes/

In this interview, we discuss:

* 0:00 Managing Across Airbnb, VRBO, & Others

* 1:22 Intro to Franklin Dusserre

* 1:54 Pricing Parity is Required

* 2:51 Benefits of Direct Booking

* 4:02 Starting French Cowboys in 2021

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