Ten years ago hotels were perfect places for staying during holidays. Now people opt for vacation rentals on booking websites. While vacation rental services like Airbnb and VRBO are popular, we often receive reviews about these third-party operators.
In this video interview series with vacation rental expert, Mary Branum, we asked her to share tips on how to book a vacation rental, how to avoid booking scams, and what renters and homeowners should do to protect themselves.
Mary Branum is an owner of vacation rentals on Galveston Island and President of STROAG.com. She knows everything about vacation rentals: from the travelers’ and owners’ sides.
1. Airbnb VS Traditional Renting: Pros and Cons
In this first video, we discuss Airbnb vs traditional vacation rentals, the benefits of booking directly from local owners, and how they build their clientele.
Questions covered in this video interview:
- How did it start
- Airbnb vs Local homeowner
- Airbnb benefits for local owners and travelers
- How to maintain good clientele
- How Covid-19 affected vacation rentals
- Relationship between homeowners and renters
1. How Did It Start?
Mary Branum: I was privileged to be part of, well, initiated the first city ordinance in the country for vacation rentals. Just prior to the ordinance, we formed an organization called The Short-Term Rental Owners Association of Galveston, known as STROAG.org, and that is our website. We are a 501(c)(3) and we are here to educate.
My property is the Coronado Palms Coastal Cottage, and my website is coronadopalms-galveston.com. My husband and I, we got it back in 2002 and as I said, it was somewhat of an inheritance.
We were going to use it as our weekend home. After a year of cleaning it up, restoring it, repairing, et cetera, I moved in for a weekend and then walked into the current home that we're in, my dream home of a Texas historical home. Chose to turn that into a vacation rental as we'd had friends stay there before, and as I can say, the rest is history, 17 years.
2. Is It Better to Book a Vacation Rental on Airbnb or With a Local Owner?
Michael Podolsky: There are websites like VRBO and Airbnb, and there are also vacation rental owners that put out their websites. Should the consumer be looking at properties at Airbnb, or go to local owners websites? What's your recommendation? Is there a benefit to consumers going to your website versus going to Airbnb?
Mary: To answer that question, there's an advantage to the consumer to go direct because it benefits both the consumer and the owner as there are no fees built-in. The third-party websites charge fees, be it to both parties or just on one side, regardless there are fees charged that can go anywhere from, I'm going to pick a number, from 5% up to 15%, perhaps 20% of the total rental.
Obviously, it's always advantageous for both parties to go direct. But when someone is starting to look, all websites are by name. Unless you know that name or you know some intricacy that is in that name that will pop up, you don't know where you're going to go on any website, and that's just kind of a given.
I think that many, and myself included when you talked about Airbnb, I do use them obviously because it's international. Having a booking, and it just happened again, is that a prior guest had a business card and booked direct. They knew the house, they knew the property, they saved money, I saved money. Works out great.
3. What Are the Airbnb Benefits for Local Owners and Travelers?
Mike: Are there any additional benefits that either a consumer or you get by using Airbnb? Are there protections built into Airbnb for consumers that can potentially remove scam operations?
Mary: Well, that's another really good question because there are separate answers to that. Is there protection built-in? The protection still comes down to the owner-operator. Airbnb seems to have more or provide more support to a guest now than an owner-operator. That may be the time and we can discuss that later.
I think there's also a false pretense that is given out with Airbnb as to what they can provide or if there's not satisfactory accommodations, etc.
I'll give you a perfectly good example of that. Every year, for a number of years, we have what is known as the Lone Star bike rally in Galveston. It's second only in size to the one in Sturgis, North Dakota. It's a motorcycle rally, and we get upwards of 600,000 guests at one time on the island.
About this time, a number of years ago, Airbnb had come out that we will guarantee your reservations, we will find you someplace else to stay. Well, that's only as good as what's available.
There was a situation that I was aware of here at Galveston, and it was a scam. I don't want to disparage somebody, but it was a scam. Someone had paid for something and they contacted Airbnb and Airbnb went to put them in another place. For whatever reason, the calendar wasn't blocked and there was no availability. There was no availability within 75 miles of Galveston.
So again, a guarantee, a warranty is like anything. It's probably only as good as the paper it's written on. We can all come up with different circumstances and thoughts on that, it's just totally dependent.
There are good owners, there are bad owners. There's good listing sites, third-party OTAs, and there's some that are questionable. One has to go with what one feels comfortable with.
4. How Can Homeowners Maintain Good Clientele?
Mike: I've used Airbnb myself, I am a good tenant. I would go and buy 12 glasses if I break one. I would take the responsibility, but I've heard horror stories about student parties taking rentals over New Year and trashing the place. What do you recommend to home rental owners for avoiding such incidents? What do you think helps you maintain a good clientele?
Mary: That's another, and I heard the horror stories too. There's been a few horror stories at Galveston, and I feel that there's a couple of things.
First of all, with clientele and who you draw to your rental, again, be it a single room or be it an estate is, I feel the quality of the guests is also dependent on the quality of the pricing. It's kind of like you get what you pay for. I don't believe one wants to price themself out of the market, obviously, but you don't want to price it so low that you get 18 of your friends together and it's $25 a person. I mean, just to give you an idea.
That's one thing, but I also believe the other, whether it be an owner that is like myself, in the proximity of the property, or using a management company, and then you go into two. There are local management companies or there's national ones. The most important is to actually oversee the property. That is just an absolute given.
You don't turn the keys over and your real property asset to whoever to rent, without knowing what is going on there and who is overseeing it.
Even with remote owners, I believe there should be responsible third party management to report, and to report the bad. I think owners probably are not always informed of what issues arise. I do believe that owners should be notified because ultimately, as in the city here, they are responsible.
The other is, be it management or owner-operated in cities, areas have rules, laws, regulations, codes. They themselves should be knowledgeable in that and look it up. The same with the management companies. I believe anybody utilizing a management company should ask those questions if they are aware of city codes or city ordinances because this is a reflection on whoever's operating it, the property.
A guest going in does not need to be contacted or passed either by a neighbor or a code enforcement officer or whatever, because the owner-operator management company has declined to let them know that trash cans have to be in by six o'clock, as an example, of the day that it's picked up. Or that one car per bedroom, two on the street, all of the cars have to be off-street parking.
Either the assumption is they don't know, or there's not the education for the individuals to appraise the guests. I have some rules that are listed or ordinances in the city, and I don't mean long, six pages of ordinances, just simple ones.
For example, home, two cars, two cars parking in front. If you have a third guest, you may park around the corner if there's parking available back there, but not additional on that street. So, there's a number of things I think that all parties need to be informed of and not just assume.
5. How Does the Covid Affect Vacation Rentals?
Mike: How is the COVID situation affecting you?
Mary: Typically, along the Gulf Coast, we get what we call winter Texans. For those of you up north that don't want to go through the snow and the ice, comes south. Florida is known for this, anywhere along the Gulf Coast. So obviously booked up, COVID hit.
Nationwide, Galveston also was shut down on the 23rd of March. It made visitors leave and hotels would be closed, vacation rentals would be closed, RV parks closed, et cetera. Our mayor reopened on May 1st. We went from zero occupancies to 100%, and I'm talking about island-wide.
For vacation rentals, it is current. I can tell you that right now as we speak, 100%. I say the majority of books through September.
Going back to the shutdown, whether it be vacation rentals, hotels, any type of tourism accommodations, the majority of states, and definitely Texas, and of course, Galveston, collect hotel operating tax. Hotel operating tax, which is mandated by state statute, funds marketing, and advertising for the state and cities that collect it also. It is strictly for marketing and advertising.
One of the functions that I serve as chair is the distribution of hotel operating tax in non-profits, which are the theater, the opera house, nature tourism, et cetera. They're the ones that are funded by this money. Basically, it's to bring heads to beds. In our meeting in June, we discussed cutting their receivables by 77%. That's huge. This is on $2.4 million, by the way. I need to give you the dollars, $2.4 million.
Mike: In June, bookings were so high that you suffered only 15% loss because otherwise, you could have lost 30%.
Mary: Yeah, absolutely. Absolutely. Even more. No, we were looking at losing approximately 70%, so that's a very good indication. At my meeting this morning, the hotels were a little down in July.
Vacation rentals were up. Vacation rentals were still at 100%. The beaches were closed in Texas, July 4th weekend, and that was due to excess crowds that came down earlier, not locals, that created a lot of issues, and it was for health protection obviously here in Galveston.
Hotel occupancy dropped to about 66% in July. Vacation rentals were still 100% in July and they were 100% in August.
I believe we're close to that, well, it's just the beginning of September. Many schools in Texas, well throughout the country are doing virtual learning and many businesses are still operating virtually, people working at other houses.
So we've done another marketing campaign that you can still basically work from home, but you can come down to Galveston and you can go to the beach in the evening, just to get out. We are still seeing high occupancy rates projected definitely through September and feel that this will go on through the end of the year.
6. What Is the Relationship Between Homeowners and Renters?
Mike: When you rent from a small homeowner like yourself, you have several properties, but you are keeping close to the homes and everything, do you become friends with your guests?
Mary: I have with some over the years, absolutely. I had one that came for 13 years, which was wonderful because their grandchildren thought their grandparents owned a house down here because the grandparents were from Texas, not locally, but everyone else was out of state.
I've had a few that we have become not only friends with, but because of coming down here, let me put it this way, I've had guests that have bought over $4 billion worth of property in Galveston. They fell in love with it and they ended up moving down here.
You become friends with guests more when you've got the winter Texans, the longer term, because they're here for one, two or three, maybe four months. I have had birthday dinners at my house. I've had anniversary dinners for guests that we became friends with. I think the dearest thing, and Mike, it was just a recent occurrence. I had a lovely couple from Kansas that came down for probably 9-10 years, and not winter Texans. They would come in the spring and fall for several weeks. They always said this was their happy place.
Unfortunately, they both passed away a year ago and their daughter came over here and brought me a photograph of them and some mementos. Just a month ago, when things opened up that you could have a group of her family, the family came down. They rented my place one a few blocks away because it was more than six, and invited me to have a celebration of life and spread their ashes in the Gulf of Mexico. That's what this is all about. It's pretty incredible.
Mike: Yeah. Right, thank you. That's called a personal touch that you don't usually get from the hotel chain.
Mary: Right. I want you to know I'm a member of the Galveston Hotel and Lodging Association, and the majority of that are hoteliers and that, but I'm also very good friends with the general managers of the hoteliers that we serve on a number of boards down here. So yeah, you don't have that connection with a hotel because you have staff. Staff work hours, and it's not the one-on-one that we have as a vacation rental owner. It's nothing against hotels, that is just a different market, it's a different way of doing business. Well, thank you for the opportunity, Mike.
2. What Should You Know About Vacation Rentals
In this second video from our interview series with Mary Branum, we asked our expert to share her tips on how to cancel and refund your booking, what renters can do in case they face issues.
Questions covered in this video interview:
- Homeowner experience
- Where to look for a vacation home
- Vacation rentals refunds
- How to handle issues when renting
- Safety tips when renting
1. Homeowner Experience With Vacation Rentals
Mary: I'm in my 17th year as a vacation rental owner and operator, and that being said, I had come from a commercial real estate background so was not averse to dealing with guests, which are similar to tenants in that. I live in Galveston, Texas, which has a population of approximately 51,000 permanent residents, but we entertain between 7 and a half and 8 million visitors annually.
We're approximately 50 miles from the city of Houston and the Houston metropolitan area have a population of over 6 million. So obviously we draw a lot of visitors from there, but also neighboring States, the rest of the US, and international travel.
I will say 17 years ago when I began, I was only one of two that were in what we call East Island, which encompasses about half the Island. The other one that was at that time operating was not small, it was 18 to 20 people. So because we had a second house, someone inherited it, didn't want to get rid of it, we chose to turn it into a vacation rental. And as I say, 17 years later, it's still very successful.
Mike: Having 17 years of experience, owning rental properties, what’s the worst story of a rental that happened to you?
Mary: I can honestly say I have never had a situation, a bad guest, an issue, and I think part of it is that I am close to the vacation rental, but I've also had the guests all know that we reside within 15 blocks of it and we're available if anything you need. I just honestly have never had a situation.
Now have there been things broken? Absolutely. But nothing major. A very good example is a wine glass was broken in the house and the guest went out and bought 12. This also, though, I feel tied into my rules of the house that are posted at the home, and the very first item is "treat this property respectful".
2. Where to Look for a Vacation Home?
Mike: What are your recommendations today for consumers that would like to rent a vacation home? Where to go to and where to look for a proper vacation home?
Mary: That's a really good question, Mike, for the simple reason, communication media has evolved tremendously over the years, so with the internet, there really are few limitations on someone looking for a vacation rental.
Obviously, the first is to choose where you want to go. Second is to decide what you want, what works for you and your family or friends that you're going to. Do you want a location? Do you want a beach location that you walk out and you're on the beach? Do you want an in-town or midtown location?
And I'm referring to Galveston, but consider generics also, where you still have access to a beach, may walk a few blocks, but you've got dine-in restaurants, you've got entertainment. That is the very first step, where do you want to go, what you want to do. And then at that point, budget, what is your budget?
So you've got three things that will dictate what, where, and when. The number of places to look at. With social media and with the internet, there are a third party online travel agents, commonly referred to as OTAs, that many local areas, cities, and counties, either through the chamber of commerce or through rental by owner, numerous things, you just start to search the internet no matter what search engine that you use. And you will always come up with something.
You will come up with either the majors or you may come up with something that is just locally oriented. And you can discern and go through there as to what appeals to you.
At the same time, you may see some things in there that may have a property name that you can search further, right? A great many of us have our own websites. So there are numerous avenues to look for properties, whether you want a room, or if you want a cottage, or if you need a large beach house, vacation rental, mountain house, numerous areas to look.
3. When Can You Refund a Vacation Rental?
Mike: Tell us your opinion as an owner, what do you think of other people? What should be common expectations over consumers? When to ask for a refund? When not to ask for a refund? What are the situations that are not in the book?
Mary: There's nothing that's ever 100%. Anything mechanical can break and will break. Unfortunately, then we would be at the mercy of someone else. You can't control every situation.
I'll give you a good example. My washing machine broke a couple of weeks ago. I offered to take the laundry of theirs, I mean, they were only here for a few days and wanted to wash some jeans and I said I'll take it to my house. And she goes, no, no, no problem. I was able to reach my dear little handyman down here and replaced the washing machine in about two hours and it worked fine.
I think we're in a day and time that people, and again, I don't want to use generalities of everybody, but one will see and hear more complaints, or read of more complaints more than the good things. People tend to publicize the wrong and not good. And I think we're in a society right now of instant gratification.
Things happen and if it's long-term and this is a supposition, there's an issue. Air conditioning is going to go out and God knows you have to have it in this South. You either try to find them a different accommodation or do a refund that they leave. But I think if the guest chooses to stay with something, then I don't believe a refund is viable.
Now, if you want to give them a gift card to a restaurant or take over up a bottle of wine or cheese and crackers or something like that is one thing, but I don't believe owners should be their feet held to the fire over "I saw a fly in the house", and I'm not being facetious over this because I have read things over this.
Someone out in the country or out in the woods and they don't want any bugs. I think obviously this is putting it in your rules and regulations are just about how you handle the property. There are realistic ways of going about things to assist. I have found, and again, going back to 17 years of good guests, that I've not had an issue or have had any questions on it.
Now there's been refunds with COVID and this is a really good opportunity to bring up about the third party OTAs. I want people treated the way I want to be treated. And when you've got a pandemic or no matter what the situation is, you get forest fires in California, or hurricanes in Florida or Texas or a pandemic, these are issues that no one has absolutely any control over and everyone had plans to do something or whatever and something else came up.
I refunded every one of my guests. I had one through Airbnb, which Airbnb was going to do it anyway, whether I said so or not, and I think the RVO, I'm not with them. But I refunded every one of my guests because it was right. I am not personally privy to, but do know of hosts, of owners, that would not refund, that they said, well, I have to pay the mortgage or I have to do this and I have to do that. As a long time businesswoman, a long time, many, many decades going into any venture, you have capital, and there's not always an upward movement.
As we know, there's ups and downs in absolutely everything. And I have always made sure from the beginning that I have a reserve. And I can honestly say that when the COVID hit and we had to close down and again, not knowing whatsoever, I had 18 months literally of reserves to cover the house sitting empty, insurance taxes, whatever it took.
There's no mortgage, but I mean, I had more than enough. But I feel that I understand if you've got to pay the mortgage and you've got utilities, but by the same token, this is a small business. And it's a small business that doesn't always have guaranteed income whatsoever. You have to run it as a business and you have to operate it with plans of, like what happened, occurring that you can't be sufficient until you can open up again.
4. How to Handle Issues When Renting Home?
Mike: Let's say, a consumer is renting a vacation rental property, they have a problem and can’t reach the house owner. What can you suggest? Let’s say,the plumbing broke, I'm renting your house, and you are not picking up the phone. What should I do?
Mary: For you as a guest, before renting, I think it would be very beneficial and behoove you or any guests to ask if there is a secondary or a backup, be it individual or company, for contact. But this does not only apply to an individual owner. This is the same thing with the third parties, and the ones that do the handling of it, the Airbnb and the VRBO.
If I am not here or unavailable or whatever the case may be, I always have a backup. Furthermore, it is required by our registration in Galveston that there be a contact person available 24/7 and respond within one hour. And this is not only just for violations or issues.
And, again, whenever the situation may occur, I always have a backup number available for my guests. I don't have it posted because it can change and it's not viable all the time. I mean, I haven't been anywhere since March. I'm just here.
But all guests receive a text message from me. And the reason being is I want them to have ... I have a business cell phone. I want them to have that cell phone number so they can call, or they can text with any issues or situations.
When we have been gone over a period of time, my backup has that phone. So it is never not monitored. And I feel with a guest, I'm going to put the responsibility on both parties, but I'm also going to put the responsibility on the guests.
...going especially to a strange place… ask questions, ask what the policies are, ask the what-ifs. And if you are uncomfortable with the answers, look somewhere else.
Mike: Should a consumer that's booking a vacation rental property, expect a piece of paper to be provided to them with emergency numbers. Do you provide such a piece of paper giving all the emergency numbers around town?
Mary: Oh, absolutely. Not only do I have a list of rules, I mean, house rules, but I have a book, I have a binder because as things change as now with the masks required. One thing very, very important, and I've noticed this in places that we've stayed at, that have been lacking, is one thing is in a very obvious place, be it by the front door or whatever, have the address.
If you have an emergency and you need to call 911 or wherever it may be in the world, you don't remember… you know how to get there and you came in, have it right there for you. That's number one. But wherever we are, we're promoting our locale. So the more information you can get and give out, I believe the more they'll be appreciative also.
5. How to Stay Safe When Booking a Vacation Rental?
Mary: I do believe with any consumer going in for vacation rental and looking for a place, please do your research and please look carefully. Stay away from Craigslist, there's a lot of scammers out there.
Research also, no matter what websites are you using, if you're using a third-party OTA, please communicate with the host. They are on there that you don't have to book instantaneously. I recommend getting a response from the host. Post a question. It was exactly what Mike said is, what if I need someone after hours? I think with anything it's your dollars, so respect your dollars and ask questions. Don't have blind faith.
Mike: Mary, thank you very much.
There are always risks involved with vacation rentals, especially during times like these. Whether you’re booking with Airbnb or rent with homeowners directly, it’s up to you. Though, we recommend that you consider all pros and cons that our vacation rental expert, Mary Branum, has highlighted in this interview.
We thank Mary for sharing her experience about vacation rentals and for providing valuable insights for both travelers and homeowners. Stay tuned with our expert interviews.
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