Keys to Riches: Unlocking a Niche in the High-End Hospitality Industry with Deana Steele

00:00:00 - Jenn Boyles

Welcome to another episode of the Direct Booking Success Podcast. I'm Jenn Boyles, your host, and today I have Deana Steele with me who is the founder of Keys to Kelowna. This is a luxury vacation rental agency operating in Kelowna, BC, Canada. Hi, Deana. Good to see you.

00:00:20 - Deana Steele

Thank you so much for having me.

00:00:22 - Jenn Boyles

I'm loving this because we are in the same part of the world. You're still a few hours away from me, but it's so nice to talk to somebody else who's also in this area of Canada. Let's get into your background. I want to hear more about how you started. How did you start in hospitality?

00:00:42 - Deana Steele

Yeah, it was. Honestly, I hate saying this, but I feel like it was served up on a silver platter. I've had my own investment property that I've operated as a furnished rental for over 20 years, but I wasn't really considering nightly rentals or even getting into the business of property management ever. I've been fascinated with real estate development. I had been working for a residential real estate developer here. My mom was a realtor when I was a kid, and I kind of thought that, oh, maybe I'll get into sales in some capacity, but I was working from home. I've been a working nomad in the marketing space for over a decade, and I moved to Italy, and I used an Airbnb, and I was like, oh, this is kind of cool. It's like a really unique demographic of people and the connections you made with the hosts, I was really fascinated. So when we moved back to Canada, I thought, you know what? I'm going to put my house that I've always offered as a furnished rental on Airbnb. And see, because again, the demographic of people was really attractive to me. Took off, which was really cool. And I was like, I am moving out of this house full time. I'm going to offer it. And it was super lucrative. Unfortunately, at that time, it was not legal to operate a short term rental. But I found a way, and all the guests were amazing, so it was never a problem with my neighbors. I was sitting at my new home one day, and I got an email from Airbnb. It's saying, with the success of your property, would you be interested in helping other local homeowners with this? And I ignored that email for weeks. And I finally filled out. It took me maybe two minutes. I filled out the questions they asked me, and within 3 hours, I'd signed two properties. Wow. Yeah. So I guess as soon as I submitted my profile, it must have gone out to the owners who had asked for help. So I got on a call right away. He had a furnished, two furnished homes ready to go, photographed already on Airbnb. And I was like, you know what? Why not? We had a great conversation and that's kind of where it all started. Word of mouth, it's birds of a feather. His brother was talking about me at a party. Everyone seemed to have vacation rentals in Kelowna and they were like, oh, I can hire this person. So it kind of snowballed from there. And I have always loved customer service, which is why I think hospitality has been super fun and easy. The real estate paired with customer service is hospitality property management, long term rentals. I had never enjoyed long term rentals with my own property, so this was so appealing to earn revenue still from the property and meet the people. So I'd been meeting all of our guests for all of our listings up until the pandemic for personal check ins. So still now we do self check in, except with our vip clients. I do like to go connect with them in person, so I will greet them and get them checked in. Yeah, it was kind of handed to me on a silver platter. But when I look back at all of the things that I've done, especially with the marketing as well, and my love for customer service and my passion for real estate, it was a no brainer. But it was just offered to me versus me kind of having to search for do I use all of my skills?

00:04:11 - Jenn Boyles

I love this podcast because I love meeting people and talking to people and finding out how they sort of got into hospitality and especially into short term rentals. And it's a common theme that it kind of just sort of happened. And I think it's hilarious that it came from Airbnb. That sparked the conversation. And what year was that when that happened?

00:04:33 - Deana Steele

14, 2013. In that season. Yeah, I was just sitting on my patio and I got an email and I ignored it. I don't open non urgent, non important emails. I leave them and I'll do a day of inbox zero and I'll open 120 tabs and leave those for a few weeks. So that's exactly what happened. And then I looked at it, I was just zeroing out my tabs and I was like, oh, what is?

00:04:59 - Jenn Boyles

And then it just snowballed.

00:05:00 - Deana Steele

Word of mouth.

00:05:01 - Jenn Boyles

So before we go any further, let's tell people where Kelowna is. Where exactly is Kelowna? I guess in relation to Vancouver, maybe?

00:05:08 - Deana Steele

Yes. Well, in relation to Vancouver, we're just in land about a 35 minutes flight if you were to pop over the mountain range or a four hour drive. And we are what we call Canada's California. So we're at the tip of the sonoran desert, so it's really hot and dry in the summer. We have over 200 wineries. We have a lake, a beautiful lake that spans like three cities and five regional districts. It's amazing. There's a mystery. I call him a lake guardian, but he's our little lake monster, similar to the loch ness, because there are points in the lake where they have not been able to measure the bottom depth. So there's tons of fresh water here. We're an agricultural hotspot, so the farmers markets are incredible. We're just surrounded by. Not enough people know about this place.

00:06:04 - Jenn Boyles

I grew up because I grew up. Here outside of Vancouver here. So we used to go to the Okanagan a long time, a lot. I love the way you put that. Right here in the province of BC.

00:06:15 - Deana Steele

Yeah. And we have, because of the wine, we do ice wine here as well. We attract a lot of international travelers, which is amazing, which spreads out our high season. Prior to the pandemic, when international travel was very popular, we would have nine months of the year. So I had never considered it. My ego wants to invest in other markets to be like, oh, I have a condo in Hawaii and a condo in Costa Rica. But truly, our market is so strong here for most of the year. And then in the winter we have incredible ski resorts with champagne powder. Nothing like whistler, like, this is dry and fluffy. It's like you're floating on clouds. It's amazing. I love it here and I've traveled a lot and there's just nothing like it. There's nothing like it. It's like the south of France mixed with Hawaii mixed with the beauty of British Columbia is like a forest. And because the population is so, like, you can find beaches that are private and that nobody, you have a whole beach to yourself. So it's amazing.

00:07:18 - Jenn Boyles

Now, one thing I find really interesting is that your company, you call yourself luxury, luxury vacation rentals. Now, I'm always a bit wary of that word luxury because it is so subjective. So can you tell me a little bit about why you use that word and how you back up the goods?

00:07:40 - Deana Steele

I guess, honestly, it's so irritating how overused the word luxury is. I don't think enough people actually know what that is. And that's why I was saying earlier, it's not for everybody to operate in this space if you don't understand even just the finer finishes in the properties when we're asking for. And that's why I had to change the word on our website from ultra luxury to elite. Like, this is an elite level property. Not everybody can experience this, not everybody can afford this, not everybody's used to this. And honestly, some people don't like to travel and be fussy. Like sometimes people walk in, they're like, oh no, I'm scared I'm going to wreck something, or I'm scared I'm going to make dirty the count. So I do find that luxury properties in our space are rare opportunities. Whether it be rare on the inside or the outside, there's not a lot of them to choose from. I do find our luxury guests look at the properties almost like collectors items. So they never usually want to stay in the same one twice, which is why we always have to try and find new ones to brand. They want to experience these experiences. I find that they'll want to try the new one. As soon as you get a new one, they want it right away. So it's really easy when you sign another one, you just reach out to your previous database and you're like, I have a new one for you. Yeah, but you're right, luxury is overused. It's not new, cute, whatever. It's just a special caliber of home that is rare, for sure. Rare opportunity for you to visit. Especially because it's very hard to get owners of these homes to hand their keys over because they have put so many extra little extra genesis quo to the house.

00:09:34 - Jenn Boyles

And it's not to say that luxury is not for everyone. We get that. And I think there's nothing wrong with having a non-luxury property. Whatever property fits with your ideal guest. And it works. I just love that you really lent into luxury. And I love the word elite too, because it makes it sound, it almost drives that fomo, doesn't it? That fear of missing out.

00:10:03 - Jenn Boyles

What is that? Why is that elite? I want to stay there. And so that is a great sort of marketing tactic. So what makes a property luxury? What makes this experience elite?

00:10:17 - Deana Steele

Well, first, usually the value of the property. So in our case, we call it like beginner luxury is over the $3 million mark. Usually I'm aiming for five, again, rare. So the location, Lakefront, is extremely rare. There's only a few hundred homes, so there's only a handful of Lakefront opportunities. And it's interesting. I happen to live on the lake. And before I moved here, I wasn't like, oh, whatever, these big houses on the lake. But it is an experience in itself to have your own private beach, a private dock. There's no one in front of you, no houses or anything. It's pure privacy. And that's another thing some of our customers are really concerned about is privacy. Like, I've signed multiple NDAs. Unfortunately, I can't name drop and be like, so and so stayed here, which is unfortunate because it really helped with marketing, let me tell you. But once you're in the network as well, it's super helpful where they just kind of do the marketing for you with, again, the birds of a feather, their same group, but yeah, location, very rare. And again, the caliber, the space that you provide. When these people are traveling, they come with their team, right? They'll come with the chef, they'll come with the nanny. Everybody needs their own space. You have to have a certain whatever offering that space. And then obviously, amenities are just at a higher level. The space is an experience, the design is an experience. The services that you can offer, they don't need too many from you. Usually it's just like housekeeping and some recommendations. Security. Some people are really concerned. They want active security, alarms. There's just always a few things. Everybody will always have some sort of a special request. The garage, if they bring a supercar, they want to use the garage where I know a lot of principal residents, homeowners, they'll lock the garage up because they put all their goodies in there while they are away, allowing you to use the home. And then I would say homes that are designed for hosting guests, not just your home that you live in, that you're opening up to guests, but designed for someone to have an experience in your city.

00:12:30 - Jenn Boyles

And what about the misconceptions? What are the misconceptions that people think you would find in a luxury vacation rental?

00:12:39 - Deana Steele

I wouldn't say there's too many misconceptions about the properties themselves, but mostly about the guests. Some people are very scared of the guests. They're like, oh, they're so high maintenance. They're actually the opposite. They're the most organized. I would say from a property management perspective, my misconception was, oh, I'll be speaking with the executive assistants or the house managers or something, but you're actually speaking to the individual themselves. At the end of the day, when it comes down to payment or coordination or contracts, we're speaking with their team. But yeah, they end up reaching out to you. Directly, which is always amazing.

00:13:18 - Jenn Boyles

I was not expecting that.

00:13:20 - Deana Steele

I was actually. I'm sure you're talking to the assistant.

00:13:24 - Jenn Boyles

And that's why they're so well organized, but you're actually talking to that person.

00:13:29 - Deana Steele

Our first initial contact will always be the primary guest. Yeah, sometimes I get handed off, whether it be to the wife or the assistant, and then I'll end up connecting with their team just to provide that extra level of service. You're bringing a private chef. Let me speak with the chef. What exactly does he need? Does he need to know where to buy the products that you're using? Does he need to ship? And I say he. Do they need to ship anything prior to what exactly you need? And again, you're actually surprised at the level of simplicity that they require. So you make these assumptions that they're going to be needy and high maintenance and they're going to need all these things and they're a smooth running machine. They just want a safe home. I think a lot of the challenges with vacation rentals is the inconsistency in the product. And I do believe they recognize, or they're starting to recognize that sometimes self managed properties can be very inconsistent because they're focused on, mind you, I find self managed can actually deliver sometimes better experiences depending on the owner and how involved they are. But, yeah, the inconsistencies. So I do find that it's a lot easier, I think, to market to this demographic as a branded entity with, again, multiple choices because they want those collectors items to stay in different properties.

00:14:57 - Jenn Boyles

How many properties are you managing right now?

00:15:00 - Deana Steele

Well, depending on the season right now we're between 17 and 34. Some of these homes are temporary, right, just seasonal, because it's very hard to get full time licenses for these large properties. The ebb and flow. So as you start to see, okay, which properties aren't performing, which are, you do kind of a purge of your inventory every year.

00:15:23 - Jenn Boyles

And how are you finding these elite guests? I know you talked about word of mouth, but you have to sort of get the first few in the door before other people can hear from you. So how are you finding them or how are they finding you? I guess it is a better question.

00:15:38 - Deana Steele

Yeah, there's not much for secrets. I basically decided that was the market I was going to go after, and I started marketing myself as going after that. And then word of mouth, the neighbors. It's a slow burn for sure, for getting that organic growth, but a neighbor sees you and then sees the operations very smooth. The guests are amazing. They ask you as you run into them in the driveway, how much money you make or whatever, and you just kind of drop a few hints and I will literally sign houses that are side by side because of exactly that. Just kind of that organic growth. A lot of people do end up finding us online. We have some great SEO with our website and social media. I do mostly behind the scenes networking with realtors because we're the first point of contact, really, for the city. So when someone's coming to explore or to house hunt, we're that first touch point when people come. So I definitely connect with a lot of realtors that way. And then we just kind of do like a little back and forth. No financial relationships or rewards. We just kind of work together because you have to build trust with them as well. Like, I'm going to take care of these people because I understand luxury. I understand what that means. I understand the demands or the requests or the concerns. Especially, again, for the privacy these guests have. Yeah, there's just a mutual understanding. So I would say if you're interested in getting into this market, do the finer things, are they a mystery to you? Do they make you uncomfortable? What are you really attracted to? And if you're not, that's okay, because again, there's a lot of people that can't. It's a small market, so it's a lot harder to find the houses. It's a lot harder to find the guests. Do you have that kind of patience? Do you have that kind of risk tolerance? Like, where are you on that comfort level? Because it is a totally different beast for marketing.

00:17:54 - Jenn Boyles

Well, I can see because you just go online, go to any Facebook group with short term rentals, vacation rentals, and it's what discount are you giving when you send out your newsletter? What discount are you giving? And I can tell that this is not what you're focusing on. The discount probably puts off people in these higher brackets.

00:18:17 - Deana Steele

Exactly. Sometimes there is value in the price, and if you go around discounting your product, it's no longer that rare special item. So that is one really beautiful thing, is you can kind of dictate your price. And I'm sorry, if you want to stay at this property, that's the price. Sometimes you can like, oh, roll in something, but it's not rolled in. It's just one bundle price. Everyone obviously loves a deal. But yeah, you're not discounting the product because you're not making it available to everybody. Absolutely. You imagine someone who spends $40 on a purse and someone who spends $40,000 on a purse, at the end of the day, you're like, what's the difference? It's sometimes the fact that it's very rare somebody cannot carry a $40,000 purse. And that's why I love this purse.

00:19:06 - Jenn Boyles

You've dialed into your ideal guest. You know who that person is inside and out under their skin, what they want, and you provide it for them. And I think that that is something that I come back to so much, especially on this podcast, is that ideal guest. Who is the right person? It's going to be easy, but it's easier when you know who they are. They're the right fit. Just everything that. All the stress sort of falls away from the problem, doesn't it? It just starts to move smoothly. So let's talk about the guests. So you were talking about doing a lot of networking, real estate agents, you are doing marketing, but it's more behind the scenes. Can you talk a bit about that, or things that you're doing?

00:19:53 - Deana Steele

Well, just relationship building. So I thought there was a particular person that I was targeting, because we do get a lot of traffic in this city from hockey players. So what I started to do was literally hunt them down on instagram. Many of them have private accounts, so go ahead and request. The request is that every hockey player, all their friends, their wives, their parents, you name it, I was like, I'm getting in there, first of all, to study that avatar and just get in front of them. Oh, keys to Kelowna. I love to know just a little natural, organic way of doing it. But I quickly found out their budgets were not what I needed. I needed more. I was actually very surprised. So I had to pivot to the CEOs of companies, right? Yeah. So they're the ones with the actual cash, which is funny. You're like, oh, these people have, like $80 million contracts. But you're like, yeah, but it's like a finite resource where I think ceos kind of think a little bit different. And then when you're talking like, some of these hockey players are like Canadian hockey players that came from small towns. They may have the money. They can't swallow that pill. They're like, this is insane. It's ridiculous. And then I just keep in touch with these people because I see the value of their network. Once you're in that trusted circle, I keep in touch with them on social media. So again, it's still that slow burn. Like, hey, how are you doing? Or whatever. I have a new property, or they follow me back because they're interested in seeing what's going on in Kelowna or this person's very interesting. I don't get paid, actually. I rely on the aesthetics, the unique aesthetics of our website. I think we did a little bit of a difference. We went for more of an artistic, editorial vibe for the website just to stand out a little bit different. Our website is not focused actually on guest acquisition. It's more owner acquisition. But I think because of the aesthetics and the uniqueness of the website, that really helps with the guests. They're able to get inquiries every day for the properties.

00:22:04 - Jenn Boyles

I think what you're doing is obviously a combination. They find you, you find them. It's a conversation, it's a relationship. The property manager, or it's through a neighbor or whatever it is. But it's not in the same way that most of us are marketing our properties where we're talking about why do you want to come and what you want to see and why do you want to stay here. It's a different league, isn't it?

00:22:34 - Deana Steele

Yeah. It's almost like not ego, but there is something where it's like, oh, so and so said this was great. So my goal with the company. So I've lived in this city for 35 years, off and on, and I have been dying to see this little city grow up. We are sorely lacking in many departments, like restaurants and culture and the art scene. And I know what we need is more influential people to move here or to bring their money here, because then the rest of us can benefit from the amenities, right? So I've always been like, we need these people here. And sure enough, you bring them, you impress them, the city just does it. We have world class amenities here that nobody knows about, so it's rare in their circle. So then they decide to move here, which is always a bummer because they're not a return guest anymore because now they've purchased a home. That happens quite a bit. You're like, you get two seasons out of them and then they buy their own mega mansion and you're like, oh, I've lost you. But then they bring their friends.

00:23:36 - Jenn Boyles

Of course their friends need somewhere to stay.

00:23:38 - Deana Steele

They need somewhere to stay. Then they buy and the cycle continues. But it's that rare. Yeah. I don't have the word to describe it because it's not like your ego, but it's almost like your peer group is doing it. So it must be, again, those people of influence. It's like a snowball effect and it's.

00:23:59 - Jenn Boyles

A different level of marketing and what I've seen on a few places, their website is almost nothing. And this is something that I would normally say to people, no, you want people to be able to book right then and there on your website. But this is a whole other breed of guest where it's like they don't want to be going somewhere where everyone else is going. They want that gem that is secret. I think it's really exciting what you're doing, and not everybody can do it, and not everybody's area is the right place.

00:24:32 - Deana Steele

Exactly.

00:24:33 - Jenn Boyles

It sounds like you've got the perfect storm there in Kelowna.

00:24:36 - Deana Steele

Yeah, it's absolutely fantastic. ROI is a little bit of a challenge here because real estate is so expensive and I find when pricing these units, people love round numbers and the prices aren't fixed. How long are you staying and what time? Because I'm like, I need to find you a nice round number.

00:24:56 - Jenn Boyles

Yeah.

00:24:57 - Deana Steele

What currency are you shopping in? So if I know you're coming with american currency, I know I have a little bit more wiggle room here because it's not going to sting as much as if I'm pricing for a canadian buyer. It is a little bit of a perfect storm here, but, yeah, there's still a lot of management on that to get it there. But the ROI is the pickle. I look at other markets and I'm like, you're getting the same amount of annual revenue, but the cost of your real estate is like 20% of what ours is. But we actually still keep a pretty diverse portfolio. And I think that's important for everybody to think about because markets eb and flow, and sometimes you're like, oh, but the rich, they'll always have money. But if there's a downturn in the market, people do slow things up. Or if there's a flashy market, like Europe is very flashy right now, so people are dumping their time and money into that market going and having those beautiful vacations. So I see like a three to five year cycle with some of these people coming back because they want to go do the next new thing, right?

00:26:02 - Jenn Boyles

Yes.

00:26:02 - Deana Steele

Then they'll come back. So by having a diverse market, for me has been really supportive. I would have never taken on a one bedroom condo back in the day, but I can't keep them vacant. There's so many reservations for those right now with our executive rental stays. So I really do think that diversity is key, but my ultimate focus is on the big needle movers on that, like, top 20% of our properties. So no, we still have affordable places to stay. We're definitely on the higher end of all of the options that you have out there. But again, it's because we offer consistent experience and a little bit of polished properties.

00:26:45 - Jenn Boyles

I love that different sort of level of guest experience. It's really great. And I have to ask you, with your position there in Kelowna and your experiences, you've been doing this a long time. What does direct booking success mean to you?

00:27:01 - Deana Steele

Means that I don't have to be concerned about the price in the market. So what I mean by that is because we have a lot of people who just come directly to us. They don't shop around, so we don't have to concern ourselves with what other people are doing. Because when there's a huge surge in inventory, people panic and it drives everyone's revenue down. And we don't have to worry about that because people are just coming straight to us. They just give us their wish list, we send them options, we send them pricing. And so that for me has been incredible. And again, we're probably doing 80% of our revenue now is direct book. And I think a lot of that is because people are just coming to us because they know we'll just take care of them and whatever the cost is, they don't think they're being taken advantage of. I'm not taking advantage of everybody, but I don't have to worry about what the market's doing. And I really think that that's what it has done. Makes me so happy for the direct book volume that we're doing now. Great. Now I'm going to put all your.

00:28:05 - Jenn Boyles

Links in the show notes so people can go check you out on Instagram and see what you're doing. Go check out your website called keystocalona.com.I also want to talk about something.

Another way that listeners can connect with you. Can you tell us about this other project that you're working on?

00:28:18 - Deana Steele

So there's a few things, but one of the free resources where you can see me every week I meet with a group called the real hosts of short term rentals, kind of a play on the Real Housewives. And there are six of us from around the globe. So we meet every Monday at 10:30 Pacific Standard Time and we live stream our mastermind group. So we just get together and we kind of deep dive on a particular topic in the business of STR each week. Whether it's something that we're dealing with in our business or some common questions that we're getting. So that's what we'll do. Sometimes we'll host hot seats for guests that are attending live or answer questions that come in that way. But, yeah, it's super fun. So we are live on Facebook. We should be live on Instagram and YouTube by the time you're hearing this. You can just search the real host to find us. And, yeah, if you have any questions, we all do somewhat private, semi private coaching, but this is the free avenue that you can come in and kind of just see, like, six different businesses from different parts of the world and how we operate. And hopefully one of us will have something that will resonate with you or feel relatable in your business. So if you're not into luxury, maybe you're into arbitrage, or maybe you own all your got. We've literally got somebody that does something different.

00:29:43 - Jenn Boyles

Yeah, no, it's great.

00:29:45 - Deana Steele

Cool.

00:29:45 - Jenn Boyles

And I'll put those links in the show notes, too. Thank you, Dina, so much for coming on today and sharing your story, talking about your direct booking success.

00:29:56 - Deana Steele

Thank you for having me. It's been great.