Lessons from The Overlook: Know when to leave

Note: Lessons from The Overlook was a periodic update on lessons learned from owning a vacation rental property in the Southern California mountain town of Idyllwild. It was a hands-on opportunity to apply some of the techniques I advise my clients to use. This will likely be the last one. You can find past updates here.

Here's the short version: Sally and I sold The Overlook.

My wife and I owned the vacation rental cabin in the mountain town of Idyllwild, California for just over five years. Now we've sold the cabin and exited the vacation rental business.

I'm not sure if we'll get back in, but I know it's the right decision for now.

Deciding when to sell a business or quit a job can be tough. I asked people on LinkedIn how they made the decision and got a lot of great responses.

Here are some of those crowd-sourced suggestions along with the process Sally and I used to know it was time to leave.

Why did you start?

There must be something gnawing at you if you're reading this. Something doesn’t feel right, but what is it? And is leaving really the best decision?

It can help to go back to the beginning. You probably imagined a bright and happy future when you started the adventure, but now something is different.

Ask yourself this about your current situation:

Why did you start in the first place?

Sally and I bought The Overlook because we wanted an investment we cared about. We imagined that owning a vacation rental gave us a number of advantages:

  1. We could enjoy the cabin ourselves.

  2. Our local property manager would minimize the hassle of owning a home.

  3. It was a chance to apply the customer experience concepts I write about.

Looking back on why we bought the cabin, we realized we weren’t getting the first two advantages.

Is your current situation fulfilling?

Once you understand why you started, it becomes easier to evaluate whether working in that job or owning that company is fulfilling. All you have to do is compare what you want to what you’re getting.

According to Erin Shrimpton, an organizational psychologist, sometimes you just know. "It can be a gut feeling. But it can also come from clear signs that whatever you are doing isn’t serving you any more."

Others responding to my LinkedIn post described changes that made their situation no longer fulfilling. Here are some popular responses:

  • The culture had changed.

  • They were no longer learning or growing.

  • Poor leadership.

  • The job was eliminated (or in danger of being eliminated).

  • It was taking a toll on their physical and mental health.

A lot of the reasons for leaving were negative, but not all. Some people prioritized family needs over work. Others moved out of town or wanted to embark on a new career.

For Sally and me, The Overlook became a lot more work than fun.

We weren't staying at the cabin very often. The times we did visit were mostly spent doing chores and maintenance.

Our relationship with our property manager deteriorated after multiple maintenance and guest damage issues that went unfixed and unreported. We searched for a new manager, but there weren't any better options.

The headaches were really starting to add up.

Is it fixable?

It's good to re-evaluate the situation one last time before making the leap. The grass isn't always greener on the other side of the fence.

We tried to fix The Overlook a couple of years ago.

Our assumption was a smaller cabin would cause fewer headaches. So we put The Overlook up for sale and searched for another property, but we never found anything we liked.

That led us to a plan B, which was keeping The Overlook but making some changes. We turned one of the bedrooms into a game room, added air conditioning for the hot summers, and upgraded some of the furniture.

It worked for awhile. We spent more time enjoying the cabin. Revenue increased substantially. Maintenance issues subsided for a bit.

But the problems eventually returned. We started spending less time at the cabin as we pursued other interests. Our property manager got stretched thin and wasn’t taking good care of our place, and we still couldn’t find a better option.

The last straw was when the same pipe burst for a second time this winter, after our property manager repeatedly failed to follow the proper water shut-off procedure before a freeze.

It was time to get out.

Conclusion

Deciding to leave can be difficult, but there’s no sense sticking around when you know it’s time to go.

I can only imagine the consequences if we had waited too long to sell The Overlook. Our costs were rising. The vacation rental market was softening. A small group of locals launched a misinformation campaign in an effort to ban vacation rentals altogether.

None of that was going to be fun.

Instead, Sally and I sold the cabin for a nice profit. We instantly felt a sense of relief when the sale closed. And now we have much more time on our calendar to devote to other things we enjoy.

Lessons from The Overlook: The outsourcing dilemma

Note: Lessons from The Overlook is a monthly update on lessons learned from owning a vacation rental property in the Southern California mountain town of Idyllwild. It's a hands-on opportunity to apply some of the techniques I advise my clients to use. You can find past updates here.

Our property manager called with some bad news.

The flapper in the downstairs toilet at The Overlook was sticking, making it hard to flush. The sink in another bathroom was draining slowly. Guests were checking in the next afternoon.

The property manager seemed unconcerned. She suggested I try to get a plumber out sometime the following week, after the guests had checked out.

"I'm just letting you know," she said.

My wife, Sally, and I don't want plumbing issues to mar our guests' experience, so this was an urgent matter to me. I scrambled to get a plumber to the cabin before our guests arrived.

The conversation exposed what I call the outsourcing dilemma.

How do you create a consistently great experience when you and your outsourcer don’t see eye-to-eye?

Thanks to outsourcing, we can keep the walkways clear of snow and ice at The Overlook.

Who owns your customers?

We face a customer ownership issue at The Overlook.

Sally and I view people staying at the cabin as our guests. We want to make sure they have such a great experience that they tell their friends about us and come back again.

From our perspective, we've outsourced guest service to our property manager.

We don't have direct contact with guests. That's all handled via our property manager who books the cabin, welcomes guests, resolves their issues, and bills them for their stay.

From our property manager's perspective, people staying at The Overlook are not our guests at all. The Overlook is a supplier to her vacation rental business, one of nearly 60 cabins managed by her company.

Problems happen when we don't see eye-to-eye on guest experience issues, such as the urgency of minor plumbing problems.

Our property manager is okay with her guests having a few minor plumbing problems during their stay, but we’re not okay with that happening to our guests.

Other industries face similar challenges where customer ownership is blurred.

  • Fast food chains franchise locations to independent operators.

  • Consumer brands outsource their customer contact center.

  • Online retailers outsource shipping and order fulfillment.

You likely face a similar dilemma if your business outsources any part of its customer-facing operation. This can sometimes create conflicts when your partner has different philosophies, priorities, and capabilities.

What challenges are caused by outsourcing?

Creating a consistently great guest experience at The Overlook is our biggest outsourcing challenge.

We've learned that any deviation from our property manager's standard procedure creates more opportunities for mistakes and services failures. 

For example, we wanted to supply extra towels for guests using the spa. Guests had been using towels from the bathrooms, but it's uncomfortable to dry off after a shower and then re-use your still-wet towel to dry off after using the spa later that evening. 

So our property manager agreed to add extra towels and we put a small bin next to the door leading outside to the spa to make this easy.

It wasn't easy.

It took nearly 18 months of reminders to get extra spa towels regularly added to the bin. Our property manager's standard procedure is to place towels in each cabins' bathrooms, so adding extra towels near the spa was an exception to their standard practice.

Which brings us to another challenge.

It's difficult to cede control of so much that impacts the guest experience to a property manager, but my wife and I couldn't rent our cabin without outsourcing.

We live two hours away from the cabin, so we'd need to hire local labor ourselves to perform many tasks. Good people are in short supply everywhere, and it's hard to find reliable help plowing snow, cleaning houses, or performing routine maintenance.

Our property manager faces similar constraints, but she's able to leverage her local presence and the scale of her operation to work with a consistent group of employees and contractors.

We’d also have to do all the marketing, sales, and customer service ourselves if we stopped outsourcing. The Overlook has been sold out every weekend for over a year and a half, so it would likely be difficult to replicate our property manager’s performance.

There are other property managers in town. We've vetted several and the results weren't good. None appeared capable of doing nearly as good a job as our current manager.

Outsourcing isn’t easy, but it’s our best option right now. It just takes a lot of effort to make things work.

How can you outsource more effectively?

A Customer Service Tip of the Week subscriber recently emailed to ask me how to work more effectively with an outsourcing provider.

While I'm clearly struggling with this myself, I did have a few suggestions.

First, set clear expectations. It helps to know who is responsible for what. That sometimes is an evolving conversation. My wife and I talk to our property manager about expectations at least once per month.

Second, provide your outsourcer with adequate resources. We act quickly whenever something needs to be repaired or replaced. We also keep a stock of extra wine glasses, light bulbs, and other small items so our property manager can easily replace them as needed.

Finally, monitor your outsourcer's performance as closely as you would an employee. We inspect The Overlook once a month using a detailed checklist and discuss any issues with our property manager. We also perform regular preventative maintenance, deep cleaning, and fix problems that are outside our property manager's scope of responsibilities on these monthly visits.

Conclusion

My preference is to avoid outsourcing whenever possible. To me, it's always best to have direct contact with your customers throughout the entire service delivery process.

But that's not always feasible.

So if you must outsource, it helps to recognize the inherent limitations. Take care to be an active participant in the relationship and constantly advocate for your customer.

One thing that can make you better at service recovery

My wife and I own a vacation rental cabin called The Overlook. It's located in a rural mountain village where propane is used for heating and cooking.

Our propane supplier offers a "worry free" service where they monitor the propane tank for us and fill it up once it gets too low. This service worked like clockwork for several years until we experienced trouble last December, when we didn't get our usual refill.

The supplier usually tops off the tank in December, right when the cold winter season is starting. My wife, Sally, called our supplier to make sure a delivery hadn't been missed. The rep in our local office promised to check on it and call back.

She never did.

The cabin was booked solid when a cold snap hit in January, and our guests were using a lot of propane. The tank dropped below 20 percent and we were going through two percent per day. At that rate, we had just over a week of propane remaining.

Sally called the propane company again. The person in the local office seemed unconcerned, but promised to check into it and call back. She never did.

Now we were really worried.

We escalated the issue to someone I know in the corporate office. Fortunately, she got our tank filled the next day.

It was tempting to dismiss the local rep as lazy and uncaring. Later on, I discovered the root cause of our local rep's apparent complacency. The problem is more widespread than you might think.

Look closely, and you'll find one insight you can use to prevent problems like this. It can make anyone better at service recovery.

What problem is your customer trying to solve?

Service recovery becomes much easier when you know what problem your customer is trying to solve.

Customer service employees can miss the customer's true problem if they only listen for the thing the customer is requesting, not the reason behind it. One technique to overcome this challenge is to listen for your customer's "I need to" statement.

Consider these examples. What is the customer really worried about?

  • “I need to get my car fixed today so I don’t miss work tomorrow.”

  • “I need to resolve this billing error so my accountant can reconcile my company’s finances.”

  • “I need to get this stain out so I can wear this suit to a big meeting next Wednesday.”

It’s tempting to focus on fixing the car, solving the billing error, or getting the stain out. And while those might be important steps, the real concern for these customers is not missing work, reconciling company finances, and looking good at a big meeting.

At The Overlook, Sally repeatedly told the local rep, "I need to get our propane tank filled so our guests will have heat and be able to use the stove." Our biggest concern was keeping our guests happy, not making sure we knew the propane delivery schedule.

The local customer service rep missed all that.

What she heard instead was a request to check on the delivery schedule. She mistakenly thought the problem was resolved when she confirmed our cabin had not missed a scheduled propane delivery.

You might be wondering how can things be running normally when our tank was getting so dangerously low. We'll get to that part of the story in just a moment.

For now, take a moment to think about a recent service failure one of your customers experienced. Can you identify the real problem they were trying to solve?

Service recovery becomes much easier when you understand what's truly making your customer anxious. Fail to understand your customer's source of anxiety and you will likely miss your chance to help them feel better.

Can you make your customer feel better?

The goal of service recovery is to help customers feel better about your company, product, or service after something went wrong. You want to prove to them you can fix the problem and earn their trust for future business.

This requires customer service professionals to look beyond their own processes and see the situation through the eyes of their customer.

Our biggest worry at The Overlook was running out of propane so guests couldn't heat the cabin or cook food. The customer service rep misunderstood our problem and focused instead on the delivery schedule.

What could she have done instead?

  • Investigate the issue, even though things seemed normal.

  • Call back when she said she would call back.

  • Verify that our propane tank would not run out and provide us with assurance.

That last one was most important.

After escalating the issue, we received an update assuring us our propane tank would be filled the next day. That instantly reduced our anxiety. We then felt a sense of relief once the tank had been filled.

Are there any barriers to understanding your customer?

Many customer service reps face hidden obstacles that make listening to customers more difficult than it seems. I devoted an entire chapter to this topic in my book, Getting Service Right.

At the propane company, two problems conspired to cause the customer service rep to do a poor job of listening.

The first was the company changed its delivery threshold. In the past, it refilled customers' tanks when the propane level went below 40 percent. The operations team changed that to 20 percent in an effort to route deliveries more efficiently, but failed to tell customers about it.

This generated a lot of phone calls from customers like us who were used to getting their tanks filled once it went below 40 percent and were suddenly worried when the expected refill never came. Local reps didn’t realize that customers hadn’t been informed, and many, like ours, got annoyed at all the extra call volume. That made listening even more difficult.

The second problem was the propane company's estimates were off. They relied on historical consumption to estimate when our tank was running low. However, it was unusually cold that winter and our cabin was rented far more often than the year before.

That meant we were using a lot more propane than normal. We later discovered that our actual tank reading was 15 percentage points lower than our supplier estimated.

The local customer service rep couldn't understand our sense of urgency as a result. She likely thought my wife was being hysterical when Sally said she was concerned we would run out because the rep thought our tank was at 33 percent when it was really at 18.

Many customer service reps face similar barriers when it comes to understanding their customers. Here are a few more examples:

  • Long queues that pressure employees to work too quickly.

  • Scripts that tell employees exactly what to say, but discourage listening.

  • Customer service software that doesn't track interactions over multiple channels.

  • Poor internal communication.

  • Lack of training on listening skills.

Customer service reps can overcome these listening barriers, but it takes practice. You can use this listening skills guide to help.

Conclusion

Understanding the problem your customers are trying to solve unlocks many opportunities to serve them better.

Sales and marketing teams can use this insight to add new business. Operations can use it to guide improvements, such as a change to the propane delivery schedule. And customer service teams can use it to recover from service failures.

You can learn more about service recovery from these resources:

Lessons from The Overlook: 5 things vacation rental guests should know

Note: Lessons from The Overlook is a periodic update on lessons learned from owning a vacation rental property in the Southern California mountain town of Idyllwild. It's a hands-on opportunity to apply some of the techniques I advise my clients to use. You can find past updates here.

My wife, Sally, and I own a vacation rental cabin called The Overlook Idyllwild. 

In addition to staying in our own cabin on a regular basis, we often stay in vacation rentals ourselves when we travel. This has given us first-hand experience as a guest.

It has also given us insight into what other owners do, and do not do well. We’ve used some of those lessons to improve our own guest experience, but we’ve also discovered a few things guests can do to have a better time.

With that in mind, here are five tips to make your next vacation rental more enjoyable.

Sunset view from the deck of The Overlook. It’s the perfect place to relax after a day of hiking.

Sunset view from the deck of The Overlook. It’s the perfect place to relax after a day of hiking.

#1 Book Direct

Airbnb and VRBO charge booking fees of 5-10%. You can avoid these by booking directly with the owner or property management company whenever possible.

There are two ways to do this. One is to avoid the big sites like Airbnb and VRBO and do a Google search for vacation rentals in the city you’d like to visit.

Try searching for “Idyllwild vacation cabins” and the first non-sponsored result you’ll see is our property manager, Idyllwild Vacation Cabins.

You can also find a listing on Airbnb or VRBO that you like, then Google the name of the property and the city. You'll often find a separate website for the property where you can book direct without the fees.

Sally and I recently rented a condo in Napa for 28% less than the listed rate on VRBO by booking directly through the property manager.

We only rent our cabin via Idyllwild Vacation Cabins so our guests don't have to pay these fees.

#2 Check the HVAC filter

The HVAC filter cleans the air for the heater and air conditioner and helps the system run more efficiently. Unfortunately, many vacation rental owners don't change these often enough.

I've had to get the filter replaced at 3 of the last 4 vacation homes I've stayed in.

Here's one example from a vacation rental in Palm Springs where Sally and I stayed in July. Imagine the air conditioner running air nonstop through this dirty filter:

An HVAC air filter completely caked with dust.

We check the filter once per month at The Overlook.

#3 Contact management with issues

Speaking of dirty HVAC filters, be sure to contact the property manager right away if you spot a problem that interferes with your stay.

Every home has it's own quirks, such as how to operate the tv or the spa. I once struggled to get an oven to work due to user error (I'm dumb). A quick call to the property manager saved dinner.

There's also a good chance you'll spot something during your stay that needs attention. It could be a cracked dish, a burned out light bulb, or a bigger problem like a leaky faucet.

Don't assume the property manager knows about this—it's easy to miss small items when a property is inspected between visits. Some issues are only noticed when you are staying in a home for a few days.

A quick call to the property manager can resolve many issues quickly and prevent the next guests from being inconvenienced.

#4 Bring dish towels

Don't ask me why, but vacation rentals almost never include good dish towels.

If you're particular about lint on your glassware, then the fluffy hand towels they usually provide just won't cut it. I always bring a few of my own.

#5 This is someone's home

Remember you are a guest in someone's home.

Many vacation rentals are owned by individual families who also use the home themselves. They take great care to provide accommodations and have to pay money out of their own pockets to replace worn or damaged items.

Be sure to treat the house with respect, just as you would if you were staying with a friend.

Please keep noise to a minimum as well. Vacation rentals are often located in residential neighborhoods and are surrounded by neighbors who live there full time.

There are organized efforts to ban or severely restrict vacation rentals in many cities because neighbors are tired of dealing with unruly guests next door.

Don't be those guests.

Bonus tip

Relax and have fun!

Vacation rentals often provide more privacy, amenities, and unique charm than a hotel. At The Overlook, we offer our guests sweeping sunset views, two game rooms, a spa, a large deck, and a wood burning fireplace for cozy evenings.

It's a perfect place to enjoy a mountain retreat. At least my wife and I think so—we were just there for a few days with family and had a wonderful time.

Lessons from the Overlook: The importance of leverage

Note: Lessons from The Overlook is a periodic update on lessons learned from owning a vacation rental property in the Southern California mountain town of Idyllwild. It's a hands-on opportunity to apply some of the techniques I advise my clients to use. You can find past updates here.

Finding a plumber for The Overlook is a struggle.

We've had a slight leak under the kitchen sink for two months. There's just one reliable plumber in town, and he's busy.

Electricians are equally scarce. It took six weeks for the one recommended electrician to fix a light. Another three months for him to complete the repair when the light still wasn't working.

Finding a reliable, competent handyperson is next to impossible. We’ve gone through several who aren’t reliable, aren’t competent, or both. It recently took three months to get a gate fixed.

These experiences prove customers don't always have the clout they think they'd do. The Overlook is in a remote mountain town where having just one option for a variety of services means you can't easily take your business somewhere else.

The uncomfortable reality is great customer service often requires leverage.

All this snow melted before we could get the light above the barn doors fixed.

All this snow melted before we could get the light above the barn doors fixed.

What is customer service leverage?

Leverage is power. In customer service, it's the power to set the terms of the relationship, such as when a service will be performed, how much it will cost, and whether you have to be nice.

In May 2021, grocers and restaurants struggled to get food because their suppliers faced labor shortages, scarce supplies, and soaring transportation costs. The largest customers, such as Walmart and Sysco, used their leverage to get more deliveries on-time.

Culturally, people assume the customer always has the power (at least in the United States). We live by the terribly misguided and historically inaccurate phrase, "The customer is always right."

The assumption behind this belief system is a customer can take their business to an eager competitor at any time if they aren't treated right. Tell that to the two HVAC repair companies near The Overlook. One of them is owned by a jerk who actively cheats customers, which keeps the other company too busy to respond quickly.

There's another issue with the idea that customers always have leverage: customers often interact with an employee, not the business owner.

An angry customer who threatens to never come back might be a gift to the offending employee. The employee rids themselves of a person they find annoying and unpleasant when an angry customer storms off. Meanwhile, the employee's pay won't be different and they won't suffer a change in job security (at least not in the short term).

How can leverage affect customer service?

Two broad trends are likely to happen when customers lack leverage. The first is a short-term impact, while the other is more long-term.

In the short-term, service suffers.

Customers have to pay more for less. Cable companies had an iron grip on our televisions for years, causing customers to pay steadily increasing fees.

Customers begrudgingly accept poor service. Many travelers have vowed never to fly a certain airline, until they realize that airline offers the only low-cost, direct flights to their destination.

There's also a downstream affect. Many cabins that compete with The Overlook have difficulty keeping up with their maintenance because qualified plumbers, electricians, and handypeople are so scarce. This creates a poor experience for their guests.

In the long-term, the market can change.

Customers alter their habits. People watch far less live television than they did just a few years ago, making streaming services like Netflix, Hulu, and Prime a viable alternative to traditional cable.

Competitors eventually enter the market. Southwest Airlines was created to challenge legacy carriers by offering low fares for convenient flights.

Customers might leave the market altogether. We've noticed an uptick in vacation rental cabins for sale in Idyllwild, in part because owners have struggled to keep up.

How can customers overcome a lack of leverage?

We've employed two strategies at The Overlook to overcome our lack of leverage. The first is to build relationships. You can get a lot more done when you're nice.

Normally, we'd get pretty upset if a plumber didn't show up. In this case, we continue to be polite and friendly, knowing the plumber will take care of the leak eventually. Because we're patient now, we also know from past experience that he'll come out right away if we had an emergency.

The other tactic we use is to be easy to do business with. We try to make make having us as a customer advantageous for service providers.

For example, we've started using a contractor to do small jobs, like fix our gate. He normally does much larger projects, such as home remodels, but he's willing to work with us because we're flexible.

Contractors often have small gaps in their workday while waiting for supplies to arrive at the job site or some other delay. A small job at The Overlook allows the contractor to keep his crew busy for a few hours on a day when he'd normally have to send people home early.

So having us as a customer creates an advantage for the contractor.

The lesson is you sometimes have to find your own leverage in a customer service relationship. For us, we’ve often had to put pride aside and re-focus on what matters most: ensuring our guests have a great experience.

Conclusion

Think about situations where suppliers and service providers have leverage over you or your business. What can you do to get a better result?

  • Will you pay more?

  • Are you willing to accept less?

  • Can you change your habits?

  • Can you build a better relationship?

  • What incentives can you give them?

Yes, it's frustrating when we don't get great service. Yet it's sometimes the reality. What we do next is up to us.

For more unexpected customer service lessons, check out my book, Getting Service Right: Overcoming the hidden obstacles to outstanding customer service.

Lessons From The Overlook: See the Big Picture

Note: Lessons from The Overlook is a periodic update on lessons learned from owning a vacation rental property in the Southern California mountain town of Idyllwild. It's a hands-on opportunity to apply some of the techniques I advise my clients to use. You can find past updates here.

One small mistake caused the whole relationship to unravel.

My wife, Sally, and I had high hopes when we hired a company to install air conditioning at The Overlook. We were looking to find a reliable partner that could service the HVAC system going forward. Our property manager was interested in a referral to serve the more than 50 homes they managed.

The company's general manager made one small mistake when he wrote the estimate. And when that mistake began to unravel, he focused on the wrong details. It soon became a big problem.

This could have been prevented if the general manager had seen the big picture.

Ecobee thermostat running at The Overlook.

Why you should anticipate problems

Service failures can cause customers to actively consider pulling their business. It takes time and money to make things right. You are almost always better off preventing a problem than having to fix it.

The problem the general manager missed was a simple one.

The thermostat at The Overlook is located in the living room. The heat from the afternoon sun tricked the thermostat into thinking the house was hot, so the air conditioner kept running even though the rest of the house was cold.

He spent a lot of time walking the property when he created the estimate. Many other problems were anticipated. His thoroughness was one of the reasons his company won the business, despite being the most expensive bid.

The one mistake shouldn’t have been a big deal. But the problem got worse.

Installation day was a long one. The crew was hoping to get the system installed in one day, because the company was located an hour away. A second day of work would mean two hours of driving.

They were anxious to leave when they started to check the system. The desire to leave quickly overrode the desire to avoid a second trip.

They missed the problem with the thermostat. What they didn’t realize at the time was a second trip would now be inevitable. A trip that would inconvenience the company, and also inconvenience the customer.

Think about the time and effort you put into solving customer problems. How much could you save in time, money, and customer goodwill if those problems were prevented?

How focusing on the little picture can cost you

Getting stuck on a small detail can dramatically increase your costs. Tiny mistakes become huge service failures that drive customers to your competitors.

Sally and I noticed the problem with our AC system the next day. The living room was warm in the afternoon, so it kept running while the rest of the house was cool.

I called the general manager and talked through the issue. He recommended we install some temperature sensors in other rooms. The thermostat could then take an average of all the temperature readings throughout the house and use the average temperature to decide when to run.

We set a time the following Monday for him to come back and meet Sally at the cabin to install the sensors. That was two hours of driving for him, so an extra cost. The Overlook is a two-hour drive from our house, so Sally spent four hours driving plus the extra time on site—effectively the entire day.

He arrived at The Overlook without the sensors. 

They weren't in stock. Rather than re-scheduling the appointment for a time when he had the sensors on-hand, he decided to move forward with the meeting. Sally didn't find out until she was already at the cabin.

The general manager focused on the little picture—keeping the meeting—and lost sight of the fact that he would have to waste two hours and Sally would have to waste an entire day.

He agreed to order the sensors and come back to install them. We tried to handle that appointment remotely, but the technicians sent to do the work couldn't access our smart thermostat without one of us present. Another failure of anticipation.

The technicians just left the sensors at the cabin, which caused another problem. We had guests coming in a few days, and couldn't just leave equipment lying around. Another failure.

This required another visit for Sally. Another day wasted driving to the cabin and back. The general manager saw his profits whittling away, so he initially balked at meeting Sally at the cabin to help install the sensors. He tried to convince Sally that she could do it on her own in "five minutes." Another failure.

He finally relented and agreed to meet her at the cabin. It ended up taking him, an HVAC expert, two hours to get the system working properly, not the five minutes he had promised.

Time and time again, the general manager missed the big picture:

  • The thermostat is the key to the whole system.

  • We all wanted to minimize time-consuming trips to the cabin.

  • A good impression could lead to 50 or more new customers.

Focusing on the big picture can help you avoid problems and repeat problems. It can also help you understand the true value of making things right instead of worrying about small expenses.

Take a moment to think about the big picture from your customer's perspective. How can you help them achieve their goal?

How to focus on the big picture

Customer-focused companies start with a customer experience vision. This is a shared definition of an outstanding experience that gets everyone on the same page.

On an individual level, I recommend the Thank You Letter challenge. It's a powerful visualization exercise that helps you earn positive customer feedback.

Give yourself more time to see the big picture and anticipate problems by slowing down. It’s counterintuitive, but you can often serve customers faster when you go slow.

Think about our AC system. The general manager could have prevented three extra trips to our cabin for his company, plus two extra trips for us, if he had just taken a few minutes to note the location of the thermostat when he created the estimate.

Lessons from The Overlook: Play the Long Game

Note: Lessons from The Overlook is a monthly update on lessons learned from owning a vacation rental property in the Southern California mountain town of Idyllwild. It's a hands-on opportunity to apply some of the techniques I advise my clients to use. You can find past updates here.

My wife, Sally, and I bought The Overlook in October, 2016. It's lost money every year. 

Operating expenses have been high. Maintenance and utilities have gone up. The cabin is in a rural part of California where insurance costs have increased by more than 20 percent. 

There are unexpected expenses. A frozen pipe burst this winter. The stove needed a part that cost almost as much as a new stove. The furnace motor burned out. 

Guests have caused damage, including broken glasses, broken plates, broken furniture, and a fire last September that shut the cabin down for a month. 

There's also been theft. 

A bluetooth speaker went missing. Ditto for an extra propane tank, a throw blanket, and a kitchen knife. Light bulbs and extra batteries were pilfered. Safety items such as flashlights have disappeared. Our snow shovel was stolen—twice.

And now this.

The coronavirus pandemic hit many businesses hard, ours included. Starting in April, a public health order prohibited most vacation rentals in Idyllwild with limited exceptions. The order was originally set to run through mid-June, but has thankfully been lifted.

There are two things I hope readers will take from this post:

  1. Running a business is harder than it seems.

  2. You sometimes have to play the long game to make a profit.

The living room at The Overlook cabin.

Why vacation rentals are a tough business

Years ago, an investor who owned several vacation rental properties told us it takes about five years for a vacation rental to turn a profit.

Right now, that seems pretty accurate.

The initial investment is more than just the house. Vacation rentals need everything a home does. Furniture, lamps, dishes, pots and pans, linens, televisions, decorations, etc. 

Then you need to make the cabin appealing to guests.

Small things add up, like updating pictures on the walls or adding throw blankets in the living room. (We’ve had to replace to throw blankets.) We also made bigger improvements, such as replacing an old electrical panel and converting the garage into a game room.

Now you need guests to rent the cabin.

Idyllwild is primarily a weekend destination. Weekly rentals are scarce. That means a popular cabin might be rented 12 nights a month (four weekends at three days each), but is also empty for 18 or 19 nights. 

The vacation rental market is competitive. 

There are well over 100 other cabin rentals listed in Idyllwild alone. Top cabins are rented every weekend, while less popular homes might get one rental per month.

Upkeep is the next challenge that eats into profits.

Dishes get broken. Furniture is worn out. People throw trash off the deck. Utilities soar as guests seemingly use as much water, electricity, and propane as they possibly can. Appliances break. Trees need trimming. 

All of this is during a healthy market. Now everything is a hundred times more difficult. Revenue is dried up for two or more months, but expenses like utilities, maintenance, and mortgages continue.

Businesses everywhere are feeling the same sting. Revenue is drastically reduced, but there are still bills to pay.

Why businesses need financial reserves

Nobody expected this economic catastrophe, but downturns do happen. We're fortunate that we can weather the storm for awhile. 

Other businesses can't. 

Many companies struggle to pay their bills without a steady stream of cash coming in. They over-borrow and over-spend during good times, leaving no room to breathe when times get difficult.

Some vacation rental owners in our market are struggling to pay their mortgages. They were already deferring maintenance and holding off on upgrades during a good market, and now they have no cash reserves to sustain them for the next few months.

There’s been some legislation passed by the U.S. government that promised relief. It took some businesses a month before that relief arrived. Others are still waiting. And the relief that does arrive often has so many strings attached that it’s more of a burden than a relief at all.

We suspect we'll soon have a little less competition. That's sad for the community and those owners, though it will ultimately help us. We’re hopeful The Overlook can finally turn a profit when the economy improves.

It's a good lesson for the future. Having financial reserves allows you to make better choices. In times like this, it simply allows you to stay in business.

Why you need to invest in your business

Business is competition. We will lose guests to other cabins if The Overlook doesn't offer an amazing experience at a great value.

This January, we invested in some upgrades at The Overlook.

The master bedroom became a second game room. This took the cabin down to three bedrooms and a maximum of six guests. We lowered our nightly rate a bit, but there's a much larger market for three bedroom cabins.

We also replaced several outdated pieces of furniture to give the cabin a more updated, airy look. 

The changes are working so far. Guests have been very happy and have given the cabin good reviews. Fewer guests means far less damage. Our bookings were trending significantly up until the coronavirus shut things down.

We're not the only company to invest before making a profit.

The pet supplier, Chewy, loses money every year as it invests in the distribution infrastructure that allows it to take on both Amazon and established pet chains.

Home goods retailer, Wayfair, loses money as well. The company is particularly good at shipping large items at reasonable prices. For example, the shuffleboard table at The Overlook came from Wayfair. The challenge is you need to ship an awful lot of shuffleboard tables to make money.

All of these companies are playing a long game, betting that losing money in the short term to make their products great will help them become dominant in the long-run.

Amazon is the poster-child for the long game, taking several years after it went public before it finally turned a profit.

Take Action

The business owners I've talked to share a lot of the same worries right now:

  • Taking care of employees

  • Serving customers while complying with health regulations

  • Keeping up with mounting debt

That's a lot of worry. But I've also heard the same advice from several veteran business leaders who have steered companies through recessions in the past: invest if you can.

The companies that are able to invest now will be far better positioned for success in the future. We just need to hang in there until then.

Lesson from The Overlook: Invest in Your Product

Note: Lessons from The Overlook is a periodic update on lessons learned from owning a vacation rental property in the Southern California mountain town of Idyllwild. It's a hands-on opportunity to apply some of the techniques I advise my clients to use. You can find past updates here.

Does your product look tired, shabby, or out-of-date?

That was a challenge my wife, Sally, and I faced at The Overlook. The cabin came fully furnished when we bought it in 2016, but it would be a stretch to say that all of the furnishings were high quality. 

We initially replaced the dishes and glasses, so everything would be uniform. Stained linens and rugs were tossed in favor of new ones. New patio furniture suddenly made the deck far more inviting.

Our big splurge was transforming an old garage into a ping pong room.

There were also some mismatched, second-hand furniture pieces that were adequate, but not fantastic. We decided to hold off on replacing those until we learned more about our guests' habits and our own preferences.

We’ve recently replaced some furniture and lamps, and we’re glad we did.

Investing in your product is often necessary to improve or even maintain a positive customer experience. Here's what we did, and why you should consider an investment as well.

Before and after pictures of the master bedroom at The Overlook.

A new look at The Overlook

The first big change was converting the master bedroom into a game room.

Sally and I decided to reduce the maximum capacity at The Overlook from eight guests down to six. You can read more about our rationale here, but essentially we thought fewer guests would translate to less damage and more profit.

The master bedroom was on the bottom floor of the three level cabin, and we decided to turn that room into a game room based on guest feedback:

  • Parents prefer to sleep in one of the bedrooms on the main floor to be closer to kids and the center of the house.

  • Couples tell us it feels more equitable for everyone to have a similar room, versus one couple getting a much larger room than everyone else.

  • Access to the spa is off the former master bedroom, so there was a small issue of privacy.

The new game room has shuffleboard, a six-seat table that's perfect for playing games or working a puzzle, and a bluetooth speaker so people can play music. We'll soon be adding a television and better lighting.

The hope is this creates a new selling point for guests.

The other significant change we made was in the great room. There was a large dining table, a too-large area rug, and a large media center that all conspired to make the room feel smaller.

A picture of the great room at The Overlook before re-doing the furniture.

We replaced the dining table, area rug, media console, and updated the lamps (the old ones were wobbly) to create a more unified look and make the space feel more open. The coffee table had previously been replaced, and now the media console and coffee table matched.

Unfortunately, we didn’t have much time to take a very good after photo on this visit.

Newly updated furniture in the great room at The Overlook.

That antler chandelier above the dining table? It’s a little wobbly, difficult for the cleaning crew to dust, and is not our style. The replacement has already been ordered and it just needs to be installed.

We traveled to the cabin in early January, when we had a small window of time to make the changes in between guest bookings. Another challenge arose as we worked—one of the beds on the main floor was broken.

I won't speculate on how it got that way, but it needed to be replaced. We had a new bed frame delivered two days later, thanks to the magic of Amazon. The bed is made by Zinus, and is a low-cost but well-made item with excellent assembly instructions. 

Why investing in your product is necessary

Investing in your product isn't always easy. Cashflow is tight in many businesses, especially small ones. Last year's meager profit immediately gets swallowed by this year's big project.

We had a great December. Probably our best month ever. But we poured all that money, and then some, right back into the cabin.

Customers have high expectations and won’t tolerate a lousy product. Those expectations come from a number of places:

  • Your competitors. Does your product look tired by comparison?

  • Past experience. Have your products become worn, less functional, or outdated over time?

  • Promises. Does your advertising communicate a false promise?

Sadly, customers don't always understand the constraints of running a business. They don't care whether cash is tight or margins are slim. They simply expect a good product.

We used our vision, Welcome to your mountain retreat, and guest feedback to guide our updates. Tough decisions needed to be made about where to spend money, so we targeted the areas we felt would yield the biggest bang for the buck.

An unexpected epilogue

Sally and I got The Overlook updated and ready on a Wednesday, just in time for our weekend guests who were expected to arrive on Friday.

A funny thing happened when the guests did arrive.

There were eight people total: six adults and two kids. Our maximum capacity is now six guests. The Overlook has just three beds with no pullout sofa sleepers or air mattresses, so there was really no place for two of them to sleep.

Did they get confused by the transition and book a stay thinking The Overlook still slept eight people? It turns out the guests knew the max was six, but they thought they could save a few dollars and squeeze in two extra people anyway.

Guests like that are more likely to cause damage, steal snow shovels (it’s happened twice), generate noise complaints from our neighbors, and put dirty dishes back in the cupboard. (Yes, people really do that.) Those are exactly the people we’re trying to avoid with the new version of The Overlook.

Fortunately, our property manager was able to re-accommodate them at a larger cabin. We lost out on the revenue, but protecting the cabin from damage is a higher priority. We want it to look fantastic for our next guests.

Visit The Overlook website to learn more about the cabin or to book it for a quiet mountain getaway.

Lessons From The Overlook: Be Flexible

Note: Lessons from The Overlook is a monthly update on lessons learned from owning a vacation rental property in the Southern California mountain town of Idyllwild. It's a hands-on opportunity to apply some of the techniques I advise my clients to use. You can find past updates here.

It's been awhile since I've shared an update about The Overlook.

A lot has happened since we put the cabin up for sale at the end of May. The summer is typically our slow season, yet we had our busiest July and August ever. Then there was a small fire that closed us down for all of September. 

The one thing that did not happen was a sale. We still own the cabin and now we think we have an even better plan (more on that in a moment).

The biggest lesson from the summer is you have to be flexible.

The Overlook vacation rental cabin

Beware of solution jumping

Solution jumping occurs when you instinctively identify a solution without fully understanding the problem. The danger is you could miss better opportunities or fail to solve the problem at all because your solution did not address the root cause. 

We initially jumped to a solution when we decided to sell The Overlook.

The problem we thought we were trying to solve was the cabin was too big:

  • It has four bedrooms, which is too much for us personally.

  • Damage increases and utility costs go up when we have more than six guests (our maximum is eight).

  • Larger cabins typically rent less often than smaller cabins.

Our plan was to sell The Overlook at a profit, buy a smaller cabin, and pocket the difference. We ran the numbers and found that a smaller cabin with a lower nightly rate would likely bring in more revenue per month.

It looked like a good plan on paper, but several factors made it hard to execute:

  • The market softened shortly after we put the cabin up for sale.

  • A high number of rentals made it hard for our agent to show the cabin to buyers.

  • We didn't find any smaller cabins that we really liked.

And then there was the fire over Labor Day weekend. 

A guest was using the grill and had it positioned against the side of the house. Some grease caught fire inside the grill and ignited the wood siding. The fire spread into the eaves before it was extinguished.

Photo credit: Idyllwild Vacation Cabins

Photo credit: Idyllwild Vacation Cabins

It could have been a lot worse, but there was enough damage that we had to take The Overlook off the rental market for the month of September. 

This is where flexibility comes in.

We could have made a bad decision if we locked in on selling the place. We might have slashed the asking price to sell The Overlook quickly and then found ourselves losing a lot of money trying to upgrade the next cabin to our standards.


How flexibility can create new opportunities

You can often discover unexpected solutions if you maintain your flexibility and resist the urge to jump to a solution. It is important to understand the problem first.

We initially thought our problem was The Overlook was too big. We now realize our maximum capacity of eight guests was the issue. 

  • There are just six seats at the dining table.

  • The living area is comfortable for four to six, but not eight.

  • Damage and utility costs go up when we have eight guests.

Advertising The Overlook as a four bedroom cabin for eight guests also limited our market.

Almost all of our renters are groups: large families, groups of friends, or several couples traveling together. These groups travel almost exclusively on weekends. Smaller cabins get more rentals during the week because a smaller party requires fewer people to make plans together.

The Overlook still had a number of advantages that other cabins we saw for sale did not have. The biggest one we could not replace was the view:

Sunset view from The Overlook

This thinking opened up another possibility. What if we reduced the capacity at The Overlook from eight to six? 

Our property manager has another cabin that has two bedrooms and a large game room downstairs. It rents extremely well. We know we can do something similar at The Overlook.

So that’s our plan.

We'll reduce our capacity to six by turning the large master bedroom into a game room and entertainment space. This should allow us to create an even better guest experience while reducing damage and utility costs. 

The changes should also increase our revenue as we expect to pick up more rentals during the week and throughout the summer.

The changes will take several months to implement. 

We're heading into our busy season, and there are already a number of rentals on the book for guests who expect four bedrooms. The good news is we have a clear path forward towards a better solution than we originally imagined.

Take Action

You can use flexible thinking to make similar strides in your own business.

The next time you face a challenging problem, resist the urge to jump to a solution. Take time to truly understand the problem you are trying to solve. Come up with alternative approaches, even if they don't seem feasible at first. 

And above all else, stick to your vision.

Our vision at The Overlook is welcome to your mountain retreat. We think these changes will bring us even closer to fulfilling that vision for our guests.