AOP — AREA OF PROTECTION

“AOP Area of Protection – an exclusion zone or restricted area around a hotel in which the operator/franchisor agrees not to have another hotel operating under the same, similar or other specified brands.”

There’s a reason that luxury hotel investors have AOPs with operators and franchises.

It’s because having too many properties in the same market, under the same banner, creates a scenario where the properties begin to compete directly with each other, and thus start to cannibalize profits per property.

The problem is that traditional vacation rental management model isn’t built on maximizing profits at the property level. Instead, it’s built on property volume to increase profits at the company level.

But this is a totally broken and unsustainable model. Because when there are no healthy profits at the property level, the only thing being scaled are operational inefficiencies and stakeholder losses. And thus, the larger the company and portfolio size, the more diluted the quality of management and returns become — especially for locally based managers.

This is why VRP is extremely selective about the managers we hire and tasks allocated to them. It’s also why we purposely cap the number of assets we manage per market.

It’s smarter, more efficient model that allows for stronger concentration on the stability and profitability of each asset operation, and it removes the possibility for margin cannibalization or dilution.