I would just say overall macro, there was a belief. And by the way, one year ago today, that belief was completely true; “Price didn’t matter. There was no availability. You could charge whatever you wanted.” But once we got to the Q2 of last year, I think this high-net worth consumer started to rationalize and say, “I’m not willing to pay year-over-year, in some cases, not with Inspirato, 50%, 60% increases in nightly rates for these high-end service luxury accommodation.” So, I think one thing in the macro is you’re going to see that the highest end of residential vacation rental, I think you’re going to see rates come down. You’re definitely going to see them come down with Inspirato in aggregate, because we raised prices significantly over the past two years and now there is an opportunity for us to fill up that excess capacity.
So, typically pricing and flexibility are combined, right? So, the more flexible you are, the better opportunity you have to be able to gain value. Because we have excess supply, we plan on providing very good value for those that will be flexible and those that can extend trips and those that can travel within our system in an incremental capacity. From an overall macro perspective, I think travel is still a very safe category. I think people are still wanting to travel. And we think that the really impacted side of our business is around Pass. And as it relates to that traveler that wants to travel seven, eight, nine times a year and is willing to take an exceptional discount in exchange for flexibility. But outside of that, it feels like it’s very healthy, but we probably have to meet demand with the right pricing in certain instances in order to drive up that occupancy.
And I’ll hand over the last question to Web.
Web Neighbor: Hi, Jim. Your question on supply and impact on gross margin as opposed to the various corporate operating expense lines, to respond to that, we are still growing the portfolio. You’ll see that in our numbers going forward. However, that growth is through a laser-focus on profitability and that manifests itself really in the gross margin line and less so in or what we internally refer to at those corporate operating expense lines that in part is renegotiation as we’ve referenced of existing deals. In some cases, even pruning the portfolio while still growing on a net basis overall. In other cases, it’s actually in advance renegotiating, revisiting supply that we don’t have under contract, but have been in ongoing negotiations.
The various capital markets disruptions and interest rate environment change just in the last six or nine months has unearthed new opportunities. And we would just emphasize that we will be very disciplined. And as we monitor some of the demand levers going forward, any additional increases in supply are really focused on the meaningful improvement in gross margin that we think is one of our biggest opportunities in the coming periods.
James Callahan: That’s great. Thank you, both.
Operator: Thank you. I’m showing no further questions at this time. I’d like to turn the call back over to Brent Handler for any closing remarks.
Brent Handler: Great. Thanks so much. I guess I’d just like to thank all of our investors and members and especially our employees for the hard work that they put in and delivering these incredible vacations every day to our members. I’m really excited about the plan that we just shared, and look forward to speaking to everybody next quarter. Thank you.
Operator: Thank you. Ladies and gentlemen, this does conclude today’s conference. Thank you all for participating. You may now disconnect. Have a great day.