This weeks 1001 Startup Idea is to establish a company that provides property management services room sharing aggregators.
What is the idea?
This weeks 1001 Startup Idea is to establish a company that provides property management services room sharing aggregators. The company will provide services ranging from setting up the property including designing the interiors to professional photography of the property to cleaning services including cleaning of linens to concierge services for guests.
According to a research by Global Business Travel Association (GBTA), global business travel is expected to reach $1.6 trillion by 2020. One of the biggest disruptions in the global travel and hospitality industry has been the rise of AirBnB and other companies in the area of sharing economy.
AirBnB has taken the hospitality industry by a storm. According to some reports, its valuations have reached upwards of USD 24 billion. It has many benefits that it offers to the guests including cheaper stays and better locations for the stay. This has led to a lot of people using their properties. Airbnb is now present in 191 countries and more than 65000 cities across the globe. This is a very vast number. It even boasts of having more than 1400 castles for renting. AirBnb also claims to have more than 3 million listings on its platform.
Eyefortravel.com reports that according to Lex Bayer, Head of Global Payments and Business Travel at Airbnb, in 2016 Airbnb tripled in growth and with nearly 14,000 new companies signing up for ‘Airbnb for Business’ each week, a big part of this is being driven by business travel.
There are a few companies which are already providing these services to AirBnB hosts in various countries. Hostmaker provides the property management services to AirBnB hosts in 4 locations i.e. London, Paris, Barcelona and Rome. There are other companies as well like Guestready which also provides services in Hong Kong, Kuala Lumpur and Singapore.
Pain Point & Target Audience
The targeted customer market for this business is the “AirBnB hosts”. The use of services of AirBnB including ‘AirBnB for Businesses’ is on the rise and this has also led to the increasing expectations of the travellers. Eyefortravel.com reports that
“Unsurprisingly, the average business traveller has higher expectations than the average leisure traveller but for somebody doing short-term rental hosting on the side, this could prove challenging. Because while shifting traveller behaviour means that today the personal touch and local insight is often valued over hotel brand blandness, many guests also expect fast reliable Wifi, nice fluffy towels and a high standard of cleanliness”
The AirBnB’s system of getting customer/guest reviews has led to the hosts taking care of their listings to ensure the customer happiness. This business will provide all services to ensure that the best possible services are provided to guests leading to more revenues for the hosts.
Business ModelThe revenue model for this business will be divided into various segments. Some of the segments for which the company can charge shall be following:
- Interior designing and professional photography;
- Cleaning and concierge services (this can either be one-time or a monthly subscription).
Apart from the above, the company can also provide overall property management services which can be based on revenue sharing with the AirBnB hosts. Most of the AirBnB host’s already charge a cleaning fee from the user and the revenue for the startup can come from this bucket itself.
Way to market
The first step would be to be to identify a city where these services could be provided to AirBnB hosts. There are various paid research reports available on the internet which have analysed the AirBnB data and stays, this could be a good reference point for identifying the launch city. In our research, we found that there are very few companies which are operating in the ASEAN region. Most of the companies providing these management services are catering to AirBnB hosts in major cities and are not catering to holiday destinations.
The biggest driver of this business would be how well it is marketed to the hosts. It would have to reach out to hosts by way of cold calling in the initial stages and the promoters will have to ensure the quality of services to ensure the word travels fast about the company and Airbnb starts seeing this as a great value add for its hosts.
In the first year of the operations, the company should target at least 100 ‘entire home’ properties on AirBnB for the property management where it will run the entire property for a commission. It should also target 200 monthly subscription clients for cleaning and concierge services.
Investment Needed For Prototype
For testing & building the prototype, pitch for raising 200K USD from angel investors or incubators in your city. There should be no office rentals or salary payout except to the staff hired for cleaning services; the entire budget should be apportioned for customer acquisition and technology. The startup could reach out to various real estate accelerators across the globe like Accredited, AREA, Elmspring and MetaProp.
You would need to have a co-founder with experience in the hospitality industry and a team member with experience in customer acquisition in the b2b industry.
Investors / Expert TakeSharing economy is on the rise and is expected to reach USD 325 billion by 2025. One of the torch bearers of the sharing economy is AirBnB, which is arguably the biggest hospitality company in the world. There is a huge demand for ancillary businesses which would support the mainstream sharing economy businesses and this is known to investors as well. this is well reflected in the example that Hostmaker, an Airbnb property management services company, has raised more than USD 9 million including USD 6.5 million raised recently from Ventech, DN Capital and DSG Consumer Partners.