Hotelesque manages properties on short-term leases
A Deloitte Access Economics report for Airbnb found that Airbnb guests make a significant contribution to Australia’s economy, contributing $1.6 billion in GDP and supporting over 14,000 jobs. The platform also creates significant benefits for consumers both in terms of price savings and different features. Hosts across Australia accommodated around 2.1 million guests for 3.7 million nights in 2015-16.
With all that economic value, AirBnB has helped create numerous tangential opportunities for savvy entrepreneurs. Australia’s startup ecosystem is full of innovative new services, however one industry alone – the accommodation and travel industry – has been turned on it’s head by the disruption of Airbnb, Stayz, and other home hosting platforms. These platforms have spurned many ingenious businesses designed to service the exploding market of homeowners renting their spare space.
While AirBnB (which also competes with the likes of Stayz in Australia) serves guests who are looking for cost-effective accommodation, it also promises landlords the opportunity to increase their rental yields. However the effort required to manage the listing, screen guests, drop keys and arrange cleaning carries numerous costs, principally being time and money (travel costs to check in on the property weekly, cleaning, key drop etc). Almost 40% of ServiceSeeking customers have used services like AirBnB and Stayz, which speaks volumes to this growing market segment.
Have you ever used AirBnB or Stays?
However the viability of running an Airbnb as a business model is taking many by surprise and a niche has opened up for realestate agents to manage the burden of letting properties on AirBnB and Stayz. And the demand for the service is exploding. One property management start-up, Hotelesque, promises landlords the excitement of big yield gains on investment property without the hassle of managing the process themselves.
The problem of managing a listing on AirBnB is real. The average owner spends an hour a week, or 52 hours a year managing their listing. A further 36% of owners spend 260 hours a year managing their listing. And 5% of owners running listings on AirBnB send 10 hours a week, or 520 hours a year dealing with guest communication, checking in and checking out, cleaning and admin. This is a huge burden in both time and money.
How Long Do You Spend Managing Your Listing?
Enter Hotelesque – a company that reduces this burden to an absolute minimum. In the last quarter alone, Hotelesque has increased traffic to its website by 165% and enquiries by 506% – explosive growth in anyone’s book. And founder Steve Keir shares numerous anecdotes of home owners generating 20% more rent for their properties than securing long term tenants the traditional way (by advertising on Realestate.com.au and Domain). In a recent survey commissioned by ServiceSeeking, the majority of investment property owners less than 4% yield. Hotelesque offers the opportunity to double or even triple this.
Hotelesque took on a Surrey Hills two-bedroom terrace that was being rented out for around $650 a week and it is now renting it out on a short-term basis on Airbnb and Stayz, managing cleaning, key exchange and everything in between. This has delivered the owner an average of $815 a week, after Hotelesque’s property management fee is taken out.
Keir wants to cut into the lucrative rental management market by convincing landlords of inner-city properties to switch from traditional rental agencies which lock landlords into a six-month to 12-month agreement to a short-term rental model without doing all the costly time consuming work of key drops, linen and cleaning and numerous property inspections.
And his efforts are clearly working, with almost 160 listings across Sydney.
For the right investors, usually owners of properties in inner Sydney CBD and eastern suburbs, the start-up can provide better maintenance of the property. His team visit the properties multiple times, advises on styling and curating photos online, a model he says works better than quarterly or six-monthly inspections.
The revenue model is attractive too as it is based on a shared risk model where Hotelesque takes a 15 per cent commission out of the landlords’ total revenue.
Despite the high risk profile Hotelesque has had many interests from property owners. So far, Mr Keir rejected around 30% of interested landlords because the properties don’t meet their exacting standards – for example properties that are too quirky or not centrally located.
While the majority of landlords still prefer consistent cash flow to cover mortgage payments, those that depart from the standard path are reaping the rewards. Particularly those with 1-2 bedroom apartments in the inner city and surrounds. However, companies like Hotelesque could offer a lucrative option for those wanting for higher returns without having to manage high volume guest turn-over, Keir said.
“It depends on what risk tolerance the investor has. If they want to improve their rental yield, and have a true expert in property management extract the maximum value on a profit share basis, their is no better to achieve this than by putting your property on AirBnB and Stayz,” he said. “With anything in life, the higher the risk the higher the return.”
With some AirBnB hosts producing job-quitting levels of additional cash, its is definitely a concept worth exploring.