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The way we move is evolving, and with recent slowdown due to Covid, the lines between leisure and business travel, short and long-term, have become blurred.
This has greatly impacted accommodation, as both suppliers and consumers ask for greater flexibility. Technology has the power to deeply disrupt the industry, and meet the needs of property investors, home owners, tenants, and travellers alike.
In 2016, GuestReady’s co-founders Alex, Chris and Patrick, seasoned entrepreneurs and Airbnb hosts themselves, spotted the limitations of short and mid-term rentals both from a technological and operational point of view, and set out to develop a solution.
Four years later, GuestReady is a tech-enabled short-term rental management company operating in 20 cities across Europe and Asia. The startup works with property owners and professional investors and takes care of all required processes to run short- and mid-term rentals such as price management, guest communication, check-in and linen services. GuestReady was named one of the top 10 startups in the UK in 2019 and won the 2018 Serviced Apartment Awards as the best service provider.
We caught up with Alex to hear more about it.
What is GuestReady’s vision?
Our vision is to be the world’s largest short and mid-term rental management company; to build solutions that enable property owners to unlock the true value of their real estate, and provide amazing accommodations options to guests all across the globe.
Platforms such as Airbnb or Booking.com have made it easy to book an apartment. However experience for guests can vastly differ between one stay to another. With GuestReady we’re creating a brand that stands for unique properties with standardised service. Similar to what Marriot or Hilton have done in the Hotel space, we want to be the most trusted brand for guests to stay with when it comes to unique short- and mid-term rentals. For property owners, we want to be the trusted operators of their properties.
What has the growth journey looked like for GuestReady?
GuestReady was launched in the summer of 2016 simultaneously across 6 cities between Europe and Asia. That year we raised around €600,000 in a European angel round and ended the year with 40 properties under management.
In 2017 we did our first acquisition in Paris, released the first version of our host dashboard where hosts could see their bookings and invoices, and raised €2.7 million in a seed round. In the meantime, our portfolio grew to 200 properties.
In 2018, we expanded our services to Portugal and the UAE (Dubai) and launched our internal mobile app (iOS and Android) for cleaning and overall task management. That same year, we also set up our 24/7 central operations centre in Kuala Lumpur. We closed the year with more than 700 properties under management.
In the spring of 2019, we acquired one of our main competitors in France and Portugal: BnbLord, and shortly after raised €5.1 million in a Series A round. We also introduced our 24/7 support service in French, and started licensing our property management software to third party property managers. We closed the year with €28 million in booking value, a 379% growth rate since 2016. Our portfolio grew all the way to exceed 2,500 properties, estimated to be worth over $1 billion USD.
Despite the choppy waters of 2020, we’ve been steering the ship in the right direction. We actually have expanded our services to Switzerland, and for the first time reached EBITDA profitability in August. We also released automated payment processing via virtual wallets, which was an highly anticipated feature we had been working on for some time.
In total we’ve generated more than €50 million in cumulative booking value, and have sold more than 1.2 million nights to guests. All of this would of course not have been possible without a stellar team, composed of more than 100 people from 22 different nationalities!
Who are the main competitors in this space and how do you differentiate yourself?
In general we don’t worry too much about competitors. Our strategy is to innovate, focus on building a great business and avoid getting distracted by what others are doing. We believe that we have several key differentiators and strengths compared to other players in this space.
Firstly, our speed and ability to scale internationally is best in class. We had an international setup from the very beginning, launching in several countries at the same time. This required us to build processes that scale across cities and countries and has allowed us to be successful on global scale. Most competitors are just focused on one market and those that expand are not very successful in their expansion markets.
Looking at numbers, although GuestReady was launched later than most players in the market, we have grown faster. Yet, despite our rapid growth we’ve never sacrificed host and guest satisfaction as it is a key metric for long-term success. Our Trustpilot rating of 4.8/5 four years into the business and counting more than 600 public reviews is a testament of our care.
Our growth has partly been fueled by our proprietary market-leading technology, which we now can and do license to third party property managers. To my knowledge, we are the only player in our industry who offers property management software with fully comprehensive features including a pricing algorithm, payment automation and operational process coordination.
Finally, our unit economics are very healthy, with a gross profit margin of over 50%. Thanks to our technology and operational setup, we are able to keep overheads low too and reached break-even in August 2020.
What new partnerships/product developments do you have upcoming?
We continuously work towards building meaningful partnerships within the industry, to provide additional value to our hosts, guests, and shareholders.
At the moment, we’ve got two exciting projects on which we’re working. Firstly, we’ve started to scale the licensing of our software, after a year of trial with a select few third party property managers. We observed very strong initial results and were able to step up the level of user customisation so that our solution now works for the largest number without additional involvement from our side. We also just started franchising the GuestReady brand earlier this year, and are very excited to further expand through that model.
Secondly, we have had very positive discussions with some large real estate investment firms that are looking to optimise their asset utilisation. We currently have a successful partnership in Dubai where we manage 60 units in a building for a large property developer. We’re now replicating a similar model across other markets with different partners.
How is the team qualified to deliver on the mission?
GuestReady’s mission is to help landlords turn their investments into a profitable source of income, whilst providing unique and flexible accommodation options to guests. We are blessed with an international team who are local to their markets but have worked and lived in other parts of the world. This helps us to collaborate well across borders, languages, and cultures. Our team has outstanding educational backgrounds, entrepreneurial expertise and experience from companies such as Rocket Internet, Deliveroo, Morgan Stanley, Oliver Wyman, Nike, Credit Suisse, Deloitte or KPMG.
Why is now the right time for GuestReady to thrive?
The current economic slowdown has brought its share of lessons and learnings, but also tested the robustness of the different industry players. I believe that we are very strongly positioned, looking at the future.
First, many small and mid-sized management companies might not have the capital to make it through this crisis and are looking to bring their portfolio onto the GuestReady platform. We’re in conversations with several players to potentially add hundreds of new properties to our platform. We gained experience through four past acquisitions and built a playbook that will facilitate future M&A activities. We have established a reputation as a player who is driving consolidation and are receiving a strong captive deal-flow.
Second, COVID has forced us to further innovate and has taught us how to expand to new markets purely online, without adding fixed costs. This model is very scalable and soon we’ll be opening up new markets with this model, also benefiting from reduced customer acquisition costs thanks to the current significant decrease of online marketing buying costs.
Finally, we have seen a decrease in the overall supply of short and mid-term rentals, which will not match the demand once borders open up. This lack of supply will result in higher occupancy rates and average daily rates. We believe that the acceptance of working from home means that more people will work for extended periods of time from a different location and that they’ll prefer to stay in short- and mid-term rentals rather than hotels. So we’re more bullish than ever about our industry.
What is one lesson the COVID crisis has taught you?
Facing such a dramatic crisis as a leader is not an enjoyable experience. However, I believe that difficult times make you grow as a person. It’s important to not get caught up in things you can’t control and instead focus on the things you can.
In this situation of crisis I was also reminded that while business performance is important, what really matters are the peoples’ lives and livelihoods. Making sure that customers, employees, partners, family, and friends were doing ok became more important than just looking at the business.
What are you doing when you’re not working? / What is one piece of advice you’d give to upcoming entrepreneurs?
To be honest, as an entrepreneur it is difficult to take time off and the business always stays with me. When I am not working I like to explore new places, be it travelling to a city I haven’t been to, exploring nature by bike or hiking or tasting great food in a new restaurant.
My advice for upcoming entrepreneurs: Just do it! There will always be 100 reasons why your idea couldn’t work, but if you are committed and work hard on a problem there are good chances that you’ll be successful.
To back GuestReady’s mission, visit the pitch now.