Business Technology

Wednesday 7 December 2016

Papal problem solved by calling Ireland's answer to Airbnb

Published 17/09/2015 | 02:30

Homestay chief executive Alan Clarke.
Homestay chief executive Alan Clarke.
Cyril McGuire. Photo: Mark Condren.
Co-founder Tom Kennedy in the Homestay offices with Debbie Flynn.

Next week, getting accommodation in Philadelphia will be tough. The Pope is coming to town and that means tens of thousands of people from all over the US could be stuck for somewhere to stay.

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But the organisers of the papal visit have come up with a solution: they've contacted Dublin company Homestay.com to set up a special online accommodation-booking system that will let out-of-town travellers find shelter in local homes that sign up to host delegates and attendees.

"They approached us and asked for help as there would be a shortage of accommodation," says Alan Clarke, chief executive of Homestay. "They said that they have a body of hosts and just needed some way to make it work. So we created a version of our marketplace for them."

Such whitelabel marketplaces are becoming an important part of Homestay's fast-growing business. The company, which has just landed €3.65m in new investment from Delta Partners and Cyril McGuire, has been described as Ireland's answer to Airbnb. But its basic model differs from the US giant, even if it occupies the same core 'sharing economy' space.

The basic idea behind the service is that hotels are empty, lonely utilities that don't suit explorers. Ordinary homes, by contrast, come with people who can act as guides in one way or another. So why not match them up?

"We're part of a broader trend of experience-based travel," he says. "It's not about price, it's about connecting a local area and a culture you're going to."

In two years of being live, he says, Homestay now has 50,000 registered hosts and travellers from 150 countries. Most of the business, he says, is in English-speaking countries.

On the business side of things, Homestay has some significant entrepreneurial pedigree behind it. Aside from Clarke's own McKinsey background, the company's founder is Tom Kennedy, who sold Hostelworld.com for €200m together with partner Ray Nolan. And its chairman is Paddy Holohan, who sold software firm Newbay to BlackBerry for €80m in 2011. Its investors are no less stellar. Cyril McGuire sold Trintech for €100m four years ago.

So the company, which currently employs 20 people but will, says Clarke, have 30 by the end of this year, is set up to expand rapidly.

"The goal is to be the global destination for homestay experiences," says Clarke. "Right now, we're continuing to build out inventory and knowledge of the service.

The basic accommodation-sharing model is booming, he says, citing survey figures that show up 20pc of travellers have rented a room in someone else's house. 95pc of the Homestay visitor reviews, he says, are "glowing" about their experience. And the average stay in a Homestay.com host is 14 nights.

"It's a global phenomenon," he says. "But it's no great surprise. As a category this has existed for decades. Think about education and kids travelling abroad. They've always stayed with homestays."

What about broader acceptance of staying in someone else's house, though? How many of us are really willing to do that or to let people into their homes for two weeks at a time?

"We try to facilitate communication between guests and hosts," says Clarke. "So we built a video calling product that allows guests and hosts to interact before a stay. Also, you have to look at the motivation. It's about engaging with the local person. Sometimes it's about price too."

Homestay is probably Ireland's most advanced startup in the nascent 'sharing economy' space. But how far does this go? A sketch in the US comedy 'Portlandia' recently parodied the model by showing a couple renting out everything from bathtubs to toilets.

"As a model of commerce, the sharing economy is here to stay," says Clarke. "It gives people an opportunity to earn income in a number of different ways and get assets in a number of different ways. If you think about Hassle.com for cleaning or Blablacar for trnsportation, it's a trend to having platforms that allow people to maximise their space or time or skillset. It's simply a model of commerce that's increasingly relevant and provides value to customers."

The company is leasing its model out to others, too.

"We created a whitelabel version of our marketplace," says Clarke. "So for any given association or organisation, we can provide a closed marketplace for that event. That could be the rugby World Cup for rugby fans or the Pope in Philadelphia."

Clarke says that the company will soon ramp up its marketing in different cities with some money already spent in Dublin.

"To date we've been quiet but we're now in a marketing effort to build awareness," he says. "We did our first campaign in Dublin in recent weeks, with ads on the Luas, the Dart and the Northside People. We saw a significant increase in hosts in Dublin after that. We're also seeing a long tail of booking volume into places like Carlow and Connemara."

Clarke says that the new injection of funding, which brings its total backing to over €7m, is a reflection of investors' confidence in the business model.

"Marketplaces of spaces and places exist," he says. "We see ourselves as a people-centric marketplace. What we're seeing is a global phenomenon."

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