Away from the bustle of Baga and Candolim, a quaint three-bedroom villa stands amidst the lush greenery of Vagator in Goa. They call it the Yellow House. Dhruv Sharma, whose family’s vacation home adjoined the property, noticed that its elderly owner would try and rent out the rooms for as little as Rs. 400 a night, but there were no takers. That sowed the seeds for his startup, GuestHouser, which has today grown into India’s largest network of vacation rental homes.
The two-and-a-half year old startup was founded around the time homestays as a concept was just about taking off in the Indian market. “The homestay or bed and breakfast concept work very well in markets like the US and Europe because people are willing to let out their homes to travellers so people can sample the local food and culture. In India, it’s more ‘CnC’, which is chowkidar (watchman) and chaabi (key), because very often that’s all you get when someone rents out their second home,” says Inderpreet Singh Khurana, Director of Partnerships and Alliances at GuestHouser. “Often, no one takes care of the house and it falls into disrepair. That’s where we come in. We manage everything at the property from end-to-end, to give people the kind of vacation rental experience they are paying for.”
An untapped space until now
Today, the 150-member GuestHouser team manages 110,000 properties across 2,200 cities across the globe. This includes villas, vacation rentals, holiday homes, islands, yachts, and houseboats. GuestHouser also has over 3,000 houseboats listed on their platform that holidaymakers can rent. But this was not always the case.
“For the first one-and-a-half years, we were only looking at building supply. This was an undiscovered space, so it was a task to convince people to let out their second homes. Most homeowners were hearing about a platform like this for the very first time,” recalls Inderpreet.
“Our entire focus, unlike a lot of other startups, has always about putting the product first. We’ve never been about numbers or marketing first. We believe that visibility follows one simple fact: a better product,” says Dhruv, the 25-year-old founder of GuestHouser. “We wanted to start with creating a network as we believed that was the actual product. If someone logs into GuestHouser, but does not see compelling reasons to stay in one of our listed homes, there is no point in bringing anyone to our site,” he adds.
Building supply remains key
The team says that convincing people to sign up their properties was a challenge in the initial days. “A lot of people have holiday homes they visit for only about a month in a year. We approached them asking if we could rent it out for them via our platform. With certain hosts, we even take care of the maintenance, check in and check out, and inventory,” says Inderpreet.
Adds Dhruv, “Goa was proof of concept for us. We started with an offline crawl to find every room and every villa available. There are over 11 million second homes in India that are not generating revenue. So, we believe our current inventory of 110,000 is just a drop in that ocean.”
Innovation and overcoming challenges
Another challenge was creating content for the platform. As a discovery platform, says Dhruv, there was a need to generate comprehensive content on what homes looked like, followed by user-generated content to provide trust of transaction. “If you want to stay at the Hyatt in Mumbai, you have certain set expectations. However, we are not a standardisation platform. We want people to discover new homes,” he says.
“I created a WordPress site that said ‘Something disruptive in travel is coming in three months.’ I had the name GuestHouser and a logo where the H had a lid on it like a house. Just convincing people that you were a real company and getting them to allow you to click pictures of their home and sign a contract that you would do transactions on their behalf was the biggest challenge,” says Dhruv.
There are about 50 high definition images of each property on the GuestHouser platform.
“It’s a complete journey where you see different angles of every aspect – the beds, the rooms, the exteriors, the bathrooms. We give you a real feel of what it will be like when you get there. There is also a team that keeps the information updated. We realised that with people doing such extensive research, and with today’s high speeds of mobile internet, that viewing a video would have to be part of the scope. So now we are curating videos of our luxury, high-transaction properties,” he says
Dhruv says that innovation is necessary in this space. “I believe one of our greatest innovations is our search algorithm. It’s a completely dynamic search. It’s a self-learning algorithm that remembers customer behaviour and choices. There is a very small window in which someone decides whether they are going to book with us or not. We only have 10-20 seconds to impress you. If we show you something irrelevant, you will bounce out. The first time we moved from assumption-based algorithm thinking to data- based algorithm thinking, our revenues shot up 67 percent,” he says.
Rental home economics
The GuestHouser team has always focussed on unit economics rather than marketing velocity. “We have booked over 200,000 nights, of which half have been done in the last six months. I know it’s a small number compared to the larger players, but you need to look at the paltry amounts we have spent on marketing; 97 percent of our spend has been on payroll and product,” says Dhruv.
Guesthouser is now on track to do bookings for over 50,000 travel nights a month, adds Dhruv:
“Our unit economics are great. We actually make money on each transaction and rarely give out discounts. For every rupee spent on marketing, we make about 8 times the revenue.”
GuestHouser currently works on a commission-based structure and gets a percentage of the fee on bookings made. They also do not allow hosts listed on their site to advertise on their platform. With an average transaction size of Rs 10,000, margins are positive. GuestHouser, which is looking at closing a round of funding, is likely to break even in the coming quarter. “Good products raise money in any environment. We are going to market with positive unit economics and a clear path to profitability,” he adds.
Talking about the way forward, Dhruv says GuestHouser is planning to up their marketing efforts, especially via channels like social and digital media. They are also planning several community building and host-education exercises with the people whose properties are listed on the platform. The objective is to train hosts on how to ensure a better customer experience.
College students: 10 ways you can make money
The team is also looking to raise awareness in India about their platform and ensure that GuestHouser becomes the obvious choice when it comes to vacation rentals. Dhruv tells us about a Holi party last month, where he heard two men discussing buying a holiday home in Goa. One of them said that his contractor in Goa had recommended listing the property on GuestHouser, and how that would earn him more revenue when the home was vacant.
It would appear that this startup is already on its way to making that vision a reality.