Nakul Sharma decided to quit his hotel job and launch an online property managment service that could turn a home into a rentable short-term option for upmarket consumers. Here he shares how he managed to secure millions in investment while signing up a major hotel group to partner with.
What is the business, when was it started and what were you doing beforehand?
Hostmaker is the leading homestay management company in Europe. I launched the business in 2014 following the boom in the homestay market, looking to bring a level of hospitality to the homestay market. We manage peoples’ rental properties to take the stress out of being a landlord and homeowner. The service includes everything from changing sheets and dropping off, picking up guests and keys, to helping with interior design, making property profiles more appealing to guests and establishing a pricing model to maximise income for the landlord. Before setting up Hostmaker, my experience lay in premium global brands in international hospitality like InterContinental Hotels and Starwood Hotels Group.
How did you get the idea, and what opportunity did you see when you started the business?
My involvement with the homestay market began when I co-wrote a paper on Airbnb’s impact on the hotel industry – specifically, how the business could benefit hotels and how the two should work closely together in the future. I came up with an idea of bringing Hilton level quality to the homestay experience – something that could be enjoyed by all travellers – from couples to big groups.
At the time, the hotel industry was reluctant to see the correlation between Airbnb and their own world. Convinced this was the future of hospitality, I left Intercontinental to dedicate myself full time to testing the Hostmaker concept. Myself and my wife, who later joined me on my mission, moved out of our home and into rented accommodation to test the experience ourselves. Using our experiences as Airbnb ‘Superhosts’ were able to quickly see the issues faced by both guests and hosts alike, and the business grew from there.
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How did you finance it and what were the challenges of that?
We put £50,000 of our own money into Hostmaker to get it off the ground. I quit my job at the end of January 2014 to focus solely on the business. The big break came when only our second customer wrote a glowing one-page review on Airbnb which was seen by the company in San Francisco. On the back of this we were invited to speak at their first host conference – which significantly helped funding efforts. Three rounds of seed funding and a Series B round later, Hostmaker has secured over £20 million investment, the largest in Europe.
What were your key marketing strategies?
For the first 12 months, we focused on getting our operations proposition right and purely grew the word of mouth recommendations. My hospitality background, the proof of delivering superior earnings to our early customers and ensuring great care in looking after the home, the guest and the host was a message that resonated with our customers.
Getting your message into the hands of the right people is key. Our marketing in the UK is focused on Central London and specifically at onboarding landlords. It is very important to know who you need to attract and what makes them tick. Using online social media platforms is also very important for us as it is a great way showcase the terrific work our design team are doing and how we can help landlords maximising their property’s appeal.
What are the revenue streams?
Hostmaker offers a range of services to landlords. Our main offering is a full-service management for a fee. This includes everything that a landlord would do for tenants. We look after the whole process. We clean the properties, collect the keys, track maintenance issues and advise landlords on how to fix them. These hosts experience total peace of mind with AA-rated insurance for public liability and damages to the home, furniture and fixtures.
We also have premium accounts for landlords which have several benefits. We will take care of every maintenance issue, big and small. Premium hosts receive annual home and contents reviews and ongoing gas servicing. Our skilled team of interior designers make sure the property is looking as good as it can for guests, encouraging five-star reviews and to boost revenue.
We have also launched a partnership with Marriott International to introduce their travellers to this new category of travel accommodation. Tourists and travellers can now log onto TributePortfolioHomes.com and book a stay in more than 200 homes in London, each of which has been chosen specifically by Marriott and Hostmaker.
What are the main challenges you have experienced and seen?
Moving into different countries and cities always presents new challenges. Identifying the right cities, assembling the team and adapting to new scenarios, the list goes on. Keeping all our teams connected and motivated is another constant challenge that comes with expanding. We have webcams and TV screens in each office to create a ‘one office’ experience even though we are all over Europe.
Another challenge comes from the fact we are expanding at a rapid rate. Keeping your fingers on all the various pulses of the company can be tough. You have to be able to manage your time effectively and make sure everything that makes the company tick is being done.
Finally, finding the right people to drive the company forward is something that we are constantly doing. We are always on the lookout for people who can add to the Hostmaker brand but finding the right people for the right positions can be tricky.
What advice would you give to early-stage businesses looking to disrupt markets?
I wish I had learned earlier on, that fundraising and operating a business are poles apart and various stakeholders in a company require very different management styles. Fundraising requires exciting potential investors about the future and getting them to part with their money to believe in your dreams. Running a business is very much about the here and now and focusing on the nuts and bolts.
You have to focus on hiring and building a credible team around you that takes the business forward without you. Jack Ma from Alibaba has a great quote where he talks about building a business that lasts at least 102 years – a clear long-term KPI! We should celebrate the little successes but always aim to create something meaningful that is more than a flash in the pan.
Find out more: Hostmaker