It's Like Airbnb, Minus the Regulatory Troubles
Airbnb gives people a quick way to make a buck by renting out empty rooms in their apartments or homes. But it ain't easy being an Airbnb host. There's managing your listing and messaging potential guests. There's stocking the pantry and turning over keys. There's cleaning up after they check out. And then--if you live in certain cities--there's the concern about regulators coming after you.
But what if you could rent out your space with none of the hassle?
That's the promise of Onefinestay, a London-based startup that has since 2010 focused on short-term rentals of luxury homes by their owners. The operative words regulation-wise are "homes" and "owners;" the company doesn't facilitate apartment leaseholders using its service, which could violate New York's short-term rental laws, as Airbnb has learned the hard way.
"This is not a 'pile 'em high, sell 'em cheap' business," says the chief executive of Onefinestay, Greg Marsh, who is also one of the company's three co-founders. "It's methodical and product-oriented businesses."
How It Works
A vacationer or business traveler can book a short-term rental on the Onefinestay website or mobile app, in New York City, Paris, London, or Los Angeles. Onefinestay's site handles the payment--and this is where similarities to Airbnb or even VRBO end. That's because with Onefinestay, the homeowner doesn't have to wait around and meet the guests to hand over keys--nor does she have to even tidy up.
Onefinestay controls quite a bit more of what could be called the traditional hospitality process than its non-hotel competitors. That begins long before a guest books a home. In fact, there's a screening process even to list a home--and, according to Onefinestay, some 90 percent of applicants are not accepted.
Onefinestay employees survey in person and hand-select properties--and their owners. These are typically upscale home, spacious lofts, or properties with a particular urban charm in a hip area of town, almost always owned by the tenant.
The service extends far. As Marsh explains: "While the homeowner is out of town, we do everything from cleaning the home to de-cluttering it, to meeting the guests to providing towels and linens, to providing an iPhone for navigation, and bath products. It's a full turnkey solution for homeowners." (The bath products are Kiehls, the linens are high-quality, and, yes, the company even re-clutters the home when it's time for the inhabitants to return.)
How It Got Started
Due to its complex logistics that resemble a traditional hospitality company more so than a fast-growth Silicon Valley tech firm, the company took its time getting established in its hometown of London, expanding to New York City in 2012, and Paris and Los Angeles in 2013. Now it's in four cities, with a total of 2,200 properties--the majority of which are in London. The company takes a percentage of the rental cost--around 40 percent, reportedly. Onefinestay has $16 million in venture capital funding, which it raised in two separate rounds from firms including Index Ventures, PROfounders, and Canaan Partners.
Marsh began working on Onefinestay in 2009 after spending several years investing in other startups at Index Ventures (which did later invest in Onefinestay). From the perspective of Warren Lee, a general partner at Canaan Partners, Marsh's qualification sitting on the other side of the funding table was a significant asset.
"It was unusual to have an investor moving over to the other side. Venture is a great job--in fact it's kind of cushy after a few years," Lee says. "It shows a strength of conviction to leave that after years and start on your own path."
The new venture is not without strain, though. A company that attempts to manage the linens (and everything else) at far-flung properties requires a lot more logistical intricacy on the ground, and a lot more man-power than a typical tech startup. Onefinestay already has 250 full-time employees, and roughly 250 contractors.
"Our business is a distinctive one in that it's a hybrid one, it has the online aspect, but it is a service business," Marsh says. "We are selling a product to very sophisticated buyers and we're selling someone something at a very high, several thousand-dollar price point."
In other words, the service must be impeccable.
"Operationally it's very intensive," Lee says. "We like that."
When I balked at that--how can you scale quickly when a hundred hires are necessary in each city?--Lee defended himself. "Simple. There are barriers to entry. Early on, there were questions about whether they could pull this off," he said. "But three years in, there is now no question."
And by working with the direct owners of properties to provide rentals--and paying its taxes everywhere it operates--the company has avoided the regulatory issues other property-renting startups have faced. In fact, Marsh says Onefinestay has "never had any altercation with any regulatory authority in the United States."
Ultimately, he says, in dealing with a high-end market, the customers actually help the company avoid trouble. "These are well-heeled guests and quite respectful people."
For the record, not all well-heeled clientele make good house guests--just ask anyone who's ever cleaned up after these rock stars' hotel stays.
CHRISTINE LAGORIO-CHAFKIN | Staff Writer | Senior Writer
Christine Lagorio-Chafkin is a writer, editor, and reporter whose work has appeared in The New York Times, The Washington Post, The San Francisco Chronicle, The Village Voice, and The Believer, among other publications. She is a senior writer at Inc.