Crashpadder Creates Bed-and-Breakfasts for the Recession Era
"Crashpadder offers people a way to save money when they travel, and also gives people a chance to earn money at a time when many are worrying about how to pay the mortgage and how to pay for vacations," says Stephen Rapoport, Crashpadder.com's 28-year-old founder. In London, where even a four-star hotel room can cost £200 ($300) per night, Crashpadder.com has about a thousand rooms available at costs between £15 to £100 ($23 to $150). Booking through Crashpadder, Rapoport estimates, is 83% cheaper than booking a three- to five-star hotel.
Rapoport hatched the idea for Crashpadder several years ago in an Australian pub, where he was tending bar during an Australasia tour. He mentioned that he couldn't afford to stay at a local hostel, and one of his co-workers offered him a room for a small fee. Other staffers soon followed suit, offering spare rooms to customers for cash. Using this model, Rapoport used his expertise as a new-media consultant to set up shop back in London.
At first, it was just a hobby he ran out of his bedroom, while he also headed a consultancy advising clients like Santander, Lloyds, British Airways, and Virgin Atlantic about the Internet. But then the global financial crisis swept away many of his most lucrative consulting contracts. "I lost about 50% of my income in a day," he says. But a cash injection from a private venture capitalist soon turned Crashpadder into his full time job.
Crashpadder doesn't charge hosts to list their properties, nor does he sell advertising, although it does collect a 10% fee from each booking. To make a decent living off low-budget listings, Rapoport has to attract a lot of business. In true startup fashion, he keeps his operating costs low: He maintains a staff of only three people including himself, running the business out of a converted shopping center in Brixton, a transitional area of South London.
Crashpadder now has 5,000 members and rooms available in 700 cities around the world, from London to Cape Town to Auckland. Rapoport tries to connect clients and hosts with similar interests and hobbies, suggesting that potential matches browse Facebook pages before confirming arrangements, so guests know they'll be getting local insight from hosts who know their interests. "Staying with a local," Rapoport says, "you learn about the really great bars, the great restaurants, the really great galleries."
Looking Ahead to 2012
If Rapoport hopes to get rich off the enterprise, the 2012 Summer Games may be his best bet. London expects about 2 million people to visit, and they'll all need somewhere to sleep. The Olympic committee alone may book 50,000 hotel rooms per night for months, according to some reports -- and London has only an estimated 100,000 decent hotel rooms. "There will definitely be an accommodation shortage, and we will be well-placed," says Rapoport, who expects to have about 4,000 rooms in London by then.
While his business fills a hole in the marketplace, it also reflects his disdain for chain hotels. "They are sterile, cookie-cutter, very expensive," he says. "Even a cheap hotel will overcharge you for breakfast, a drink in the bar, internet, and you end up feeling a bit like cattle, even like cattle being milked. You go to another country to eat the food and to see the sights, but also to experience the local culture -- and you don't experience any culture of any kind, let alone local, in a chain hotel."
In his younger days, Rapoport was a devotee of Couchsurfing, which he calls part of the "free stuff" movement. Couchsurfing is an idealistic nonprofit service that arranges home-stays for free. "Our mission as an organization," its site says, "is to create inspiring experiences: cross-cultural encounters that are fun, engaging, and illuminating."
Crashpadders, Rapoport says, is for grown-up couch-surfers. "Couchsurfing is more of a free-love service," he says. "Our target audience is people like me who used to use it but now are looking for something a bit more comfortable." Instead of a couch in a shared space, he says, his business provides clean, private quarters -- and his customers include self-employed business travelers who expect better service. "A lot of them are people like me, running a startup," he says. "Any money spent on a hotel is essentially coming out of their pockets."
Security has not been an issue, he says, and after hundreds of bookings, he's only had one complaint, about a guest who booked a room but didn't show up. (A 50% deposit had already been paid to the host by credit card, Rapoport says.) All rooms are secured with credit cards, Rapoport says, to verify a user's identity and details – and perhaps to charge for broken or stolen property, although Rapoport says it's never happened.
A quick tour of a £40 ($60) London crashpad makes it clear that these accommodations are not palatial suites in swanky mansions, but utilitarian lodgings in working people's homes. Guests are typically provided with an en-suite bathroom, bed (or futon), desk, chair, family photos, and access to the rest of the house, including the kitchen and coffeemaker. It may not be five-star, but nobody could accuse these digs of being cookie-cutter chain-hotel rooms.