Startups Boost Profits, Convenience for Savvy Airbnb Hosts

Loft Bedroom
By Farran Powell

Ted Liu, a 39-year-old real estate broker, began listing his Santa Monica, California, townhouse for short-term lease through a piggyback startup company that uses Airbnb to provide pricing and hospitality services to hosts.

"My wife and I recently moved out of four-bedroom place and thought, 'Why don't we consider renting out our place so we can make a little bit of extra money to help with the mortgage?'" Lui said, who started using San Francisco-based Pillow Homes to manage his Airbnb account. Online management property sites are sprouting up in cities where the Airbnb is popular to arrange bookings and other services like leaving chocolates on guest pillows.

Liu contacted Pillow Homes, available in the San Francisco Bay and Los Angeles areas, to manage the price listings for his Santa Monica home and guest communication. His home is $250 a night -- an attractive price for regular bookings -- but he doesn't want to be burdened by the day-to-day logistics.

"The strategy is to get people into our place, and once we have a track record then we can start raising the rates closer to market," said Lui, who hopes Pillow Homes will help him achieve "superhost" status, the Airbnb benchmark for an extraordinary host, before the end of the year.

Pillow Homes Expanding From San Francisco

Sean Conway, the 30-year-old founder of Pillow Homes, bootstrapped the startup with his business partner Justin Miller in 2013. The service has since raised $2.6 million with plans to expand to other major U.S. cities like Miami and Austin later this year. "Our value is we can become the power sellers of Airbnb by maximizing people's income by a 24/7 booking team for multiple platforms to increase the price fielding," said Conway, who comparing the growing economic environment of Airbnb to eBay.

Similar to eBay, Pillow Homes users set a ceiling and a floor price for their property to maximize revenue. Users pay Pillow a 15 percent booking fee to handle pricing, guest queries and logistical questions, such as key exchanges. Charges for house cleaning are handled separately.

The key to eBay's success has long been attributed to eBay "super sellers" who use the platform for marketing and a digital retail space, experts say. "We think the same is going to happen to this market," Conway said about the multibillion dollar industry in U.S. short-term rentals.

Similarities to eBay

Randy Engler, 43, who started his career at eBay, noticed the similarities between the e-commerce site and Airbnb that encouraged him to found Proprly, which provides essential hospitality services. "I've seen see so many successful companies come out of existing platforms like eBay, such as PayPal, and I thought the same thing would apply for Airbnb," he said.

Proprly customers fork out around $130 and $140, a line item in Airbnb, to pay for services like house cleaning and key deliveries to guests. The start-up is available in most areas around New York City, in places in the city where Airbnb is popular, and the site plans to extend to San Francisco and Paris later this year.

A 44-year old attorney named "Robert," who insisted on anonymity to avoid legal consequences with his landlord, leases his one-bedroom East Village apartment when he's away on business with Proprly. "When I'm gone for a week or two, it could be two different parties staying the in the place, and Proprly will clean it up and get it ready for the next person," Robert said. "A normal cleaning person, you can't schedule with a 24-hour notice. It helps cover the ($2,600) rent," he said, adding that he would have tired of leasing his apartment f he didn't have a reliable service for cleaning and providing key exchanges.

The attorney estimates that leasing his place at $195 a night had made him $10,000 in the last year. He added that services like Proprly have cut down his interactions with guests from four hours to one a week. "They make it possible unless you want to do it as a second job," he said.

Managing Host Fatigue

Airbnb coined the term "host fatigue," referring to hosts that feel overwhelmed by the amount of worked needed to rent a place full-time. The average vacation rental owner in the U.S. spends 8.4 hours per week on marketing managing their properties and charges around $217 per night, according to a HomeAway vacation rental report.

Amiad Soto, 27, and his twin brother Kobe, founded Tel-Aviv-based Guesty (formerly SuperHost) in 2013 to provide customer service support for Airbnb hosts. "When we traveled and put our place in Airbnb, it wasn't a smooth experience, Amiad Soto said. "And we decided they're should be a service that does this for you." Guesty received seed funding from Mountain View, California-based Y Combinator. "Airbnb is focused on legalizing its platform while we're focused on helping their customers," Soto said.

Guesty charges hosts a 3 percent fee for booking reservations and tacks on other costs for coordinating house cleaning and key drop-offs. The service handles third-party vendors and is not confined to one specific location, operating all major cities in the U.S. as well as globally.

Adam Falla, 35, a self-proprietor who moved to Austin, Texas, last year; stumbled across the Guesty site for renting his one-bedroom apartment in the Logan Circle section of Washington, D.C. He used Airbnb before he switched to using the Israeli-based software based reservation and property management site. "The amount of time that I spend in a week has probably gone down from five hours to one hour and has saved me 80 percent of the time, " he said. "Obviously, it's reduced the kind of time of management needed to manage the [Airbnb] profile effectively."
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