Added on - Sep 2019

Trusted by 2+ million users,
1000+ happy students everyday
Showing pages 1 to 8 of 44 pages
JILL AVERY ANAT KEINAN LIZ KINDonefinestayMiranda Cresswell was delighted to be helping Greg Marsh (HBS MBA‘06), founder and CEO of onefinestay, a vacation home alternative tofine hotels, with branding work for the company. onefinestay wasfounded in September 2009 in London, and offered high-end homerentals to travelers who sought a more authentic and local experiencethan a typical upscale hotel might provide. The company equipped itsrental properties with luxury amenities such as fine linens and towels,prestige brand toiletries such as Kiehl’s, and an iPhone loaded withlocal maps and restaurant recommendations. By the fall of 2014,onefinestay had approximately 250 full-time employees, and anadditional 250 contract staff. The company operated in four cities inEurope and the U.S.According to Marsh, onefinestay's brand had been "hacked" togetherquickly during the company's early years. After five years of rapidgrowth, Marsh brought Cresswell on board to do a comprehensiveanalysis of the company's brand and its positioning in the marketplace.Cresswell had spent several months gathering data and insights, andwas starting to experiment with use case scenarios that took a crack atsegmenting the company’s customers. The preliminary results wereinteresting, but raised more questions than they answered, andCresswell wondered if this was the best way to segment the market.While segmenting in this way was intriguing, it led to a brandingchallenge – as a start-up, it was difficult for onefinestay to have theresources to support multiple brand messages in the marketplace anddifferent segments wanted different things from their travelexperience. She pondered whether there were other ways to groupcustomers that would allow for a more universal positioning for thebrand or whether the company needed to focus on one or twosegments to serve.Positioning the fledgling brand was a challenge. Who was the companycompeting against and how could it carve out a unique valueproposition that would appeal to travelers and be differentiated from
what was offered by other hospitality options? Was its current moniker“the unhotel” working for or against it?As a two-sided marketplace, onefinestay also struggled to find thebalance between meeting the needs of two customers: the homeownerhosts who supplied the company's unique inventory of properties andthe guests who paid to stay there. At times, their interests were atodds with one another. As Marsh and Creswell considered refinementsto their product strategy, they had toEducationalconsider how their productand service offering differentially impacted the host and guestexperience.The competitive landscape was heating up and Marsh was eager toallocate marketing resources in a way that would generate substantialreturns and help scale the company. He had big ambitions for thecompany, but wondered what the right growth strategy was. Should hefocus on increasing the breadth of onefinestay’s global reach byexpanding into more cities around the world or should he focus onbuilding depth by increasing market penetration in the cities in whichhe was already operating?The Founding of onefinestayMarsh was born and raised in London, England. Following hisgraduation Christ’s College, he worked for GF-X, a logisticsmarketplace startup, in a variety of operations and marketing roles.Following the completion of his MBA program at Harvard BusinessSchool, he joined Index Ventures, a leading London-based venturecapital firm, as an associate on the IT investment team.Marsh had just returned from a 2009 trip to Pisa, Italy when the ideafor onefinestay occurred to him. He had a “dreadful stay” in a “drearyairport hotel,” but thoroughly enjoyed an out-of-the-way restaurantrecommended by a friend who had grown up in the area. Without thefriend's advice, Marsh recognized he would have missed out on a localexperience in lieu of the typical tourist attractions. At the same time,after coming back to London and making his nightly walks home fromwork, he couldn’t help but notice the many luxury residentialproperties in the area that appeared empty for vast portions of the
year. Marsh wondered, "Why are these places empty? Why are theplaces where I would most want to stay if I was visiting a city the oneswhere you can't get to stay?"1He called it a “no light bulb moment,”noting “the lights aren’t on because nobody is home.”Marsh conducted research to see if anyone else was doing somethingsimilar, and ran the idea by a colleague who encouraged him to startthe company. Marsh’s concept was to provide discerning travelers withupscale home rental options that would be more authentic than hotelsand more reliable than other vacation rental choices. At the same time,homeowners would earn extra income from their properties when theyotherwise would have stood vacant.2Marsh elaborated further:Our mission is not to destroy the hotel industry. However, a proportionof travel— certainly the majority of leisure travel—is just infinitelybetter and far more enriching to stay in a home than in a building thatis soulless and has been designed for transient occupancy.... Whatwe’re bringing to that rental sector is generally a curation and qualityand service control that you take for granted in some industriesincluding hotels and chain restaurants, but that you don’t find in thismuch more informal sector of the economy or that you haven’t founduntil now.3In September 2009, Marsh left Index Ventures to co-found onefinestaywith Demetrios Zoppos and Tim Davey. Zoppos and Marsh had workedtogether at GF-X, and Marsh knew Davey through his work as co-founder and chief technology officer at one of Index Venture’s portfoliocompanies. (SeeExhibit 1for management bios.) Marsh commented,“With this business, I wouldn’t even have attempted something soambitious and complex without Demetrios and his operations expertiseand similarly with Tim and his experience: we simply couldn’t havedone this without our technology.”4Together they raised approximately €200,000 from friends and family,and launched onefinestay in May 2010. Marsh reflected, “We really didhave to beg, borrow, and steal to get the first half dozen homes on theWeb site to start the ball rolling. Another adage, fake it till you make it,well, we faked it a bit—of the first half dozen homes, one was mine,one was Demetrios’s, and one belonged to a friend who has neverrented it out and insisted that he was never going to—it’s long sincecome off the site, may I say—but we needed calling cards.”5
By late 2010, onefinestay was able to raise $3.7 million in a Series Around led by Index Ventures, PROfounders Capital, and a number ofangel investors with experience in the travel and hospitality industries.The company grew rapidly, signing 100 homeowners and increasingrevenue tenfold in 2011. Spurred by its success in London, in May2012, onefinestay launched operations in New York City. One monthlater, the company announced it raised $12.2 million in a Series Bround, led by the U.S. venture capital firm Canaan Partners, along withparticipation from Index Ventures and PROfounders Capital. (SeeExhibit 2for board member biographies.) (According to Marsh,onefinestay had raised additional capital since 2012, but had notdisclosed its more recent funding events publicly.)Boosted by tourism during the summer London Olympics, by the end of2012, onefinestay had 1,000 member homes in New York and London,and employed a team of more than 100 people. The companycontinued to expand and refine its operations, and in September 2013,launched in Los Angeles and Paris. onefinestay also began developingpartnerships with travel agents and corporate travel organizations. Bythe fall of 2014, onefinestay had operations in four cities, with plans forcontinued rapid expansion. The company had over 2,000 houses orapartments to rent, with more than 5,000 rooms. In total, onefinestayhad a property portfolio worth over $5 billion.The Rise of the Sharing EconomyThe sharing economy (also known as “the peer-to-peer rental market”or “collaborative consumption,” among other names) generallyreferred to the exchange of assets or services among individuals, aidedby the Internet and smart phones. Since the mid- to late-2000s, theuse of technology and online market platforms was enablingindividuals to become part-time entrepreneurs, blurring the distinctionbetween consuming and producing. The best-known examples ofsharing economy companies included Uber and Lyft, the taxi-like ride-sharing services; Airbnb, an accommodations rental platform; andTaskRabbit, a marketplace for outsourcing small jobs and householderrands.Forbesestimated the revenue flowing through the sharingeconomy would exceed $3.5 billion for 2013, with year-over-yeargrowth of more than 25%.6Investors had taken notice and wereaggressively funding sharing economy companies. By October 2014,
Uber had raised $1.5 billion, and had an implied valuation of $17billion, more than rental car market leaders Hertz and Avis combined.Airbnb had raised $795 million, and had an implied valuation of $10billion, more than the market value of Hyatt Hotels, a leadinghospitality company with 549 properties around the world. ShervinPishevar, a Silicon Valley venture capitalist argued, “This is amovement as important as when the Web browser came out.”7Nonetheless, observers recognized the challenges faced by sharingeconomy companies, including establishing trust, providingdemonstrated value, and addressing the “chicken-and-egg” problem ofensuring enough supply and demand. Investor and entrepreneur RajKapoor also pointed out the need for consistency of service in theofflineexperience, particularly during a sharing economy company'searly days.8Perhaps the biggest hurdles for sharing economycompanies were the legal and regulatory issues, since most existinglaws had been established for traditional large-scale organizations, andwere primarily set at state and city, rather than national, levels. Somelocales such as San Francisco, Washington DC, and the UnitedKingdom were developing regulations to support the sharing economyand encourage economic growth, while other regions were movingmore cautiously. By the fall of 2014, Airbnb remained in a contentiousbattle with New York state regulators, and many other cities andcountries were grappling with the tax, legal, insurance and policyissues raised by sharing economy companies.Managing a Two-Sided MarketplaceWhile people often described onefinestay as a “high-end Airbnb,”Marsh disagreed with the comparison. He noted, “We don’t think wecompete with Airbnb any more than Marriott competes with Expedia.”Marsh pointed to onefinestay’s collection of carefully curated homesand apartments, its attention to detail—similar to that of a high-endhotel—and the fact that guests never interacted with hosts asdistinguishing characteristics. In addition, Marsh saw onefinestay as “avertically- integrated service-enabled market, providing a variety ofvalue-add on top of a brokerage piece. What we’re doing behind thescenes to create that market and then service and support it, isactually almost more important than the market itself. We’re not adistribution business, we’re a manufacturing business.” He further
described onefinestay as “a hospitality company and also a verycomplex logistics company behind the scenes.”9Homeowner Hosts: Managing the Supply SideMost of the properties listed on onefinestay were homeowners’ primaryresidences. Marsh commented, "The homeowners might travel for amonth or two, they might have work that takes them overseas, theymight have a second home in the south of France or whatever. It’seven more important in those situations that they’re emotionallycomfortable with onefinestay and the guests that we introduce to theirproperties, and [that we] manage them on their behalf as a very, verycredible service partner. There’s lots of stuff we’re doing behind thescenes to earn that trust.”10He elaborated further on a homeowner’sdecision to join onefinestay:It’s not only about money. Of course, people wouldn’t be likely to do itif there were no money or emotional benefits involved. The averageonefinestay member probably earns a household income of $250,000 ayear and their property is worth ten times that. It’s not like an extrafew thousand dollars a year is going to fundamentally transform theirlives. But, if it’s free money, and someone else is doing all the work, allyou have to do is overcome the anxieties and the trust issues aroundaffiliating. When you get your home back after your vacation cleanerthan you left it, you stop asking yourself, ‘Well, why the heck would Ido that?’ and you start thinking ‘Well, whywouldn’tI do that?’Homeowner members were required to list exclusively throughonefinestay and were expected to make their homes available to thecompany for at least four weeks per year. Two-thirds of onefinestay’shomeowner members came through word-of-mouth referral. KeyvanNilforoushan, onefinestay’s Paris general manager noted, “I know toexpect three calls on a Sunday from people who’ve been out to dinneron Saturday night with one of our hosts. When hosts come back fromholiday, that’s when it happens.”11Marsh reiterated the importance ofsocial validation and noted that most decision makers on the supplyside were female, "Often it’s one mom talking to another mom at theschool gates. We realized that if we could figure out how to makethings sufficiently easy and compelling for folks who would nototherwise do this, we could bring a tier of inventory to the marketthat’s never previously been available.” (SeeExhibit 3for additional
information on onefinestay’s member hosts.) Marsh explained theprocess of signing up homeowners:The “take-on” process starts when the owner first joins. It’s not onesingle interaction, but takes place over a period of a few weeks.Homeowners may have heard about us from a direct mail marketing,through an editorial piece, or increasingly, from a friend or anassociate at work. We go to visit them in their home. The visit isbasically a sales meeting, in the sense that we are trying to persuadethem in a very general and soft way, to join the service. We’re almostdiscouraging folks from membership unless we’re really convinced it’sgoing to be valuable for them and for us over the medium- to long-term.Marsh estimated the company listed approximately one in ten of theproperties offered to them. He explained, "People get anxious thatwe're the taste police, but it's rarely a question of taste. Our issues aremuch more likely to be practical, like is it a good location, doeseverything work properly?”12A third co-founder and president of theAmericas, Evan Frank added, “The homes need to have WiFi, theyneed to have bathrooms and kitchens in really good condition, andthey need to have character. It has to look like somebody lives thereand that the owner has a personality. What we don’t want are homesthat look like standard hotel rooms or apartments. Whether it’s nicefurniture, great views, interesting pictures on the walls, you have towalk into the home and think there's something special about it."13Once onefinestay and a homeowner decided to move forward, the nextpart of the take-on process was called the registration phase. It tookplace again, on premises, in order to register the homeowner’s assets.A representative from onefinestay went in with a scanner and createdan extensive and detailed inventory of the property—information abouteverything in the home and where it was located, down to the rulesand exceptions of the owner. Marsh added, “That might includeinstructions such as not to use an abrasive surface cleaner on thedownstairs table. It might also include information about whichbookshelves or wardrobes to seal off, and which spare room should beused for storage.”The meetings typically lasted a few hours, and for a large property,could take significantly longer. As Marsh noted, “Ultimately, we need to
be able to deal with any issues that arise in that home, so we canmanage the property as if the owner didn’t exist.” The next step wasthe photo shoot. onefinestay merchandised the property, wrote copy,and presented images of it on the company’s Web site. Marshcommented, “We’ve actually done a lot of process engineering to getthe quality consistently excellent at a sensible cost.” Typically, the firstreservation occurred within just a few weeks since homeowners oftensigned up with onefinestay in anticipation of an overseas or extendedtrip. According to Marsh:This is where the fun part starts. Once the homeowner leaves town,the property’s essentially under our control. We go into the home andwe stage it. We call that provisioning. We run through the originalchecklist and it’s almost like an episode of CSI. We bag and tag things,and when needed move stuff around. We do a little bit of de-clutteringand we usually seal off a spare room or some of the wardrobes andcabinetry with little bar-coded, tamper evident seals. They serve as anudge to remind guests to be considerate during their stay. There’s adeep clean, including fresh hotel- grade thread-count linen sheets onthe bed, plush towels in the restrooms, and fancy bathroom products—Kiehl’s in New York, Aesop in London, and L'Occitane in France.The homes included in onefinestay's portfolio were distinctive.Examples included a former sugar warehouse in New York City withviews across the Hudson River, a three-story loft in a former rectory inNew York’s Murray Hill neighborhood, and a two-bedroom apartment inLondon’s St. Pancras railway station’s clock tower. (SeeExhibit 4forimages of sample properties.) Prices ranged5Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F278116from $250 per night for a comfortable one bedroom apartment to wellover $2,500 per night for a grand townhouse. Pricing for homeownerswas negotiated up front and then marked up by onefinestay beforebeing posted online. As one reporter noted, “The beauty ofonefinestay...is that you stay in the kind of place you’d like to live in,but probably can't afford.”14Attracting Guests: Managing the Demand Side
Desklib Logo
You are reading a preview
Upload your documents to download or

Become a Desklib member to get access