A few weeks ago Beyond Pricing gained some column inches for attracting seed funding of $1.5 million in a round led by Resolute Ventures.
The startup, which launched last June and specialises in pricing technology for the holiday rental market, began life as Beyond Stays, a property management platform for Airbnb hosts and other short term rentals.
However, as other property management startups such as Guesthop, Pillow (Startup pitch here) and Flatbook, came to market, the team decided to focus on developing software to help property managers get more from their rentals.
The team, co-founders Ian McHenry and David Kelso, head of growth Kameron Bain and software engineer Michael Palumbo, looked at existing rate management software for hotels and found it could not be applied to property rentals, often just a single unit.
McHenry says:
"Short-term rentals are now 25% of the accommodation market and growing 10x the speed of hotels, so it was also an attractive but under-served market."
Beyond Pricing believes the vacation rental space, currently estimated to be worth $85 billion in the US and Europe and growing 30% year-on-year, will account for an even larger share of the accommodation market going forward.
The startup sees huge opportunity for revenue management in the space between the likes of Airbnb and HomeAway accommodation platforms at one end and hosts and property managers at the other.
It's already an interesting segment with various startups, some named above, stepping in to be part of the ecosystem building up around the property rental market.
Beyond Pricing is claiming a first with its dynamic pricing and revenue management engine for holiday rentals although it points to recent startups such as Pricelabs and Smarthost which also aim to help hosts manage pricing.
The company also thinks it's ahead of the pack with agreements already in place with property management specialists including OneFineStay, Proprly, Guesthop and Lokkappart.
It makes its money through a 1% charge of booking revenues to make it affordable for anyone renting anything from a spare room to a luxury property.
Beyond Pricing is already in 26 cities and the recent funding will help it expand expand into further markets.
Q&A with Ian McHenry, co-founder of Beyond Pricing
What problem does the business solve?
We solve the problem of optimizing revenue for vacation rental properties. Hotels have sophisticated software to help them set rates. Vacation rental owners and property managers don’t. Hotels are managing rates across a portfolio of, say, 200 rooms whereas vacation rentals are optimizing for a single unit. We had to create a whole new way of predicting demand and optimizing prices in order to bring more sophistication to this segment of the accommodation market.
How did the initial idea evolve and were there changes/any pivots along the way in the early stages?
We started the company as Beyond Stays, which was a short-term rental property management company and brand. We had a lot of success in San Francisco because we were able to guarantee that we could cover our management fee (15%) through increased revenue.
We were seeing upwards of 40% increases in revenue using the dynamic pricing system we had built and we quickly realized that there was a lot of opportunity to focus purely on that. In addition, that was our core competency and where I had spent the majority of my career previously.
We launched in June 2014 in San Francisco. There was so much pent up need for the product that we quickly had thousands of users across the globe asking for the product in their respective cities. We haven’t looked back since and are now powering pricing for the majority of urban property managers in the cities we serve.
Why should people or companies use the business?
We make you upwards of 40% more revenue effortlessly. Our value proposition is simple. We created a dead simple, consumer-friendly piece of software that is powered by extremely powerful analytics and data behind the scenes. As an individual vacation rental owner, we put a lot more money in your pocket.
As a property manager, we make you look smart and give you a strategic advantage when pitching clients. We’ve seen property managers who tried to manage rates on their own lose business in troves to property managers using Beyond Pricing.
What is the strategy for raising awareness and the customer/user acquisition (apart from PR)?
We’ve had a ton of success simply with word-of-mouth. Since we’ve defined this space, we have a huge first mover advantage and we’re moving quickly to keep that lead. We are also proud members of the Vacation Rental Managers Association and we work with the whole community to help them generate more revenue.
Where do you see the company in three years time and what specific challenges do you anticipate having to overcome?
In three years, we will be the go-to platform for managing revenue for vacation and short-term rental accommodations.
As far as challenges, the ecosystem requires a certain level of education when it comes to dynamic pricing and using data to drive decisions. It’s not always intuitive. For instance, their gut may tell them to double prices for any holiday, like Christmas, when the data tells us it's actually the slowest night of the year in terms of demand.
Our challenge is to create an elegant product that helps people make those counter-intuitive decisions.
What is wrong with the travel, tourism and hospitality industry that it requires a startup like yours to help it out?
The biggest challenge for the accommodation space is creating easy passing of information between systems. Modern software is built on APIs and the travel space in general has been slow to open up. We are working on make it much simpler to price and distribute inventory with just a few lines of code and we’re looking for forward-thinking partners on the OTA and PMS side to help us with that mission.
What other technology company (in or outside of travel) would you consider yourselves most closely aligned to in terms of culture and style... and why?
We think Stripe is a great example of a company that took something very antiquated and difficult to integrate (payments) and made it simple. And it simply concentrates on making it incredible easy to accept payment and isn't distracted with trying to create its own ecommerce suite or its own point-of-sale. Similarly, we want to create a simple, elegant way to optimize your revenue.
Which company would be the best fit to buy your startup?
We’re focused on building a huge standalone company. We occupy a huge yet unsexy segment of the market between the OTAs and the owners and property managers. Similar companies to occupy this space in hotels include Sabre and TravelClick. They’ve created gigantic businesses that generate a lot of cash and we aspire to do the same.
Describe your startup in three words?
Pricing made simple
Tnooz view:
It's amazing how quickly this ecosystem has built up around the likes of Airbnb. There are startups to help manage properties, those that help with pricing as Beyond Pricing does and many others for concierge and cleaning type services.
We know this slice of the accommodation market is growing and it has been widely reported Airbnb will overtake hotel giants in the next few years.
In some cities it seems property investors have turned former long-term rentals to Airbnb lets because they get a higher return. And, there have been moves from Airbnb to fit in more with the hospitality landscape as well as changes in the law in some cities to help boost the sharing economy.
Little surprise then that all these services would spring up around such a burgeoning segment.
Beyond Pricing claims average monthly revenue boosts of between 10% and 40% while its price point of 1% should make it accessible and attractive to small and larger property owners and managers alike.
Dynamic pricing based on more than just historical patterns is already being incorporated into the hotel segment so why not apply it to vacation rentals? The startup's demand prediction technology drawing information from a variety of sources including vacation rental sites, hotels and airline arrivals to give owners and managers a much fuller picture to base pricing on.
Scale as always is going to be important but Beyond Pricing already seems to be a couple of rungs up the ladder not only with $1.5 million in investment but also in terms of partnerships with short-term rental property managers and integration in the pipeline with large players such as HomeAway and Booking.com.
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