Launched in Istanbul in early 2012, HemenKiralik is a fast-growing vacation rental platform with a focus on properties in Turkey and neighboring countries. Its sister site is Flat4Day.
The marketplace and booking system covers furnished, short-term real estate rentals, similar to global giant HomeAway but without much overlapping inventory.
HemenKiralik has raised a little more than $3.5 million from the venture capital firms 212 Capital and Aslanoba Capital.
Turkey is a growth market for non-hotel lodging. In the past decade, hotel bed capacity in Turkey has grown with a 6% compounded annual growth rate, versus a 14% growth in tourist/traveler arrivals in the country.
Clearly, there is -- and there will remain for some time -- a mismatch between demand and supply, which is prompting an increasing interest in alternatives to hotels.
The company has developed innovative solutions to the problem of adapting a generic transactional marketplace market to the unique characteristics of this regional market.
Q&A with CEO Remi Onur:
Tell us how you founded the company, why and what made you decide to jump in and create the business.
In 2011, we had been watching the rise of a new model of travelling on the west coast of Turkey.
This wasn’t a very foreign or novel concept for us, especially given how many people around us grew up renting out summer rentals in the Western and Southern Turkish coast for a couple weeks or a month every year.
Four co-founders launched the company in 2012 with four co-founders and boot-strapped it in its early months.
The business took off in Turkey really quickly. Soon we launched our Arabic, Russian, German & English brands. Most of our international travelers call us “Flat4Day”.
Funding arrangements?
The company has raised a little over $3.5m USD from VCs.
Estimation of market size?
Last year, 26 million local travelers spent more than 52 million nights in Turkey’s motels, lodges and bed & breakfasts.
For international travelers, the number is even higher, with more than 140 million nights spent by 35 million international travelers in Turkey.
Another interesting tidbit is that there are over 8m secondary homes in Turkey with approximately 60% of them being vacant for about 10 months of the year.
Prior to HemenKiralik, only about 50,000 of these properties were listed ‘somewhere’ online for the purpose of a peer-to-peer economy.
But all of those were benefitting only from a “classified” listings model. With HK, we brought over 27,500 properties to the transactional marketplace economy.
Competition?
The largest competition we have in the region is from Booking.com, although they use a different model than ours.
In terms of same-model, we are about 5 times larger in terms of inventory than the nearest global competitor.
Revenue model and strategy for profitability?
HemenKiralik is an open marketplace for hosts. Listing is completely free. We operate on a transactional model, where we charge a certain commission to each booking made on the side.
The operation is very lean and already close to break-even. As growth comes, profitability will hopefully follow.
What problem does the business solve?
A lot of the time, internationally focused vacation rental marketplaces or networks focus on having the broadest inventory reach in terms of geography.
They enable the travellers with access to a significant amount of information from all over the world, but they pretty much leave them alone to make the final decision of finding the perfect property.
In emerging markets, the online or mobile side and the marketplace understanding of the vacation rental industry is not yet mature. Usually, our travellers need more hand-holding in terms of the custom service offered and a focused approach, when it comes to the selection of inventory.
More than 2/3 of Turkish tourism happens within Turkey. The top destination visited across the Middle East, for over 400 million people, is again Turkey.
There is nobody else, who is approaching to solve the “travel to Turkey” or “travel within Turkey” like us. The goal is to replicate what we have done here in the Middle East and Eastern Europe as well.
Size of the team, names of founders, management roles and key personnel?
The company currently has 35 full-time employees based in Istanbul servicing Turkey in addition to the Arabic and Russian speaking region.
The 4 co-founders are:
- Remi Onur - CEO (age 33)
Former Partner & CDO at Peak Games, the largest social and mobile gaming company targeting Turkish & Arabic speaking region.
- Mehmet Ulku - CMO (age 28)
Former head of User Acquisition at MedyaSos, a creative online and mobile ad agency working for the largest consumer brands in the Turkish market.
- Alper Kaya - CTO (age 26)
Lead architect for interactive design firms including Uretmake, MaybeDesign. Former CTO of Storks.com.tr – a leading jewelry e-commerce platform in Turkey.
- Rina Onur – Managing Partner (age 28)
Co-Founder & former CSO of Peak Games, the largest social & mobile gaming company targeting the Turkish and Arabic speaking region. Ex-Investment Professional at Turkven PE and investment banker at Morgan Stanley.
How did the initial idea evolve and were there changes/any pivots along the way in the early stages?
Tourism is one of the biggest sources of revenue for our region; it always has been even before the era of vacation rentals marketplaces.
The business has existed in a very fragmented fashion in the offline world for generations.
When the peer-to-peer online marketplace model started to pick up in the Western world, we decided to give it a go here at home.
After launch, we realized that a quick ‘localization’ of the existing ideas wouldn’t work for our region.
Problems ranging from public insecurities about online shopping for a service to inefficiencies of payment infrastructures led us to trying new avenues to better adapt the model.
We have worked heavily on in-person verification of our properties and a 24/7 Hotline for our travellers to ask questions.
We have integrated Arabic travel agencies into the network for customers who didn’t have access to an online payment method.
Why should people or companies use the business?
When you’re travelling and want to get an authentic culinary experience, you try to eat at a restaurant that the locals prefer.
We are the solution that the locals of Turkey, Middle East and Eastern Europe prefer. Why would in-bound tourists look elsewhere for the widest and most authentic experience than the locals' favorite way?
We manually review each listing before it goes up, keeping them in pending stage until they can meet certain criteria. More than 60% of our properties in Istanbul -- our most popular destination -- have been manually verified and photographed by a member of our team.
What is the strategy for raising awareness and the customer/user acquisition (apart from PR)?
Locally within our region, we have grown organically pretty rapidly.
Given the amount of funding raised, aggressive user acquisition of international customers for the built inventory isn’t a viable option.
Thus we rely on strategic partnerships and distribution models to increase our marketing power of our growing inventory and brand.
Where do you see the company in three years' time and what specific challenges do you anticipate having to overcome?
In 3 years, we want to expand the market grab and operational power we have in Turkey to a significant part of the Middle East and also Eastern Europe.
We want to be growing, but also profitable. We have followed a similar trajectory with our previous startup; thus we expect a lot of resistance from differences in ecommerce and mcommerce behaviour, secure and accessible payment methods.
What is wrong with the travel, tourism and hospitality industry that it requires a startup like yours to help it out?
The world is too big for 1 or 2 companies to dominate and claim for itself. There are entire regions that thrive from both local and inbound tourism. There is a need to foster these economies.
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?
The story of BlaBlaCar is very interesting. It is an ‘older’ startup that was founded in a usually unwelcoming European country to have a wider, cross-border reach after almost 10 years of work.
Its perseverance and its ability to adapt over the years to finally find the secret sauce is quite inspiring. We were impressed at how it entered the Turkish market this past autumn with a savvy approach.
Which company would be the best fit to buy your startup?
A global vacation rental company that is committed to operational and strategic strength in specific regions around the world would be a good guess.
It could also be a general travel-focused company that wants to strengthen their vacation rental arm with an agile startup.
Describe your startup in three words?
Agile, Focused, Hungry
Tnooz view:
Regardless of whether you think Hemen Kiralik is more like HomeAway or Airbnb, you can see some similarities in both success stories.
Transactional consumer Web marketplaces are difficult to build, but once the supply-and-demand flywheel starts turning, scaling can happen quickly and relatively cheaply.
To create value, Hemen Kiralik needs to crack the code on mobile (by improving the usage and popularity of its apps) and by bolstering its unique supply of inventory, which will distinguish it from competitors.
It already appears to have a regional lead over its rivals.
One other concern is how the company can create stickiness among lodging owners. In other words, how can it prevent rivals from poaching its inventory? The founders will have to offer lodging owners a more compelling value proposition and also attempt to be more attuned to their local and regional needs and tastes than competitors are.
We wish the company luck in its ambitions, and look forward to seeing how it executes on its vision.