STARTUP STAGE: Roost matches travelers with roommates to cut hotel costs in half

Sam Tate, Founder/CEO of Roost

Roost is a marketplace that makes the travel experience more affordable by matching users with suitable roommates to share hotel rooms.

Users can search for roommates by trending events, such as music festivals, or by popular cities.

Describe both the business and technology aspects of your startup. 

Roost is a website that helps travelers find compatible roommates to share hotel rooms and split the cost. It is both a hotel booking platform and a roommate matching service.

Like Hotwire, users book a class of hotel (2-, 3- or 4-star) in the neighborhood(s) they want to stay in. Users pay half the cost of the hotel room, plus a small commission.

From there, users can view profiles of all the other people who are going to the same destination on your trip dates.

This includes filtering potential roommates by sex, age, rating and their answers to some basic roommate questions (such as if they like to get up early or stay out late, and if they are messy or neat, etc.). There are photos and ratings/reviews from past roommates. 

To choose a roommate, users tag the profiles of the people they would want to share a room with. You’ll only “match” with a roommate if both of you tag each other (like a dating site). 

Once there is a match, users can chat with their roommate via our messaging portal and get to know each other before the trip. 

Safety is important at Roost. Every “Rooster” must pass a criminal background check and have their identity verified before being allowed to match with a roommate.

What inspired you to create this company?

Two summers ago, after my junior year of college, I took a month-long solo backpacking trip to Europe. As a broke college student, I stayed mainly in noisy, crowded hostels.

Whenever I splurged on hotel rooms, I would look over at the perfectly good empty bed next to mine. I started thinking that if I could share my hotel room with another person, then we could split the cost. It would essentially be a hostel rate for a better hotel experience (private bathroom, big bed, TV, gym, pool, etc.).

One of the issues I had with hostels was the randomness of it. I was assigned to share a room with as many as eight other people of all different ages, genders and levels of weirdness. Many of the people did not speak English.

I thought if I could share my hotel room with someone who I was likely to be compatible with, I would not only be saving a lot of money but also potentially make a travel buddy.

Give us your SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of the company.

Strengths: Roost rides the trend of the sharing economy, travelers save lots of money (50%), we help hotels compete with vacation rentals. Roost incorporates safety procedures, background checks and a peer rating/review system.

Weaknesses: Hurdle of getting people to accept a new concept, marketing/PR challenges. 

Opportunities: Group travel in alternative accommodations, building a community of Roosters at each destination (meetups, events, etc.), help hotels compete with Airbnb, partnerships with hotels.

Threats: Entry of competitors (replication). Is sharing a hotel room too far to push in the sharing economy? Potential legal/liability issues.

What are the travel pain points you are trying to alleviate from both the customer and the industry perspective?

Accommodation costs are a huge barrier to traveling, especially for millennials and Gen Z. Roost helps travelers save 50% on their hotel costs.

Also, we are finding that people want to make a personal, human connection (or find a travel buddy) when away from home. Creating this feeling of community is important, especially for solo travelers.

Hotels have been losing market share to vacation rental companies such as Airbnb, especially in the younger demographic. Young people are looking for a more personalized travel experience.

Personally, I love Airbnb. However, with the proliferation of short-term vacation rentals, many city residents complain that their neighborhoods are being overrun with tourists and that apartments are being converted to short-term vacation rentals, which is causing a housing shortage. 

Unlike Airbnb, Roost won’t reduce the number of residential accommodations in a neighborhood or contribute to increased rental rates. We are just more efficiently filling existing hotel rooms, and helping boost the local economy, such as restaurants and shopping.

So you've got the product, now how will you get lots of customers?

We are partnering with social media influencers in the event/festival and the budget travel space. We are also working with bloggers to help spread the word. We have an ambassador program and a referral program as well.

We are also experimenting with ads on social media and Google. There is also a plan to sponsor events such as music festivals and conventions.

The idea of sharing a hotel room with a stranger usually evokes a pretty strong reaction from people. We hope to get some media/press coverage to help us spread the word.

Tell us what process you've gone through to establish a genuine need for your company and the size of the addressable market.

I started Roost in my capstone entrepreneurship class at the University of Southern California. Throughout the semester, I interviewed hundreds of would-be customers and determined that while there was a great desire to travel, there was a pain point around expensive hotels.

Young people are open to things that will save them money and allow them to experience more adventures.

Before launching the full version of the site, I built an MVP. In just a few months, I was able to help over 800 travelers find roommates by targeting music festivals and tech conferences. I did no marketing and just a few social media posts. 

There is a clear need for a service like Roost around music festivals, fan events and conferences, which attract large numbers of like-minded budget travelers. Hotels often increase their rates around big events, and social media groups and online forums are peppered with posts from people looking for roommates to split costs. 

It is also clear to us that people going to music festivals and fan events also want a way to meet other like-minded people to share the experience with. This desire for connection is part of the attraction of staying in hostels.

To capitalize on this, we might eventually create Roost meetups by partnering with restaurants, bars and tourist-oriented tour and activity companies.

In doing our market research, we also realized just how many people travel solo: more than 80% of millennials have done it. While Roost is great for solo travelers, we also help couples and friends who are willing to share a bed. 

In the future, we plan to expand to larger group travel in alternative accommodations such as vacation rentals and short-term apartments.

The travel space is exciting, and the hotel industry is huge. In 2018, the global hotel industry was valued at over $600 billion annually and the budget hotel industry alone was valued at over $200 billion.

How and when will you make money?

Roost’s business model is commission-based. Each roommate pays half the rate of the room, plus a small percentage. We launched in November 2019 and have started processing bookings.

What are the backgrounds and previous achievements of the founding team, and why do you have what it takes to succeed with this business?

I was born and raised in the Boston area. I attended the University of Southern California for college and earned degrees in business and entrepreneurship. I also won an award, the 2019 Marcia Israel Outstanding Student award, which goes to the most promising undergraduate student.

Roost was named a top five startup to watch at the Southern California University Venture Summit by VentureFuel. I graduated cum laude in May 2019.

My co-founder Sharath Prabhal is also a USC alumnus. He graduated in 2009 with a master’s degree in computer science and is Roost’s CTO. Sharath has over 10 years of experience in product management at tech companies and is a highly skilled full stack developer. He left his job as a project manager at Upserve to join Roost.

We are both avid travelers and belong to the demographic (millennials) we are targeting the most. We are both very committed and are working full time on Roost. We are a strong team with minimally overlapping skill sets, and we have a great working relationship.

What's been the most difficult part of founding the business so far?

We are proposing an idea and concept that is new to a lot of people. Sharing a hotel room with a stranger is not always the easiest concept for people to wrap their heads around. We need to reassure them that it is as safe as possible. 

Like other startups, another big challenge is marketing with limited resources. Getting the word out has been a challenge. We have recently partnered with a handful of social media influencers and bloggers in the music festival space to help promote the product.

Generally, travel startups face a fairly tough time making an impact - so why are you going to be one of lucky ones?

We are confident that the market exists, but travelers currently find hotel roommates in ways that are outdated, unsafe and inefficient. People post on sites such as Facebook and Reddit. There are no safeguards and finding out basic information is hit or miss.

Comparing candidates and figuring out who should front the bill and worrying about getting repaid are hassles. Roost is unique because we streamline and standardize this whole process for you. We help you find an ideal roommate and we book your half of the hotel room for you. We make both things quick, easy and secure. 

From Uber to Airbnb and Turo, we share all sorts of things in modern life, so why not hotel rooms? It’s a natural extension of the sharing economy, particularly for younger people who have grown up in it.

How does Roost ensure traveler safety?

Making Roost as safe and secure as possible is our top priority. 

We conduct criminal background checks and verify the identity of everyone when they create their account. We also offer the ability for travelers to choose a same-sex roommate.

Some people, especially women traveling solo, are only comfortable sharing a room with someone of the same gender, so Roost lets you filter potential roommates by gender. If something else is important to you, like age or roommate rating, you can filter for those things too.

In addition to the same-sex roommate option, we encourage roommates to communicate only through our secure online messaging portal. Also, when you arrive at the hotel, your ID must match the one Roost has on file for you. 
 
Roost also has a peer rating and review system and we constantly monitor these to remove people with poor reviews.

What hotels do you book?

We have very high standards for the quality of the hotels that we book. We source hotel rooms from well-known national and international chain hotels.

What is next for Roost?

In addition to expanding into new markets such as Europe, we are also interested in exploring larger group travel. We would help groups of travelers find other groups of travelers to share and split the cost of alternative accommodations such as apartments and vacation rentals.