The hospitality industry is going through a profound change in recent years. On the surface, the rise of Airbnb is changing travelers’ lodging preferences, jolting traditional hotels from their decades-long rule of the market.
However, it’s not as clean-cut as it seems. The "vacation apartments" market has grown tremendously and yet we don’t see hotels closing their doors. In fact, cities around the world are putting regulation spokes in the wheels of online hospitality service marketplaces such as Airbnb.
Travel e-commerce giant Booking.com is making serious moves to grab some market shares of vacation apartments from Airbnb, as Booking Holdings CEO Glenn Fogel recently acknowledged . The company wants to be “a leader or the leader” in alternative accommodations and just this week reported 5 million “reported listings,” topping Airbnb’s reported 4.5 million. Booking.com is aware, it seems, that hotels will no longer be the only lodging option for vacation and business trips.
With that being said, a recent move by Airbnb — introducing Plus, for verified quality apartments — seems to inch closer to the type of hospitality associated with the hotel industry.
The two giants are carefully stepping out of their comfort zone and toward each other on uncharted territory in a fight that will define the future of hospitality services.
This fusion of upscale apartments with hotel hospitality is what is enticing to the two giants, and rightfully so. With shifting preferences of travelers to a more personalized experience, hotel-like apartments seem like the ideal choice. Interestingly enough, this niche is already occupied by Sweet Inn, a relatively unknown company, that has demonstrated a stellar growth in its four years of operation.
Based in Paris and Tel Aviv, Sweet Inn was founded by CEO Paul Besnainou. In 2013, Besnainou and his family decided to check out the Airbnb platform, and rented an apartment in Jerusalem for a week. Though they enjoyed the experience, the Besnainou family missed the comfort that comes with hotel hospitality and services. Realizing that vacationing in an apartment has its unique charm, especially when traveling as a family, Besnainou thought it would make more sense to improve the "apartment experience" rather than retreat back to staying in hotels.
As opposed to other entrepreneurs who solved this hospitality pain point by founding property management companies, Besnainou decided to launch Sweet Inn in 2014 as a new kind of hospitality brand, one which would rent, manage and sublease the apartments combined with an experience worthy of a 5-star hotel.
The company kicked off its operation in 2014 in Jerusalem, where Besnainou resided. With just one apartment, listed on Airbnb, Besnainou got immediate validation — the apartment was booked for three weeks within less than 24 hours after it was posted.
Besnainou recalls with a smile, “It was just me and my idea. I remember one time, the cleaner didn’t show up so I rolled up my sleeves and cleaned the apartment myself. I sat there, waiting for the machine to finish its cycle — the guests were to arrive in an hour — and decided to expand the business. Next stop was Paris, my hometown. When I rented 10 apartments, my sister Sophie insisted that she wanted to design them, to make them stylish and unique. She had no design experience. Today, Sophie leads the design philosophy and operation of Sweet Inn.”
On the face of it, I thought the premise of Sweet Inn seemed like a bad combination of all the things wrong with hotels, such as having to pay fixed costs for upkeep on spaces that stand vacant, and all the disadvantages of short-term rentals in relation to upscale hotels when it comes to having economies of scale in customer service. However, Besnainou proves me wrong.
“Firstly, it is much easier to locate apartments for leasing than an entire building for the purpose of ApartHotel or hotel. Sweet Inn is able to expand rapidly in a city we already operate in or ‘break into’ a new city with relative ease,” says Besnainou.
“On the flip side is the demand. If we were to open a relatively small hotel in a city or neighborhood, say of 50 rooms, we would need to make sure that those 50 rooms were all booked in order to be profitable. While this makes sense in top tier high volume neighborhoods, it gets tricky in less in lesser locations; Sweet Inn can move in on this neighborhood, lease five apartments and easily fill them. If and when things change in the neighborhood, we are able to react quickly, either by leasing more apartments or cutting back. Now that’s an agile scalability mode of operation,” he concluded.
Since its launch, the company has grown 100% year-over-year, raising $22 million, and launching in 10 cities. Sweet Inn is constantly updating its technology in order to serve its 450 and growing number of apartment. Eitan Reisel, who recently joined the company as a CRO after heading the gaming sector at Google, says, “We are working on all fronts to streamline our operation, optimize pricing, and provide our guests a seamless experience – from booking to checkout.”
Sweet Inn was perhaps one of the first to recognize the premium apartment market, but it is not alone in the space. Competitors include companies like Sonder, StayAlfred and, of course, the industry giant Airbnb, which recently launched the Plus.
How will you compete with Airbnb Plus? “What really sets us apart from the rest are our local teams, stationed in every city where we operate. The local teams, operate from the 'city lobbies' (our centers in every city), are there for the sole purpose of caring for our guests, much like a hotel’s lobby. They are available 24/7 via live chat on the app, by phone or in person in the city lobby. The care and all around service we provide our guests is unparalleled in the ‘vacation apartments’ universe,” answers Besnainou.
“We are in control of everything. Nothing falls between the cracks, nothing fades with time, everything is exactly as it is supposed to be. We don’t need to keep track of hundreds of hosts and how they maintain their properties or how they behave with the guests. We are way ahead of the curve.”
What seemed to me the worst combination of hotels and rental apartments might reveal itself as a competitive advantage in the current market. With tech changing every day, and previously unimagined opportunities becoming available, come new pain points. Entrepreneurs would do well to look for these unmet client needs and build actionable solutions for them. There they will truly be able to build a relevant, flourishing business clients will flock to.
