CEO Interview: OneFineStay on Sharing Economy Legal Trends and Mobile

Editor’s Note: Skift is publishing a series of interviews with online travel CEOs talking about the Future of Travel Booking, and the evolving habits and device preferences of travel consumers. Check out all the interviews as they come out here.

Greg Marsh, co-founder and CEO of UK-based OneFineStay, says all of its upscale vacation homes are bookable online, and a majority provide instant confirmations, although plenty of guests take advantage of call center support both during the booking process and their stays.

OneFineStay loans out iPhones, with its app preloaded, to all guests, and the company’s service teams use the app, as well, to manage the guests’ stays, Marsh says.

Marsh has lots to say about the value propositions of “the scale guys” such as Airbnb, and the “differentiated guys” such as OneFineStay, which offers a relatively hands-on upscale experience, and what that means for the emerging megatrend in alternative accommodations.

On the regulatory front, Marsh believes that the laws governing peer-to-peer rentals are getting liberalized in many jurisdictions, although OneFineStay supports laws that limit accommodations being transformed into de facto hotels, which has the detrimental effect of taking housing off the market. Over the latter issue, “street skirmishes” will continue for an extended period, he believes.

Skift discussed the future of travel booking as it relates to the peer-to-peer market and vacation homes, as well as other issues, with Marsh. An edited version of the interview follows:

Skift: I thought some of the trends we might be able to discuss regarding accommodations might include curation, personalization and mobile. I realize that is a mouthful but what trends are you seeing in these areas or others and how will they affect the booking of vacation home rentals?

Greg Marsh: I think curation is certainly a huge component, not only of our proposition, but of what we see as being one of the next phases of the market, which is the emergence of differentiated vendors. In the first instance, whenever a category or new market emerges you have the scale guys, the guys who consolidate, who aggregate demand and aggregate supply and provide a solution for everybody — even if it is not a perfect solution for everybody.

As markets evolve and mature, you see the emergence of more specialized vendors who have a more particular segment’s needs in mind. In a case like OneFineStay, very much our bread and butter is servicing the needs of a group of travelers who are not just looking for a functional solution to an accommodation experience, but who are looking for an exceptional way to experience an urban center, who are looking for a curated and quality-controlled experience.

By no means does that mean that every segment of the market is willing to pay the extra premium for that differentiated and quality-assured and curated experience, but as with every market there are people and, in the case of travelers, it is actually a pretty meaningful slice of the accommodations market, who are willing to pay for that experience.

Skift: And what about things like personalization and mobile? What role do you see them playing?

Marsh: We think about mobile as being something that goes way beyond distribution. On the distribution side we, like most businesses, are seeing a growing portion of our discovery and exploration traffic coming from people who in the first instance discover us from a mobile channel or explore the brand from a mobile experience. There is no doubt that is an important component of our inbound traffic. Sometimes that is from a small pocket device, sometimes it migrates to a tablet. Usually we find it converts to a desktop or laptop screen rather than converting on a cell device, partly because we have a higher price-point product.

However, mobile goes far beyond that in two dimensions for us. The first is smartphone technology is very much the key to how we deliver our service experience. OneFineStay is not a digital business only. We certainly do distribute digitally, but a lot of what we deliver as a service is a hospitality experience guests enjoy when they come into town. That includes not just meeting them when they arrive and providing clean linens and a beautifully prepared apartment. It involves all the beautiful boutique toiletries and the fluffy towels. From a mobile perspective, it goes to us lending them a smartphone during their stay. We give every guest an iPhone with our app pre-installed on it and they can use it without paying data roaming while they are in town.

To deliver that local service to guests, our service teams all make use of the OneFineStay app in very much the way Uber drivers make use of the Uber app. We extensively depend on mobile and smart apps to operationalize our service infrastructure.

Skift: Do call centers play a major role in your business? You said people aren’t booking on their smartphones and some are booking on their desktops. What about call center support?

Marsh: From the early stages of the business we’ve had a fully staffed team. For the moment that team is based in three time zones and we support guests wherever they are in the world. A good proportion of folks who book with us do interact with a human being. And the reasons for that are partly because it is a complex, unusual new travel experience. It is a new category of travel and so they often have questions and require support during that purchase funnel. And also partly in our case because it is a high price-point product. While some of the information is available on the site people often have bespoke requests and we can help them fulfill those requests. We have always thought that being there 24/7 for customers both before they book, during that purchase process and of course during their stay is integral to the high-end service that we deliver.

Skift: You referenced the scale guys that are providing the one-size fits all product, and I guess that would be Airbnb, and you think of OneFineStay as the curated guy, as one of the differentiated guys. But I guess all of the players in this market have to confront the trust issue in a peer-to-peer business. How are you dealing with some of those issues and any legal pressures that you might be facing and the industry faces from various jurisdictions in the U.S., the UK or wherever?

Marsh: The good news is that the trends are progressive and favorable in every market where we operate. We’ve seen in the last six months, in particular, the French government liberalize the use of short-term rentals provided they are residences rather than them being  effectively just a transiently utilized pied-à-terre. We have seen the UK government announce just in the last couple of months and they have now published legislation that liberalizes the use of short-term rentals and gets rid of a law that’s been around since 1973 and totally no longer fits the purpose. We have seen a variety of other cities in the U.S. announce or implement more liberal regulatory regimes and practices. So I would say the trend in general is in favor of enabling homeowners to make more use of primary and secondary homes while they are traveling.

Where I think there is going to be an ongoing street skirmish is around taking properties out of the residential market and turning them into de facto hotels without planning consent. And that is going to remain a problem in pretty much every market. Frankly, we share the concerns and sensibilities of local or municipal authorities in respect to that kind of activity. That certainly isn’t our business. We are a company that’s only around to manage residential homes and places people actually live. This ultimately is an idea whose time has come. It makes more use of scarce resources in city centers. The most enlightened municipalities are aware of that and are on board with the program and we are very supportive of attempts to make sure this is done in a conscientious and well-balanced way that is in harmony with the needs of residences and travelers.

Trust is an enormous barrier for many homeowners. In addition to it being a big step to take, it’s your home, your pride and joy. In our case for OneFineStay, these are properties that typically have a multi-million dollar value. So clearly someone has to go through a real emotional journey to get comfortable, not only with the facts that the guests are going to treat the place properly, but that we are going to respect and honor that investment they are making with us. And that’s why it’s always been integrated into our business. When we first engage in conversation with homeowners we meet them in person. We go visit them in their homes. We get to know them as human beings. We get to know what they value and what’s important to them. When we service their homes it is our teams that go into them on every occasion.

Similarly, when we accept bookings from guests we are making a decision based on guests’ behavior, the price they are willing to pay, and sometimes other factors related to their stay and whether we are even going to allow these guest to stay in this home.

Skift: You mentioned you have call center support in three times zones, but are all your properties bookable online, and if not, what will make that happen?

Marsh: They are all bookable online through our site. Most are available through instant confirmation, and a majority of our transactions take place straight through processing. In all cases we are the agent for the owner. We manage distribution and we also work through third parties to help bring those homes to a wider market of potential guests. For instance, we have recently done a distribution deal with American Express Centurion cardholders. We also work with a number of premium travel agents internationally.

Skift: HotelTonight recently expanded from same-day bookings to a seven-day booking window because the company needed to enlarge its markets. I’m wondering if OneFineStay’s market is large enough for you or whether you envision a day when you will have to stray a little bit from the types of properties that you are currently offering?

Marsh: We started out in London just a hair over four years ago. We launched in New York two years ago. We launched in Los Angeles and Paris late last year. All of those markets are growing at a rate that is always a challenge to keep up with. We certainly have our hands full even in those four markets. However, that clearly doesn’t represent the extent of our ambitions or the extent of the opportunity. We are actively making plans to launch in one further European territory in the next few quarters as well as in more than one new territory in the United States. And we’d love to have our feet on the ground in Asia Pacific certainly within 18 months. We certainly think we are only scratching the surface in the core markets.

In terms of how we think of our expansion, we think the vast majority of our opportunity in the near term is doing more of the same without sacrificing quality for scale. There are certainly likely to be other adjacent products, segments or categories that we could address, but right now based on the size of the market opportunity and the rate of our growth we are kind of sticking to our knitting.

Skift: I have some family in the UK so, as they might say, my next question is designed to wind you up a bit. What are some of the complexities in launching a UK-originated business in the U.S. and when are you really going to give it a go? You launched in the U.S. a couple of years ago, and you are in two U.S. cities. And you also talked about how your team has to visit each homeowner before bringing them on board so how scalable is your business, and when are you really going to give it a go in the U.S?

Marsh: Well I would argue that we are certainly more than just testing the waters in the U.S. OneFineStay globally employs more than 500 people. This is a business that depends on a much higher touch service than a pure-play distribution company. In every market where we operate we build a real operation. We have scalable and sizable teams on the ground. And that is our fundamental value proposition.

If you look at major urban centers and where money is spent in the accommodations sector in a city like New York, around $10 billion a year is spent on accommodation of one type or another in the hotel sector. Almost half of that is spent on four- and five-star hotels. So we are not talking about a market niche. We are talking about a large and stable portion of the total travel market in major cities. It is given over to people — I wouldn’t say they are price insensitive — but they are certainly quality of service and quality of experience sensitive. So our business, when you look at it from the outside in, looks like we are in a small number of cities, but the reality is in each of those markets there is a real big business to build. And we are well on the way to building big businesses.

For us the expansion strategy doesn’t consist of letting 1,000 flowers bloom, the expansion strategy consists of nailing markets one by one and getting the product and service experience right everywhere we go. And ultimately making sure that we are building a quality brand for folks who have upscale needs.

Skift: Anything you’d like to add?

Marsh: If I look at the emergence of the nontraditional lodging category more broadly, we are at the beginning of the beginning. This is going to represent a major change in behavior. We have also seen a lot of the distribution-focused mass market businesses, including Priceline, HomeAway, Expedia and Airbnb, all of these guys have very significant war chests and are going to be going aggressively after mindshare and distribution visibility over the next couple of years. When we talk to travel agents, they are telling us people are asking for vacation rentals. They are asking for non-hotel accommodation experiences. Businesses like ours represent the very tip of that megatrend and it’s going to be fascinating to watch this over the next couple of years. As an observer of the industry and from the position of where I’m sitting, it is going to be even more fascinating to be in the hot seat.