A Belgian startup, OneHouseStand, has launched an online platform to help businesses and individuals alike rent private places to organize their events.
At first it may look like a good idea to enable private owners to make their property available for rent. But is this business idea really worthwhile? A market research may have been useful.
What’s the market?
In an interview (in French) with national newspaper Le Soir, one of the founders explains that 50% of requests come from individuals, the other 50% from businesses (for team building, product launch events, …).
To make customers’ lives OneHouseStand is also acting as an intermediary to catering professionals and proposes several possibilities at the time of booking a place.
Why rent a private place for an event ?
Owners of unusual places have for a long time had the possibility to rent their place, for instance on the occasion of movie shooting. You’ll certainly remember the house of the Brown family in the Paddington movies.
Renting a private place remained however a very small market and was reserved to some very special places for on particular industry.
OneHouseStand makes it in a sense available to many more to rent a place and takes inspiration from AirBnB to fill in this gap in the market. But how big is the gap and is this market really worth the effort ?
Is there really a market ?
As often the business idea arose from an observation made by the entrepreneurs themselves : events held in private places make for better memories. While this hypothesis may be true, one has to assess nevertheless the market size and wonder whether there is enough potential in renting private places for the purpose of events to make a living. This question is especially crucial when you only live on commisions (10% in the case of OneHouseStand).
Unlike AirBnB however the needs filled by OneHouseStand are not recurrent (clients are unlikely to organize parties or events in the same place over and over again). This poses a serious question of growth.
Assessment of the business model
In this model there are several risks that shouldn’t be underestimated
Offers on the platform
One real risk is to have too low a number of offers on the plateform (currently 150 places are proposed) which would undermine its credibility.
Distribution of the demand : the Menu Next Door syndrome
Another potential risk is to see demand concentrate on a handful of places only. Those who get the less requests will eventually be less motivated to stay and would withdraw their place from the platform. The loyalty of those offering their services on the plateform is key to the stability and growth of the business.
In a sense this is one of the reasons that made Menu Next Door fail. Amateur chefs were not loyal enough, got discouraged which led to a big turnover in the offerings. If one wants to focus on growth, loyalty is of the essence.
AirBnB is the biggest risk
In my opinion the biggest risk remains AirBnB itself. There are indeed very few barriers to entry and AirBnB can leverage economies of scope (and of scale of course) that would completely outplay new entrants like OneHouseStand (see Porter’s 5 forces model). On the one hand AirBnB already has the biggest pool of potential places to rent making it immediately an attractive plateform to satisfy new needs like the ones covered by OneHouseStand. On the other hand AirBnB works on image recognition algorithms that would make it possible to identify potential locations suitable for organizing events and hence suggesting owners new ways of making money. At the latest Big Data Paris fair Michael Curtis, VP engineering at AirBnB, explained that its teams are working on analyzing 170m images posted on the platform to recognize specific features and make better recommandations. One could perfectly imagine detecting places suitable for events and recommend owners new ways to monetize their property.
Posted in Marketing.