Meet the largest VC-backed hospitality management company in the world
Business Leader recently sat down with Nakul Sharma, the founder and CEO of HOSTMAKER – the largest VC-backed hospitality management company in the world.
The British firm is rapidly expanding across Europe, having recently expanded into Florence, Cannes and Madrid to include 7 major European cities – despite Brexit
Nakul explains how his company has achieved 400% year-on-year growth, raised funds for expansion and what it means to be recognised as one of the top 100 Asian tech entrepreneurs in the UK.
Why did you create the company?
I launched the business in May 2014, following the boom in Airbnb, looking to bring a level of hospitality expertise – which is my background – to the homestay market by offering full-service management.
I had just co-written a paper on Airbnb’s impact on the hotel industry – specifically, how the business could benefit hotels and how the two should work closely together in the future – and it seemed like the market was ready for it.
The idea was, and still is, to bring a Hilton-level quality to the diversity of homestay experiences, for all travellers – from couples to big groups.
For me, this was the future of hospitality, so I left InterContinental Hotels Group to dedicate myself full-time to testing the HOSTMAKER concept. I knew it would be a risk but the signs were strong that this had potential to become big.
My wife later joined me on the venture, leaving her job as a lawyer, and together we put £50,000 of our own money into the business to get it off the ground. We were already Airbnb ‘Superhosts’ so we had a good understanding of the issues faced by both guests and hosts. Still, we wanted to get more concrete evidence, so we took the plunge and turned our home into a test home, while we moved into rental accommodation ourselves.
The big break came when our second customer wrote a glowing one-page review on Airbnb which was seen by the company in San Francisco. On the back of this, we were invited to speak at their first host conference – which significantly helped funding efforts. Three rounds of funding later and HOSTMAKER has secured over £20m in investments.
What were the main challenges in setting up the business?
One of the biggest challenges is finding the right talent to drive the company forward. What’s great about this business is that it’s rooted in great people, from our Welcome Wizards and great housekeepers all the way to corporate offices.
HOSTMAKER is so important to us, having just started it out ourselves, that we want to make sure we surround ourselves with people who share our passion. We’ve been growing fast, from a team of about 100 in January 2018 to more than 200 in June, and probably more than 300 by the end of the year, so we are always on the lookout for people who can add to HOSTMAKER in one of our 9 cities. Fortunately we’ve made sure remote teams have the right tools to stay in touch! That said, finding the right people for the right positions can be tricky.
Rapid expansion comes with its own set of challenges, such as moving into different countries, setting up a whole new team at scale, but also staying on top of all the different teams. That’s why you need great leaders as well as fantastic colleagues. Luckily we have grown into a really connected team, with cross-city meet-ups, easy remote working tools and a high-potential programme which we take very seriously.
How would you describe the company’s growth and what further challenges have you overcome?
HOSTMAKER’s growth has been remarkable. In four years we have gone from just one property to now operating in nine cities across five countries. We are now active in London, Paris, Rome, Florence, Madrid, Barcelona, Cannes, Lisbon and Bangkok, with over 200 people working with us. It can be crazy to think that we started of with just £50,000 of our own money, and will now be hitting an eight figure turnover in 2018.
Has Brexit affected your business?
The travel industry always benefits from greater connectivity between countries: it could be more flights, easier visa requirements, less trade tariffs. They all help to foster links and to attract tourism. We are confident that this industry remains key to UK economy, and that all precautions will be taken to ensure this continues.
Although we don’t see Brexit having a direct impact on our business model, we want to make sure the impact on our teams, among them many EU citizens, is limited. Long-term, we are confident London will remain an attractive place for people to work and live in, but the easier it is for EU citizens to come in, the better for us.
How have you achieved 400% year-on-year growth?
Our relentless focus on what’s right for our hosts, guests and employees is what drives us day in and day out. In hospitality, the classic service profit chain approach rings even truer: if your team is passionate and happy, they will make your clients and guests happy. We do spend a lot of time on talent, and we’ve grown our talent team significantly to support our growth.
More practically, our initial work on developing our own technology where it mattered most – pricing and operations – is really paying off now, as it allows us to scale much quicker. So far, we’ve returned more than 40 million to our hosts.
Besides, one of the teams that has expanded the most is our in-house design team which has quadrupled in 6 months, to make sure each and every home we list is up to our standards, and offering top-notch redesigns where needed.
Can you tell me about your crowdfunding?
We’re very lucky to have the trust of a great range of hospitality, tech and real estate investors across our successive founding rounds.
Sansiri, our lead investor for our $15M Series B in November 2017 for instance, is a billion-dollar real estate and developer from Thailand, and especially interested in the future of home and travel. On the other hand, our historical investors DN Capital and Ventech are tech specialists who are especially interested in our channel management and proprietary operations and pricing systems.
We have a fantastic relationships with them, and their help has been precious to grow the company in the right direction.
How would you describe the growth of AirBNB and how it has changed the industry?
The growth of the homestay market has been incredible over the past few years, led of course by Airbnb which now features more than 4 million listings, but followed by a number of other actors. We work closely with all the major players, including HomeAway, Booking.com or Expedia, as well as with more traditional platforms like Zoopla and Rightmove, to ensure the best returns for our home owners, while respecting local policies and limitations on short-term rental.
For us, it’s incredibly important to work hand-in-hand with local authorities to understand what travellers they would like to attract to their cities and boroughs. We are fortunate that due to the nature of homestays, our guests tend to stay much longer than in hotels, are willing to go to less central neighbourhoods to experience the off-the-beaten path of the destination, so they are great temporary citizens for local economies.
What did it mean to you to be named in the top 100 Asians in UK tech last week?
It was an absolute honour to be included. I am so proud of my heritage and it was great to see so many tech leaders with a similar background receive recognition. There are some incredible tech businesses in the UK headed-up by Asians, and it is humbling to be included alongside them.