These days when we spend our holidays abroad, we’re spoiled for choice when it comes to accommodation. Particularly for those seeking unconventional retreats from fast-paced city life, it seems crazy to think of booking a hotel when plenty of extravagant, exotic and incredible properties are just a few clicks away. Of course, those options come with their own headaches: Listings may not accurately represent the space, there’s often a lack of concierge services and transportation transfers, and so on. In short, many problems stem from a lack of trust between homeowner and guest. Aiming to resolve these negative aspects of the fast-growing sharing economy of home rentals, Stay One Degree launched at the start of the year.
“Starting Stay One Degree almost came out of necessity,” founder Thomas Bennett says. Disturbed by a particularly bad experience from renting his own home out in Spain using mass market platforms, he and his business partner Jorge Muñoz — both Hong Kong investment bankers who met while working at Barclays — sought to build a trusted network of homeowners and guests. “Similar to LinkedIn,” he quips. Just send a connection request, and you’ll be linked up to a thousand of the most fabulous — and quality-controlled — vacation homes you can dream of. We met with Bennett and his partners to learn what his new platform, Stay One Degree, is all about.
Thomas Bennett: I’ve lived in Hong Kong for 12 years, my co-founder has lived here for 15 years. We had homes overseas, in Spain. My home was empty 48 weeks of the year, which is such a waste, you get bills every month from the cleaner here, the pool guy there.
We had tried mass market platforms, but I had a bad experience where people damaged my home. We rented to what was supposed to be two families — that was what was communicated — and then because our cleaner went in every other day, I found out that it was a dozen young people and they were clearly just partying. There was wine on the sofas, things were damaged and broken. You just feel so let down by that. Never again.
So, I looked at my options. I thought, “Okay, I’m not going to do what I did before again, that was horrendous.” My other option was a luxury agent, but [that means] I still don’t know who’s in my house, it’s still a stranger. Have they vetted them? Maybe, maybe not. They charged very high fees, and once I paid my fees, paid my taxes, I’m left with not a lot. It wasn’t worth my while. So what I did — and what a lot of people end up doing — is do nothing. Your house sits there empty.
I started talking to friends in the same situation. A guy would have a place in Whistler, sitting empty; a guy in Niseko; someone in Koh Samui.
Everyone we know is so connected — we know each other now, we’re one degree — your one-degree network will be one, two, three thousand people that you know; they’re friends, colleagues, people you’ve worked with. Your two-degree, friends of friends, has got to be tens of thousands of people. Your three-degree will be hundreds of thousands of people. When you open LinkedIn, type anyone in it and they’re always two- or three-degree connections — it’s amazing.
We thought, why are we not renting to these networks? We went and tried this: Me and my wife and my children went around New Zealand for six weeks, and we only rented from people we knew and trusted. We borrowed a car, we got better villas, better rates, they told us which were the best bars, the best vineyards, the best beaches. We thought this was the way forward.
It took me two months of coffees, lunches, emailing to arrange my trip. I’d never do it again because it was so time-consuming. We thought, how can we do this in a matter of clicks? And that’s Stay One Degree: We wanted to create a social network that allows you to network and connect with your friends, and to rent homes within a trusted network.
TB: We’re absolutely thrilled. Jorge had a good relationship with the Arculli family previously, and when we launched, we got in touch and had an initial dialogue. They liked the concept and what we were trying to do, and it’s lovely to have them on board because they epitomise exactly what we’re trying to do: They’re an incredibly trusted family, very well respected, and also very well connected.
Derek Arculli: The product makes so much sense. There are a lot of people that we know in Hong Kong who have homes that they don’t rent out. But if you could rent out to someone you know and trust — either your friend or your friend’s friend — why not? It gives you extra income, it’s a win-win for everyone, for the owner of the house and for the people who travel.
TB: We were testing through 2017, and publicly launched last December. We’ll have 1,000 homes by the end of this quarter, with homes across 42 countries, and we’re growing very very fast in terms of our member base. Just imagine, we started with eight homes and 10 members. It’s just gone by word of mouth between friends, and we’re very excited.
TB: We are a Hong Kong company. We’ve all spent a long time here and my children were all born here. One reason why we decided to have a company in Hong Kong — other than the fact that it’s our home — is that the demographic in Hong Kong is perfect. People are so well connected. You have a demographic of very high-income people; there’s a lot of people who are from somewhere else, it’s very diverse. People travel and go on holiday a lot. For us we’re focused on building from hubs, and Hong Kong is a hub for us from the ground up.
TB: So we met with one of our homeowners this week, and twice she’s had people turn up at her door in the south of France — a very expensive house — knock on the door and say they booked on Airbnb. She has no listing on Airbnb. So she has to turn them away: They had paid €20,000 for a fake listing.
We were on the flip-side of renting as well. Two years ago we were in Bali — booked a place for two weeks off Airbnb. There are hundreds of homes, it’s very difficult to differentiate. After a lot of time, we picked one: The photos looked clean and tidy, but we got there and it was just a dump. The photos must have been 10 years old or heavily edited, but this was not what we booked. The air conditioning didn’t work, it was too hot. Things were broken, so while my kids were running around the pool they cut their feet. You’ve got no comeback. You’ve paid your money, and you are stuck. Other than paying again and going somewhere else, you have no choice.
Your holidays are so valuable. What you spend on your holiday is so valuable — you save up all year to go on holiday, it has to be perfect. That’s why we vet our homes so carefully. You look on our site, they’re all just beautiful homes. They’re represented properly, because we know the owners.
TB: The cost per night, we have some from US$100–$200 a night to some going up to US$40,000 a night. Our focus is not on price, it’s on quality. You can have an apartment on the Portuguese coast in a white little village town that’s beautifully stylish — it’s €120 a night. For me, that is the same — it’s got something special about it. Just like how staying at a Caribbean private island in Bermuda is very special. They’ve got something unique about them, whether it’s the style, the architecture, the view or the location.
And people give their friends good prices, right? So you’re getting anywhere 20–50% discount for what you find on other sites, and you get the opportunity to chat with someone that you know. It’s a totally different relationship, and you get all that local knowledge. We think this model is the way forward.
To our homeowners, we charge 8%. There’s a couple of things that drove that. One was: the homeowner and guest should be the main beneficiary of Stay One Degree. Some of the agents out there are charging huge fees — one in the UK charged me 50%. You take 50%, you pay your taxes with that, you’re ending up with 20–30% — it’s madness. Our fee is lower than Airbnb, lower than HomeAway, it’s lower than luxury agents.
The second element of the fee structure that we didn’t like was — especially if you’ve booked Airbnb — that when you check out, there’s a guest service fee. So if it’s $1,000 for your five nights, they add another 10% on, so it’s $1,100. I just don’t like it. We felt that the homeowners is receiving the funds, they should pay their 8% commission which is very low, and the guests should pay a clear transparent price. It’s meant to be friends booking off friends and mutual friends. The fee should be such that it’s attractive to people.
TB: A lot of people have that infrastructure, especially in Asia, where costs are low and homes need quite a lot of maintenance. If you have a home in Bali or Thailand, if you locked up a home and left it for three months, it could be rotted when you go back, just because of the humidity and climate. The cost of staff is not that high, so generally in Asia, absolutely yes. In snowy weather, or the Caribbean, absolutely yes, you need it. In the south of France or Spain, you can lock it up and leave it, but most people do [have staff] anyway.
A chef is what people are increasingly asking for. At home, I might have a cleaner or a helper; when I’m on holiday I want to be looked after like I’m in a hotel. I don’t want to be washing up, I don’t want to be cooking, I don’t want to spend hours going to the supermarket. I want to relax, have space and sit down for lunch with my family.
TB: I have no issues staying in hotels. A hotel gives you convenience, they’re in city locations, and they generally give you consistency. But as soon as you need more space with family or bigger groups, one — if I have my three kids in one or two rooms, it’s very expensive; and two, you just need more space. Instead of a little fridge with your drinks, you need a kitchen; you need to be able to feed your kids when you want, you need your own space around the pool, you just have different needs. Hotels don’t work for families in my view.
TB: It depends on the relationship with the owner. A lot of our homeowners have been introduced to us through word of mouth via friends, where if we feel confident about the quality of the house, we pull through. We still do all our checks: ownership checks, passport checks, background checks; if they’ve been listed anywhere else, we check.
If a new house comes to us and we don’t know [the owners], we visit the property, we vet it, and check. The quality is absolutely crucial. We insist, for that reason, on professional photos; we write the details for people so that their home is properly represented, so that it’s fair and honest and written in a way that inspires you.
DA: Another nice thing about staying with Stay One Degree is that when you go there, the owners are really proud of their home and they’re really proud of the area as well. Let’s say you go to Niseko, not only will they share their home with you, they’ll share all their little hole-in-the-wall restaurants. You go to a hotel, they give you the standard one just down the road. The list from a homeowner is a whole different experience — you feel more like a local as well.
TB: The reason for that is short-term rentals in Hong Kong is very much a grey area, if not illegal, and it’s the same with many cities around the world. One of the reasons we look over villas and chalets is because there’s a lot of regulation with city rentals. Amsterdam, for instance, just restricted short-term rentals to 30 days a year. London has 90 days; New York has stopped it completely. In Hong Kong, you can’t do short-term rentals. It’s really an issue focused on cities because governments and regulators have couple of terms: One is, there’s not enough housing for key workers. In Hong Kong, that’s a huge issue. If you have all these empty apartments doing Airbnb — or short-term listings — for holidaymakers, then where do your workers live? There’s just not enough housing. There’s also the issue of disruption to communities: Every day, different tenants are coming in. Some may or may not behave very well. People just don’t want it. People are still risking it, but you’re seeing more guesthouses that are licensed on Airbnb because of this reason.
Yachts are day-use, so they’re all licensed, so that’s the difference. We’ll have to see where the regulation goes. My own personal view is that the rent issue in the cities will only get worse, because you have a lot of pressure from users — people living in the buildings, you have pressure from the hotels, you have pressure coming down on top from lack of accomodation for workers. That’s why our focus is very much on villas and chalets which are totally independent from those pressures. Someone who has a house in the middle of nowhere in Spain, it’s a totally different situation.
TB: It’s growing very well, very fast and we’re adding a lot of homes. What we’re also doing is offering ancillary services, so a homeowner can choose to add insurance. Your typical home insurance doesn’t cover people staying in your home. If your child breaks the TV, it’s not covered. If you leave the door open, it’s burgled, it’s not covered. We offer a dedicated insurance for the sharing economy, and there’s an incremental charge.
We also offer a concierge service as well. Everyone says they offer concierge service, but we offer more of the offshore logistics — we want to encourage the interaction between the homeowner and guest.
TB: The sharing economy has been going for 5–10 years now. It’s present and happening, and social networks are happening. It has huge benefits, but there’s a fundamental trust issue. When you get in an Uber, who is that driver? Or you’re renting from someone: Who are you renting from? Complete strangers. Then you have social networks that are very powerful, but are you getting tangible benefits from those networks? Do you get lower costs? Do you get more access?
We think that in the next 10 years, it’s going to be the meshing of the two: Social marketplaces where people start leveraging their networks and start sharing, but in a trusted format. We can do houses, we can do cars, we can do boats. We’ve had members ask to add a plane. We’ve had a member asking to rent out his classic cars. Any asset that is under utilised can be shared, once you solve the trust issue.