Anyone Can Start A ‘Homestay’ Business Without Ever Owning It

Written by Zainal Zikri & Nasuha Aiedn

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The short stay home business or homestay has been around for decades. People have rented out their rooms or properties for short term stays as a full-time business or just to make secondary income.

The arrival of Airbnb in 2008 changed the industry forever. Here you had a platform that could list these properties and be seen by millions all over the world. During the early days, you had entrepreneurs making millions from just renting properties they own or don’t even own! Those days are gone as the industry is more regulated and more people are involved in this business. Nevertheless, it is still a profitable business if you do it right. 

MyRehat will share the overall process of how to start this business. MyRehat, like many entrepreneurs, wanted to be an accommodation specialist without ever owning any of these properties. Here are the steps we took for our homestay business.

Identify the Location

The location is the most important factor when setting up your homestay business. All the research you can do online before you actually visit the site.

You can browse these websites iProperty , PropertyGuru, Speed Home and Mudah.my  , to identify the properties. For us we only operate City centre properties and those properties less than 45 minutes from our base of operations. 

For example if you live in Kota Damansara you may want to target properties near you but you can also do city centres like KLCC or Bukit Bintang.

Next, you can check the popularity and selling price of your chosen location in booking sites known as Online Travel Agencies (OTAs) such as Airbnb, Agoda, Traveloka and Booking.com whether it is in a high demand area or not. If those OTAs show the location has many homestay units within the area, this means the area is popular and in high demand.

Target Fully-Furnished Units

The fully furnished units means you don’t need to hire Interior design, buy furniture, put in kitchen cabinets, have a Smart TV and everything else needed for a home. You can start operating your units within a 2 week time frame after obtaining it.

MyRehat prefers units that used to be operated as a homestay as you can literally operate the unit the next day. The only thing that MyRehat has to add for these units is Netflix. As everything else from bedsheets, kitchenware and internet are all there. Keeping your cost low is important in this business.

Rental or Revenue

Once you have identified the unit, start negotiating the payment terms. In this business, there are two methods of payment. Fixed monthly rental or revenue sharing.

Revenue sharing is a method whereby you agree to share the profit and operational costs with the owner of the unit. Here is the formula to calculate the Net Profit for Revenue Sharing Method:

Step 1: Revenue (–) Platform Cost = Gross Profit

Step 2: Gross Profit (–) Expenses = Net Profit

Step 3: Split the Net Profit =

• 70% (Owner)
• 30% (Operator)

Here is an example below:

Step 1: RM4,000.00 (Revenue) (–) Agoda Charges 12% Commission (Platform[OTA] Cost) 

= RM3,520.00 (Gross Profit)

Step 2: RM3,520.00 (Gross Profit) (–) Expenses RM600 [Utilities, Maintenance, Wifi etc] 

= RM2,920.00 (Net Profit)

Step 3: RM2,920.00 (X) 70% Owner

= RM2,044.00 (Net Profit for Owner)

RM2,920,00 (X) 30% MyRehat

= RM876.00 (Net Profit for MyRehat)

Ideally for your business, best is revenue sharing, however this method may not be acceptable to all owners.

Unit Photography

First impressions are very important to capture people’s eyes and attention. The photos of the listings can make or break the chances of you getting bookings. Hiring a professional photographer is highly recommended. The professional photographer will take the pictures from various angles with good lighting. Plus, they will cover every appealing aspect of your property. High-quality photos will make the unit stand out among your competitors

The market rate for photography is between RM250 to RM400 for a unit. This again depends on your negotiation skill to get it lower. If your photographs are poor quality, no marketing efforts will be enough to generate business as impression matters. 

Listing on an OTA

OTA is a web-based marketplace that lets customers explore and book travel goods and services directly via travel suppliers, such as hotels, flights, rentals, tours, cruises, and activities.

Airbnb, Traveloka, Booking, Agoda and Expedia are the most well-known OTA. You can start with Airbnb first then proceed with others as you gain more experience in the business. 

Once listed, monitor it constantly. Make sure you get good reviews and adjust your prices accordingly to low and high seasons. Reviews are important as people will book based on reviews. 

 

This is an overview on how we started. This works for us may not be for you. Use it as a guide. MyRehat will be publishing a series of articles on the homestay business. Watch out for the next one, in the meantime check out the units on our site for ideas on how to start your homestay business journey.