Can SimplyGuest Fight Off OYO, StayAbode, NestAway And Cos In Tight Co-Living Market?

The pain of finding rented accommodation should be very familiar to anyone who has ever had to move to another state in India for work or college. Every move comes with its own set of challenges – from learning the local work culture, to getting acquainted with the way each city’s specific quirks and challenges. This also extends to finding the right apartment to rent. In Ahmedabad, for example, house owners trusted their peer network more than the real estate agents. In Bengaluru, the pink-shirted real estate agent brigade seems to write its own rules.

And, it’s not just about finding the right apartment, but also finding one that’s close to the workplace, and fits under the budget. This adds to the complexity of accommodation search, leading the tenant to either compromise on the location or budget.

This situation has played out for so long, that startups are identifying this market gap and offering co-living solutions for the growing number of urban migrants in India. Co-living spaces not only provide furnished housing, but also take care of amenities and service needs such as utility bills, housekeeping, daily cook etc.

India’s Economic Survey of 2017 has estimated the total inter-state migration to have hiked 191% between 2001-2011, as compared to the last decade. Startups such as Nestaway, Zolo, and Coho along with prolific companies such as OYO and Lemon Tree have forayed into the co-living market.

Another startup tapping the $120 Mn co-living market is the Bengaluru-based SimplyGuest. Unlike other players in this space, which either target singles and young professionals, SimplyGuest wants to cater to both singles as well as families.

Just A Team Of Four

SimplyGuest was started in 2015 by brothers Ambareesh and Subbu Athinkunte. The duo later onboarded one of their early clients, Mayank Pokharna, as the third cofounder. Since then, it has been a three-person army and a part-time employee in the operations role at SimplyGuest.

“Our competitors like Zolo and Coho, control entire buildings and hence have similar houses and also attract customers of similar age-groups and frequencies, which are mostly singles in the age bracket of 20-28. Whereas, the variety of housing we provide is much wider as our target audience is not limited to just singles.,” Subbu Athikunte, cofounder of SimplyGuest told Inc42.  

Targeting single users and families, greatly expands the potential market size for SimplyGuest, but also presents its unique challenges such as variety in inventory. “Our objective is to become an end-to-end solution for the living needs of a large economic segment. We also aim to be a solution for house owners looking for someone to manage their houses while they are away,” Athikunte said.

Currently, SimplyGuest manages around 250 beds across its 70 property listings across Bengaluru including villas, shared flats, hostels and more. Further, the company claims to have a 92% occupancy rate across its properties, with an average ticket size of rent between INR 8K and INR 35K. In the next two months, the bootstrapped company plans to expand on a large scale in Bengaluru specifically in the HSR and Koramangala.

The startup claims to have recorded a revenue of INR 3 Cr revenue in the last year, through a mix of fixed and variable rent models. Under the fixed rent model, the house owners rent the property to SimplyGuest to handle the entire renting lifecycle, while, in the variable rent model, the house owner mediates in the renting process and is responsible for furnishing the house. In fixed rent model SimplyGuest earns around 20-22% of the monthly rent. While in variable rent model, the company’s margin is between 12-15%.

Photo Description: SimplyGuest Search Filters 

Improving The Guest’s Living Experience

Of course, living in an apartment is quite different to just renting a temporary accommodation. In addition to housing rentals, SimplyGuest has exclusive offerings for its customers such as the option to rent bicycles, car parking spaces, and expense management tool for individual tenants co-living in a house for which it takes a nominal fee. For instance, car parking costs about INR 1,500 per month.

“We are always thinking of how to make living in our flats better. Short distance transport is a challenge in cities. We have realised from our guest’s feedback that commuting 1-3 kilometers is an annoying problem for our guests,” Athikunte said.

The co-living startup also has flatmate expense sharing tool built into the tenant’s dashboard. The tool enables customers to track their monthly expenses from any point, paying the rent online.

Athinkunte said these features bring real value to its customers. “This is one of the reasons why we have the highest retention rate among shared living startups. We make their life so easy that they just don’t want to move out.”

Photo Description: SimplyGuest Tenant Dashboard

Smart Solutions To Operational Inefficiencies

Of course, delivering a great digital experience means the lightheartedness has to be balanced with hard-nosed technology.

To build its inventory of properties, SimplyGuest does software analysis on listing requests. The software is fed with information from the owners, such as the location, house orientation (in keeping with vaastu), doors, keys, number of washrooms, storage, and condition of the amenities etc. Based on these inputs, the software enables the company to estimate the revenue potential of the property, and assess the quality of rental experience for a customer.

“In this era of information and technology, it makes little sense to rely on primitive methods to solve housing problems and meet customer requirements. We rely on technology to remove operational inefficiencies and pass on the savings from this to our tenants, house-owners and service providers,” Athikunte added.

SimplyGuest is also reviving properties which have been neglected by owners though its model, which means more options for potential customers. Managed co-living spaces solve a lot of the headaches of the renting experience, and also provide a sense of community for the tenants, which is rare in the traditional model.

As Athikunte told us, “Our tenants move out of SimplyGuest homes only for two reasons: when they get married or if they move out of the city.”

The organised co-living sector in India has grown 100% over the last year with the entry of startups such as OYO, Nestaway, StayAbode, Grexter, Zolo, Coho and others.Yet, the sector is estimated to have an untapped demand of around 46.3 Mn beds in India.

This untapped market demand is reflected in the growing investments in the co-living startups. Recently last month, Bengaluru-based StayAbode raised Pre-Series A funding from Voyage Group, Akatsuki and Incubate Fund. Prior to this in January, Grexter had raised $1.5 Mn (INR 10.6 Cr) from Venture Catalysts. Grexter’s funding was closely followed by the Mumbai-based ZoloStays, who raised a $30 Mn Series C funding round led by IDFC Alternatives, Mirae Asset and Nexus Venture Partners.

Last year, OYO Rooms also announced the launch ‘OYO Living’. The hospitality startup aims to expand its co-living vertical in the top 10 Indian metros by the end of 2019 with 50K beds.

In today’s digital age, where workplaces are increasingly warming up to the idea of telecommuting and 24×7 office spaces, the pressure of keeping up with work is ever present. Simply put, not many young professionals or families have the bandwidth to manage homes, utility bills and other facilities such as parking. With co-living, young professionals and families don’t have to bargain with brokers or home-owners on the rent amount or mode of payment.

The rapid urbanisation means that co-living spaces offer an alternative to the traditional renting market, which is often unorganised and not digital, which explains why more and more people are going the co-living route.

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