Entrepreneurs are getting creative with new goods and services to capitalize on the short-term vacation rental ecosystem.
Dipen Gala was making a moderate income as a host on Airbnb in 2015 when something clicked. Standing at the center of this still nascent, fast-growing economy, the Chicago Booth MBA graduate thought up a fresh opportunity to fix the hosting experience.
He launched VirtualKEY, a software startup that makes vacation rental homes “smarter” with Internet of Things (IoT) technology. Today, the Chicago company’s products are used in 200 cities globally.
“As the old saying goes, during the gold rush, it was not everybody who went for the gold that made money, but the people who provided the tools to those gold miners that really made the money,” Gala said in his conference room atop a French bakery in Ravenswood, Chicago.
The short-term vacation rental market has inspired a wave of third-party services in Chicago and beyond. From consultation, taxes and cleaning to property management, entrepreneurs are finding new ways to get a bigger slice of the sharing economy.
This phenomenon is nothing new. Whenever there is disruption in the market dynamic, secondary or tertiary services emerge to form a robust ecosystem, Gala notes. In today’s ride-hailing boom, new ventures have emerged to track a driver’s emotions, help raise alertness on the road, and even provide cleaning-on-the-go services.
Inspiration on the grind
These services usually form around problems that hosts identify during their day-to-day operations. After finding the check-in and check-out process a major hassle for both hosts and guests, Gala used his IoT engineering background to imagine a solution that would turn the whole Airbnb unit into a smart home. His solution connects thermostats, power outlets, voice assistants and lights, and allows guest entry to be remotely controlled.
“The pain point is very acute in this industry,” Gala said. “For short-term rentals, you’re constantly changing keys and access with multiple different parties of people.”
VirtualKEY, which is used mostly by property managers, makes smart locks for multi-point entry, including doors, elevators, intercoms and garages. Its app provides time-sensitive access for guests, staff and concierges. It also allows managers to control the doors remotely and monitor the exact times when guests check in or cleaners complete their tasks, according to the website.
“During the gold rush, it was not everybody who went for the gold that made money, but the people who provided the tools to those gold miners that really made the money.”Dipen Gala, VirtualKEY
Gala says hosts can use consumer-facing smart home products, but he wanted to build an enterprise product for professional property managers, who are owning a bigger share of short-term vacation rentals. VirtualKEY has also partnered with Vacasa, one of the biggest vacation rental management companies globally.
Clever hosts don’t need a background in technology and engineering to unearth innovative business ideas. Dave Hart, an Airbnb host in Chicago, seeks out local businesses to get special deals for other hosts and their guests.
He sees an opportunity in providing guests with discounts for sightseeing, dining and events when they’re in town. Anyone can give recommendations or look up Yelp reviews, Hart says, but actually providing discounted deals adds value to guests. This arrangement earns him a little extra income from each booking.
Hart says local businesses are willing to collaborate as long as hosts can organize. He created the Smart Host Collective, an online forum for Chicago vacation rental hosts to help each other, support local businesses and get more deals with third-party service providers.
“I’d like to get as many hosts in Chicago as possible working together. The bigger the organization, the more negotiating power we have, the better deals we can get,” Hart said.
He has started talking to some large national and international companies that are interested in this model. If they work out, he says, he could expand the idea to other cities in the U.S.
“Always having some entrepreneurial aspect of your life could sharpen your real job,” added Hart, who works full-time as a digital marketer for Verizon.
Products by hosts
- Dave Hart has formed a partnership with 24/7 Chicago Locksmith, providing 20% off any labor cost and 10% off hardware for people in the Smart Host Collective.
- Dave also provides printed neighborhood guides for hosts at a price, so they can better show guests around the city and boost local businesses
- While VirtualKEY doesn’t directly work with Airbnb hosts, you can get inspiration for the potential of future Airbnb homes from their offering, and see if using a property management company might help you run your own listings.
VirtualKEY provides automated time-sensitive access for guests, staff and concierge services delivery for multiple access points. Control the doors remotely.