New start-up aims to make $3 million in first year using the airbnb model
New start-up FavStay is positioning itself to become the leading platform in Southeast Asia for people wishing to list, discover and book unique accommodations by 2018.
FavStay, founded this year by Suchada Taechotirote , owner of Pompome.com, and Natavudh Pungcharoenpong, co-founder of Ookbee, the largest e-book service provider, also hopes to become a US$1 billion (Bt35.85 billion) firm by valuation by 2020.
Suchada Taechotirote, chief executive officer of FavStay, said the start-up aims to cover destinations in every country in Southeast Asia, starting with Thailand next year.
FavStay’s business model is similar to Airbnb, which provides a platform, website and mobile application for people to list, find and book accommodations.
In Thailand, it has lined up six tourist destinations – Bangkok, Hua Hin, Khao Yai, Pattaya, Phuket and Samui.
It now has about 5,000 property listings and aims for over 20,000 by the mid of next year. It plans to expand to at least four destinations in Southeast Asia in 2016 – Indonesia, Malaysia, the Philippines and Vietnam – with over 30,000 listings in total.
While a Airbnb clone, FavStay has its own uniqueness and advantages. It is not purely an electronic marketplace for accommodation, but also manages listed properties for their owners.
“Ours is a hybrid model as we believe that providing a total solution cannot be done on a purely electronic platform. This model fits the culture in Asia,” she said.
FavStay’s revenue comes from collecting a marketing fee of 12-15 per cent of booking value. It aims to generate revenue of $3 million this year, even though it just launched the service in the middle of October.
It aims to quickly increase listings and bookings. To encourage consumers to book accommodations on FavStay, it needs to have more listings and more channels to allow consumers to book more easily. It plans to launch a mobile app early this month.
“Our challenge is to have an [acceptable] occupancy rate at all times,” she said.
Price and decorations are the competitive advantages of FavStay over Airbnb, she added.
Natavudh said FavStay is in the process of raising pre-Series A funding with a target of $5 million, which is expected to be completed in the first quarter of next year.
SMEs that turn into start-ups, like FavStay, have an advantage since they have an existing business and they can be scaled up quickly.
FavStay’s booking value is already several tens of millions of baht. It aims for several hundreds of millions of baht next year. Booking orders run about 30-50 units per day.
“Once FavStay has 20,000 listings, then we are head-to-head with Airbnb.
“The strengths of FavStay are being a local service provider that truly understands the local market and having a great team, especially the co-founders, who are keen and were successful in his and her own business domain before joining together.
“Suchada ran pompome.com for four years and showed rapid growth every year, while Natavudh has run Ookbee as a successor to the tech start-ups in Thailand since 2012,” he said
Krating Poonpol, the fund manager of 500 Tuk Tuks, an arm of global venture capital fund 500 Startups, said FavStay has the potential to become a unicorn start-up in 2020.
Ookbee targets Series C funding of $10 million in 2016
Since the middle of last year, when Ookbee raised Series B funding of $7 million with Transcosmos as the lead investor, it has expanded to a digital community platform for local content creators from only a digital publishing platform.
The market for digital content is larger than for e-books and will likely be a replacement for the book market.
Digital content means all kinds of content – comics, fiction, feeling good stories, music and magazines.
People can consume these contents with any format, at any time and with any device.
This year, Ookbee expanded its coverage to the five digital content communities through its own investment and acquisitions.
It set up Ookbee Comic, Tunwalai for fiction, Storylog for feel-good stories, Fungjai for music and magazine D.
The five communities now have over 3 million users.
The company has experimented with monetisation with a micro-payment model to allow people to purchase chapters with community coins. It plans to drive this community to be a content store, in the same way as an app store, so that content creators can realise sales.
“This is the new business model for monetising content, rather than being stuck in the traditional content business, especially the book business, that has to wait for the whole content before publishing.
“Writers or content creators can sell their contents chapter-by-chapter. To achieve this, they need to have a big enough fan base driven from the communities we build for them,” he said.
Ookbee has also expanded to providing a community-driven kick-starter platform to allow content creators to turn their digital contents into products and services that can be concerts, events, seminars or merchandise.
For example, music content creators at Fungjai can use its platform to launch concerts by selling tickets for the performance. This business model will be introduced next year.
Revenue from this business model comes from commissions – a percentage of sales for each campaign launched on its kick-starter.
“We have trialled this business model concept throughout the year. We have invested over Bt50 million in the five digital communities of content creators.
“We expect to launch commercially in 2016 by putting investment both resources and money in 2016 after getting the Series C round funding that we target at $10 million in the first half of next year,” he said.
Ookbee also entered the e-commerce business through a joint venture with Transcosmos to open Ookbee Mall with an investment of Bt150 million.
“Spending in the physical world is still greater than the digital world, so we have to drive our over three million users to make purchases at our Ookbee Mall,” he said.
Last but not least, Ookbee in early October unveiled Ticket Box, a platform for selling tickets for all kinds of events in Thailand. Ticket Box is a joint venture with Vietnamese start-up Ticket Box.
Ookbee’s overall business is expected to double this year. It targets to continue growing at 100 per cent next year. Its valuation is about $100 million.
“Ookbee has the high company valuation, but by potential, FavStay has the characteristics to become a unicorn start-up, since FavStay is in a business domain that has a lot more people willing to spend to buy the service.
“With the technology embedded into the service and platform as well as the capability to expand listings and destinations, FavStay has the ability to scale up fast,” he said.