Brothers In Airbnb
By Yvonne Yoong.
Like two peas in a pod, brothers Elvin Wong, 34 and Eric Wong, 35, also share a passion for property. Starting off with direct sales, they later decided to become property agents, leasing out units for the long term.
“We advertised on online property portals and got enquiries for a month’s stay or two but owners would decline. So, I figured that short term stays could be the new trend,” shares Eric.
This spurred him to look for further opportunities that would cater to this need for short term stays. Eventually, he found an opportunity to fulfil this demand by venturing into the homestay business catering for short term stays.
By then, both brothers had steadily amassed their own share of properties, with Eric having bought five units and Elvin already securing seven properties.
In leasing out their units for the long term, they noticed that rentals might drop eventually, hence affecting their returns after paying off their monthly loan repayments.
Eric cites the following example.
“For the first two years, my studio unit at Damansara Perdana in Selangor which used to be rented out at RM1,600 per month dropped to just RM1,400 per month in the third year, so my cash flow also went down,” relates Eric.
“At that time, my loan instalment was RM1,100 per month. With the drop in rental rate, instead of making a profit of RM500, the monthly return was only RM300,” he adds.
Not content in settling for status quo, he started seeking new opportunities for increased revenue.
“I wanted better return on investment (ROI) so I started operating a homestay business on the local iBilik platform as an agent. Finally, my friend who was also doing the same homestay business informed me about a new platform from Europe called Airbnb,” he says adding that he then registered as a host in 2012.
And the rest, as they say, is history.
PROFITING FROM AIRBNB
According to him, Airbnb came to Malaysia in March 2010. Currently, there are over 4,000 hosts in the Klang Valley with 18,000 Malaysian property listings under Airbnb. Landlords or agents are considered owners or hosts on this platform while short term tenants are referred to as guests.
“Airbnb is one platform, not just for one (type of) property but for people who want to engage in the business. Airbnb is one of the marketplaces for people who want to run their homestay business to put up their listings and for people to do bookings,” opines Elvin.
“Airbnb is open to agents. Basically, it charges commission from two parties – one being the guest and the other – the host. Guests are charged 12% whereas hosts are charged 3% for every transaction. Also, anyone can register on this platform for free. For example, if RM100 a night is charged for the room rate, you will have to pay RM112 – with the additional 12% coming from guests while hosts are charged 3% per transaction,” explains Eric.
Attributing Airbnb as low-risk in nature and easy to navigate online, another advantage is its security features.
Should disputes arise between guests and hosts, this can be reported to Airbnb which has a host guarantee policy for whatever is lost or damaged which will be reimbursed. This gives a sense of protection for the owners of the units.
Guests who have signed up with Airbnb would have authorised their credit cards with Airbnb so they could be reimbursed in the event of untoward incidences.
“Airbnb benefits owners as there is another solution for ROI which is capable of bringing in double or even triple rentals despite the low seasons. People may patronise hotel stays as they want service, but with Airbnb, it’s a lifestyle.
“Unlike hotel bookings, it offers three types of accommodation to choose from. One can opt to rent the Entire Home to oneself or book a Private Room and share some common places. The third option is to choose a Shared Room to stay within a shared space like a common room.”
“In Malaysia, there are options like high-rise condominium units and landed property in the form of terrace houses to rent from,” says Eric who is now renting out high-rise apartments via Airbnb.
Elvin adds that the Malaysian model for renting properties is mostly confined to terrace houses and condominiums. This is in comparison to novel overseas offerings whereby one can rent thematic residences including converted “Ship Houses” or “Aeroplane Houses”.
SHIFTING TRENDS AND POPULARITY EVIDENT WITH HOLIDAY MAKERS
A similarity between overseas and local Airbnb guests sees many booking units for vacations. This trend is gaining increasing momentum here as well.
The brothers have business models in Penang and another in Kuala Lumpur.
“Prior to 2015, the Airbnb market depended on foreigners but since then, there are many locals making bookings,” adds Elvin of the shifting market trends.
With Airbnb having taken off so well, he says the new upcoming trend is entertainment-led Airbnb.
“There are three types – the first is short term rental accommodation with good food and beverage (F&B) space. There are now many cafes which are being rented out short term, some even for a few hours. I heard one is coming up in July that can be booked online.
“It’s not just accommodation but the trend also includes work space venue with the third being personal entertainment space,” he adds.
Airbnb he says also offers practical solutions for developers facing the challenge of unsold units as they can get them fully furnished and rented out via Airbnb. They themselves have done this.
Operating on the short term Airbnb platform requires owners to provide everything for their guests including blankets, shampoos, shower gels, towels, etc. that is akin to hotel stays.
Elvin says that besides owning the property, one can also rent the unit to start their own Airbnb business by informing their landlords beforehand.
He advises those interested in operating this business to have their own Standard Operating Procedures (SOPs) of how to check in and out.
The ambitious brothers are looking into promoting Osaka in Japan on this Airbnb platform to enable locals to enjoy short term stays with native Japanese, allowing them to savour their authentic way of life.
“If you want to experience the Japanese way of life, just book via Airbnb to stay at a Japanese host’s house to experience how they live and what they eat. You can book the entire stay and become a host.
“However, if you want to rent a house in Japan, you must get a Japanese guarantor which is not easy. The rate in Japan is lucrative as one studio which can fetch a monthly rental of RM2,500 in the long run there can be rented out at RM300 or RM400 per night so the returns are very high,” he sums.
This he says, is the future trend of Airbnb operating on the local platform catered to the outbound market.
Like GRAB and UBER, Airbnb operates on a sharing economy that is already transforming the way the property market does business.
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