Parker Stanberry, co-founder of Oasis Collections, is the first to admit he was a bit surprised when approached by AccorHotels, the French-based hotel group that is aggressively making acquisitions in the technology and private accommodation spaces.
Parker Stanberry: “We are not an app, we grow city by city.”
“They seemed an unlikely investor. At first I was surprised, then I thought, interesting. I didn’t know if they were interested to learn about what we were doing or explicitly interested in buying us,” said the former investment banking analyst at Merrill Lynch.
“But we understood they were serious about the space, were prepared to make a cash investment and was building their own vertical in short term rentals.”
About a month after the initial approach, Stanberry flew to Paris for three days of meetings and “by the end of the second day, I knew it’d be a good fit”.
In the end, AccorHotels took a 30% stake in the company for $12.5 million. “It certainly wasn’t in my plan. As an entrepreneur, I am cautious about partnering with a big company – but as I got to know them, they understood that and said, you are still running your own company.”
In this interview post-the investment, he said, “Accor invested based on how we had expanded quite quickly with a quality product using limited resource. They specifically liked us based on our approach to quality control and on the ground service in the short term rental market. Our brand will benefit hugely from Accor’s support and distribution, they have the knowledge and ability to create demand and offer a global platform for us to expand.
“They will provide a huge resource of market intelligence for us, particularly in Asia and Europe. Accor has one seat on the executive board and no day to day involvement in the business.”
The cash investment has “changed life” a bit, said Stanberry. “It’s made things easier, especially in the bank account. There were so many things we wanted to do.”
And on the to-do list is global expansion with Asia on the priority list. “This is a huge area of inteest to us and by early next year, we hope to be in Singapore, Hong Kong and Tokyo in time for Olympics 2020.”
Stanberry, who has no hospitality experience, only in restaurants when he purchased a quick service restaurant in New York and sold it in 2006, started Oasis Collections in 2009 out of Buenos Aires, Argentina. He had been travelling there for three months and found the experience of booking short term rentals using local accommodation agents inconsistent.
Realising there wasn’t the variety of quality accommodation experiences or a brand he could trust, he and two other investors committed to purchase 10 apartments spread across Palermo that they could manage as owners.
The original intent was to bring homes and hotels together – and bring the best of both these worlds together. “We looked at what was good about homes and hotels, and brought the two together,” he said.
Oasis Collections curates homes and then layers them with technology to offer a consistent guest experience, acting as property manager on behalf of home owners.
What they were to realise was how super intensive the hospitality business was, “despite being proud of what I felt was a good concept”. He and his two friends had put $10,000 into the startup. It raised a further $110,000 in 2009 and another $600,000 in 2011. Today, it’s raised a total of $20m, $12.5m of which came from Accor.
It sees itself as a hospitality company, not a tech company. “We use technology to improve the guest experience through scale. That’s why the conversation with Accor was easier. We are not an app, we grow city by city. It was hard before we had scale, especially the operational aspects. Selling to owners was tough, and putting all the elements together – quality control, concierge, booking, guest experience.”
The tipping point came when it achieved 70-80 properties in Buenos Aires and could support a six-person team. “We cracked the organisational challenge in 12-18 months.”
Then came the part of transplanting the model in other markets with Sao Paulo being the first stop. After that, it started work on cracking the B2B space, building technology for home owners.
What differentiates Oasis Collections from competitors? “We are the only one blending home and hotel concept on a global scale. There are companies trying to add a service layer to Airbnb, there are a couple of companies which high setvice curation models in one or two cities – for example OneFineStay and Rio Exclusive.”
Oasis is now in 11 countries in South America, North America and Europe, It aims to reach 30 cities by year end and 100 cities by 2020. Its target is 250 properties per city.
The challenge is maintaining consistency and quality as it scales and keeping it efficient. Stanberry said “70% of the model remains constant with a 30% variance – whether it’s the supply side, or consumer side, business or leisure, we have to tweak a few things depending on the city.”
The regulatory problems facing sites such as Airbnb also affects Oasis but “because we are personally controlling the process, it makes us less threatening to neighbours”.
“With Oasis, we are the property manager. We decide on minimum stays, maximum occupancies, it gives people more confidence but of course, when a city announces no rentals under 30 days, it affects us.”