One to watch
- What it does, in a sentence: Enables the travel trade to take on rental marketplaces such as Airbnb with competitive pricing, quality controlled and immediately bookable properties around the world.
- Founded: March 2015, London
- Founder/s: Nico Nicholas and Elkie Nicholas
- Size of team: 25
- Your name and role: Nico Nicholas, CEO and Co-Founder
What problem are you trying to solve?
Demand for short-term rentals is skyrocketing but many travel agents are reluctant to harness the opportunity this presents because of quality issues such as confirmation delays, fraud, double bookings, and poorly maintained properties. RentalsCombined aims to change this. We provide a ‘one-stop shop’ that only offers verified and professionally managed properties, which travel agents can book instantly with 100 per cent financial protection from the Travel Trust Association.
How big is the market – and how much of it do you think you can own?
The rentals market is huge, already worth over $100bn, and so far we’ve claimed a fair slice of it: our net earnings projection for this year is $10.5m from gross turnover and is due to reach $21.25m in 2018. Over the next few years we expect the market to get even bigger, especially in the corporate sector where organisations are discovering the benefits of a cheaper and more comfortable alternative to hotels, and so our portfolio is set to expand too, growing from 670,000 to 1.5m global properties.
How do you make money?
Our business is split between business and leisure travel, with business rentals making up the lion’s share of revenue. We’re founded on quality and value, and to make sure standards stay high, we add a small margin to property prices that allows us to ensure technological, financial and promotional services are always at their best. This margin includes 10 per cent commission which we pay to our professional travel agents, but we still manage to keep our prices competitive (and often cheaper) than marketplaces such as Airbnb who don’t negotiate pricing and add a booking fee. We want our partners to thrive and provide rental experiences that keep customers returning.
Who’s on your team that makes you think you can do this?
I have to start with my wife Elkie, the co-founder and Brand Director of RentalsCombined. Fifteen years ago – at the height of a successful career spanning the fashion and FMCG sectors, she was drawn to the rental market and her passion for it has never waivered. We also have a fantastic board of directors, an exceptional team, and 25 full-time coders, all committed to keeping the company one step ahead of the rest, and having a little fun along the way.
Who’s bankrolling you?
We recently closed a considerable funding round, although this and all our investment to date, has been made by friends and family. We haven’t yet gone down the institutional/VC investment route.
What advice would you give other entrepreneurs trying to secure that kind of finance?
The first step would be to apply for the government’s ‘Small Enterprise Investment Scheme’ (SEIS) and the ‘Enterprise Investment Scheme’ (EIS), which give protection to first seed investors. Once you have some traction there, bigger investors tend to feel more secure, and larger investment comes easier.
Having a clear idea of what you want to achieve and ensuring you are bringing something innovative, and necessary, to the market is vital. But don’t be discouraged if the right backer doesn’t appear straight away; finding the best investor will take time, tenacity, and consistent self-belief. It’s also important to keep your options open, rather than limiting yourself to the traditional private equity route – consider alternatives such as angel investors, crowdfunding, incubators and accelerators, and start-up platforms. You never know what new opportunities a wider perspective may create. ‘Intelligent investors’ (those with industry connections) are also a benefit, and can help fast-track the business by opening doors you never knew existed.
What do you believe the key to growing this business is?
The core pillars of success in this industry are: choice, quality, simplicity, and security. We are constantly striving to diversify our offering, break into new markets, and enhance our network, tools and services. This makes us standout in a crowded marketplace as a rental expert that always provides an exceptional, yet hassle-free experience. We also offer speed and efficiency that exceeds most other rental players; our real-time booking means rentals are immediately secured and the platform handles all documentation, payments and commissions; simplifying and streamlining the process.
What metrics do you look at every day?
We monitor a variety of metrics – the most important for us is lost sales, so we analyse searches that were made but which don’t return adequate results to give a wide enough offer to secure a booking. We then focus on improving our offering in those areas. Revenue is important, but when you’re a start-up, it’s more crucial to look at metrics and use those to tweak, review and tweak again until you maximise your conversion rate.
The whole team look at any feedback we’ve received – this could be from customers, agency or distribution partners, or people within our own team. We have two team meetings per week where we brainstorm and share our ideas or concerns from feedback, and prioritise tasks together based on this.
Additionally we always check our website stats including visitor numbers and patterns, as well as what our competitors are up to.
What’s been the most unexpectedly valuable lesson you’ve learnt so far?
As an entrepreneur, your own excitement can make you believe that when someone says ‘I like this’, it means they are guaranteed to invest or buy from you. I have a strong belief that a deal is done only when the money’s in the bank – not before! The other thing I’ve learnt from all of my businesses is that things always take longer than expected – make sure you’re prepared for a longer hike than you anticipated!
What’s been your biggest mistake so far?
Hiring people on their word and not testing them beforehand. It can be expensive and damaging if you hire someone who you think can do something, hand over that part of your business to them only to find out months later that they couldn’t do the job and have in fact taken the business backwards – we spent a great deal on such a mistake, which ended up holding the business back and caused a reduction in the company’s value.
What do you think is on the horizon for your industry in the year ahead?
Vacation rentals will continue to grow year on year, due to greater awareness amongst consumers that rentals are cheaper and more spacious than traditional hotels. The demand for rental accommodation continues to be recognised by the largest blue chip travel companies, some of whom have already embraced our network partnerships through both dual and white label branding, and our API, which allows our inventory to be merged with traditional hotel booking systems. Finally there will be greater regulation in the sharing economy and platforms will need to offer services such as instant bookings, which RentalsCombined has offered from the start – to remain competitive.
Which London start-up/s are you watching, and why?
I was lucky enough
to be included in Sadiq Khan’s London Partners trip to New York, where I met a number of London start-ups that I find very interesting like YoyoWallet, LuxTripper, Jambo and SEAB Energy (I LOVE green power).