Case 8: Housing Anywhere
Introduction
Students going abroad for exchange or internships are often facing problems of paying double rents
due to the inability to sublet their rooms, while incoming students cannot find short-stay
accommodations. In 2009, Niels van Deuren, a student Business Administration in Rotterdam, The
Netherlands, encountered exactly this problem while preparing for his exchange semester to
Singapore. He did not want to give up his beloved room in Rotterdam, but at the same time, leaving it
empty during his stay abroad seemed like a waste. Subletting his room thus seemed to be a natural
option, but it appeared that not a single Dutch student was willing to rent his room for just one
semester. However, short-stay housing demand from incoming international students in Rotterdam
was booming. Meanwhile, Niels also struggled to find a room in Singapore: besides the lack of supply
of affordable housing, he did not feel comfortable having to transfer a large payment before having
inspected the room himself. This is where the idea for HousingAnywhere.com was born: Niels saw a
gap in the market and he decided to launch an online platform that would connect Dutch students
going abroad to international students coming in.
Figure 1: The number of partner universities of HousingAnywhere.com plus three “phases” of
development (Source: HousingAnywhere.com Business Plan 2017)
In the very same year the idea was transformed into reality when Niels commenced a student project,
primarily aimed at serving the needs of just students of the Erasmus University in Rotterdam.
However, the platform soon raised awareness and popularity among many other schools in Rotterdam
as well. This proved to be only the first step towards success: in 2010, Niels van Deuren was
approached by Maastricht University, who had heard about the success of HousingAnywhere.com in
Rotterdam and were eager to implement the platform in their university as well. This is where Van
Deuren saw that there was room for expansion in the Dutch market of universities, and within a couple
of years the platform expanded to all other major Dutch (university) cities such as Amsterdam,
Utrecht, Leiden and The Hague.
In 2011, the company took its first steps across the Dutch borders as universities from various major
European cities like Cologne, Stockholm, Vienna, Barcelona and Paris indicated to be interested and
the network rapidly expanded internationally. At the time this case was written (early 2017), the
network comprised already over 130 partner universities in 50 different countries, mainly in Europe
and the Americas (see figure 1). In total, 450,000 properties have been listed on the platform so far,
100,000 of which are currently vacant.
Driven by ambitious goals, HousingAnywhere.com has gone through a remarkably rapid growth so far.
An interesting question is how sustainable this trend is, especially in the light of increasing competition
in the student housing market. This case will investigate the development of HousingAnywhere.com
until now and analyse the problems encountered on the road and the challenges it currently faces.
The research question guiding throughout will therefore be: What strategy should
HousingAnywhere.com follow to conquer the challenges that prevent the firm from scaling up?
Company background and business model
The main mission of HousingAnywhere.com is to “increase the current housing options at a university
and help more and more international students with their housing needs.” This is to be achieved by
connecting outgoing students who are willing to sublet their room to incoming students who are
looking for a room. This leads to a business model that offers three primary services:
1. Incoming students can safely and easily book a relatively cheap room in the city and country
of their destination, and they get the opportunity to integrate with local students. Security is
offered by means of the Secure Booking Service. This implies the following: first, the incoming
student and the room advertiser agree on their terms and conditions, after which the
incoming student transfers the first month’s rent to HousingAnywhere.com. Upon arrival, the
incoming student checks whether the room meets the terms agreed upon. Once approved,
HousingAnywhere.com transfers the money to the advertiser.
2. Outgoing students can safely sublet their room, which means that they do not have to give it
up, they save money by not having to pay double rent and can more easily and safely find a
room abroad. Although initially intended just for outgoing students, from 2015 onwards,
HousingAnywhere.com also seeks contact with local housing providers and landlords in order
to meet the high demand.
3. Universities increase their reputation by offering a good housing service to prospective
incoming students and save time by not having to deal with all housing-related issues.
The platform can be used for free: however, the incoming student pays a one-time commission fee of
25% of one month’s rent if the deal is successful. The network, and thus the number of transactions,
is not yet big enough to make this income flow sufficient for the company to become profitable.
However, HousingAnywhere.com has found additional sources of income in the partner universities
themselves. If a university wishes to officially link itself to the network, it has to purchase one of three
different packages offered: the Starters Plan (950 euros), the Complete Plan (4200-7100 euros) or the
Premium Plan (30,000 euros). For a more detailed description of these plans, see figure 2. The latter
two plans extend the basic services of the platform and standard promotion by various benefits such
as a locally appointed HousingAnywhere ambassador for the university, a results report per semester,
and customized posts on Facebook. In this crucial initial phase of introducing and expanding the
network, HousingAnywhere.com remains primarily dependent on external investors. In the first few
years of its existence, it has received two major fundings: a seed investment of 1 million US dollars by
Netherlands-based venture capital firm henQ Invest in 2015 and a Series A venture capital investment
of 5 million euros by henQ Invest and Italian investor Real Web in 2017.
Figure 2: Description of the three different plans HousingAnywhere.com offers (Source:
HousingAnywhere.com Business Plan 2017)
On the other hand, there are plenty of costs. Main costs include employee salaries, rent of office
space, and business trips of the University Sales, University Relations and Room Acquisition
Departments. So far, the company has not managed to make a profit yet.
As mentioned before, HousingAnywhere.com started as a small student project. At the time this case
was written, the company was run by a team of 60 employees, divided over distinct teams and
departments. The entire staff, led by CEO and founder Niels van Deuren, operates from the company’s
headquarter, which is located in Rotterdam. The young staff is characterized by the vast number of
different nationalities: 16 nationalities and 10 languages are represented, with most employees
having lived in multiple countries. As a result, the website is available in 8 different languages and
many universities can be approached by staff members who are familiar with the local language and
customs.
Because of the small-scaled teams, there is a very strong informal family culture within the company:
nearly everyone knows each other. Hierarchy is not very strict: of course, teams have heads that
convene to discuss issues on company level, but they are very approachable for any employee. The
CEO forms no exception: he is regularly around at the office and knows his employees well. This
company atmosphere is described by the staff members as a major strength and one of the reasons
behind the recent success of HousingAnywhere.com. Because of the strong growth path the company
has embarked on, it is expected that 90 people will be working for HousingAnywhere.com by the end
of 2017. Inevitably, this will have an impact on the family atmosphere of the company. Therefore, one
of the major challenges the company will face is how to preserve this distinct atmosphere while still
allowing for growth.
Market for student housing
In their battle to grow while preserving the family atmosphere HousingAnywhere.com always has to
keep its competitors in mind. HousingAnywhere.com will have to retain its unique features to stand
out and in the meantime remain competitive. To reach this goal they will need to be sure of who those
competitors are. This might seem like an easy process. However, when analysing competition, the
obvious list of competitors is not always correct and even less regularly complete.
The classification of HousingAnywhere.com’s competitors is not any less challenging. This is because
HousingAnywhere.com operates in an extreme niche: the market for housing for short-term exchange
students. This is a market that has not been tapped into by big companies like Airbnb. Airbnb is more
focused on short stay holiday bookings, whereas HousingAnywhere.com has a timeframe of several
months. Be that as it may, HousingAnywhere.com should consider Airbnb as a potential competitor.
The transition into this market would be very easy for Airbnb as they have got a big network in place
and have a high level of brand recognition. However, if Airbnb were to initiate this transition, they
would probably do it through the means of a takeover. Airbnb has abundant capital and the contacts
that HousingAnywhere.com has with universities are valuable. So it might not be bad news for Van
Deuren after all.
Another big company that is an unexpected competitor for HousingAnywhere.com is Facebook.
Facebook provides a means of easy communication between individuals all over the world. This results
in the potential customers of HousingAnywhere.com looking for housing on the website of
HousingAnywhere.com and then contacting the landlord or sub-letter themselves via Facebook as to
avoid the fee HousingAnywhere.com charges. Facebook is in this sense not a direct competitor, but it
is a business that steals customers away. HousingAnywhere.com should make their services as an
intermediary more essential, not just as a platform to find housing, but also as a service that connects
people and oversees the process.
As said before, preparing the list of competitors can be a troublesome process. One problem arises
when the identification of competition depends on the geographical scope used for the analysis. When
a company operates on a global scale, like HousingAnywhere.com, there can be competitors that also
operate worldwide - Airbnb and Facebook - however, a similar geographical focus is not fundamental
to the characterization of a competitor. A global company might also face competition from a
company on continental, regional or national scale. This often happens because of different customs
and tastes. In that case the identification of the competitors should differ depending on the
geographical focus.
On a continental scale, in Europe, HousingAnywhere.com encounters Uniplaces as a strong
competitor. This is a platform for landlords, looking to let rooms to international students, to post
their property on. This is, however, not specifically meant for short-term exchange students.
HousingAnywhere.com is therefore more specialized, but it also means there a fewer potential
customers. Another way HousingAnywhere.com differentiates itself, are its strong ties to the
universities. Customers might see HousingAnywhere.com as more reliable because of this.
HousingAnywhere.com also faces competition from copycats that focus solely on the region or
country they are located in. These copycats are mostly groups of friends that think copying the model
is easy money, however, they go as fast as they come. Nevertheless, this illustrates an important point:
entry barriers are low in the industry of student housing. Every individual with a computer and some
programming skills can set up a website that provides this service. In other words, the imitation
impediments are low. Then how come that HousingAnywhere.com did survive and these copycats did
not? This can be explained through early-mover advantages.
Rents on apartments or rooms are usually hundreds of euros per month. This is an enormous
expenditure for students, for whom this is a large part of their limited budget. These students will
therefore want to make sure that they get what they pay for. Exchange students usually cannot assess
the quality of the room on advertisements alone. These students usually yearn for some certainty and
the good reputation that HousingAnywhere.com has built up over the years might provide exactly this.
Consumers that have had a good experience will recommend the service to others and will be
reluctant to switch to a competitor in the future. Buyer uncertainty combined with a good reputation
can make for a powerful isolating mechanism. It is because of this reason that it is paramount that
HousingAnywhere.com retains its reputation of high reliability. Already they are making steps in this
process. Recently they have introduced a report button and they are actively combatting scammers.
HousingAnywhere.com has upheld its reputation thus far, and thereby increased its customer base
significantly. This has led to a vast network of letters and tenants and a great supply of properties. The
vast network that is already in place also increases the value of the platform for future customers,
since they have more properties to choose from. As these new customers join the network, the value
increases further. The growth of the HousingAnywhere.com network becomes a vicious circle, which
becomes very challenging for entrants to match. On this path to becoming a large company in the
future, HousingAnywhere.com will have to make the necessary adjustments to sustain its growth.
HousingAnywhere.com will have to prepare itself for the future.
Towards the future
HousingAnywhere.com supplies around 100,000 accommodations in 50 different countries. At the
end of 2017, HousingAnywhere.com wants to be active in 60 different countries. This number will be
increased to 100 countries for 2018. In order to reach these objectives, the company has already
initiated several reorganizational measures.
Reorganization of the team
HousingAnywhere.com has been under transformation. From a small start-up with a strong family
culture with limited number of employees, HousingAnywhere.com has expanded its staff members to
a total of 60 employees, slowly approaching a record of 90 employees by the end of 2017. This calls
upon the need for a solid firm structure with a clear task division within each department. Up until
2016, HousingAnywhere.com had 6 departments: Relations department, Sales department, Room
Acquisition Department, Customer Care and Product Development department, Information
Technology department and Financial Department. Since the beginning of 2017, a marketing
department has been added to the department lines.
As each department grew as the days went by, HousingAnywhere.com’s former firm location did not
have the capacity to allow the teams work properly within their division without entangling each
other. Niels van Deuren took this chance to relocate HousingAnywhere.com, acquiring a spacious
compass in one of the skyscrapers in the central business district of Rotterdam. In contrast to the
initially rather anarchic system, this new location offered the space for more team-based activities
with clear task divisions.
One of the main internal challenges for the future would be to sustain the cohesive atmosphere where
everyone knows each other and feels interconnected with. The close tie between diverse
departments, allowing for knowledge spill overs, lies at the foundation for the steady growth of
HousingAnywhere.com.
Marketing department
HousingAnywhere.com’s ultimate business mission is to be active anywhere around the world. The
establishment of the Marketing Department was a strategic decision to foster market penetration.
While the Sales Department and Room Acquisition Department focuses on expanding the market, the
Marketing Department will constitute the strong backbone of the expansionary strategy. In other
words, the Marketing Department will be responsible for all marketing related activities that range
from advertising activities to managing the HousingAnywhere.com ambassadors to creating brand
exposure through social media.
The constitution of the Marketing Department is made possible by the 5 million funding of investors
at the start of 2017. As HousingAnywhere.com is still in its growing phase, it has not been able to
break-even yet. The biggest cost variables are constituted by wage payments and sales efforts.
However, Van Deuren indicated that HousingAnywhere.com will be able to survive even by only
collecting the commission fees of partner universities in the coming years, due to the large network
of partners HousingAnywhere.com has been able to build over the past years. This indicates a bright
future, but still a long path to go in order to fulfil its mission of offering housing anywhere around the
world.
Do question 1-2 before continuing
How does the future for HousingAnywhere unfold?
Suppose that the enormous growth of the platform of HousingAnywhere was noticed by AirBnB, a
firm that offers a similar service for all kind of people, mainly focused on short stay holiday bookings.
However, AirBnB is reluctant for an immediate large-scale investment, because it does not have
accurate information on the student housing market. HousingAnywhere wants to expand its services
by offering housing options to short-stay university guests, such as visiting professors and researchers.
However, it considers its supply of student rooms not suitable for this market. Both companies
therefore decide to enter in a joint venture contract in which AirBnB and HousingAnywhere own
respectively 65% and 35% of the stakes in the joint venture. The contract includes an option for AirBnB
to buy the HousingAnywhere share of the joint venture after 2 years at a cost of 1.0 billion US$.
Considering the uncertainty involved in the project, AirBnB estimates that there is a 70% probability
of joint venture success after two years. In that case, the market value of the joint venture would
equal 3.5 billion US$. However, there is a 30% probability of joint venture failure. In that case, the
market value of the joint venture is 1.5 billion US$. Assume a discount rate of 10%.