A Jurny Towards Contactless Hospitality
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While we may not be able to explain the strong performance of the stock market year-to-date, we can understand why certain technologies are accelerating their rate of adoption. Telecommunications tools like Zoom, modular factory robots like Bright Machines, and autonomous last-mile delivery drones are all seeing strong interest from investors as we get used to “the new normal.” Many of these business models were good ideas in the first place, and even better ideas given today’s circumstances.
Back when foreigners were allowed to visit Japan, they would have noticed how common contactless restaurants are. In place of waitstaff, you’ll find a humble vending machine that takes your money and sends your order back to the kitchen. No need for a middleman when you just want to eat and go. Now, the same idea is being extended to lodging.
About Jurny
Founded in 2017, Los Angeles startup Jurny has taken in $2.75 million in funding to develop a turn-key hospitality platform that uses technology to optimize the short-term lodging model that anyone who has used Airbnb would be familiar with. In order to understand the value proposition, let’s start with a property owner who wants to produce income from a residential property such as an apartment building. A few options would be:
- The traditional landlord-tenant model – rent each apartment out using a yearly leasing model
- The short-term rental model – rent each apartment out to multiple tenants each month
In both cases, the property owner will need to employ a property management firm to handle the operations. When you’re renting properties at scale for any duration, the work quickly starts to add up. The next step would then be to start vetting property management firms to try and achieve the highest yield you can expect for your property given the fees you’re paying.
Update 10/04/2021: Jurny has raised $9.5 million in fresh funding to accelerate the global expansion of its latest product offering, Jurny Virtual. This brings the company’s total funding to $12.5 million to date.
Jurny has built a software-based hospitality management service. It’s a patent-pending technology platform that automates the entire process of running a hotel – an automated hotel if you will. The result is a high-profit, low-overhead business model that produces a higher profit than any other method out there for the property owner.
The Property Owner’s Perspective
After a property owner has decided to work with Jurny, the process is seamless. The properties to rent will be outfitted with a smart home starter kit, things such as keyless entry, smart thermostats, security cameras, CO2 sensors, and 24/7 noise monitoring systems. These are all technology solutions that protect the property owner while providing a better experience for the guests.
Once the flats are ready to be occupied, Jurny markets them direct-to-consumer via their app or via more than 20 different booking platforms out there such as Airbnb or Booking.com. They can even white label the offering to use your own brand. Once your properties start being booked, no further action is needed. Between stays, Jurny handles everything.
There’s nothing worse than having a guest complain about how dirty your apartment is, and then finding out the third-party company you hired to clean your Airbnb between stays happened to have a new person working that day who did a shite job. Jurny integrates an on-demand cleaning service that follows a 150-point CDC-compliant checklist.
The cost for the property manager is a 15% monthly management fee which is based on revenues for the unit. With that comes an extensive list of benefits including:
Many of the above services also contribute to a better guest experience as well.
The Guest’s Perspective
If you’ve used Airbnb from the guest side, you’ll know how dreadful their customer service can be. If you check into an apartment where you believe safety is an issue, they’ll expect you to bring it up with the host. If the place is absolutely filthy, you’re expected to work that out with the host. Pretty much every problem you encounter, you’ll be advised to “raise it with the host.”
The entire Airbnb model emphasizes that these are transactions between the host and their guests. Airbnb only provides a platform that lets the two parties transact. This makes sense if you think about how quickly they were able to scale. You cannot grow a business that quickly if you’re having to field every little guest complaint, especially when you have absolutely no control over resolving whatever problems arise. Let the host sort it out.
Airbnb’s business model makes economic sense, but that’s irrelevant to the guest who is on the receiving end of poor customer service. The Jurny model solves the pain points both guest and host encounter with the traditional short-term rental model. Simple things like handling the WiFi connection, thermostat temperature, and keyless entry through a single app makes life so much easier. Having some level of consistency across every property you stay in is what Airbnb lacks.
From the guest’s perspective, there’s everything to like about the Jurny experience.
The Economics
Going back to our earlier discussion of renting a property vs. listing it on Airbnb, the latter will generate more revenues, but the fees start adding up incredibly fast.
For your standard Airbnb transaction, the host pays 3% and the guest fee is stated as:
“…typically under 14.2% of the booking subtotal – the nightly rate plus cleaning fee and additional guest fee, if applicable, but excluding Airbnb fees and taxes.”
Credit: Airbnb
If we assume the guest fee is 10% for each transaction, then net fees paid to Airbnb sit at 13% just for the platform. For the property owner, the fees have only just started. We now need to consider hiring an Airbnb management firm. An entire business has now sprung up around managing Airbnb rentals for property owners, and you’ll need to use one if you want to manage multiple properties at scale.
According to Airbnb management firm GuestReady, commission-based fees for Airbnb management firms range from 12-40%, depending on the package you select. If we use the bottom end of that range, both parties are paying a combined 25% in fees versus the 15% charged by Jurny.
Using an Airbnb management firm isn’t just to avoid the operational hassles, it’s because there are additional benefits. GuestReady describes some of these benefits as:
- Professional photos – Increases visibility by up to twofold.
- Dynamic pricing – A 20 to 40% increase in booking requests.
- Advertising on both Airbnb and Booking.com – A 30 to 80% increase in booking requests.
You’re choosing Airbnb over the traditional renting model because that maximizes your property’s income. It’s the same reason why you need to use an Airbnb management service – maximizing income. Jurny gives the property owner the best of both worlds – all the benefits of a property management firm without all the fees.
So far, we’ve mainly talked about the short term rental use case, but Jurny has much bigger aspirations for their business model. Running a hotel is no easy job, and many boutique hotels are looking for a turn-key solution that makes cash flows more predictable. Jurny recently partnered with a hotel in Miami that will be completely rebranded as a Jurny hotel, and they were just hired by 121 Hotel in Nashville to run their operations. These are the smart hotels that will be found in tomorrow’s smart cities.
Of course, nothing proves a business model like traction. Jurny has grown to more than 2,500 properties in their pipeline, while their competitors lost 100’s to 1000’s of units, some even folding entirely.
The Competition
Jurny faces some formidable competition from many firms, most of which require “master leases” for a similar value proposition. As a property owner, you’ll need to lock yourself in for a set time frame to use these services. Jurny differentiates their offering by not requiring a master lease. Even if you’re running the perfect operation, it’s still a tough business to be in, especially now. While there’s an increased interest in “contactless hospitality,” there’s also an overall decrease in demand for short-term rentals.
One startup called Stay Alfred was leasing individual units and entire buildings in cities, and then renting them out on a short-term basis to travelers. With over 3,000 properties under management, the company had raised $60 million in funding before permanently closing due to the impact of the pandemic on their business. One can only assume that their business model required a minimum occupancy rate in order to service their lease payment obligations, and this wasn’t being met with the downturn in tourism.
Raising lots of money to buy up thousands of properties and offer them as short-term rentals may not be the right approach. Building a software platform and allowing it to scale over time reduces these risks. Jurny’s founders bootstrapped their entire operation until their most recent round. Anyone who spends their own money building a business knows how this forces you to be lean. And being able to run lean when hard times hit is how winners get made – survive and thrive while the competition gets slowly weaned out.
Conclusion
We’ve talked before about how the famous mantra “software is eating the world” has held true and continues to hold true. Robot makers are simplifying hardware by moving the complexity into the software. AI chip makers are extending Moore’s Law using software. And Jurny is removing the inefficiencies of hotel management – one of the oldest businesses on this planet – by using software and data. When all stakeholders involved pay less fees to receive better service levels, it certainly appears to be a winning business model.
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