The business of holiday home rentals has been one of the most natural areas to migrate to the world of e-commerce — the ability to search for and view lots of properties makes it a significant improvement on whatever it was that people used to do in the past (magazines? vacation agencies? brochures?), and that has helped the online rentals industry to blow up. One area that hasn’t evolved very much, however, is pricing and paying — oftentimes, the cost of a rental is static, and paying in many cases ends up being an offline effort. Until now.
Zaranga, part of the current Y-Combinator class, is tackling the rentals market with something new: the concept of dynamic pricing. Like Priceline in the world of airline tickets or hotels, on Zaranga users can name the price they’re willing to pay for a holiday rental. Also like Priceline, users can also simply pay whatever price the homeowner wants to charge. “There is no dynamic pricing in the vacation rental market, even though it is extremely common in the rest of the travel industry,” Anirban Bardalaye, one of the co-founders, says, noting that discounts these days usually get included manually instead, as in the case of last-minute bookings to fill vacant properties.
The site has been in a closed beta since April 2012, and it currently covers properties within a short driving distance from San Francisco in areas like Wine Country and Lake Tahoe. It plans in the next week to add more properties in the Monterey Bay, along with others within a two-hour drive.
Bardalaye tells me that Zaranga was borne out of his and co-founder Amitav Chakravartty’s own renting frustrations. Zaranga and his wife began renting places instead of staying in hotels after their first child arrived — it’s a lot easier to self-cater when you have a baby — and it was then that he realized how long it took to sort this out compared to booking hotels. Even though rentals have been available “online” for years, in reality they are the lowest tech version of e-commerce around. You often still have to phone people for availability; and paying in many cases cannot be done automatically. “I just wanted to get a rental as easily as I get a flight,” he said.
Chakravartty had an even more simple complaint. “I have been scammed on rentals sites before and felt very frustrated,” he said.
On the other hand, there are some basic facts on the supply side also backing up the idea. Those renting places out still have a hard time changing pricing on the fly to account for those times when their prices are not attracting enough interested guests, and when they do they find them too expensive, according to a recent survey from HomeAway, found that some 83% of property managers are “dissatisfied” with current commission charges. Added to the fact that 72% of U.S. travellers look for deals when they look online — introducing dynamic pricing into the mix appeared to be the answer.
The two took to their own professional experience to solve the problem. Bardalaye has trained and worked as a software engineer but also holds and MBA, while Amitav Chakravartty, his co-founder, has had startups before, and they met while both working at Serena, the enterprise IT integrator. Seeing first-hand the ability for IT to solve real-world issues for businesses gave them the idea that they could do the same for this specific vertical.
Right now, “name your own price” is used by just over half of all the customers on the site. They say that naming your own price is actually tried out more than it actually gets used in the end — meaning that it is also simply a good way to attract people to Zaranga as a whole.
In these early days, the site is geared to rental agencies rather than individual home owners, and for now, it is staying away from city rentals. “We don’t want to compete with Airbnb,” Bardalaye says. Longer term, the idea will be to expand the basic e-commerce platform and dynamic pricing into a larger, cloud-based property management system for both agencies and individuals. “We have an ambition to have our own property mgmt system for smaller players who don’t need all the services on the more expensive property management systems offer,” he says.
For now, interested TC readers who would like to try this out can get $35 off their booking from now until Friday, March 1, when they type in “TECHCRUNCH” when booking. Happy travels.