STRz talks to Guy Westlake, the CEO of Lavanda, about the potential of short-term rentals to unlock value in society and shape the future of urban living.
• What is your background?
“Prior to starting Lavanda, I was head of marketing at Shutl (acquired by eBay in 2013) and the company’s first employee. Shutl is a pioneering on-demand delivery platform for multichannel retailers. My earlier career spanned various B2B software product marketing roles at Canon and Vignette (now OpenText). I have a Masters in European Business from ESCP-EAP in Paris.”
• What made you start Lavanda?
“Lavanda was born from a deep-held belief that the sharing economy – specifically Airbnb and the evolving short-term rental sector – has untapped potential to unlock major value in society and shape the future of urban living. As a company our mission is to help cities understand, embrace and realise this potential.”
“Exploding demand for premium homestays in the major cities is currently being crudely and unprofessionally fulfilled by landlords and homeowners. As a result, the experience – be it as a guest, as a host, or simply as a local resident who might be impacted by this activity – is hugely variable. Lavanda solves this by providing guests and hosts with a trusted experience that is both hospitality-led and technology enabled.”
“More importantly, we quickly recognised that more than half of hosting is non-permitted, often commercial subletting – i.e. acting in breach of lease, and in many cases in breach of local planning regulations. We saw an opportunity to pioneer a compliant and professional service that works in the best interests of all the major stakeholders: local residents, landlords and their managing agents.”
• Describe Lavanda’s product and service, and has this changed at all since launch?
“Lavanda is a value-added property manager that combines luxury hospitality operations and data-driven yield optimisation into a single, technology-led experience for residents, landlords and managing agents. Our platform powers three core products:
Home by Lavanda. Our flagship service for homeowners. Rent your home effortlessly at the touch of a button whilst leveraging Lavanda’s technology and unique brand of hospitality to optimise returns.
Lavanda Agent. Our B2B short-term rental platform Lavanda partners with local estate agents to power a best-in-class short-term rental proposition, driving profitability and growth in their core sales and long-term lettings business.
Lavanda Residential. Lavanda is a strategic partner for institutional investors in the development and end-to-end operation of serviced apartments and build-to-rent housing schemes, offering optimised returns from fully-flexible and aspirational full-service living.”
• How big is your team, and what are the key strengths you look for when recruiting?
“We have a team of 50 people based in London, near Chancery Lane, of which 10 are full time software engineers. The team is now growing really fast, and we’re constantly on the lookout for the best candidates across our product, sales, operations, and technology teams. We prize the following sets of skills above all else:
Customer focus. You take huge pride in how you are perceived by your colleagues and your customers, and are always happy to dig deep and go the extra mile whenever required.
Problem solving. You must be an autonomous problem-solver and a confident decision-maker who’s able to prioritise ruthlessly in line with value creation.
Analysis. You are comfortable manipulating large quantities of data and can extract key learnings and insights with confidence. You pride yourself on making informed decisions quickly.”
• What’s been your biggest challenge and success to date?
“Biggest challenge. The greatest challenge has undoubtedly been launching and growing a business, whilst at the same time struggling to find product-market fit in an industry that is undergoing constant change and regulation. Fortunately, that challenge is now behind us; I’ve managed to appoint my dream senior management team who are driving the business forward, and together we’ve won the backing and support of a team of world class investors and industry partners.”
“Greatest success. We’ve been fortunate enough to have a number of recent successes, but the greatest one that I am able to talk about right now has been signing up our first national partnership with 200 branch estate agency, Hunters. Hunters were very quick to see the value and potential of Lavanda’s premium short-term rental service, and we are now rolling out to major cities across the UK to drive new value in their core sales and lettings business.”
• How did you raise funding and is the company profitable yet?
“To date we have raised money exclusively from private angel investors and continue to invest in aggressive growth and product development.”
• Who’s your target customer?
“We are developing a horizontal platform with the potential to shape the future of the residential property sector. This platform powers three products, and each product targets a specific customer set:
1. Home by Lavanda: services homeowners in London and Manchester.
2. Lavanda Agent: powers the core business of local estate agents in London, Manchester and Liverpool.
3. Lavanda Residential: optimises yield for property investors, developers and serviced apartment operators in cities across the UK.”
• How do you drive supply and demand growth?
“We believe that long-term value is created by championing a faultless, hospitality-led customer experience and prizing quality of service. Quite surprisingly, this is a major gap that we have identified in the market! Our deep understanding of the needs of guests and tenants enables us to attract high levels of occupancy which, in turn, we can service optimally by leveraging our in-house technology to deliver industry-leading yields. As technology is at the very heart of everything we do, we’ve successfully built a genuinely ‘omnichannel’ platform from scratch to enable all of this; meaning we’re able to seamlessly integrate with any and every source of short-term occupancy (Airbnb, Booking.com, HomeAway, Expedia, etc.) as required in order to maximise returns for our partners. This is further supported by proprietary pricing algorithms that optimise yield.”
“Our approach is to offer a unique value proposition to the market, supported by a winning customer experience. Get that right, and demand for our service will look after itself. We let our partners and clients do the talking for us.”
• What’s your outlook on the future?
“As demand for ‘homestays’ continues to explode globally, and the experience of staying in someone else’s home becomes increasingly accepted and professionalised, traditional hotel and serviced apartment models will be forced to adapt. Short-term tenants will be able to access a comparable and, in many cases, preferable experience at a lower price point.”
“Equally, a lack of innovation in the underlying property management model has meant that BTR (build to rent) operators are struggling to deliver more meaningful value to residents and investors. Increasing land and property prices mean that, with the current property management model, the only way to maintain yields is by building smaller and smaller spaces which are unaspirational for tenants. Generally speaking, people don’t aspire to live in boxes! At Lavanda we see this as a clear lack of product/market fit, so have pioneered our own brand of “performance property management” to power a new proposition for residents, and industry-leading yields for investors. Solving the problem of yield is key to increasing the supply of long-term rented housing, which is necessary to service the needs of “generation rent” and help avoid a future housing crisis.”
• What can the sector do collectively to help drive growth?
“Collectively the government and the industry need to take proactive measure to better understand, embrace and professionalise short-term rentals and homesharing. Planning laws need to adapt and new classes need to be created. This is key to powering the next wave of global innovation for the sector – more flexible and affordable urban living – whilst at the same time unlocking meaningful value in our cities at a socio-economic level.”