Pillow: Startups Seek to Support Hosts

Sweet Dreams

Yesterday I attended a talk sponsored by Pillow, one of the new San Francisco-based startups seeking to support hosts and guests in the vacation rental economy. In January the company raised $2.65M in seed funding.

Seattle is a new market for Pillow; they currently operate only in select California cities. I attended the event with little knowledge about the company, beyond what I’d gleaned from a few Facebook posts. Charlie Ryan, Head of Sales for Pillow, was the lead speaker for the event. Unfortunately, he did not give us much background about the company, and it wasn’t until I queried him afterward that I learned Pillow has only been around for 18 months.

It appears part of their hiring campaign in new markets involves working with area real estate agents to tap into owners of second homes or help buyers looking to purchase properties expressly to put them into the vacation rental fray.

Pillow: The Pros

They photograph and set up new listings for a host (or will take over a host’s existing account) with a minimum 3-month commitment. This is attractive to those fearful or overwhelmed by the work involved in creating and running a new listing.

The company acts as 24/7 guest concierge and host liaison that handles: guest communication, check-in, unexpected needs or issues, linens, cleaning, and maintenance support of a host’s entire listing.

They work with screened and trusted cleaning and maintenance vendors who are insured by Pillow in the event of injury or damage, and whose performance is continually being reviewed by guests.

Pillow’s algorithms will track a listing’s performance and offer “intelligent pricing.” Essentially a forecast of area spikes due visitor activity and inquiries, festivals, holidays, and sporting events. This pricing is intended to capitalize on nights that will command higher rates.

Their fee is 15% of the nightly rate, before the cleaning fee and fee deducted by a host’s vacation rental site of choice. (They primarily operate on Airbnb, VRBO, and will work with numerous other sites.)

There is a $29 minimum for Pillow’s services.

They offer a Fixed Income “bid” to take over a host’s projected earnings for the months ahead that will ensure a host can command a price they’re comfortable with, while Pillow pockets any extra earnings they garner after paying the host their mutually agreed upon rate.

Pillow: The Cons

At this time, the company is only working with entire home listings—not single rooms. So for owners like me who live on site but have work commitments that often take them elsewhere, they can’t hire Pillow…yet.

I sense the company is terribly green. I want to sit back and see what they do with their seed funding and if they can gain traction. Their employees seem young and inexperienced to the needs of new (or gun-shy) hosts.

Depersonalized service. Part of what attracts many users to vacation rentals in that in-person interaction with a host. From that first email hello to that in-person hello, people who seek hotel alternatives desire that human connection and a local’s referrals to area sights, bars, restaurants, etc. Pillow claims that according to their surveys of past guests, their users seek to cut out the “middle man” of the key turnover, etc. that involves dealing with a real person, but I question this. From my experience, guests love to come and go at their leisure so they don’t bother someone or have to be accountable about their arrival, but the majority of them crave what I have to offer—insights from a real human being who knows the area and can enhance their vacation or business stay.

The Verdict: 

I want startups that support hosts to succeed, but I sense a grabby-grab air to many of the businesses that are getting in the game to assist hosts. What I liked about Airbnb when I first began hosting and traveling via the site in 2013 was the human interaction that was native to the experience. These businesses that are seeking to streamline and “cut out the middle man” seem to me to be the reverse of why Airbnb was founded—to connect people with affordable vacation options—and OTHER PEOPLE.

I get it. Airbnb’s valuation, popularity, and fame continues to rise, and I suspect they’ll eventually go public. They employ people around the world and have stakeholders to answer to as they grow more and more successful. I attended last night’s event with a real estate friend and she told me stories about the many folks in my city who are clamoring to get in on their slice of the vacation rental market action. It’s often more lucrative to a long-term tenant, after all.

BUT something is being missed in the grab. I am the first one to admit that I value connections over money (sometimes to my own detriment), but this new market of algorithms and Instant Book and strategizing to make the almighty buck is missing the mark. As the market becomes saturated with folks keen on the mint of tourism and hospitality, with no real inclination or interest in what it takes to truly be hospitable, folks like me who got into this looking to make genuine connections are contemplating stepping aside.

The former hospitality ethos that thrived in the nascent days of Airbnb is becoming inhospitable in a saturated and commoditized vacation rental marketplace.

I welcome your thoughts or conversation on Twitter.

Photo credit: summerbl4ck