Muslim P2P property rentals capturing share in a $50 bln global market

The sharing economy has grown substantially over the last five years, driven by the need to address market inefficiencies and transfer control of transactions to consumers. It is projected to reach $335 billion by 2025, according to PwC. Key segments comprise travel (peer-to-peer rentals), car sharing, finance, staffing, and music and video streaming. Other sectors are  also growing, including meal sharing, clothes sharing and office sharing.

A particularly important segment is peer-to-peer, or P2P, accommodation rentals, characterized by Airbnb, where homeowners or occupants lease vacant space in their properties and compete directly with hotels, often providing a more cost effective and more authentic guest experience.

According to Rachel Botsman, a leading expert on collaborative consumption, the P2P property rental industry was valued at $26 billion in 2011.

The P2P property rental market is estimated to be close to $50 billion in 2015, assuming growth in aggregate market value was 17 percent CAGR between 2011 and 2015, in line with eMarketer estimated growth rates of global e-commerce spend of 17 percent between 2013 and 2015.

KEY PLAYERS

Airbnb was the first successful mover globally in the P2P rental market. Founded in 2007 in the U.S, it reached a valuation of $10 billion in 2015, according to Venture Beat. It now has over 1.5 million listings in 34,000 cities and raised over $1 billion in funding in 2015 from a consortium of private equity investors.

The credentials of the P2P rental market and the initial success of Airbnb has prompted several other entrants into the market.

London-based onefinestay was launched in 2009 and focuses on distinctive and upmarket homes. It expanded to New York in 2012, raising $12.2 million in Series B funding during that year.

Hamburg-based 9Flats was founded in 2010 by former head of European operations at popular travel site lastminutebooking.com. It allows online booking of private residences in over 100 countries and in its most recent disclosed funding round secured an investment of $10 million.

MUSLIM-FOCUSED OPPORTUNITY

Muslims are increasingly asserting their needs when travelling – in particular demanding halal food, prayer spaces, alcohol-free and family-friendly environments, and separate facilities for men and women where practical.

Muslims spent an estimated $142 billion on outbound travel in 2014, according to the State of the Global Islamic Economy Report 2015-16, and their lifestyle needs are already being increasingly addressed by service providers across the travel ecosystem, including hotels, airlines and tour companies.

There is a significant opportunity for P2P rental service providers to provide tailored service offerings to Muslim travelers who seek authentic homestay experiences. This was highlighted as a key opportunity in the Digital Islamic Economy Report 2015-16.

Unique Muslim lifestyle needs have largely remained unaddressed by the big global players. Airbnb and other global P2P rental service providers currently do not explicitly list Muslim-friendly accommodations. However, service providers are beginning to address Muslim lifestyle needs for private accommodation.

Serendipity Tailormade has begun offering homestay packages to its guests, accommodating the preference to stay with locals for a more authentic travel experience.

Founder and Director of Luxury Travel, Nabeel Sharif, told DinarStandard, “Here at Serendipity Tailormade we’ve featured the Malaysian Homestay as our primary destination for similar experiences [for booking private accommodation via P2P rental sites]. This has given our clients who are looking for a more adventurous way to see Malaysia the opportunity to stay with locals. We’ve also worked with homestays in India…These are great travel experiences one couldn’t find from a regular hotel or resort.”

UK-based Bookhalalhomes was founded in 2015 and connects travelers to halal travel experiences, ranging from short-term stays to longer term lets, and offers travelers the opportunity to vacation without compromising Islamic beliefs and practices, according to the company in a press release.

Accommodations are carefully vetted by the website to ensure that basic Islamic criteria are met, and includes halal food, prayer facilities on site, non-alcoholic drinks, and leisure facilities for travelling men, women or families.

Bookhalalhomes founder, Karima Bihaki, is keen not only for guests to have a halal experience, but also to promote a virtual “ummah”, enabling members to form close bonds and benefit from each other as they adhere to Islamic practices.

Currently, the website lists private accommodation in London, Dubai, Marrakech, Rotterdam, and Yogyakarta, and has plans to expand its global scope significantly.

CONSIDERATIONS

There are a number of key considerations for P2P property or accommodation rentals to succeed through focusing on Muslim markets.

Having a compelling, clearly articulated value proposition. There is a risk that a P2P rental service could be perceived as a “copy” of conventional platforms, which would limit the uptake of the service among Muslims.

Elena Nikolova, founder of popular travel blog Muslim Travel Girl says, “I can see there is an opportunity for everything if there is something different and added on. If this is a copy of Airbnb and call it a Muslim name I am not sure if there will be much to go on. Especially if the target is Millennials.”

Current offerings are in their early stages, but have many of the ingredients of successful service providers in other segments of the travel market, including hotels and resorts, namely, the clearly-articulated focus on Muslim needs.

Reaching critical scale. In addition to potential interest among travelers, there is an attractive opportunity for Muslim families to generate income and connect with the “ummah”, those of the same faith and sharing same fundamental values.

A key element of success is a carefully targeted campaign reaching Muslims worldwide, both hosts and guests, through leveraging effective networking channels, such as MuslimAdNetwork, the largest global vertical ad network focused on Muslims.

Self-certifying the halal quality of accommodation. There is a need to underwrite quality and maintain halal standards for guest experiences, which may be a challenge and could make the venture more costly, with potentially damaging consequences if not addressed properly.

Highlighting the problem in conventional P2P rental services, Nabeel Sharif of Luxury Halal Travel said, “In recent months, the high profile of Airbnb ‘nightmares’ has been of high focus, and where Muslim guests have further requirements in terms of food and privacy, the quality and standard levels would be a cause for concern.”