STARTUP STAGE: Buoy helps vacation rentals maximize revenue through data

Buoy

Buoy uses an in-house developed "buoyancy point" algorithm and dashboard enabling vacation rental owners and managers to make data-informed decisions on pricing.

The company, which launched at the beginning of August, will go through the Techstars accelerator program later this year.

What is your 30-second pitch to investors?

Vacation rental revenue management is difficult, and the many solutions on the market employ a flawed methodology that leaves money on the table and confuses users. 

Existing solutions just use a standard ‘base rate’: a subjective number set by the user that an algorithm pushes up for weekends and peak seasons. But anything that's a wild variant to what's actually happening in the market - like the pandemic - the algorithm can’t cope with. So if rates are off the mark, owners and managers often don’t know until it’s too late.

At Buoy, we have created the first algorithm of its kind in short-term rental management.

We replaced the base rate with our ‘buoyancy point’ - a dynamic and entirely market-based index of millions of vacation rentals and hotels around the world. 

We don’t just produce data, but make smart, data-informed decision-making accessible to anyone who needs it. Our proprietary dashboard overlays disaggregated data to communicate what property managers want to know most: their relative position to direct competition and how professional revenue managers predict upcoming demand.

In short - we are trying to make Buoy the most helpful company in the industry by doing everything an incredibly talented revenue manager could do with existing technology - but accurately and in a fraction of the time.

Describe both the business and technology aspects of your startup.

Our business is to help owners, hosts and property managers maximize their revenue from short-term rentals.

At the heart of our company is our algorithm, which took months to build and is set from market conditions rather than the input of an arbitrary ‘base rate’. Feeding into this is data sourced daily from Hotel APIs and OTAs including Airbnb, Booking.com and Expedia. 

All of this is then communicated through our proprietary dashboard and visual timeline which took years to perfect. Through this users can disaggregate data and filter it to only show what is relevant to our users. They can then adjust their rates directly relative to their competition.

We also send a daily email report that lets users improve their relationships with data without having to access our dashboard.

Give us your SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of the company.

• Strengths: Buoy is a completely unique product because our algorithm is derived from market conditions instead of a base rate. 

• Weaknesses: We are young and still only available on Guesty, so lots of people want our service but can’t have it.

• Opportunities: This has been a crazy year for the vacation rental industry where demand has not followed your typical seasonality and has continued to grow exponentially. Property managers trying to demystify revenue management whilst making the most of high demand right now is a huge opportunity for us to show our value.

• Threats: Entrusting tasks completely to software and AI - even when they can do the job better and faster than a human - is still a struggle in the industry.

What are the travel pain points you are trying to alleviate from both the customer and the industry perspective?

Pricing and reporting is now the top technology pain point for rental hosts, with dissatisfaction tripling since 2018. For most customers we work with, it’s less about managing money than managing the anxiety of missing out.

So you've got the product, now how will you get lots of customers?

The feedback we’ve already got from our existing customers on Buoy’s performance is great, we now need to spread the word of what it can do far and wide.

More integrations with marketplaces like Guesty, who we currently work with, will be critical for our growth. 

We’re also going through the Techstars accelerator programme right now which will help mature our business operations whilst opening up a lot of new doors for us.

Tell us what process you've gone through to establish a genuine need for your company

The process has been a journey that has been the work of several years. For me it really started when I was working with property owners and managers who had zero revenue management knowledge.

It showed me the power of explaining the methodology behind it in a way that’s simple to understand - and that they wanted a tool to actively set pricing and engage with the data. 

Then over the course of three years as an independent revenue manager I interviewed over 300 short term rental hosts and managers to nail down what they really wanted to understand from the market and what would make them feel informed when making tactical pricing decisions. Our dashboard was born from this need. 

How big is the addressable market? 

Big and getting bigger. Right now the short-term rental industry is in a period of explosive growth, projected to go from $49 billion global revenue in 20210 to $101 billion in just four years time. 

Every vacation rental manager or owner in this market could use this software. CEOs can use it to keep an eye on their business, rental managers can use it to understand their booking environment, and an individual can use it to price up their second home.

How and when will you make money?

Our platform can be used by operators of any size, for which we charge a fee per listing per month, or a percentage of the booking revenue for smaller property managers or owners. 

What are the backgrounds and previous achievements of the founding team?

CEO Tim Speicher is a talented revenue manager and data communicator certified from Cornell University, with plenty of experience in vacation rental companies. He wrote an algorithm for Oasis when Hyatt invested, but never got a chance to put that into practice. 

Candice Speicher is a visual storyteller and chief creative officer of Buoy, having worked in data visualization and graphic design at Beats. 

CTO Szabolcs Pasztor has designed, scoped and led development of high-profile projects at Spotify and his software firm Dakai before joining Buoy.

Prior to that he worked as a full stack engineer at German healthcare startup Temedica.

What's been the most difficult part of founding the business so far?

Gaining data access. We want to sync our users’ rates to major OTAs, but those systems are closed to us. The gatekeepers (PMS’s and Channel Managers) take high commissions and have old tech infrastructures that are hard to work with. It is a gigantic hurdle that has made progress slow.

Generally, travel startups face a fairly tough time making an impact so why are you going to be one of the lucky ones?

The companies that really make an impact are the ones that have a new perspective.

Base rates are a frustrating methodology as anyone who works with them can tell you. The data in Hostfully’s recent report supports this. It showed pricing and reporting as a top pain point, and declining faith in dynamic pricing algorithms in the midst of Covid-19. By my math that’s rising pain + declining faith + time of crisis = opportunity for disruption.

We also had an advantage because I wrote the algorithm on newly available data.

It’s disaggregated, comprehensive, and highly filtered. Before 2019 the algorithm would not have worked because the underlying data didn’t exist yet. Everyone is going to adapt to this type of data over the next few years. We’re just lucky (or unlucky haha) to be the first!

A year from now, what state do you think your startup will be in?

We want to have helped thousands of hosts maximize their revenue. When smart entrepreneurs are building their portfolios for the first time, we want to be their go-to source for data-informed decision making.

What is your end-game? (Going public, acquisition, growing and staying private, etc.)

Ultimately we want Buoy to be the Weather Channel of the vacation rental industry - essentially the primary visualization people use to understand the market trends governing their business.

Ideally we would find a way to make it free. There are a million ways we could define success, so the only thing we’re focused on right now is making ourselves profitable.

How have you addressed diversity and inclusion within your business?

Our founding trio is multinational, multi-racial and multi-gendered so while it’s partially hardwired into our company, we are working with DEI mentors in the Techstars network to formalize our process and check for unconscious bias.