Management services put fine touches to homestays

Palace Museum lipstick is made by Bloomage Biotechnology Corp Ltd, based in Jinan, Shandong province, which is a manufacturer of hyaluronic acid, a substance that has become popular for skincare. It is an artificial form of a substance that naturally occurs in the body. The next step was for Keys to enter into an agreement with Bloomage in July 2020.

Selling Bloomage products at homestays using Keys services is just part of the companies' "beauty plan". Another part is adding beauty parlor services to homestay spaces, Lin said. Keys helps upgrade the facilities, find the right cosmetologists and add beauty operations to business licenses so that homestays can provide such value-added services for guests.

The efforts have paid off, the company said. The average length of business relationships between Keys and these homestay business owners is five years. In 2021, homestay businesses saw their income jump 50 percent with the upgrades and the number of orders also rising 28 percent.

Seventeen leading Chinese homestay service providers, including Lost Villa and Cloud Retreat, have joined the "beauty plan" initiated by Keys.

It is absolutely a win-win story, Lin said. In one year, the stock price of A-share listed Bloomage more than doubled as the business relationship with homestays bloomed.

"Bloomage's stock price has been buoyed by the new story introduced to the market. Many beauty parlors have been opened this way. The initial investment was limited, and Bloomage controls all the product distribution channels," Lin said.

"I think homestays will grow into an advertising channel for more brands in the next three to five years. Brands can provide the latest products at homestays so that consumers have a first-hand experience with them. It is also easier to get feedback and make instant changes," he added.

Precise consumer insights led to the new business idea, Lin said. Since women have much greater input in the choice of accommodations than men, generally, they are the key consumers to attract, he said. Many women have higher expectations than men in domestic environments, especially in terms of brands, services and consumption.

"As women have more decision-making power over accommodations, it is logical to offer more value-added services to them," Lin said.

Added value is important not only for homestays in cities, but also for those in rural areas that are working to attract and retain customers, he said. Since many of them are located in remote areas, there may be limited recreational opportunities nearby. To address that, homestay managers should try things like organizing parent-child activities, providing pottery classes and adding state-of-the-art design elements to living spaces so that people are motivated to take pictures and upload them to the internet.

"As we position ourselves as a middle platform company by empowering many smaller businesses with our independently developed technologies, the most important thing is to continuously provide new value and new growth engines for homestay owners. The gist is to help these owners make more profit without adding to their chores," he said.

The market has also noticed Keys' value. In November 2019, Keys obtained an investment of $200,000 from Silicon Valley startup accelerator YC Combinator in China. With this, Keys has become the only Chinese homestay company to obtain venture capital money. Despite the impact of COVID-19, Keys started preparing for its series B financing in early November.

But added value is built on solid groundwork, which Lin said is based on standardized services at the very center of Keys' business model.

Glancing at online ads for homestays, it's clear that old, Western-style apartments and houses make up a large portion of the market in Shanghai. That also goes for siheyuan, the traditional courtyard residences in Beijing, or villas within walking distance of West Lake in Hangzhou, Zhejiang province.

Younger people, especially those with an overseas academic background in the arts or design, are drawn to these spaces. Many such budding entrepreneurs rent them, give them a decorative makeover with 50,000 yuan or so and sublet them as independent homestay venues.

But management companies like Keys make the argument that their standardized services and assistance to homestay operators give vacationers more peace of mind. They say having a platform to work with landlords is crucial.

Keys said that after homestay landlords download a Keys application, return it and an agreement is reached, management work is performed by the company. The company has a cleaning team, and from noon to 4 pm, housekeepers deliver clean bedding to homestays, change the sheets and clean up the house.

Keys says it also provides homestay business owners with a complete set of online tools covering the entire process from taking orders, matching available rooms and dates, delivering bedding and settling accounts.

The advantage of its highly modular approach is its standardization, which can be easily copied in other markets, said Lin.

Keys is now managing 375 homestays in Osaka, Kyoto and Nara, Japan, which have had relatively little problems with COVID-19. In September, Keys entered into an agreement with Tsinghua University to promote homestay services in Russia. Once a track record is established, such agreements may be extended to markets participating in the Belt and Road Initiative and ASEAN member states, Lin said.

"Homestays can be personalized, but their services should be standardized," he said.