Why it matters:
- Revenue generated by the global short-term rental sector has reached $177 billion — accelerated by the remote-work boom and millennials' penchant for flexible travel — with the vast majority coming from short-term booking platforms, according to Skift research.
- Renting unrented vacation properties at a discount can help owners maximize profits while travelers save on travel.
- Partnerships in this hospitality space are growing, as B2B relationships have turned into an important revenue source for online travel booking platforms.
When Ben Jamshahi moved back to the Bay Area from Hawaii in 2017, he rented his vacation homes in Hawaii and Lake Tahoe on sites like Airbnb and Vrbo. But he found that he couldn't fully book his homes. Instead, he achieved only a 40% occupancy rate. The homes lay empty for days on end.
Jamshahi, a serial entrepreneur who had just sold his latest endeavor, the now former Babalous Restaurant Group, was missing out on potential income. So in 2017, he created his own vacation rental site where he listed his properties. The six homes that he listed rented right away, and for most of the year.
Friends asked Jamshahi if they could list their properties too. Slowly, the site grew. The following year, Jamshahi and a few close friends he'd worked with before attended an industry trade show, the Vacation Rental Management Association International Conference. At the time, the vacation rental industry was very much in its infancy. But after lessons learned at the conference, Jamshahi saw a chance to get in on the ground level.
"Data was fragmented, the players weren't communicating with each other, and there was no consistency in pricing," he said. "We saw [a] lot of opportunities to be able to consolidate the fragmentation and provide a niche site and marketplace that vacation homeowners and property managers could use to increase their occupancy."
The challenge with online booking sites like Airbnb, Jamshahi discovered, is that it becomes harder to get noticed as the number of rentable properties exponentially grows. Properties sit unrented not because they're bad places to stay, but because they're lost in the shuffle.
"With every issue you solve with a new company, you inherently create more problems, and this was a problem created by companies like [the vacation rental companies]," he said.
Jamshahi settled on a model that would find unrented vacation properties on the market, then negotiate a deal with the property manager or owner for a discounted rate. Both owners and travelers would benefit travelers with a cheaper vacation, while owners wouldn't sit on empty properties. Ideally, owners would get to 100% occupancy.
To capitalize on millennials' and Gen Z's penchant for flexible travel, Jamshahi called the company Whimstay. It fills a niche in the crowded and competitive vacation rental market, comfortably co-existing with platforms like Airbnb. Business intelligence firm Skift estimates revenue generated by the short-term rental sector globally at $177 billion, with the vast majority from short-term booking platforms.
[Read: Courting Customers: Leading Travel Companies Embrace Tech to Hyper-Personalize Experiences]
Whimstay built a business model that caters to millennial and Gen Z preferences for more flexible travel amid the remote-work boom
Millennials and Gen Z account for almost half of all Americans, with Gen Z alone estimated to have a spending potential of $12 trillion by 2030. These demographics are known for spontaneous travel behaviors, and often book trips last minute. On the heels of the pandemic, more people can work remotely too — at least part-time — choosing to work from a beach cottage or mountain cabin.
Whimstay tailored its services to cater to these trends, offering features that appeal to travelers who value flexibility, ease of booking, and competitive pricing.
"As we know, COVID allowed people the freedom to work from everywhere," said Jamshahi. "They were no longer tied to an office."
Recent Swift research found that as of March 2024, 65% of respondents to a travel-related survey had taken extended trips or more short-term trips due to their remote work status. Seth Borko, Skift's Head of Research, said that while a recent push to return to office may dampen this trend, it doesn't kill it.
"In general, shorter-term rentals can be a very cost-effective way to travel and a very good way for families to save money," Borko told CO—.
Wyndham and Booking.com were the first to approach Whimstay about a partnership, asking the company to help with liquidating some of their inventory. Business-to-business (B2B) relationships have become an increasingly important revenue source for these types of online booking agencies, as they shift away from direct consumer relationships.
With discounted properties, the company is helping both travelers and property owners while making money
Jamshahi wanted to create "a win-win-win" situation where "we make money, we help property owners maximize occupancy, and we give travelers the best deal with a customer-centric model," he said. He wanted to create a business that made all players better off than they were before.
The company partners with professional property managers to offer exclusive discounts on properties that otherwise remain unrented, focusing on bookings 30 days and under. In 2018, Whimstay started out with listing a few hundred properties. When COVID hit, it refunded bookings and dove into research and development. That allowed them to bounce back when travel offered consumers plenty of last-minute bookings.
Since then, the company experienced 500% year-over-year growth thus far in 2024, and its team tripled in size to accommodate growing operations. Whimstay successfully raised capital to fuel its expansion, including two crowdsourcing rounds on StartEngine.
Typical Whimstay booking group sizes range from two to four people, with stays averaging three to four days and a booking value between $1,000 and $1,400. On average, guests save around 25% and over $200 per booking with Whimstay, according to the company.
Property managers using Whimstay have reported substantial increases in occupancy rates, according to Jamshahi. For instance, one property manager in Truckee, California, experienced an occupancy increase from an average of 48% to 83% after adopting Whimstay's last-minute pricing model.
Whimstay eyes new customers via price transparency, partnerships with big brands like Wyndham, and European expansion
One challenge with the vacation rental market, said Jamshahi, has historically been customer service, specifically, who does the customer go to if they have an issue? With both short-term rental companies and owners involved, it's not always clear where the onus should lie. Jamshahi wanted complete transparency around customer service.
Whimstay has a dedicated team of customer service specialists that consumers can call for help.
"For any company that's going to get into this market, they've got to consider, 'How do I increase my customer satisfaction and make that the heartbeat of the company?'" he said. The startup is in the process of creating additional customer service avenues such as a chat function.
Jamshahi wanted to provide transparency around pricing as well. Whimstay doesn't allow property managers to charge additional fees that aren't agreed upon within the platform. Customers know exactly what their total price is well before clicking to buy.
New site changes give consumers even more confidence that the deal they're seeing is the lowest price in the market, said Jamshahi.
"It's showing rather than telling them we're the lowest price," he said.
Most recently, a series of partnerships has helped Whimstay vastly grow its property network to nearly half a million listings across North America, Canada, Mexico, and the Caribbean, with plans to extend offerings in the United Kingdom in the near future.
Wyndham and Booking.com were the first to approach Whimstay about a partnership, asking the company to help with liquidating some of their inventory. Business-to-business (B2B) relationships have become an increasingly important revenue source for these types of online booking agencies, said Borko, as they shift away from direct consumer relationships.
Then came an agreement between Whimstay and Expedia Group, which added over 250,000 new listings to the Whimstay platform.
"At the end of the day, we're a marketplace," Jamshahi said, "and we're able to add a lot more inventory because of our partners. I'm very excited about what we've built."
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
CO— Exclusives: Insider Strategies
How the buzziest brands and hottest startups are solving today's biggest business challenges. CO— brings you advice from startup founders and top executives for thriving in a new world.
