We have discussed the specifics in online business of daily apartments rent in Ukraine with founders of Dobovo.com Volodymyr Bezlyudnyi and Dmytro Malakhov.
How did you come to online business?
Volodymyr: «I graduated from Physics and Technology department KPI in 2004 and on the third year of study I started web-programming. I worked as a programmer on remote stand only. We got to online daily rent business with Dmytro in 2004. Actually we are still working using the same scheme: IT + daily rent = is our everything».
Dmytro: «In 2003 I graduated from KhAI, I was working at Antonov aircraft factory as an engineer for one year to get a Masters diploma. I was going to learn programming at the same time but I never had a chance to do it as my managing skills were useful in getting first orders for PHP+MySQL websites development. Together with other graduates we made primitive html-pages and earned first money. One of the ordering customer worked in daily rent and it opened new shpere for me».
Tell us about Dobovo.com. What was the big idea who made the first investments?
Dmytro: In 2004 we stared an offline agency Ukraine Apartments and we were among the first to start accepting Pay Pal transfers from foreign clients. Than it was an incredibly exclusive offer to the foreign customers so we attracted a lot of clients from USA who trusted us their money. In five years we realized that offline system is dying and we decided to carve out the online niche. We invested our own finance — together with Volodymyr we handled financing using the funds from our another business.
First we hired software developers from India as Ukrainian specialists attendance costed more. But this experience appeared to be very negative — the amount of bugs in the software written by developers from India was simply way over the limit. After that we hired our own dev team — four developers and tester.
Volodymyr: The idea of Dobovo.com came to us in 2010 as an effort to automatize our daily apartments rent agency. We had a database of some reliable hoteliers in Kiyiv, Odessa, Lviv and some other cities. And we set our sights on turning the daily rent market in Ukraine to a civilized online marketplace where our partners could get much more bookings than from a «manual» agency paying the commission only in case of a succeed deal. The clients in their turn would be able to make the choice based on the hoteliers statistics and reviews of the guests who have already stayed at the apartment. At that time popular today Airbnb service wasn’t present neither on European market nor certainly on Ukrainian. Nobody knew about them here and so we didn’t have an example to follow (unfortunately :). We used booking.com as a guide (they didn’t work with apartments at that time, only with hotels) and our experience on the local market.
Dobovo.com was made as a service where the clients can make an informed choice of accommodation based on the hoteliers statistics and real reviews from the clients.
How would you describe the Ukrainian market of daily rent?
Dmytro: According to our estimates the amount of apartments and houses for daily rent in Ukraine is around 15-20 thousands and 8 thousands from them are already listed at Dobovo.
In convertion to money I would say that the total assets turnover in Kiyiv is around 80 millions UAH per month (around 4 thousands offers with average occupancy for 20 thousands UAH a month per apartment). The volumes on market of Ukraine in total is about 3-5 times higher.
How did the crisis this year influence the market?
Dmytro: The market «shifted» to the central and western part of the country as expected. Beginning from June we can mention a notable growth of demand for rent in Kiyiv — the middle class moves from Donbas and usually people use daily rent services while they are looking for permanent accommodation.
Ofcorce we have totally lost the deals in Crimea but at the expense of refuse to travel to Crimea we notice a record breaking demand in Odessa — it exceeds the offer at several-fold.
In reference to the rates they fell a lot converting to dollars but grew in hryvnias (at least three times in Kiyiv).
Comparing to 2013 the geographical distribution of auditory changed. A year ago we had 65% Ukrainian customers, 20% Russian and 15% from other countries. This year the amount of clients from Russia tends toward zero. Today we have 89% Ukrainian customers and 11% from other countries including the closest neighboring countries.
What is the main distinguishing features of Dobovo.com from business rivals?
Volodymyr: There are two types of daily rent websites — booking systems and listings sites where direct phone numbers of the hoteliers are shown. The listing is usually on a paying basis for the owner. We do not compete to the listings websites, moreover, most of them are our partners. Such websites are popular only due to Ukrainian daily rent market’s specifics. The customers who see thousands of offers with direct telephone numbers of the hoteliers and actually start calling them around keep me wonder with their obstinateness. Especially when there are dates with high demand are required.
Our main rivals are Airbnb and Booking.com services.
Our main distinguishing features from Airbnb is that we are oriented to Ukrainian market. This is not the only difference, more detailed:
– Airbnb requires a full prepayment, we — only the first night.
– There’s no discount system on Aibnb, the hoteliers of Dobovo.com are able to set the automatically calculated discount based on amount of days in booking and special offers for free days between confirmed bookings.
– Our rates and prepayment are set in local currency.
– We cooperate with accustomed by Ukrainians payment systems – Portmone, Liqpay, Privat24 and also we have a direct merchant from Ukrainian bank.
– We cooperate directly with payment terminals.
– We have our in-house call-center with 10 support specialists (and we are increasing the personnel)
– And of course, our pride — 10 thousands real reviews about apartments.
What is so special about your review system?
Volodymyr: From the beginning we decided to make leaving fake reviews impossible. We guarantee this as we only send an e-mail request for review only to the clients who really stayed at the apartment.
We knew that we will be collecting the data base of reviews for long time when we were taking this decision. But we succeed and today we have over 10 thousands real reviews that help the clients make their choice.
Dmytro: I’d like to accent that we do not delete any reviews on hoteliers requests.
How do you monetize the business?
Dmytro: We take commission from the hoteliers — 5 — 15% from the deal. The amount of commission may vary due to the rating in search results on the website that takes to consideration a lot of different criteria of the reliability of the hotelier. The commissions is already included to the price.
The client transfers the deposit to our bank account and we don’t pay it out to the hotelier before the guest receives the service. If the client is not satisfied with the apartment or any unforseen circumstances accure and the client can not be accommodated at the booked apartment we refund the deposit and account 50% from the prepayment more as a compensation. The compensation can be used only for the next bookings via Dobovo.com.
Concerning the revenue I would say that we are not actually trying to make a big profit, most of it is being reinvested to the project: software development, marketing and advertising.
We have another business that dives a stable profit. So we don’t take money from Dobovo.com, we think the time didn’t come yet.
How did the public accept the service?
Volodymyr: Our partners from offline agency, the hoteliers, were really happy when we decided to connect them with the client’s database directly. The commission is very low considering the amount they have to pay to traditional agencies. In return we require high quality of the service and actual availability schedule.
At the beginning we had around 30 owners and about 200 apartments in Kiyiv, Odessa, Lviv and Kharkiv. Today more than 2235 hoteliers work with us and the amount of the apartments listed on the website is close to 8 thousands in 63 cities of Ukraine. The amount of apartments increased on over 50% and reviews — 45% from January to November 2014.
How do you promote the project?
Dmytro: We use various advertising channels: context ads, Google Adwords and Yandex.Direct , CPA-networks, we cooperate with sites for hot-offers and discounts such as Groupon etc. We stake on our partnership program — for example we cooperate with LUN.ua. We use only online promotion, 99% of our ads is in Uanet.
What are the main goals for Dobovo.com?
Dmytro: Our main goal — is to make Dobovo.com an incontestable leader of the sphere in Ukraine (we are already #1 as a local company). We decided not to spread to another countries but to strengthening our positions on the local market, for example with focus on houses in the Carpathians.
Volodymyr: We strive to make the daily rent in Ukraine more civilized and organized. Dobovo.com is build to give the hoteliers a permanent and reliable source of reservations and the clients have an opportunity to choose accommodation basing on the reviews and real experience of previous clients of the hotelier.