Getting stuck into the property market is not always the best way to turn a buck – but it has worked for Tom Walsh.
He devised his business after deciding to let his Temple Bar apartment out to tourists on a short-term basis. Long before Airbnb was a glint in its founder’s eye, Walsh’s letting venture was so successful that, within a year, he had set up a company with his brother Ger and had begun to expand here and overseas.
Established in 2004, Staycity now has more than 1,000 short-term let apartments across eight European cities, including Dublin, Edinburgh, Liverpool, Manchester, London, Birmingham, Paris and Amsterdam.
With ambitions to increase its portfolio to 5,000 apartments over the next five years, the serviced apartment operator also expects its revenues and employee numbers to rise.
“It all started simply enough. I owned an apartment in Temple Bar that had been home to a recording studio used by the likes of U2. My wife and I lived there for a while, but decided to short-let it rather than sell it when we moved out in early 2003.
“As my brother Ger was an IT guy, I asked him to put up a website to see if anyone would be interested,” said Tom.
Bombarded
“Within weeks of listing it online, we were being bombarded with bookings. Ger and I decided then that once he had finished his final year at college, we’d lease a small block in Dublin, run it as a little business and see how it went,” he added.
The brothers duly got a lease on a building with 27 units in the newly developed Italian Quarter on the north quays in Dublin city centre in March 2004. They quickly expanded by adding units in buildings on St Augustine Street and at Christchurch.
At this point, Tom was still working in his daytime job as a plant manager at the high-tech chemical and biomedical manufacturer Henkel Loctite Ireland. But within two years of getting the keys to the first leased building, he had quit his job to look at opportunities for Staycity in other European cities.
“From the earliest days, we had a number of cities plotted on our business plan in terms of expansion. We wanted to be in cities that were similar in pattern to Dublin with a good mix of leisure and business travellers, and good year-round occupancy rates,” he said.
“In 2005, we found a guy in Amsterdam with a single apartment block who agreed to use us exclusively as our marketing agent, with him taking commissions on bookings. That worked well for us, but we didn’t feel that the commission model would necessarily work elsewhere. We decided to focus on taking leases on entire buildings and operating them ourselves elsewhere.”
Long-term leases
Staycity’s business model is now based on long-term leases and management contracts. All its apartments are fitted with the aim of giving customers all the comforts they’d expect from home, while stripping out extraneous features that would lead to higher costs.
As Airbnb has shown, plenty of business and leisure travellers would rather stay in an apartment than a hotel. But unlike Airbnb properties, Staycity apartments come with services typical of more formal accommodation.
“I love the Airbnb model and wish I’d thought of it. But at the same time, most of the travelling public are under time constraints and want all that’s best from the hotel sector, such as 24-hour reception. I don’t really see Airbnb as competition. I’d say we’re in the same camp as them in terms of challenging the hotels,” he said.
The Staycity model has proven particularly popular with business travellers. The company’s expansion has been assisted by a financial boost from Irelandia, the Ryan family’s investment vehicle, which took a 40 per cent stake in the business in 2007.
It hasn’t been all plain sailing however. As with many other companies, Staycity saw some its plans put paid to by the recession.
“The recession was a significant event for us on a number of fronts and one of the biggest things it did was set back our growth. Before the downturn, there were syndicates buying up apartment blocks and we’d manage all of them, but then financing dried up and it was difficult to get deals together. Things have come back though and we’ve had three solid years of signing new deals.”
Now employing 250 people, including 35 in its Dublin headquarters, Staycity is estimating revenues of €30 million for this year, which it hopes to grow to about €100million by 2018.
New cities
Having recently signed a £17 million (€20.9 million) deal for a 170-room building in the centre of Birmingham and with plans to open apartments in Greenwich, Venice and Lyon before the end of the year, Tom is feeling upbeat about the company’s prospects.
“We’re not really interested in expanding outside of Europe at this point. Our focus is on continuing to grow in our existing markets and also possibly moving into other gateway cities such as Milan, Munich, Stockholm and Madrid, cities with a good mix of business and leisure travellers,” he said.
