Startup pitch: SegundoHogar targets Latin American vacation rental market
SegundoHogar, a Latin America-based startup, wants to takes a piece of the peer-to-peer sharing economy by focusing on the vacation rental space in the the region.
SegundoHogar allows property owners to list their rental home in its website, customers will be able to search and book it online (upon confirmation from the host). This is similar to the process of how the vacation rental giants Airbnb and HomeAway works.
The startup takes 10% of the total listing amount (as commission) at the time of booking, guests will have to pay the remaining amount at the time of stay.
Q&A with general manager Constanza de la Cruz below.
Tell us how you founded the company, why and what made you decide to jump in and create the business.
Everything began in 2003 when we created a tourism-based content network called Visiting– but it was only recently (in 2010 with the help of Endeavor, an entrepreneurial NGO in Latin America) that we realized our network was missing its own product.
We began working on a temporary rental reservation system for properties in Latin America that was originally called Visiting.net.
In July 2013, we did a comprehensive rebranding and it became SegundoHogar.com. We wanted to take advantage of this great opportunity in order to greatly optimize the search and reservation process in the region’s vacation rental industry.
Size of the team, names of founders, management roles and key personnel?
Our team is comprised of seven core people who are surrounded by a structure of strategic partners that include about 20 people. Without them, it would be impossible to continue the growth SegundoHogar.com has been experiencing.
- Diego Noriega – founder and president
- Constanza de la Cruz, a tourism industry veteran who had a successful exit with the company Avantrip.com, is the company’s General Manager
- Pablo Saubidet is a partner and an active board member who helps develop strategy and tactics
- Francisco Berdaguer is also a partner and oversees the legal area
These key team members are supported by others in-charge of technology, inventory, operations, sales, administration, and finances.
SegundoHogar was initially financed by Noriega (its founder), who invested over $500,000 for product development and marketing.
Estimation of market size?
Vacation rentals– including offline rentals via real estate companies– in Latin America is a $10 billion market. The market is this gigantic due to the gaping lack of hotels in the region’s most important tourist destinations.
For example, in Mar del Plata, Argentina or in Punta del Este, Uruguay there are significantly fewer hotel rooms than homes and apartments for rent.
There is no other vacation reservation service in Latin America that totally satisfies the necessity like SegundoHogar.
There are both paid and free classified ad services in each country. Airbnb has a light presence in the region, but it is not well known by locals which gives us a significant competitive advantage considering that, in Latin America, 85% of people vacation within their home country.
SegundoHogar has a Call Center to ensure that travellers needs are totally met and to provide a high quality travel experience that, today, is nearly impossible to come by.
In addition, we guarantee the quality of local service by thoroughly educating each Property Manager associated with SegundoHogar. We truly hope to help professionalize the vacation rental industry in Latin America.
Revenue model and strategy for profitability?
We operate under a simple commission-based model: when the user makes a reservation, they are charged 10% of the booking amount (our commission). This strategy has been proving successful and has been bolstered by our partnerships with Property Managers, our focus on travellers, our ability to generate demand, and our regional outlook.
This mix has allowed us to rapidly scale throughout the region and, at the same time, focus on the user experience.
What problem does the business solve?
The entire vacation rental search and selection process is ridiculously complex in Latin America, thanks to completely disjointed and disperse supply, and the multiple points of contact required to actually rent a property.
There is also uncertainty and risk associated with payment which, many times, means that travellers actually visit the rental property beforehand to make sure that it will fit their specific needs. This entire process is incredibly frustrating.
SegundoHogar makes everything more efficient, simple, and risk-free – something that each traveler greatly appreciates.
How did the initial idea evolve and were there changes/any pivots along the way in the early stages?
The initial strategy of SegundoHogar has remained consistent in order to quickly scale operations while assuring outstanding customer service. Nonetheless, we constantly iterate our customer acquisition and inventory development tactics and study metrics to find ways to improve. We have a strong startup culture where the passion and energy to improve the Latin American travel experience is our main focus.
Why should people or companies use the business?
Everyone who travels for any motive in Latin America should utilize SegundoHogar.com – it is the easiest, quickest, and most reliable option to find a vacation rental in the region, from Mexico to Patagonia.
Our beautiful properties and excellent customer service guarantee the traveller an authentic Latin American experience coupled with outstanding advantages that renting a home or apartment provide, including significant savings.
What is the strategy for raising awareness and the customer/user acquisition (apart from PR)?
We are working online and offline to position the concept of online vacation rentals (where SegundoHogar is naturally the preferred service).
We also participated in the International Tourism Fair in Buenos Aires (the largest is Latin America) with a large stand where we spoke with travellers and property managers, and positioned our company as the market leader.
Where do you see the company in three years time and what specific challenges do you anticipate having to overcome?
In three years, we see SegundoHogar as the undisputed vacation rental leader in Latin America, thanks to our competitive advantages in acquiring users and inventory.
We also hope to create the first vacation rental travel community in Latin America. The challenge is immense which is why we are conversing with potential partners to lock-in our regional market leadership in three years.
What is wrong with the travel, tourism and hospitality industry that requires another startup to help it out?
In Latin America, the inefficient processes, the lack of consolidated supply, the lack of trust in current platforms, and the weak travel culture make the industry require a concrete solution – one that we are offering with SegundoHogar.com.
What other technology company would you consider yourselves most closely aligned to in terms of culture and style… and why?
There are two companies that we closely identify with:
HomeAway: They have maintained their entrepreneurial spirit even after their IPO, and they have managed to communicate fluidly in each country where they are present. We are in the same industry, and HomeAway recently implemented a commission based business model – the same one we have had since day one.
WeHostels: We share a horizontal work structure where each person in the company is committed to being the best in their area.
SegundoHogar made an interesting point by saying that 85% of the travellers vacation within their home country, and the hotels in the region are not enough to serve the market. These pointers immediately validates the opportunity for a vacation rental player in the region.
HomeAway too observed this trend three years ago where it acquired Brazil’s vacation rental service AlugueTemporada.com.br.
SegundoHogar’s competitors in LATAM region include HomeAway, VRBO, Airbnb, FlipKey, CyberRentals, OasisCollections (luxury version of Airbnb in LATAM), and FindVacationRental. However, except for global players, other competitive services lack in inventory in the region. A Google search for vacation rental players in LATAM has mostly the global players in its first page results.
While SegundoHogar is expanding aggressively in LATAM, one should also remember the initial struggle the global players experienced (rather, still experiencing – Airbnb’s recent tax issue).
Vine video of SegundoHogar (click on mute symbol to start)
Karthick was general manager for Tnooz in Asia until September 2014.