Problem
Luxury rentals are a growing market, but ownership is an exclusive and high-friction experience
At over $4.0 trillion in asset value, the Luxury Villa market is large, growing, and extremely fragmented. Secular tailwinds from the pandemic have accelerated demand for private, single accommodations as many workers have the ability to work remotely at least some of the time. Despite having inconsistent, often underwhelming experiences with Airbnb and other OTAs, vacation rentals continue to capture increasing share from hotels.
Other firms (e.g. Wander, Pacaso) have implemented a Fractional Ownership model to break open the luxury rental market. However, current Fractional Ownership companies have significant complexities in executing this business model at scale because they require a large capital investment to secure the asset — opening up an opportunity for The Villa Life to obtain a significant market share with less risk.
Solution
Seamless luxury rental ownership and management
The Villa Life is a vertically integrated platform that manages rentals and allows accredited investors to build their real estate portfolio(s) by purchasing a minimum 5% interest in the Villa of their choice. Any user (including non-investors) can schedule a stay at TVL’s villas. All Villas are handpicked and carefully vetted by TVL’s management team before it is approved. The Company’s mission is to become the default destination and application for travel and investment in Luxury Villas.
Product
The first platform to integrate a strong rental program with fractional ownership
Rental Program
One of the core uses of the product will be to drive rentals to the villas the Company property manages. The luxury market is currently very fragmented with OTA’s, marketplaces, wholesalers and property managers trying to drive traffic to their properties. The Villa Life aims to change this by building the largest inventory of properties for people to choose from. The Company presently has ~400 properties under contract in the Caribbean, and are already larger than Airbnb Luxe (#1 Luxury Property listing site) in 2 out of 3 destinations (St. Barts and St. Martin) for Luxury.
Co-Ownership Program
As managers of properties through its Rental Program, the Company will be able to provide Investors KPI’s and other relevant investment information to acquire the asset. Adding to the value of the real estate is being a part of “The Villa Life” network which handpicks and inspects every villa before it is listed. Real estate is fractionalized when homeowners want to sell the real estate. The benefit is two-fold.
- Partial Sale: Presently, if a homeowner needs liquidity, unless financing is obtained, they will need to sell the whole asset. Now, with The Villa Life, homeowners can liquidate a part of their property and obtain liquidity.
- Full Sale: If a homeowner wants to sell the whole property, they can do this also. The Villa Life aims to offer faster sales because investors can, in theory, invest into a luxury villa offering an enticing yield at a fraction of the price.
Technology of The Villa Life
The cornerstone of The Villa Life technology is its flexibility and extensibility. The Company relies on React Native which uses Node. Js, which is an industry standard. Through conversations with the Founders, relying on a tech stack that is used widely in the industry makes it easier for a planned exit with a larger business if the opportunity arises.
Key attributes:
- Supported by any OS browser
- Seamless booking flow
- Clutter-free dashboards
- Responsive front-end designs
Traction
With 400+ villas and a waitlist of 2,000+, The Villa Life is ready to scale
The Company has completed its product development on the Villa Rentals side, and Villa Ownership is scheduled to launch its beta late Q1 2023. Additionally, the company name is a notable brand asset for search engine optimization and customer acquisition.
Customers
Business model
Scalable and diversified business model with compelling unit economics
The Company's asset-lite approach eliminates the Balance Sheet Risk faced by competitors in the industry and enables it to swiftly scale at a hyper pace. For example, Pacaso, valued at $1.2 Billion USD has scaled to ~100 Luxury Homes compared to 400+ for The Villa Life.
Additionally, the Company has a strong sales catalyst in its rental program which insulates the business during economic downturns and creates organic demand for the real estate as it becomes available for sale. Customers in the rental program typically spend >$15,000 USD per trip demonstrating the financial means to invest into a share of a Villa as well. At 10,000 Villas, conservatively, each Villa will net $120,000 in Revenue for the Company, delivering $1.2 billion in recurring rental revenues.
The Company also intends to fractionalize 1,000 villas per year over the next 5 years which is projected to equate to $5 billion in annual transactions. Other benefits will be provided to users of the Invest App including preferred rates on all Villas within the Company's Rental Program.
Ongoing capture of property performance data will enable the Company to accurately value and add (or dispose of) properties. Since opening up its platform to hosts, the Company has added more Villas under contract than Airbnb Luxe in 2/3 markets.
The company is evaluating the following revenue models:
- Transactional fees of 10% for villas fractionalized. Presently, the Company has 66 villas that are expected to become available for sale valued at $300 million
- Rental program where it collects 30% of gross bookings as its fee. The Company aims to drive $120,000 in revenues per Villas. At 10,000 villas, this means a projected $1.2 billion in revenues for the business (~$3.5 billion in GBV)
- Other monetization channels. With a large portfolio of luxury real estate, the Company can add insurance (trip insurance, home insurance), new products or services (luxury jets, yachts) etc. to drive more revenues.
Competition
Uniquely positioned to democratize luxury rentals with an asset-lite strategy
Vision and strategy
Building the world’s largest Luxury Villa company
The Company plans to scale its inventory and become an exclusive provider of Luxury Rentals over the next 5 years. Their path to building an exclusive pipeline of 10,000 Luxury Villas is as follows:
(1) Partnerships with New Developers (1,000 properties) – Exclusivity on Channel Management for the Rental Program (2) Direct Home Listings (7,500 properties) – Homeowners list directly with The Villa Life and sign an Exclusive Arrangement to manage real estate. (3) Consolidation of Local Property Managers (1,500 properties) – Acquisition (Series B, Proof of Concept is provided successfully by Vacasa)
The Company projects to have ~$2 B in Annual Revenues from its 2 programs over the next 5 - 7 years demonstrating a clear path to 1,000x MOIC. More importantly, the team has exited in the past to Airbnb for $300m. A comparable exit would imply a 10x - 15x MOIC as a worst case scenario.
Prior exit to Airbnb
Co-Founder Jazz Poulin scaled his venture Luxury Retreats to ~4,000 Villas before being acquired by Airbnb. Just before being acquired, the Company had started moving towards building an exclusive supply of villas. Post-acquisition by Airbnb, the number of Villas fell drastically because Airbnb had removed the service side of the business, opening up a market opportunity for The Villa Life to step in and take control over the market.
Founders
20+ years experience in hospitality and luxury rentals, including an exit to Airbnb
Tejas Shah CPA, CA, MBA
CEO
Numbers savvy and real estate expert. Brings 10+ years of experience in capital markets and hotel management.
Jazz Poulin
CMO
Marketing savvy and luxury rentals expert. Co-founded Luxury Retreats in 1999, sold to Airbnb in 2016 for $300M.
Gurjinder Minhas
COO
Operations savvy and real estate expert. Brings 10+ years experience in capital markets and hotel operations.