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Wed 14 Jun 2017 04:59 PM

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Blueground: Showing there's room for innovation in the hospitality business

Alexandros Chatzielftheriou, CEO & co-founder, Blueground, tells how his company is trying to shake up the serviced apartment sector and why there’s still room for innovation in the hospitality business

Blueground: Showing there's room for innovation in the hospitality business
Alexandros Chatzieleftheriou, CEO & co-founder, Blueground.

Please tell us about the Blueground model and how it stands out in what must be a very competitive field with lots of customer choice.

Blueground provides premium, fully furnished and serviced apartments to business travellers and expats staying in Dubai for mid to long term duration (1+ months).

Our business model is unique and differentiated from traditional serviced apartment operators in two key areas. Firstly, compared to traditional hotels, we use existing residential property supply, avoiding lengthy and capital intensive construction. Thus, we are able to scale our operations fast.

Secondly, compared to other furnished apartments operators, our in-house developed technology automates all aspects of the business -- a proprietary online booking and payment platform, a mobile application that covers all interactions with guests as well as a multi-aspect operations system that has changed internal efficiency.

As a result, Blueground holds a cost advantage (25-50% lower price) and a convenience differentiation (larger spaces, privacy, residential feeling) compared to hotels and other serviced apartments of comparable quality. Thousands of business travelers have stayed with us to this day, because of these benefits we offer to them.

When was Blueground formed, who formed it and why did they target this market segment?

Blueground was formed in April 2013, in Athens, Greece. The idea was born out of my personal experience as a consultant, as I had to stay in hotels for very long periods of time.

While a nice hotel for a few days is great, after some time you reach a point where you get tired of the sterile hotel ambiance and the related process. I thought that there must be a better solution for long-term stays. I did some research and discovered that the business travellers and expats accommodation market globally is huge, estimated at $134 billion.

Also I realised that there was no company tackling the corporate housing issue with furnished apartments in a large scale and professional approach.

So, together with a group of friends, we launched Blueground to offer a differentiated and cost advantageous accommodation solution to the hard-working business travellers.

You’ve just raised some more capital - who made the investment and what will that money be used for?

Indeed, we just raised $5.8 million more in a Series A funding round led by the European fund VentureFriends and the American fund Endeavor Catalyst. Since our founding in 2013, we have raised a total of $7.4 million. The new funding will allow us to further grow our presence in the markets we already operate in, expand into new markets and also to develop further our technology.

Do you own real estate assets, or are you renting them from the owners? If the latter, what’s the structure of the agreements that you have with owners and what’s the benefit of working with Blueground?

We don’t own any real estate assets, but instead we rent existing residential properties in the most sought after residential areas of Dubai like Marina, JBR, Downtown, DIFC, Palm Jumeirah, Barsha Heights (TECOM) and Media City.

We renovate, furnish and equip all of the apartments, converting them into beautiful, best-in-class rentals.

To date, we have gained the trust of over 400 property owners, who prefer to rent their properties to us for the following reasons… They are dealing with a single, trustworthy, long-term, corporate tenant; we handle all property maintenance issues; their property’s value gets increased, due to our high-end furnishing; we offer flexibility as we can release a property back to the owner within short notice; and we charge no agency or property management fees.

Blueground was born out of its CEO’s own experience of staying in hotels.

Dubai is one of the target markets for expansion - what’s the progress so far and what’s your ambition for the market?

We entered Dubai eight months ago and we strongly believe in its tremendous growth potential since it is the region’s business hub. Right now we have 60 units active. Our goal is to reach 250 apartments by end of the year and a total of 500 apartments within the next three years.

What do customers like about Blueground and why do you think it will succeed long term?

We have hosted thousands of business travellers and expats in the three cities where we operate, since our founding in 2013. They prefer to stay with us because we offer a strictly premium product. We only lease apartments at the best neighbourhoods and at the best buildings.

Most of our properties are on a high floor, have great finishing and offer great views. They are decorated with modern, functional furniture and are fully equipped down to the detail of Apple TVs, Nespresso coffeemakers and Marshal speakers.

We have an obsessive focus on customer satisfaction. We offer 24/7 guest support and if there is any problem with a guest’s stay, we make sure we solve their problem and over-compensate them in a way that they become forever loyal to Blueground.

We provide our tenants with a consistent, transparent and reliable service that is important for both companies who provide housing to their employees and to senior professionals who book individually for themselves. We work with a great team of people in our Dubai office and we have deployed operations processes, based on our prior experience hosting corporate guests in Istanbul and Athens, adapted to the local market needs.

We believe that we will be successful on the long run because we are addressing a real market need, we are focused on our customer in a way that very few companies in our industry do, we are very nimble to adjust to local market conditions, we invest in technology and finally because we have a great team of people working with us.

Is there more room for innovation and entrepreneurship in the hospitality sector or is Blueground a rare case of a market disruptor?

Overall, the hospitality industry is very dynamic and with the use of modern technology, there will definitely be continuous innovation in all areas, including where people stay, how they make bookings, the check-in processes, the in-room experience and everything else.

Obviously, the biggest disruptor in the vacation market has been AirBnB, but there are a number of other startups challenging the status quo as well. We believe that Blueground is disrupting the corporate hospitality market for longer-term stays. Corporate guests need a long-term accommodation solution which is reliable, flexible and with very high service levels. These requirements cannot be satisfied with a simple marketplace model and this is where we come in.

What’s the long term plan for Blueground - IPO, private sale, acquisition?

At the moment, we are focused on building a great business that serves a real need for business executives, with a long-term view. Our plan is to grow Blueground to hundreds of cities around the world.

Having said that, we are a VC-funded organisation and our investors will be looking for an exit after a certain period of time. This time is still far away, so it is not possible to know what it will look like then.

Mohammed Ansari 2 years ago

This is indeed a very smart business