Tom Kennedy, the entrepreneur who, together with Ray Nolan, made a fortune selling the Hostelworld business to private equity for over €200m in 2010, is back with a venture that may change forever how and where we spend the night.
Kennedy’s Dublin headquartered Homestay.com has raised over €3m in funding from venture capital Group Delta and UK firm Britannia Student Services to build up and develop its disruptive new business, which promises to scare the pants off some of the larger hotel and hospitality operators.
The low-key company founder has brought in some serious players to help deliver his vision. Homestays chairman is internet entrepreneur and former Baltimore Technologies ace Paddy Holohan, who sold Newbay to BlackBerry maker RIM for $100m in 2011. The company has also just hired Alan Clarke as chief executive. Clarke was head of gaming at Paddy Power. Debbie Flynn, whose background is in the language school sector, is also a key player.
Kennedy’s track record is pretty good too. He was involved in the Avalon hostel in Dublin before hooking up with serial technology entrepreneur Ray Nolan in a move to try to make hostel bed booking more efficient. They set up Web Reservations International (WRI), better known by its brand name hostelworld.com, in 1999.
The initial funding of the business involved an original pitch. They approached five hostel owners and in return for the promise of €20,000 in free online advertising they each coughed up €10,000. Other investors came in later, including U2 manager Paul McGuinness and his business associate Trevor Bowen, ex-Baltimore Technologies executive Michael Butler and insolvency practitioner Michael Buckley.
It was a simple concept but one that worked spectacularly well, growing rapidly to become the 600lb gorilla in the bed-booking space. The idea paid off in spades with a €200m plus cheque for Nolan, Kennedy and other investors.
Kennedy’s masterplan is to put a similar booking and organisational structure on the massively fragmented home-stays market. This is where people come and stay in other people’s houses for a fee. It is one of the fastest growing sectors in the entire tourism and accommodation space.
The lessons learned from the huge Hostelworld.com success will now be applied to put manners on this unruly market.