JOHANNESBURG - Further disruption in South Africa's accommodation and property letting sector is on the cards as AirAdvance, a fintech start-up, provides those offering private accommodation through Airbnb easy access to affordable finance. It uses a confirmed Airbnb booking as collateral for a cash advance.
The founder of AirAdvance, Jozette Chetwynd-Palmer, said: “Using Airbnb to generate revenue is growing rapidly in South Africa as it joins the rest of the world in the sharing economy. In fact, last year, Airbnb stats show that South Africans hosted over 830000 guests in their homes.”
Findings released during Airbnb's Africa Travel Summit found that South African Airbnb hosts have earned more than R4billion since the platform was founded in 2008. “I put my apartment on Airbnb but found myself cash-strapped when guests made a request for black-out curtains. This sparked my idea for AirAdvance as I realised that being an Airbnb host is more than opening your home, it is also running a small business, and like most small business owners, hosts may occasionally need access to capital,” Chetwyn-Palmer said.
“The major banks in South Africa didn't recognise Airbnb bookings as income, and I realised that this growing market wasn't being served at all. AirAdvance provides financing to hosts based on their Airbnb history and future bookings.”
A host's Airbnb rating and reviews are also taken into consideration when offering them an advance on future bookings. This allows AirAdvance to incorporate a trust metric into their scorecard which helps create a more accurate risk assessment. “Only hosts with reviews are considered,” said Chetwynd-Palmer. “The maximum amount that can be borrowed against a confirmed booking is R50000 per host. The cost of taking an advance on bookings is calculated based on the host’s Airbnb history, future bookings and overall trust score.”
Jozette explained how AirAdvance worked. “Hosts simply link their Airbnb properties by making AirAdvance a co-host and they are then offered an advance value based on their future bookings. Once terms and conditions are signed, hosts can expect the funds in their accounts within 48 hours. AirAdvance only direct debits hosts for the amount owed after they have been paid by Airbnb. By linking the repayments of the advance to future bookings, hosts have peace of mind that they will always have sufficient cash available for repayments.
The business of hosting a property has taken off in major cities worldwide and South Africa is no exception. It is a small business opportunity for many and also an excellent way to get to know people from all over the world. Staff Reporter