Feriepartner - 7000 rentals in Denmark & Sweden
Feriepartner is a chain of 27 independent holiday home rental agencies with 7,000 seaside holiday homes in all of Denmark. As an independent chain, the business is run on democratic principles with a significant level of entrepreneurship. 83% of their bookings are direct and mostly from Germany. Feriepartner is now growing in Sweden and is eyeing-up Norway and Northern Germany.
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Flemming Toft Andersen, CEO
The average rent for a holiday home is 15 to 16 weeks. So it's a difficult market and I don’t think it will be possible to raise the average more than a week or two.
Interview of Flemming Toft Andersen, CEO of Feriepartner.dk
Vanessa: Please tell us briefly what you were doing before your position at Feriepartner and your current position.
Flemming: I've been in the short term rental business for almost 30 years beginning when the Berlin Wall came down and the German demand for rental homes in Denmark grew. I drove around Denmark making rental contract with house owners.
Today, as the CEO of Feriepartner, I'm focusing on removing the blocks so we can continue our growth. We grow primarily organically in a market of a total of 40,000 holiday homes and we rent approximately 7,000.
Vanessa: So you have 7,000 homes under your wing and they are only in Denmark or you are also expanding internationally?
Flemming: The 7,000 are in Denmark. We just started up in Sweden but it's very new, only 150, so the absolute focus was Denmark.
A CHAIN OF 27 INDEPENDENT HOLIDAY HOME AGENCIES
Vanessa: Tell us about the brand.
Flemming: Feriepartner is a chain of 27 independent holiday home rental agencies with these 7,000 seaside holiday homes in all of Denmark. As an independent chain, our business is run on democratic principles with a significant level of entrepreneurship. This year we celebrate our 30th anniversary together. Our local partners own their business themselves and have strong roots in the local community and they are passionate in their work with both holiday home owners and travellers.
Vanessa: Is it a franchise model or how does it work?
Flemming: Actually they do own their businesses but the chain owned let's say the back and the front end, the marketing and all legal aspects. You could say it's a kind of franchise.
Vanessa: You give them technology as well or how does it work?
Flemming: Yes. We deliver all the processes actually, the local agencies are focusing on delivering outstanding service for the house owners and the house guest. That’s what it’s all about.
GIVING LOCAL MANAGERS CONTROL - A PERFECT MARRIAGE
Vanessa: Do you make your percentage on booking or how does it work? There is a yearly membership?
Flemming: We have a very close relationship between the chain and the local agencies working together for at least 30 months ahead and we work on exclusivity. So the local agencies make the contract with the house owners (leases are capped to one year in Denmark.)
The combination that the local agency own the contract with the house owner and we, as a chain, deliver all kind of IT, bookings, processes and so forth. It works very well due to the fact that they own the business, they will succeed and we will of course succeed too. So that's a nice perfect marriage I will say.
There are very few local bureaus left which are not in our chain in Denmark. Some are sold to people coming from outside, mainly US and India.
OPENING INTERNATIONALLY AND THE GERMAN MARKET
Vanessa: So do you operate the same way in Sweden?
Flemming: Yes we do. We just started but the Swedish market is much smaller than the Danish market. In Denmark there are 200,000 holiday homes, 40,000 are commercially rented but in Sweden only 6,000 or 7,000 are rented commercially. We define the commercial market as houses which are suitable for the German market which are our biggest market, 70% of our bookings coming from Germany.
Vanessa: How does your distribution work? Are you successful?
Flemming: We have been growing organically until and we want to continue on that journey. It’s was we call in Denmark “hurry slowly” by focusing on quality homes and providing better local service to guests and house owners. This is how we will grow.
in Denmark we have a long tradition of Germans liking to go North and have their holiday in Denmark. The demand has been rising in the last couple of years due to stay-cations. People like to make holiday close to home and we are benefiting from that. At the moment demand is so big that the limit for growth is stock, basically the amount of houses or the amount of good quality houses.
Vanessa: Where are you listing your homes? Do many book direct?
Flemming: 83% of our bookings are done direct so we are not so much into OTAs. We do use a few but in a very controlled way, only making contracts with OTAs which can produce complimentary bookings. The mainstream bookings we can make ourselves. In some markets we’re not strong so in those it makes sense to use OTAs.
BUILDING A STRONG BRAND INTERNALLY & NPS
Vanessa: Is branding important in your model?
Flemming: Branding is of course important but they are private holiday homes so the most important part is actually to keep the personality of the house but still everything should function, especially cleaning.
Internally we maintain and strengthen our brand and identity through 4 to 5 annual partner meetings where new ideas are initiated and new directions set. We respect each other, learn from each other and all our partners show great responsibility for our common brand and values when conducting their local businesses.
Externallym we ensure consistency with a clear digital strategy, common sales and marketing platforms and, of course, strong quality products that meet our guests expectations. In order to improve our products and services we run a net promoter score to measure how well are we performing both with guests and local agencies.
We learn from the feedback and are giving the information back to the house owners so they can raise the bar for facilities. For instance Wi-Fi, more than 90% of our houses have Wi-Fi at the moment and it's pretty important for the guests. Not all the house owners want it but the guests want it.
80,000 CLEANINGS A YEAR - BUILDING LOGISTICS
Vanessa: So let's talk a little bit about technology. You run 7,000 properties on your website, I imagine you must have quite a big tech team of your own.
Flemming: Well not that big but they’re clever! Actually here in Copenhagen we have only 14 people. The first version of our backend back in 2010 took three or four years to build. Tomorrow we launch version 30. We have a Feriepartner academy where we train the local partners to use the backend.
In Denmark we have 200 people working on the coastline servicing guests and house owners and these people are taking courses in our backend which we call Superbook. Superbook is not only at booking tool, it's also a handling service. We have a task planner that we have developed ourselves to handle cleaning for instance. We do more than 80,000 cleanings every year and that takes some logistics.
Vanessa: Did you build your own yield manager?
Fleming: We have facility to measure the yield obviously but I would admit we are not first movers. We try to be first follower to take the smartest ideas and make it work in a semi-automatic way and afterwards in a more fancy way. So we’re not let's say at Sykes level in the UK but we tried to pick up the best ideas and make them work in Denmark.
ORGANIC GROWTH WHEN OUTSIDE INVESTORS ARE POURING IN
Vanessa: Who are your competitors? You must be number one right, in Denmark?
Flemming: If you count unit numbers and houses, we are number two. Hopefully we'll reach number one but we are a keen on focusing on delivering the best holiday and delivering a good level of return to the owners.
But it's a tough competition and our competitors are owned by US investors and another by investors from India. The business is booming and that brings obviously investors to this business.
Vanessa: Have you had investors?
Flemming: We do not need money to growth actually. We are quite profitable ourselves so we can deliver the journey ourselves. And obviously if there's a possibility to acquire a company, it will be interesting but we prefer organic grow between five to ten percent each year. That works for us and we have the time for growing and that's our way of doing it.
Vanessa: So Sweden has started and where are you going next?
Flemming: And if it works in Sweden we will probably go for further to Norway and then Northern Germany. So you will be able to say that we’re a North European Holiday Home company. That's our dream.
GROWING IN A SEASONAL LEISURE MARKET
Vanessa: Your industry predictions for 2020, what do you think is going to happen?
Flemming: For sure growth in the short term rental market and especially in the stay-cation market. This year 2019 the Danish market rose by about 6% and the prediction for 2020 will be more less the same, that means plus 5%-6% again. But as I mentioned, the limitation is the amount of stock.
It looks like that the 40,000 on the commercial market are stabilising meaning that the only way to raise the bar and rent more weeks will be for a longer period of time. In Denmark, we’re measuring in amount a weeks and the average rent for a holiday home is 15, 16 weeks. So it's a difficult market and I don’t think it will be possible to raise the average more than a week or two. That will be the maximum. We need more houses on the market.
Vanessa: Cheers Flemming thanks so much.
Flemming: Cheers bye bye.