#edGY: Malaysia’s answer to student lodging woes

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THE journey to higher education is one that’s riddled with problems that have nothing to do with education. Chief among them is finding suitable accommodation.

For most students, attending university means moving away from home, a brilliant prospect in the mind of a teenager, except for the trouble of looking for a place.

It isn’t just about finding a roof over one’s head and a door that can be locked. A student also needs air conditioning (or proper ventilation and a good fan), space for a study desk, a washing machine and facilities for cooking.

Trying to tick those boxes while not being ripped off in the process can be a frustrating prospect, especially with the first semester looming ahead.

Since 2010, Malaysia has seen about one million students entering colleges and universities annually, with 70% of them attending institutions out of state and 10% from abroad.

If Malaysia was a place where college and university-operated student housing were widespread, this would be fine.

However, this is often not the case, with many institutions’ dedicated housing only accommodating less than 10% of their students. Everyone else has to look for private accommodation in off-campus homes or student hostels.

Some out-of-towners make day trips, driving — sometimes even flying — and spending a couple of days circling nearby residential areas, scouring listings online, speaking to student agents and viewing rooms. They settle on whatever they like best and pay their deposit.

But those who are able to view the accommodation before renting are among the lucky ones; most of them just book blindly and hope for the best.

International students are not as fortunate. They engage agents to make arrangements on their behalf, only seeing their new pad when they check in. As you can imagine, horror stories are not uncommon.

Local start-up Hostelhunting.com is looking to shake up the student housing scene with its online booking marketplace.

Start-ups with solutions that tackle truly difficult infrastructural problems such as MyTeksi for public transport and iBilik for general rental have come out on top in their respective industries. It’s in the same spirit that Hostel Hunting is looking to make a real change in the way property owners and students are matched in a fragmented and opaque industry.

According to founder and director Loke Weng Leong, Hostel Hunting wants to do for student accommodation what Airbnb does for short-term rentals: to bring players onto one platform and streamline the hunting process while eliminating some of the key problems that both students and hostel operators face.

For students, it’s the risk of being conned by dishonest agents or getting a room that doesn’t match its rental. For hostel operators, it’s the hassle of arranging one room viewing after another, especially if they’re medium to large operations with more than 100 rooms.

Hostel Hunting, which was launched this week, enables students to browse listings of available rooms for rent near local colleges and universities. It is starting off with popular areas such as Subang Jaya and Bandar Sunway — home to institutions like Taylor’s College, Monash University and Sunway University.

Together with Loke, the venture is co-founded by Marcus Low, Joey Lim and Wen Khai, who are hostel operators with condominium units in Bandar Sunway. Faced with recurring problems as hostel operators, they wanted to set up a form of listing for their service. They were introduced to Loke, who runs a media agency, and together they developed the idea of Hostel Hunting.

With Hostel Hunting, students can search for rooms based on type, location or institution. Each listing contains a brief description, photographs, amenities and rules.

“Everything is above board — we also tell you what the security and rental deposits are,” says Loke. The website also enables students to communicate directly with landlords via a private messaging system.

“We require students to fill up basic information about themselves and upload their images. When a student makes a booking,  the landlord reviews the student’s profile first. If the landlord is comfortable with the student, he can then choose to accept the booking, and the student will have to pay deposit.”

This way, there is little room for surprises for both the landlord and student.

Hostel Hunting also provides a time window when both landlord and student can terminate the agreement.

“There is a period for landlords and students to say, ‘Hey, this is not what I signed up for.’ So, if the student is not altogether honest, the landlord can say, ‘I reject this booking’ and he can keep the deposit. Then, he can rate the student on the website,” Loke adds.

If a deal doesn’t work out, Hostel Hunting refunds the initial deposit paid. Students can also review landlords as a way of injecting some balance into the room rental system. Bookings can be paid for via bank transfer, PayPal and, from January onwards, credit cards.

“We’re putting control back into the market,” Loke says. At present, the burgeoning student rental market is a subsector that is full of ambiguity.

“A lot of the landlords still use agents and they still use handshake deals,” Loke observes.

A scan through Hostel Hunting reveals many slick-looking hostels with facilities and services comparable to boutique inns, with stylish interior design and furnishings.

Rentals range from RM200 to RM1,200 a month depending on the area, type of accomodation, number of rooms and proximity to education institutions.

“As best as we can, we approach the right hostellers. Some of the rooms are really nice. I wished I had stayed there when I was a student,” says Loke.

Before launching this month, the four founders were in talks for a whole year, starting the website in March, and development of the site accelerated from August to November.

To use the website, students have to register for an account and post a photo, basic details such as age and nationality, a brief description as well as an emergency contact, while owners have to set up profiles from which they can list their units.

Expanding the platform

Hostel Hunting is focusing on adding professional hostel operators onto its platform, and is personally assisting owners in uploading their listings. It aims to have 500 to 600 listings from the Sunway, SS15 and Subang Jaya locations for its launch this week, which is scheduled to coincide with most college and university intakes.

“Like any platform, having only 10 listings isn’t going to cut it, and we don’t want to be too spread out. For the first four months, we will focus on listing the existing hostel operators in those areas,” says Loke.

The founders have ambitious expansion plans for the platform. They are investing RM800,000 in the business’s first phase.

By the end of 2015, they want to reach most student areas and, depending on growth, are hoping to expand operations beyond Malaysia in two years. They also hope to break even by next year.

However, by January, they hope to encourage anyone with a property who wants to take part in the industry to list their properties themselves. They will also be expanding into other student areas such as Setapak, Kampar, Penang and EduCity in Iskandar Malaysia.

Hostel Hunting is determined to overcome two major challenges that many start-ups face — monetisation and the dilemma of prioritising buyers and sellers.

A commission-based business model ensures that it will make money from the outset. For facilitating the booking and collecting the first month’s rent on behalf of the landlords, Hostel Hunting will take a 50% cut from the initial one-month rent.

“Landlords don’t have to pay to list, but they will pay us for successful bookings. If there are any issues with the student, or if the landlord has any issues, then there will be a refund,” explains Loke.

With three of the shareholders and directors being in the seller’s market, they also have access to some inventory in their first few locations. Even before its launch, Hostel Hunting already has the widest listings for the Subang and Sunway areas.

The founders see great potential in the platform.

“Currently, in Sunway and Subang, there are at least 20,000 rooms for rent. Imagine all the houses, condos and shophouses. Everyone is converting them into student accommodation,” says Lim. “Currently, we’re only hitting 500 to 600 listings.”

But they acknowledged that moving this model onto an online platform will be difficult, as many operators are still running on conventional methods such as placing banners outside units, waiting for calls and repeated viewings.

“I think the main obstacle we will face in the coming year will be educating the market. Although the current model is fragmented, it is what people are used to,” says Khai.

Translating pages for foreign students is also in the pipeline, although the team admits that it will have to wait for more feedback from the market to see which region and language to cater for. In the meantime, Loke says they will ensure their site works with Google Translate.

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This article first appeared in #edGY, The Edge Malaysia Weekly, on December 15 - 21, 2014.