We don't think so..
Popular blogs like treehugger.com, inhabitat.com and curbed.com covered this phenomenon, as dozens of other minor blogs did.
ÖÖD Airbnb module - Photo: Anton Toomere for ÖÖD
An appealing Idea.
Not so fast, Billy.
Estonia is famous for the export of prefab houses and there is even an Association of Producers to guarantee good quality and fair competition.
In Estonia, there are large companies specializing in the production of modules (Kodumaja and Harmet) and other companies producing a mix of element houses and modular buildings (Matek, Timbeco, Qhaus, Ritsu, ...).
The list of reputable producers is long and can be found on the website of the Estonian Woodhouse Association.
A commoditized Industry.
It might sound surprising but this is the hard truth: the Industry of Prefab Timber Houses is commoditized.
Where is the benefit?
Tiny houses have been around for a while, as well as the trend of converting shipping containers into small garden homes.
How comes that making more of these can create disruption?
Really, who does benefit from it?
Little or no innovation in this type of product.
Today in Sweden (Estonia, Norway, ... ) one can build "garden rooms" with no permission, provided the construction does not exceed 25 m2 and it is properly located with respect of neighboring properties.
A few examples can even be found on our website: the small LEILI by Gloghome and the larger SHIP by Kauss.
LEILI by Gloghome.
SHIP by Kauss.
Keep it simple.
ÖÖD is selling more than a module, they are selling a dream... conveniently packaged in an outstanding marketing message.
You can't fool Customers.
Any wise buyer knows how to use Google to find the best deal. Someone who is looking to jump into the "quick Airbnb" business is not going to throw money away and most likely will investigate thoroughly which are the alternatives to the so popular ÖÖD modules.
It will not take long before these people will land on the webpage of other manufacturers and, at that point, the laws of consumerism applies... and we know for a fact that this kind of game is played on the price.
David and Goliath
Many might have thought that ÖÖD was destined to be the new David. We think that it takes more than one startup to disrupt a commoditized Industry.
This time David might not kill the Goliath and the Manufacturers could end up having more work thanks to the exposure generated by ÖÖD.
Let's do some math
We got really curious and we started to investigate how much would it cost to bring home one of these modules.
NOTE: all the prices mentioned in this article are without VAT and without transport.
The price for ÖÖD Airbnb hotel module is not published on their website... so we had a meeting with the ÖÖD guys and we asked more info about their product. Kaspar Kägu, Head of Sales at ÖÖD, told us the price is around 45 000 EUR for the module fully finished, excluding the bed.
Let's assume one can rent all weekends and one day for each week. There are 52 weeks in one year.
Let's suppose also that for 8 weeks in summer the module can be rented for the entire week.
That makes 3days x 52weeks + 4days x 8weeks = 156days + 32days = 188 days/year of occupancy.
When renting the place at 100 EUR/night one would have a turnover of 18 800 EUR/year.
Considering the extra expenses to transport the module, to set it up and to run the business, the investment would be repaid in no less than 3 years and a half.
Now, while this is not too long time for break-even, there are many assumptions made.
What can go wrong?
Everything can go wrong:
- 1) no one can guarantee an occupancy of over 50% (188/365);
- 2) no one can guarantee that the place can be rented for 100 EUR/night... that depends very much on the location.
For average locations (or any location where there are a lot of Airbnb places avalable) a renting fee of 50 EUR/night seems more reasonable.
The result is that the real break-even time could be well over seven years!
So what can be done to make the "Airbnb hotel module business" less risky?
Easy, find a cheaper module.
Over the years we have seen modules of all kinds.
45 000 EUR looks very expensive to us, so we started to investigate in order to check where the market price stands for this kind of small garden building.
It didn't take long to find another object which offers the very same value proposition: same size, same premium finishing and customization available.
The only difference is the glass facade that is replaced by premium vertical cladding.
The module we found also offer a foldable terrace which makes it completely burglary-proof.
...much like a medieval castle!!!
NOTE: in our opinion the 3-sided glass wall will not work at all in warm climates since the direct solar radiation will transform the module into an oven... and no, there is no air conditioning that can solve the problem of direct solar radiation (you can't overpower the sun at southern latitudes).
Our best guess is that ÖÖD will have to come up with a 1-sided glass facade model for all those locations who require shading from sun or more privacy.
Here are some images, courtesy of the Producer.
The foldable terrace.
The module completely closed... on the four sides!
The terrace is motorized and it opens with a remote, like the ones used for gates.
The front facade is all glass.
The interior can be customized according to customer's wish.
The standard model comes with a small room + sauna + shower and toilet room.
View of the main room at the entrance.
View from the main room.
These photos should be enough to show the quality of this product.
We believe that this premium module can effectively replace a ÖÖD module for the purpose of Airbnb renting.
The main question at this point is: what is the price of this alternative solution?
We asked the producer to made a price offer for us, based on our custom design.
In order to get a fair comparison, we replicated the exact interior layout of the ÖÖD modules.
A little less than 30 000 EUR.
It appears that ÖÖD modules are marketed for a very high-end clientele as their price is about 30% higher than the competition.
We see a potential weak-spot in the business model proposed by ÖÖD OÜ.
Remember the brilliant value proposition of ÖÖD OÜ?
So where is the weak spot?
1) the type of Client we are looking at is business and not private;
2) the best interest of the Client would be to cut as much as possible on costs in order to maximize his/her profit.
Our point of view
We do not want buyers to be fooled by over-inflated marketing.
This is why we felt the need to speak up and bring our opinion to the table.
Let's work together to create a bright future for the Industry of Prefab Timber Houses.