The growing popularity of web-based companies that let homeowners earn extra cash by turning their spare rooms or vacation homes into ersatz hotels is expanding to the garage. ParkatmyHouse, a British-based company that lets people rent out their driveways or parking spaces to people seeking scarce urban parking, launched in the United States this week.
Not every homeowner is wild about the idea of letting a stranger pay to crash in their spare bedroom or park in their driveway, but investors are very interested in companies catering to this niche, in spite of nagging security problems.
"We estimate the global vacation home rental market at more than $120 billion," William Blair & Co. analyst Ralph Schackart wrote in a report last month initiating coverage of HomeAway, which competes with similar companies including Airbnb and VRBO.
The companies have plenty of room for growth and offer a business model that is scalable and tends to attract repeat customers, analysts say. ParkatmyHouse, along with the home-sharing sites and car-sharing services like ZipCar, taps into a growing trend toward shared consumption, Schackart said.
Unlike ZipCar, ParkatmyHouse is a "peer to peer" service that lets homeowners or businesses who have space in a parking lot, garage or driveway advertise it for rent by the hour, day, week or long-term. People looking for a place to park can search by zip code, neighborhood or landmark. ParkatmyHouse charges owners a 15 percent fee of the agreed-upon rental price.
In a tepid economy, more people seem willing to consider either using a stranger's property or renting out their own, and analysts see growth potential for the parking business.
"I think it has lots of appeal," said Sam Hamadeh, founder and CEO of research company PrivCo.
"There's no question there is a market for the little guy," he said. "These rental sites do have an advantage in that they're covering a niche."
There's clearly buzz around the idea. ParkatmyHouse has earned spot owners roughly $5 million since its 2006 launch, mostly in the past year and a half, according to company founder Anthony Eskinazi.
Last year, the company received an undisclosed amount of funding from BMW i Ventures, a startup-funding venture of carmaker BMW. Eskinazi said the investment is part of a partnership that will include other innovations like a mobile app to help drivers find nearby parking spaces.
Tom Boyce, director of marketing at another parking-spot-rental business, ParkingSpotter, said the number of users and traffic to the site took off last year, although the site has been connecting drivers and spot owners since 2008. "Within the past 12 months we've seen about a 50 percent growth from where we were," he said.
Along with managing ParkatmyHouse's surge in growth, Eskinazi's challenge will be copying the successful parts of the home-rental business model while avoiding the pitfalls that have shadowed companies like Airbnb.
"There is a market for it, but it will face some of the same issues" as it grows, Hamadeh said. The biggest problem with rental sites in general is their potential use by criminals and scam artists, analysts say.
"As the market has grown, there's more and more fraud," Hamadeh said.
Airbnb was the target of bad press last year after a host's home was vandalized and burglarized. After what the blogosphere derided as an inadequate acceptance of responsibility, Airbnb rolled out a $50,000 liability guarantee for homeowners plus a host of verification and security features.
"I appreciate the U.K. is less litigious, so it hasn't been as much of a focus for us," Eskinazi said. He said that with the American launch of ParkatmyHouse, the company is working on a liability insurance policy that would protect property owners if a renter's vehicle is damaged or if the renter is hurt while on their property. Although Eskinazi said "self-policing" keeps scam artists away, some site users have posted reviews complaining about parking spots that were nonexistent or inaccessible.
"It is peer-to-peer so there are some inherent risks," he said, although he added that the company planned to follow in Airbnb's footsteps and implement verification of people posting spaces for rent.
Hamadeh said customers might be put off by a "buyer beware" business model. Companies like ParkatmyHouse need to take a page from eBay's playbook and implement security and verification practices if they want to thrive, he said. "EBay made sure they had a guarantee. That's the reason they've survived 15 years after founding."