A leading homestay and hosted accommodation provider working across Australasia is looking to solve a shortage in housing for international students as it seeks backing from investment banks in the region.
MyStay International, which is the owner of the Australian Homestay Network, appointed investment banking veteran Ed Slade who heads up education-focused Schoolhouse Solutions earlier this year to rally interest in the homestay sector.
In 2023, MyStay International provided rooms for some 11,750 students, making it the country’s largest homestay provider. Additionally, gross revenues in 2023 were A$40 million and grew 130.5% vs 2022, the company’s finances show.
“There is a global shortage of student accommodation, and homestay represents the quickest, most asset-light solution for the sector,” said David Bycroft, founder.
MyStay, which has previously worked in the US, also hopes to expand its market share across North America.
“We are often called the ‘Airbnb of student accommodation’ and we have thousands of students knocking on our door to find rooms, as well as families that want to rent out their spare room.”
The advising firm, with expertise covering K-12, edtech, recruitment, education property among others, has previously said that investor interest in education infrastructure remains strong, despite rising interest rates.
In its review of 2023, Schoolhouse Solutions noted that in 2024, student accommodation will remain in “very short supply” despite an expected resumption in development of new builds and slowing student flows to the country.
It also warned that universities registering operating deficits could limit funding for new campus infrastructure.
The paper also indicated that students from South Asia, “who are the key target of visa crackdowns in the UK and Australia, tend to rent houses rather than e.g. homestay or PBSA”.
“Australia is a large market opportunity for us, as there are over 900,000 students in Australia but only 80,000 beds in purpose-built student accommodation,” Bycroft added.
“As an asset-light business with a scalable platform, we can grow bigger and faster than any PBSA company.”
PBSA is “not a viable solution” for current student demands, he added, highlighting the cost of land and building means “investors will be seeking much higher rentals than students have ever paid in the past for any new PBSA”.
“Current demand has already lifted the cost of PBSA significantly. This puts it out of the reach of most students,” he told The PIE. “Homestay/hosted accommodation has been overlooked.”
With NEAS introducing standards for homestay providers in 2023 – which stakeholders hope will boost consumer confidence – homestay is expected to “become a robust, value alternative to PBSA as accommodation remains tight, standards are raised and student rental costs remain low”, the Schoolhouse Solutions report added.
MyStay was the first recognised, government-sanctioned provider of homestay under the new NEAS homestay standards.
Some 13 of the company’s top 15 trading months since 2008 have occurred in either 2023 or up to April this year, Bycroft said, sharing details of trading results.
While MyStay International had been searching for an investment partner over the past six months to rapidly grow its business in Australian and New Zealand, unexpected rapid growth has slowed discussions, he detailed.
“We have had unprecedented interest from investors due to the accommodation crisis,” Bycroft told The PIE.
“We plan to reopen these within the next 12 months when the data will show exceptional results for potential investors.”
“We have had unprecedented interest from investors due to the accommodation crisis”
The company is focusing promoting ‘hosted accommodation’ as the “only viable short to medium term solution for international student accommodation”, he continued.
“It is important we promote the term ‘hosted accommodation’ in conjunction with homestay as much of the over 18-year market is under the misapprehension that homestay is for under 18’s only. 66% of the international students that we manage accommodation for are over 18.”
Both industry and government need to collaborate to regulate hosted accommodation providers and ensure incentives, such as tax credits, are available for those hosting international students through endorsed providers.
“International student accommodation is a problem that can easily and quickly be solved if the industry and government work together to promote properly managed, standards based hosted accommodation as the solution.
“Compliance is becoming a bigger part of our sector, and standards require thorough background checks, insurance coverage and student wellbeing. Our software capability manages and tracks compliance efficiently while allowing rapid growth,” Bycroft concluded.
