Interview with Joao Fernandes, Co-Founder at ‘Foreign Friend Guesthouse’

Lisbon became a very special city for us. As we participated in the HackTravel event in Lisbon, we had a chance to meet many wonderful and professional people. One of them is Joao Fernandes, managing director at Foreign Friend, is a Guest House located in Lisbon in a charming old building recovered, full of light and sun, in one of the noblest and quiet districts of Lisbon, Lapa. In this article, we want to share with you a story of Joao and discuss some of the travel industry topics.

1. Which travel portals do you use when you travel and why?

It depends on the travel purpose. Usually, I use Booking.com because I tend to book hotels more for business travels. Also, Booking.com has most of the hotels listed there. I check AirBnB for groups/friends/family leisure trips because it is easier to find an option that will suit everyone’s needs and budget.

2. How many sales channels do you use for your business? Which of them do you like most and why?

I’m currently using Booking, Expedia, Airbnb, and our own website booking mechanism. They have proven their reliability, and most of all, it’s a safety net for our guests — and for us — that we both trust to be a dependable intermediate and secure platform.

I like Booking.com the most because it’s where my property performs best in terms of revenue. Their user-interface is very user-friendly, the analytical tool is also a very good resource for the business, and the customer/partner support service is effective as well.

Lately, we work on the Expedia because we just started that our performance there still has a lot more to improve. Also, because their fee is higher — therefore our rates are higher there — than the one on Booking.

3. Do you find fees of booking.com and other similar portals too high or do you think its reasonable fee?

I think that everything above 10–15% is too high. We must not forget that there is a lot of competition and the whole industry operates in a low-margin/big-scale model, so obviously these fees have to be necessarily low at all times, regardless of the size of the business.

I think that we all have to think that, at the end of the day, we want to have properties performing at the higher occupancy rate possible and secure the best and fairest price for the room according to the market so that the guest can match its experience to its best expectations, recommend and come back again.

4. How often do you change the prices of accommodation?

I tend to keep an eye on market pricing on a regular basis but I would say that I only adjust pricing if the performance of bookings is not up to the expectations for that particular season. I would say these adjustments take place every month or every 2–3 months in advance.

5. Do you feel other hotels and managers as competition or partners?

Both. Inevitably, they are our competitors but if I have a guest at my door and I can’t accommodate him, I’m happy to send him to another property where I know he will be taken good care of. I expect others to do the same with me. I think it’s a more positive attitude than just saying ‘sorry I don’t have a room’ to guests.

6. Do you sell any additional services to your guests? (Like tour guides, trips, water sports) If no, would you do that in automatic emails and/or our wifi landing page?

We do also offer airport transfers and private guided tour services to our guests upon request. It’s not our core business but we’re licensed to for that, we have the means to provide these services and I’m glad to do so whenever I can. This is also because my previous professional background is related to guiding small private tour groups all over Portugal.

Right now we are also making efforts to grow this part of the business but we’re finding it harder than what we expected, I think mostly because the available platforms to connect clients with operators still have a long way to go in this field and they tend to only on-board bigger scaled operators. It’s hard to grow a small scale business in this area. Any improvement that could come from Siesta would be wonderful, of course.

7. Is there a really well-known country travel or accommodation portal only for Portugal/Lisbon? Are you selling there?

No, there are none. We only sell through the above mentioned OTA’s.

8. What is your opinion on Airbnb’s problematic in big cities?

I wouldn’t say problematic because, for example, in the case of Lisbon, where we had a chronic problem for decades of abandoned buildings all over the city. This was caused by years of government-frozen rents that didn’t allow landlords to rent out their properties in the market at a value that allowed them to perform necessary interventions and/or renovations so inevitably they would get to a point where they were inhabitable.

Platforms like Airbnb allowed many people to generate income at a rate impossible to match in the traditional long term rental market. Rehabilitation started to become easier AND desirable so that all these abandoned properties could perform at the same level. This attracted foreign investors and the so-called ‘gold-rush’ had begun. Of course, this caused a major problem in the traditional long-term rental market because there were close to zero properties available for younger people looking for a house to rent.

Prices skyrocketed everywhere near the centre in the metropolitan area and this is what caused all the debate following the market cap regulation that was implemented this year to stop the spreading of more properties ending up there rather than in the traditional long term rental market.

I genuinely think that it was more like a ‘perfect storm’ scenario that set all these issues in motion. We can’t blame Airbnb or any of these platforms for chronicle government mismanagement and lack of fiscal and income competitiveness on traditional long term rental laws.

9. What do you like Lisbon the most?

First of all, nice and friendly people. Also, good, healthy, and affordable food along with the awesome weather all year round. It’s a perfect trio that even the most incompetent governments can’t harm.

On top of that, we were awarded as the 3rd safest country in the world (only topped by New Zealand and Iceland). However, the water might be cold (~16–20º) if we compared with other countries but you can surf decent waves almost all year round within just 15–30 mins drive from most our bigger cities (Lisboa, Porto, Aveiro, and Faro, for example) and enjoy wonderful beaches.. There ain’t many other European capitals that can brag about something like this. We are really very fortunate for this.