Favela Experience

Favela Experience

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Last Update: March 18, 2013

Favela Experience provides adventure and cultural tourism activities that develop local communities and benefit the environment. The core product is overnight homestays in a network of favela (urban slum) households in Rio de Janeiro, Brazil, which provide sustainable income to hosts. For this product, target customers are 18-35 year-old adventure travelers. This segment significantly contributes to the $89B adventure travel market and the $15M Rio de Janeiro favela tourism market. Specifically, the product generates revenue through nightly bookings as well as referral fees from other favela tour operators for guests’ purchase of discounted activities. Ultimately, the concept is unique as the only homestay network in urban slums allowing meaningful cultural exchange between hosts and guests.

Type: hybrid

The Problem

Nearly two million people live in Rio de Janeiro’s favelas, poor squatter settlements that remain largely neglected by government and marginalized by society. In particular, the average monthly income in Rio’s favelas is $180, even though the minimum wage is $330. (Fundacao Getulio Vargas) This poverty is exacerbated by Rio’s position as the world’s 13th most expensive city. (Mercer Consulting) Likewise, other indicators show that favelas lag in quality education and healthcare. On average, favela residents receive 3.5 fewer years of schooling, and teenage pregnancy rates are five times higher than non-favela residents. (R7 Noticias) Nonetheless, favelas are vibrant with music, art, food, sports, and hospitable people. Moreover, in advance of the 2014 World and 2016 Olympics in Rio, new, 24/7 police are keeping favelas safe. As a result, now over half of all travelers to Rio, over 500,000 foreigners per year, plan to visit favelas. (The Rio Times) Yet, walking and vehicle tours run by outsiders fail to both immerse travelers in favela culture and contribute to these communities’ economic development.

The Solution

Favela Experience generates sustainable income for favela families by offering authentic homestays to travelers in favela residents’ homes. Host families earn 70% of bookings while travelers live daily favela life alongside locals at only $30-50 nightly for a private bedroom. In addition, we connect our guests and other travelers to discounts on favela-based tour activities, earning referrals by generating more business for local tour operators. Ultimately, guests experience a developing world reality, breaking negative stereotypes about Rio’s most fascinating communities.

Example

Since favela host families earn 70% of booking fees, they can easily double their monthly income by working with Favela Experience. Marcelo has been a host in our pilot since February 2013 and has generated $650 USD on a monthly basis, double his typical monthly rental income compared to if he had rented his apartment to locals. With this money he's investing in his home for it to better accommodate guests, so he can generate more income in the future with which he can support his family and pay for his college education. Moreover, Kirk and his wife were Marcelo's recent guests. They loved their accommodations and enjoyed experiencing the favela culture first-hand in a beautiful setting. Now Kirk and his wife are advocates for favelas and help to break stereotypes about them when talking about their trip with their friends back home.

Budget: $1,000 - $10,000

Marketplace

There are many accommodations options in Rio de Janeiro, but none offer Favela Experience's cultural immersion experience. Though few match the company’s low, $30-50 nightly rate for private rooms, many pricier options exceed Favela Experience's accommodations’ comfort and service levels. As such, the greatest competitive threats are: • Hostels as well as bed and breakfasts that charge $15-25 nightly for shared rooms (4-12 beds) and $50-100 nightly for private rooms and ensuites • Independent listings on home rental websites including Airbnb and Wimdu, which charge $25-150 nightly for lodging ranging from shared and private rooms to entire apartments and houses • Two and three-star motels and hotels that charge $75-150 nightly for private rooms While complementary to Favela Experience’s accommodations, walking and vehicle tours of favelas can compete for those customers who want to experience favelas, but may not want to stay in them. These tours cost $35-100 per traveler and last between two and eight hours.

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