Airbnb, the online marketplace, and hospitality service, it enables the people to rent or list their short-term rentals including the vacation rentals, homestays, apartment rentals, hotel rooms, or hostel beds. The important to note is the company doesn’t own any lodging. It is basically a broker service and it receives the percentage service fees as commissions from both the guests and the hosts in synchrony with every booking. Airbnb has over 3,000,000 lodging listing in 65,000 cities and 191 countries. The host sets the cost of the lodging. Like the other hospitality services, Airbnb is a form of collaborative consumption and sharing.
Previously, Airbnb has acquired many rental companies. Now, as expected, it has acquired Luxury Retreats International, a Montreal-based company. This is an effort to expand its business and to expand its high-end vacation rentals and its travel services.
Airbnb acquires Luxury Retreats
The CEO of the Luxury retreats, Joe Poulin said that they will join Airbnb and they have reported to Airbnb CEO and co-founder, Mr. Brian Chesky and they have come to a conclusion that Luxury retreats team will remain in Montreal.
The company has said that Luxury retreats offer the high-quality listings and they will provide the world class service and they have a wide range of amenities and this acquisition will complement the Airbnb’s work in order to provide a wide variety of homes and a better experience to the travelers, especially the travelers who are visiting the traditional vacation destinations.
Luxury Retreats provides the best service and it has access to its support team for the guests and the company has the dedicated villa specialists, who assistin creating every unique design. The company has a strong network of more than 4,000 homes worldwide. The company tries all the best ways to impress its customers.
Chesky says that he and his team have spent countless hours in working for the best designs. The level of interest in the service and best their best efforts will make their business a successful one.
Airbnb Lux- the beginning
For the past few months, rumors have churned out that Airbnb will introduce new Airbnb Lux product category on its platform, after the acquisition of the luxury rentals, this could definitely become a reality.
The company has followed numerous marketing strategies with the high-profile celebrities over the past one year that suggests that the company is interested and it is willing to move toward the luxury space. Recently, Airbnb has paid for Lady Gaga’s multimillion dollar home, where she stayed in while performing at the super bowl in Houston.
Stepping into the luxury category look like a natural extension for the Airbnb. Now, it has achieved a tremendous amount of scale and it has about three million listings across the globe. From now, the company may focus on its improvement and would continue to expand its reach and it is going to provide the best hospitality service to all its customers across the globe. And it may diversify its business.
This diversification has officially begun in November when the company introduced Airbnb Trips, the company’s raid into tours and activities. During the launch, Chesky said that many possibilities have added up on the Airbnb platform, but they are not just limiting to the flights, grocery delivery, restaurant reservations, transport reservations and much more.
Luxury vacation rentals
Airbnb is not only the place for entering the luxury vacation rental market. AccorHotels has already owned the OneFineStay and its intention is to acquire Atlanta-based Travel Keys, it operates in a similar model to Luxury Retreats.
The sudden interest in the luxury vacation rental market among the larger companies like Airbnb, AccorHotels is because of the following reasons. The major reasons arehigher margins and fewer regulatory issues.
In the case of Airbnb, the reasons for having these types of acquisition are “several-fold” said the CEO of Paris Perfect, Mr. Byrne, Paris perfect is another company that focuses its business on high-end apartment rental space, it is similar to OneFineStay, it brings a new customer who is more higher-end. And the important thing is that it brings consistency in terms of properties and also in on-the-ground management.
Byrne believes that this acquisition of Luxury Retreats by Airbnb is more about acquiring talent and experience instead of technology this is the important thing that is needed in the business environment. Airbnb is the best booking platform; it doesn’t require any help with that. They have a good contact with clients and it maintains a good relationship with them. But the aspect what Airbnb is missing is that consistency. For example, Paris Perfect maintains 100 properties in Paris that all are of similar quality, if something God Forbid happens, then Paris perfect will have dozen other properties that Paris Perfect can offer them then and there. By acquiring Luxury Retreats, Airbnb hopes to automate everything and it will build an inventory that you can know and trust means a lot in the business.
With the Luxury Retreats, the CEO of Vacasa, Eric Breon says that he sees many synergies with Airbnb also. Luxury retreats are in the department of vacation rental management. Basically, they don’t have on-the-ground staffs that are working from homes; they generally work with high-value homes that have their own staffs with dedication.
This model is above the booking service and the marketing aspect. With this, local staffs are employed directly by the owner of the property. It is generally a high-margin business; this is the criterion, which Airbnb basically has. The commission range will be about 20 percent and there are lots of potential margins here. It is just a small segment, but lot of margins is there.
Breon said that focusing more on the traditional vacation rental was unavoidable for the company like Airbnb. And this is very exciting that how Airbnb created a new segment of inventory. It’s not that some people want to necessarily stay in someone else’s home; it’s not always preferred by business trips or vacations for some people. Traditional vacation rentals will be even more popular and it is a way to move forward.
The CEO of OneFineStay, Evan Frank said that their company is planning to enter the traditional luxury vacation and there is a plenty of space for the companies like OneFineStay, AccorHotels, and Airbnb.
The interesting thing in this is a distribution channel for homes that have not really been built still. HomeAway has said all of a sudden that it is a $1 billion market. So when these type of distribution companies get acquired, it’s about the fact that how to sell this new accommodation product, which has a market over the past ten years.
In the case of the traditional vacation models, they are less restrictive in the aspect of the regulatory concerns.
Airbnb is fighting the regulatory battles across cities like New York, Paris, Barcelona, and Miami. And there are many challenges that the company faces day by day. And all these challenges will help the company to grow and have a better business. And the move towards the traditional vacation rental market is a way to chip away the market share of the competitor companies like VRBO, HomeAway and it looks like a perfect move.