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Vacation Rental Startup HouseTrip Picks Up $40M Led By Accel In Another Big Round For Collaborative Consumption

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HouseTrip.com, one of the startups working at the accommodation end of the collaborative consumption market, with a platform for people to rent out homes online, has picked up a roomy $40 million as it looks to scale up its operations en route to booking 3 million nights of accommodation this year. The C Round for the London-based company is being led by new investor Accel Partners, with existing investors Index Ventures and Balderton Capital also participating. The funding brings HouseTrip’s total raised to date up to $60 million.

Arnaud Bertrand, HouseTrip’s young CEO and founder (he’s 27 and started the company when he was 24), tells me that the main use of the money will be to scale up its operations, as HouseTrip looks to rise up above the many, many other companies that are also going after the same market: private people who want to rent out vacation homes to tourists who don’t want to stay in a hotel, either for reasons of cost, or services or simply experience.

HouseTrip currently offers 130,000 properties — everything from small studios to big houses — covering some 15,000 locations, but this is just the tip of the accommodation iceberg. In Europe alone, there are 3 million properties to rent, he says: “There is a lot of opportunity to grow.”

Expanding the number of houses on HouseTrip’s books is a key part of the strategy in a market where catalog counts for a lot — just look at the power of Craigslist, eBay or Amazon and you can see how important it is to have inventory to bring in traffic and users. Homeaway, one of HouseTrip’s closest competitors, notes on its site that it currently lists over 325,000 properties, compared to the 130,000 on HouseTrip, so there is definitely room (and a need) to grow.

There are a number of companies coming at this market from different directions. Among them, Airbnb — which is also reportedly raising $100 million at the moment — focuses primarily on rooms rather than full homes; Luxury Retreats (raising its first $5 million in September) is looking only at high-end properties. HouseTrip falls somewhere between these two — or rather, is trying to cover a bit of all of it. Most of the site is given over to home rentals rather than single rooms. Although those are there, Bertrand tells us that this isn’t the main focus, for now.

Instead, the main focus is trying to make the process of renting a place to stay as simple and professional as booking a hotel online, with less of the cost and more flexibility and character in exchange.

Although Bertrand acknowledges that “there have been home rentals, and rental sites, out there for a long time,” he says what HouseTrip offers is a route, by way of its platform and algorithms, to making the whole process much easier for all involved. He tells the story of a German home owner who he came across when he was first starting HouseTrip. The man had been renting out a second home for 20 years at that point, Bertrand says. He liked HouseTrip so much, and it was so much easier to use than what he’d been doing before — cutting out administrative work and more — that he invested most of his savings into becoming Bertrand’s backer. “He came out very well from that,” Bertrand says with a little laugh.

And this points to the second area where Bertrand hopes to take HouseTrip: not just growing in terms of properties covered, but in terms of services offered to users on the platform to make the experience even better — because, after all, getting a nice place to stay without too much hassle will be just as important for the company going forward as having a decent selection of places on offer.

Currently the site employs 18 engineers, and Bertrand says he wants to hire more — challenging as it is today to find engineers. He is evasive, however, when asked to describe what other services might be coming up. “There are things you can do when you reach a certain scale, using the data you collect,” he says. “There are things we can do to help the host in many ways.” This could include potentially tourism assistance for guests, or property management dashboards for home owners.

It is this emphasis on new technology, and how it can help HouseTrip rise above the others in this category, that attracted Accel to the investment. “They have some very effective systems that they use to rank properties, and we think they have come up with a unique approach,” says Sonali de Rycker, a partner at Accel. “And their algorithms work. Nearly half the hosts in top destinations make money back within three months. It’s not a case of put your photo up and pray.” She says that the average range of profits on homes on the site goes from £650 to £5,000 per month.

One of the big question marks about companies like HouseTrip (and possibly to an even greater extent companies like Airbnb and Lyft) is that they may be challenged to reach critical mass for their services, relying as they do on people shifting their privacy boundaries. Neil Rimer at Index Ventures, one of HouseTrip’s first investors, believes that the peer-to-peer revolution is changing people’s perceptions — giving companies like HouseTrip the chance to really disrupt the establishment, which in the case of HouseTrip is the multi-storied, many-faceted hotel industry.

“There is a threshold you have to cross to use peer-to-peer anything,” he admits. “But there are so many P2P things you can do today that are easier on-ramps. Our thesis at Index is that once you cross that threshold, there is no going back, and then it’s just a question of ‘why not do this?'” This extends into much more than just accommodation or ride sharing, but into money lending and more. “There are people providing assets and services who are just like you and me, so why not let them sweat their assets so that you don’t need to pay crazy margins for mediocre services provided by established businesses?”