As a wave of new hopefuls enter the online travel market using social media elements to stand out from the pack, two more traditional sites that focus on vacation rental accommodation, Roomorama and Lofty, are merging to scale up, and they’re picking up a $2.1 million seed round to help them along the way.
The list of new investors in Roomorama, as the combined company will be called, include names that are already connected to the online travel market, including Jose Marin (investor in Russian travel site HipWay and hotel booking site GuestMob); PROfounders Capital, Lerer Media Ventures, and Thrive Capital Partners.
Fabrice Grinda, the French founder of Lofty and himself a serial investor in a number of travel sites, says that the merger came out of the complementary needs of the two companies.
Both focus on the mid-range to high-end travel market. However, Roomorama had the customers but lacked inventory; and Lofty had inventory but not enough customers to fill it. “In a the travel marketplace you need a critical mass of both buyers and sellers to make it work,” Grinda says.
Equally, there is a nice fit between the two in terms of geography: Roomorama is based in Singapore and does a lot of business in Asia, while Grinda says that a full third of Lofty’s business is in the U.S. with another third in Europe.
Unlike some newer sites like Airbnb, which is disrupting the traditional travel business by letting users bypass hotels for lower-cost alternatives in people’s homes; or Casahop, a house-swapping site that does away with payments altogether, Roomorama is something of a throwback to an older business model based around offering properties from rental market professionals, who manage those accommodations with all the bells and whistles, and prices to match.
The company says that at the moment, the average gross booking value on the site is $1,300, with some 80 percent of people booking their places for between eight and 14 nights. Currently, there are about 50,000 properties on the site covering 3,600 locations. The aim is to double that by 2012 while keeping a focus on high-quality properties, reliability and the ability to close deals quickly.
Grinda notes that in the merger, the management team and the B2B sales team of Lofty are joining Roomorama; those who work on the technical side are not, as Lofty makes the transition to Roomorama’s platform. Roomorama’s co-founder and COO Jia En Teo will now share that role with Lofty’s CEO Olivier Brion, who now becomes the co-COO.