Two European Airbnb rivals have agreed to join forces. An early Rocket Internet Airbnb clone, Wimdu, and another accommodation platform originally headquartered in Germany, 9flats, are merging some five years after firing up their respective businesses. The news was reported earlier by German startup news site WiWo.
Financial terms of the deal have not been disclosed.
Wimdu claims an inventory of circa 300,000 apartments globally, while 9flats says it has around 250,000 — with the combined entity claiming more than 500,000 properties on its books (vs Airbnb’s 2M in worldwide listings).
German media has previously reported Wimdu seeking a buyer in a ‘fire sale’ — having apparently burned through a 2011 $90M investment (meanwhile Airbnb went on to raise some $3.38 billion over the same period). We’re also hearing the deal was a fire sale, via our sources.
9flats will reportedly lead the joint entity, under CEO Roman Bach. In a statement, Bach, who was head of biz dev and marketing at 9flats prior to taking over the CEO role from founder Stephan Uhrenbacher, flags up the benefits of combined scale.
“I’m excited about joining forces with Wimdu to create one of the largest businesses within the online accommodation industry,” said Bach. “The combined company will enable us to create an even stronger value proposition for our guests and hosts, while simultaneously accelerating growth and improving long-term profitability.”
In addition to battling Airbnb’s scale, accommodation platforms in Europe are facing increased uncertainty over the regulatory environment — with moves afoot in various cities to control or cap usage of home sharing platforms.
Earlier this year, for instance, a 2014 housing law change came into force in Berlin — banning short term tourist rentals of entire apartments without a city permit. German media reports this law change pushed 9flats to shift its headquarters from Germany to Singapore, where the new combined entity will also apparently be headquartered.
Elsewhere in Europe, the regional government in Catalonia has also been cracking down on peer-to-peer rentals in Barcelona, holding steady on a moratorium on any new rentals and raising fines for illegal rentals. While the UK government, previously supportive of sharing economy platforms by offering tax breaks for users, now looks to be reconsidering this unfettered encouragement — with the BIS government department writing to London’s mayor last month asking for his assessment on whether home sharing platforms are contributing to inflating rents in the city.
Safe to say, regional regulations look set to pose a growing headache for European accommodation platforms in the short term. So combining forces offers one way for smaller players with a European focus to mitigate that risk by adding scale and reaching into more markets.
Spiegel Online reports the deal as 9flats acquiring Wimdu, noting a large number of job cuts at the latter over the summer. Albeit, in its official PR, Wimdu couches the deal as a ‘merger’, claiming its restructuring measures in recent months have boosted its financial position — and noting for example that costs per booking “were almost halved”. It adds it’s “already writing black figures”.
The company also states that “jobs and locations remain intact”, post-merger — suggesting there are no immediate plans for additional job cuts on the German-based business side.
“Further investments in strategically important markets will be made. Increasing both customer satisfaction and the mobile range is also on the agenda,” it adds.
Wimdu confirmed the combined entity will continue to operate both brands in parallel — with 9flats manager Giacomo Ialenti taking over the CEO role there.