Airbnb may have been founded on the premise of renting out spare sofa or bed space as a cheap alternative to hotels, but the company has moved upmarket in a big way, and is about to take that up another notch. The company is in the late stages of acquiring Luxury Retreats, an Airbnb-style service that focuses on high-end homes, for a price believed to be around $200 million, our sources say.
The potential deal for Luxury Retreats was first reported by Bloomberg, at a price of under $300 million.
Airbnb, one source notes, “is deeply interested in the company because of their extremely talented team with deep experience in the luxury segment. Their capability in the luxury is unrivalled and complimentary to the capabilities at Airbnb.” Homes on the platform include a villa owned by Francis Ford-Coppola in Puglia, Italy; and Richard Branson’s Necker Island.
This would fit in with Airbnb’s wider remit, too, to continue diversifying its user base and income, potentially ahead of a public listing. The company has now raised close to $3 billion and last summer filed to raise $850 million at a $30 billion valuation.
We have another clue that points to the deal: in addition to our other sourcing, when I emailed Joe Poulin, the CEO and co-founder of Luxury Retreats, to see if he could tell me anything, I received a reply directly from an Airbnb spokesperson — who I had not contacted yet.
He provided the following comment: “We are always looking to provide our community with access to new and different options, but we have no announcements to make.”
Luxury Retreats — based out of Montreal, Canada — has raised $16 million in funding. As we noted when we covered their last round in 2015, of $11 million, the company had been already profitable for years.
The company has tapped into an explosion of interest in the Airbnb-style of finding and renting homes, which has touched even the high end of the market.
“The sharing economy has exploded in popularity and we see a big opportunity in delivering predictability and consistency to our guests,” Poulin told me at the time of the funding.
Others in the same market include OneFineStay, which was recently acquired by AccorHotels for $170M; Index- and GV-backed Secret Escapes, a membership flash sales site for luxury holidays; and HomeAway has its own sub-brand, the similarly named Luxury Rentals.
Luxury Retreats is a bit different from these because of its attention to vetting sites — or “curation” as Poulin calls it — and generally making the walls of its sharing sandbox just that much higher. This is also consistent with how Airbnb has been trying to develop attention to the quality of its service.
“You can’t just load a property and go,” said Poulin. “Our peel off is that we have a little more control. It’s not fully peer to peer because we certify all properties. There is a need for driving business on the high end. Luxury is not sold, it’s delivered.”
The company works on a 20 percent commission “and in some instances a bit more,” depending on the needs of their high-end clientele. That works out to be not much more than the aggregate commission Airbnb and others makes when a property is listed there. Airbnb charges five percent or so to the homeowner, and then a further six – 12 percent on the guest side, and that’s before cleaning fees.
This is in addition to a deal in the works at Airbnb, for crowdfunding platform Tilt, for north of $50 million.
Interestingly, the Luxury Retreats acquisition comes after Airbnb had met with the Canadian ambassador to the U.S. late last year where he pitched Airbnb, on behalf of the Trudeau government, to invest more heavily job-wise in Canada.