The San Francisco based company with a private valuation of $30 billion has only recently ventured into the high-end rental market, traditionally dominating in urban rentals. The deal with Luxury Retreats is a continuation of their recent trend of pushing into new categories, such as flight-booking and trip planning, ahead of a possible initial public offering this year or next.
Founded by website developer Joe Poulin in 1999, Luxury Retreats’ roster of homes, personally vetted by employees, includes a villa owned by filmmaker Francis Ford Coppola in Italy’s Puglia region topping out at $10,840 a night and a French-style chateau in Vienna with a cigar and cognac bar, wedding chapel and outdoor apricot trees for $27,102 a night. Private hunting tours at the chateau are extra.
“I like this acquisition. I think it makes sense and it’s logical” for Airbnb, Santosh Rao, a technology specialist and head of research at New York-based merchant bank Manhattan Venture Partners told the Globe and Mail. “Airbnb is just getting into the luxury side. It’s just very nascent. So I think they’re just buying growth in that category.”
Average transaction values for luxury vacation rentals are significantly higher than the average Airbnb big-city booking because they are typically longer stays.
“It’s much more attractive I think for Airbnb to grow in that market and there’s a lot of top-side opportunity for them,” Douglas Quinby, an analyst at research firm Phocuswright told the Globe and Mail. He said property managers in the United States are far less likely to list their homes on Airbnb than with HomeAway or VRBO, meaning there’s a lot of room for the company to grow.
While the agreement may sound like a hefty price to pay, working out to a minimum of about $50,000 for each property Luxury Retreats has listed, Airbnb is also buying the Montreal company’s expertise in the high-end travel market. Luxury retreats is profitable and will immediately bolster Airbnb’s margins and revenue.
It’s a move that will boost prospects for a new generation of Canadian tech firms, not to mention a positive move for a longstanding Montreal company.
Luxury Retreat’s 250 employees will continue to work out of Montreal under the direction of Poulin, and Airbnb officials have said they expect to add additional team members and resources to the Canadian team in the year ahead.