Airbnb Acquires Vacation Rental Company Luxury Retreats, Officially Moves Into Luxury

Airbnb announced today that it had bought Montreal-based Luxury Retreats International in order to help it develop its high-end vacation rental and travel services. This comes after previous reports of discussions between the two corporations.

Although no official price was given, it is believed that Airbnb paid between $200 million and $300 million for Luxury Retreats.

Luxury Retreats CEO Joe Poulin will join Airbnb clone script and lead luxury houses, reporting to Airbnb co-founder and CEO Brian Chesky, according to a press release issued this morning. The Luxury Retreats team will continue in Montreal.

“Luxury Retreats offers high-quality listings, world-class concierge service, and a range of amenities,” the companies said in a statement. “The acquisition will complement Airbnb’s work to provide a variety of homes and experiences to travelers, particularly those visiting traditional vacation destinations.”

For guests, Luxury Retreats offers concierge services and access to its support team, as well as villa professionals. It presently has a global network of over 4,000 households.

Chesky claims to have spent numerous hours with Poulin and his staff in a statement. Because of the high degree of demand in the serviced and luxury end of vacation rentals, Chesky and his colleagues may be looking to buy comparable businesses.

Is this the start of Airbnb Lux?

For months, rumors have circulated that Airbnb would launch a new Airbnb Lux product category on its platform, and with the acquisition of Luxury Retreats, that may finally become a reality.

Chesky hinted at this during the holidays when he used Twitter to crowdsource ideas for the company.

Furthermore, the company’s numerous marketing sponsorships with high-profile celebrities over the last year appear to indicate a readiness to go more toward the luxury space. Airbnb, for example, recently paid for Lady Gaga’s multimillion-dollar mansion in Houston, where she stayed while playing at the Super Bowl.

At this point, expanding into the luxury market seems like a natural extension for Airbnb. It’s only natural that the company would aim to continue growing its reach and diversifying its operations now that it’s attained incredible scale with more than 3 million postings worldwide.

Airbnb Trips, the company’s entry into tours and activities, was launched in November, signaling the start of that diversification. Chesky also hinted at the prospect of further services being added to the Airbnb platform, such as flights, grocery delivery, transportfairbnb ation, restaurant reservations, and more, during that launch.

Luxury Vacation Rentals are in High Demand.

Airbnb isn’t the only company attempting to break into the premium vacation rental industry. AccorHotels, which already owns onefinestay, revealed its desire to buy Atlanta-based Travel Keys, which operates in a similar fashion to Luxury Retreats, earlier this month.

Higher profitability and fewer regulatory concerns are the best explanations for larger companies like Airbnb and AccorHotels’ sudden interest in the premium vacation rental industry.

“There are multiple motivations for Airbnb to make this type of transaction,” said Madelyn Byrne, CEO of Paris Perfect. Another high-end apartment rental company is comparable to onefinestay. “It provides them a new, higher-end customer, as well as consistency in terms of properties and strong on-the-ground administration.”

According to Byrne, this transaction is more about obtaining talent and expertise than it is about gaining technology. “Airbnb offers a fantastic booking site and doesn’t require any assistance. They maintain excellent communication with clients, however, consistency is lacking. For example, we handle over 100 houses in Paris, all of which are of comparable quality; if something goes wrong, we have a dozen additional properties to give them immediately away. They intend to automate everything with Luxury Retreats, and having inventory that you can know and trust means a lot.”

Vacasa CEO Eric Breon sees many synergies between Luxury Retreats and Airbnb. “Luxury Retreats is a small vacation rental management company. They don’t usually have on-the-ground staff at properties, although they do work with high-value homes that usually have their own staff.

There’s a lot of potential margins there with a commission rate in the 20% level. It’s a small market, but there’s a lot of room for profit.”

Breon also stated that for a firm like Airbnb

Breon also stated that for a firm like Airbnb, focusing more on traditional vacation rentals was unavoidable. “I think the way Airbnb established that new section of inventory — the primary owner occupied — was quite intriguing. However, they quickly tapped out that information. Many people are hesitant to stay in other people’s houses in this manner. For some people, it is not normal or always chosen for business trips or vacations. Traditional holiday rentals will continue to be popular.”

Onefinestay CEO Evan Frank, whose business is also looking to join the more traditional luxury vacation rental market this year.

“The thing that’s so remarkable is that home distribution channels haven’t actually develop yet,” Frank explain. Suddenly, HomeAway is cited as estimating that the vacation rental business is worth $100 billion. It’s a bit disjoint. There is no single, true distribution channel through which all of these homes pass.

“So, when I see these distribution firms acquire. I think it’s really about the know-how to be able to market this very new accommodation product. Which has only been around for maybe five to ten years.”

“Yes,” Frank answered when asked if working with traditional vacation plans was also less restricted in terms of regulatory issues.