Airbnb poised to buy exclusive vacation villas specialist
Prospective $200m-plus deal for Luxury Retreats would be one of company’s biggest
Not content to rent out apartments and guest bedrooms, Airbnb is in advanced talks to acquire Luxury Retreats, a Canadian company that specialises in high-end vacation villas, in a deal expected to be worth more than $200m.
The proposed deal, a mix of cash and shares according to a person close to the transaction, would be one of the largest yet for the Silicon Valley accommodation company that has disrupted the travel and accommodation industry.
With deluxe houses such as the “Chateau Petit Versailles”, a 14-bedroom mansion that rents for $27,000 a night and includes a chef, concierge and housekeeping staff, Luxury Retreats would bring a new class of lodging to Airbnb’s site.
Montreal-based Luxury Retreats was founded in 1999 and lists more than 3,000 properties around the world, each individually vetted by the company. Among those featured is Richard Branson’s Necker Island, which can accommodate 34 guests and costs $80,000 per night for the whole island.
The deal would also help Airbnb tap the experience of the executives at Luxury Retreats, who would stay on with Airbnb but still be based in Montreal and retain the company’s Canada-based staff.
Although the annual bookings of Luxury Retreats are just a fraction of Airbnb’s, having access to the luxury market could help the Silicon Valley company boost its appeal to elite travellers who are likely to spend more on high-touch services. The company has recently branched out into guided tours for travellers, which range from surf lessons in California to Korean embroidery classes in Seoul.
Airbnb’s yearly bookings are around $3bn, while Luxury Retreat’s bookings are about $150m, according to estimates from Santosh Rao, an analyst at Manhattan Venture Partners. Airbnb has raised more than $3bn from investors who recently valued the company at $30bn; its backers include Peter Thiel’s Founders Fund, Greylock Partners, Andreessen Horowitz and Tiger Global.
Mr Rao expects that the deal will be accretive to Airbnb’s margins as well as to its revenue. “The margins for high-end [accommodation] always end up being higher,” he said. Based on his calculations, Airbnb broke even in 2016 based on earnings before interest, tax, depreciation and amortisation.
The talks between Airbnb and Luxury Retreats were first reported on Thursday by Bloomberg.
Nick Papas, a spokesman for Airbnb, declined to comment specifically on Luxury Retreats. “We are always looking to provide our community with access to new and different options, but we have no announcements to make,” he said in a written statement.
Luxury Retreats did not respond to a request for comment.
Joseph DiTomaso, chief executive of AllTheRooms, an accommodation search engine, pointed out that Airbnb is paying a premium for the luxury homes that will be added to its network — the deal works out to about $53,000 per property on Luxury Retreats.
“Longer term, this upscaling of Airbnb is therefore a threat for hotel-based online travel agencies like Priceline and Expedia,” he said.
Airbnb’s move will also raise the heat on high-end vacation home rentals sites such as London-based Onefinestay, which was acquired by Accor last year, and HomeAway, which is owned by Expedia.