This section covers significant highlights, soft-touch launches, and testing-the-water moments. News appearing at the end of the preceding month may also be included. Each section has a Yes Consulting comment.
Casago acquires Vacasa. Quoted as a merger requiring approvals and process, the objective is to take the new company private and pay a shareholder premium for acquisition. Casago is a growing franchise business with 37 franchisees (6 owned), and Vacasa floated through a SPAC at $4.5bn and has subsequently spectacularly failed and, at the time of writing, has a market cap value of $78m with an inventory of 38,000 properties. We have written a summary of the deal for Scale Rentals. Roofstock, a leading proptech platform, plans to invest in and provide strategic guidance to the combined company, bringing deep real estate expertise and technological solutions to enhance property management capabilities.
Comment:- A snip if they can sort the current model, but RoofStock is an interesting addition to the narrative. Report Link. Just before publication however we see an existing shareholder appearing with a deal. One to to follow.
Los Angeles wildfires need a mention. Thumbs up to Airbnb.org, the nonprofit is committed to offering emergency accommodations for an additional 25,000 individuals affected by the ongoing wildfires in Los Angeles.
Comment: Airbnb is mentioned below. It is a household name, not a tech real-estate behemoth. We analyse Airbnb below
Spain housing price pressure: UK and other country residents planning to buy holiday homes in Spain could face a 100% tax increase as the Spanish government addresses a growing housing shortage. Rising public anger in Spain and other European nations stems from locals being priced out of home ownership due to high rents, driven by gentrification and the conversion of properties into short-term tourist rentals, particularly in urban and coastal areas. Spain has long been a favourite destination for UK holiday home buyers seeking a sunnier lifestyle in places like Ibiza, Marbella, and Barcelona.
Comment: No surprises, polarisation of wealth and a less capitalist approach. Plenty of other places will arise. We have added more information in the Airbnb section below, as well as a link to a report authorities should read. North Coast of Africa or the Middle East, anyone?
$925m PMS valuation: This one is curious, and the valuation seems high, but the devil is in the details. The company has been quoted as running 100K properties, less than Guesty but another significant investment. Hostaway, a PMS for short-term rentals, has raised $365 million at a $925 million valuation to capitalise on this growth. They say they have plans to use the funding to enhance its dynamic pricing tools, integrate AI-powered features, and expand into key European markets. To us, this looks like buying power!
Comment: Someone, please tell me how this valuation works.
The Airbnb Section
Airbnb $ Value Proposition: We wondered about the inherent share value proposition of Airbnb and discovered a qualified group of analysts had produced this analysis of Airbnb. It makes interesting reading as very few have been pessimistic about Airbnb in previous years.
Strengths:
Strong brand recognition and a large user base
Industry-leading margins
Successful mobile app adoption driving higher engagement
Diverse geographic presence with room for expansion
Weaknesses:
Slowing growth in core markets, particularly the U.S.
Increased marketing expenses impacting profitability
Potential margin compression due to growth investments
Premium valuation relative to peers despite converging growth rates
Opportunities:
International expansion into high-growth markets
New product offerings such as co-hosting marketplace and relaunched experiences (see Co-Host report link below)
Potential for increased monetisation through new services
Growing trend of experiential travel aligning with Airbnb's offerings
Threats:
Intense competition from traditional hotel chains and other OTAs
Regulatory challenges in various markets
Economic uncertainties affecting travel demand
Potential for market saturation in core segments
This doesn’t help either, as on Jan 24th, Airbnb saw a 4% decline in its stock price, trading as low as $128.44 before closing at $127.87. The drop followed insider selling activity by top executives.
CEO Brian Chesky sold 38,461 shares on January 21st at an average price of $133.19, totalling $5.12 million. After the sale, Chesky retains 12.46 million shares, valued at approximately $1.66 billion, reflecting a 0.31% reduction in his holdings.
CTO Aristotle N. Balogh sold 700 shares on the same day at an average price of $135.47, amounting to $94,829. He now holds 183,314 shares, valued at about $24.83 million, marking a 0.38% decrease in his position.
Comment: As said above, new blood is needed, and the above matches the 2023 Oct announcement by Brian Chesky where he says: “Airbnb is broken…. and…. has announced plans to fix the issues plaguing Airbnb. Still waiting!
To add insult to injury, the U.S. government has sued Airbnb, alleging housing discrimination after a host refused to rent an apartment to a mother with three school-age children. In a complaint, the Department of Justice said the home rental company violated the Fair Housing Act through Jarrod Blake's rejection of a rental for Charisse Ylitalo and her sons, aged 9, 11 and 14.
Airbnb Spanish Challenge to Regulation
Airbnb is challenging the Spanish challenge on short-term rentals, and the benefits are quoted using this Oxford Economics 2024 report. Summarised, it says, and its overall good news:
Direct and Indirect Spending:
STRs supported €127.5 billion in direct tourism spending in 2023, contributing €148.6 billion to EU GDP.
This activity supported 2.1 million jobs and generated €39.6 billion in tax revenues.
STR hosts earned €26.5 billion, with 97% of this income staying within the EU. These earnings are often reinvested into local economies, boosting community vitality.
STRs exerted downward pressure on tourism accommodation prices, saving travellers an estimated €7 per night on average in key European destinations.
Social and Regional Impacts:
STRs facilitate tourism in rural areas and less visited urban neighbourhoods. For example, rural STR nights have doubled since 2020, spreading economic benefits beyond traditional tourist hotspots.
In regions like Portugal's Douro Valley, STRs supported over 200,000 guest nights in 2023, improving local job opportunities and living standards.
STRs are particularly attractive to families, with 39% of guests travelling with children. This allows families to enjoy greater flexibility and comfort compared to traditional accommodations.
STRs scale quickly for one-off events like the 2024 Paris Olympics and the Eurovision Song Contest, avoiding the long-term costs of overbuilt infrastructure. For example, demand surged by 90% during the Paris Olympics, stabilising prices and reducing accommodation shortages.
Challenges and Considerations:
STRs occupy a small percentage of housing stock in major cities (e.g., 0.5% in Amsterdam), but their presence can influence housing availability and prices. However, studies suggest fostering residential investment through STR activities could alleviate housing shortages in the long term.
Overly restrictive regulations may shift activity to other accommodation types, raising prices and diminishing local economic benefits. A balanced regulatory approach is essential to retain STRs' advantages.
STRs enhance Europe's competitiveness as a global tourism destination by providing affordable alternatives to traditional accommodations.
That's enough for Airbnb for one newsletter, but significant headwinds remain.
Now Sonder? Co-founder Francis Davidson has stepped down as board chairperson of Sonder, succeeded by Janice Sears, the lead independent director, as part of a move to enhance corporate governance. Davidson remains CEO and a board director. A former Disney executive, Erin Wallace, has joined the board, replacing Nabeel Hyatt, and will support Sonder's growth and operational efforts. The company recently entered a long-term licensing agreement with Marriott International, aiming to integrate 9,000 Sonder units into Marriott's portfolio by the end of 2024, with an additional 1,500 units planned later. Sonder secured $146 million in liquidity, including $43 million in convertible preferred equity, to bolster its financial position. In 2024, the company reduced its corporate workforce by 17%, scaled back its portfolio, and raised $10 million to improve liquidity.
Comment: It won’t be long before this beast gets tethered, and perhaps Casago and Vacasa have stimulated the grey matter.
ByteDance, a Chinese company, owns TikTok, raising concerns among U.S. lawmakers about potential national security risks. These concerns stem from the company’s access to data from American users and its ability to influence the content they see. ByteDance’s legal team argues that banning TikTok would infringe on the First Amendment rights of U.S. users. Despite this, a federal appeals court in December upheld a bill requiring either a sale of TikTok or a ban, set to take effect on January 19. If implemented, the bill would prevent new users from downloading TikTok from app stores like Google and Apple. Existing users would also be unable to receive app updates.
Donald Trump has permitted the app to operate since his inauguration for a
further 75 days to allow the company to resolve its ownership.
Comment: This was worth adding due to the high levels of use in hospitality and social media seeking to get into the booking chain.
All you tech startups: This is a fascinating YouTube video by Parker Conrad, a pretty interesting guy who founded Rippling, a cloud-based human resources platform designed to assist with onboarding, payroll, benefits, and vacation tracking.
The video is entitled “How to build the future”. If you have a short attention span, then start at 30 minutes. What does this have to do with STR tech? A lot. The narrative concerns point and limited solutions, business process management, and inter-related applications. It is about compound software, building multiple powerful applications and capturing more wallet share, especially with sales & Mkt getting harder and harder. All this is underpinned by significant investment and AI.
Comment: We agree and ask why we have recently seen sizeable investments. Acquisitions are part of this, BUT in a new era of AI and travel demographics, new platforms must be built or old ones re-architected to make this progress. This would seem supported by the ex-CEO of BookingPal in his recent article on channel managers.
The big one to watch: OpenAI announced the launch of Operator, a digital assistant capable of independently handling online searches and completing travel, events, and dining purchases. Operator represents the tool travel leaders have envisioned since ChatGPT’s debut. However, its introduction has raised concerns among industry executives about the potential displacement of intermediaries and online travel agencies such as Booking.com and Expedia.
To enhance its functionality, OpenAI has partnered with several third-party companies, ensuring Operator can access data from key travel platforms, including Booking.com, Tripadvisor, and Priceline.
Earlier in the month Thomas Reiner, partner at Altimeter Capital, stated that online travel agencies and metasearch engines face significant challenges with the rise of AI-driven search. He predicted that AI assistants would become the primary method for booking travel, enabling users to book hotels, purchase flight tickets seamlessly, and order rideshares like Uber, among other tasks. He also suggested that traditional search engine optimisation could soon become obsolete.
Comment: So far, it appears to be an MVP, but this moment is scary. Book Direct may see it as an opportunity, or big data companies and huge inventory may well see their chance to share the booking with its Google competitor. Money tends to leverage direction so we will watch carefully. To use, it needs a $200 subscription and would be a turnoff for the average guest, but it will no doubt be e-commerce if based on rev and advertising. And there is always Google!
“The benefit is the activity that brings families together—QR Clue turns a vacation rental into a bonding experience where everyone’s working together, thinking, and having fun without ever leaving the property.”
Check it out, and let us know what you think!
Third Party Articles.
Yes.Consulting writes for some online STR publications on specific topics, but we do deep dives for our premium newsletter members. Dynamic pricing is this month!
Article written for the Scale Community: “Casago Acquisition of Vacasa”
Article written for HCH. Airbnb co-hosts: redefining or reinforcing?
Quote of the month: "Truth Well Told" creates messages that are both genuine and persuasive.
Philippe Pieri CEO of havenin.com
Supplier of the Month:
From now on, we will add a “supplier of the month” and suggestions for companies that add value, are new, unique or are helping the world in general!
Please send suggestions to contact@yes.consulting
JUST IN:
There is always one piece of news which comes in late, and we will be doing a deeper dive on this:
Berlin-based HomeToGo (also owner of PMS Smoobu), an OTA-like meta and booking marketplace, has agreed to acquire Interhome from Switzerland-based retail giant Migros. The price is in the “low three-digit million range in Swiss francs”. Nothing has been signed as yet, however, and there is plenty of time to see how this strategy will play out! Rumour has it that Awaze lost out and a timely exit for the last six years for Henrik Kjellberg, the CEO of Awaze.
THE BIG REPORT
DYNAMIC PRICING AND WHY MANAGERS ARE RIGHT TO BE CONCERNED
2025 will be the year where data becomes very important to professional companies as they work to maximise margins and use this to create stronger foundations as other pressures build. There are significant problems, however, and we discuss them below to weed out the issues and discuss how to avoid the continual fluctuation of results.
Data covers all elements of the STR business, and we will cover all of this over the coming year, revealing anonymised collective company statistics and creating comparable financial industry metrics.
In this 14-page analysis, we concentrate on the most critical challenges managers or hosts face when filling the sales funnel: dynamic and automated pricing, the problems, the reasons, the players, the challenge, and what others are doing to rectify the issues.
For access to the report click here to read.
Paid membership is necessary. It is also available via a member’s password on Yes.Consulting
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