Large hotel chains are feeling the heat from Airbnb and other startups building digital marketplaces for travellers with a more flexible range of places to stay, and more flexible prices to match. And that is leading some of them to make acquisitions.
RCI, a division of the Wyndham Hotel Group, has acquired Love Home Swap, a startup out of London that lets people book time to stay in other people’s homes, while at the same time list their properties for people to book.
Wyndham is not revealing the terms of the deal, but we have learned from sources close to the deal that it is £40 million (just under $53 million) in cash. The company had raised about £12 million ($16 million) in funding.
Notably, as part of the deal, co-founder and CEO Debbie Wosskow is stepping down from her role leading the company and moving to an advisory position for the next six months. Her brother Ben, who co-founded the company with her, will step up as CEO.
Wosskow has been one of the more outspoken executives in the London tech community when it comes to advocating for a more diverse landscape of founders, and last year she and Anna Jones, the CEO of Hearst UK, formed AllBright a funding and education network geared at female entrepreneurs. Stepping away from the CEO role will give her more time to focus on that.
The deal is not the first time that a large hotel chain has acquired a travel startup to move into the new wave of marketplaces. Last year, Accor Hotels paid $170 million to acquire OneFineStay, a would-be Airbnb competitor that focuses exclusively on high-end properties.
Meanwhile, Expedia was reportedly rebuffed in its attempt to acquire Luxury Retreats (another company focused on high-end properties that eventually was snapped up by Airbnb). In the meantime, it and Priceline have been pumping up their inventory of vacation rentals in an attempt to compete with Airbnb.
Love Home Swap is a logical acquisition for Wyndham’s RCI group. While the larger company is famous for hotel chains like Travelodge and Ramada. It also has long had a business in self-catered and family accommodation, and RCI specifically is focused on time-share rentals, but Wyndham and RCI have yet to move into the complementary area of private home rentals.
“Since first pioneering the vacation exchange concept more than 40 years ago, RCI has continually found new ways to evolve and grow its own business while also propelling the exchange industry further,” said Gordon Gurnik, president of RCI. “Through this acquisition we expand the exchange options we offer travelers and strengthen our footprint in key growth markets across the globe.”
The Love Home Swap deal is a far cry from the numbers that float around Airbnb, which is reportedly heading for an IPO, and has raised over $1 billion and is now valued at $31 billion.
Nevertheless, it underscores a large swing in the hotel industry for the bigger and more established companies — be they large hotel chains, or the megaliths that control the vast amount of hotel bookings online. They are all buying up and investing in some of the smaller upstarts to help position themselves for the next stage of competition.
Airbnb feels unstoppable now, and its moves into areas like flight booking, vacation planning and other services adjacent to accommodation are gradually making it more likely that it will soon be able to close (and control) the travel loop completely. In that regard, Wyndham’s move feels less a threat, as it is a sign of how the big owner of Ramada, Super 8, Travelodge, Howard Johnson, Wyndam Hotels and more, is merely coming along for the ride.
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