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Summary:

European vacation rentals site HouseTrip has everything going for it right now: not least fast growth and a fresh new round of funding. Co-founder Arnaud Bertrand lays out why he thinks his site can carry on winning — and reveals the scale of his ambition.

arnaudbertrand-housetrip

Updated: Arnaud Bertrand isn’t your typical startup founder. Where brogramming cliches about “crushing it” bounce around Silicon Valley’s coding galleys, the French entrepreneur is mild-mannered and unassuming. Where his peers are brash and bombastic, the 27-year-old is careful to keep his monster-sized ambitions under control.

And yet the ambition is there — and company he runs, online vacation rental company HouseTrip, is doing well right now. It just raised $40 million and is even pushing the much-vaunted Airbnb into second place in parts of Europe.

The businesses are not exact rivals — HouseTrip focuses on helping people rent entire homes for their breaks, rather than rooms — but they are both taking the continent seriously. There are a number of different ways you can compare the two companies, and in many cases Airbnb comes out on top: it’s certainly the biggest beast in some of the popular urban destinations around Europe, even when you strip out the room-only listings.

But at a national level, Housetrip is ahead in many countries across the continent — with far better coverage of rural locations and out-of-the-way hotspots that appeal to families on vacation, rather than urban travelers on short breaks. In its home market of France, for example, Housetrip emerges narrowly ahead in volume, while in other popular destinations (Spain, Croatia and others) it boasts a greater lead in its number of listings.

In a highly competitive market that includes rivals like Wimdu, OneFineStay and many, many more, that’s no mean feat.

And the fact that Bertrand cuts against the grain is, perhaps, part of the reason for that success.

The Insider

After all, unlike most of the people fighting for this market, he didn’t end up in the business by accident: he started out in the world of hotels. The idea for HouseTrip came to him and his wife, Junjun Chen, while they were studying at Ecole Hôtelière de Lausanne, the oldest and most famous hospitality school in the world.

“When I studied hospitality over five years I guess what you really understand is service — how to make people feel welcome,” he says.

“If you ask the team I’m very, very detail-oriented, and the product is all in the detail. What gave me that focus on the details, certainly, was studying hospitality. In Paris hotels, if one pillow is not perfect, or one knife is not exactly two centimeters from the edge of the table, it’s a big, big deal.”

Hidden underneath his crop of curly red hair, it seems, is a mind focused on getting it right and almost nothing else.

HouseTripThe company, which started in Switzerland but now has its HQ in London, became unique when it took on its latest funding. The round was led by Accel, making HouseTrip the only company that all three of Europe’s leading venture firms — Accel, Balderton and Index — have backed. They’re all on board because they see a massive opportunity, and (perhaps) a chance for Europe to exert its power over foreign competition.

This, says Bertrand, plays to the continent’s natural strengths.

“When you look at most of the big travel companies, they’re European-based,” he explains. “By far the biggest is Booking.com, which is a Dutch startup. Travel is different maybe because that’s our DNA in Europe: Most of the market is European; Most of the schemes for decades have been European; We invented the hospitality industry, and so on.”

He may be overstating the case a little (Booking.com is a powerhouse, but it was acquired by the Connecticut-based Priceline back in 2005) but Europe is definitely HouseTrip’s stronghold right now. Its biggest cities include Paris, Barcelona, London and Berlin, where demand is high and the company is working hard to keep its supply of listings closely matched.

But while Bertrand says those large locations are profitable — Paris, he claims, hit breakeven nearly two years ago — the company is taking on a lot of funding: near $60 million at last count. He is using venture money, he says, to try and achieve scale. This means opening up new destinations and bringing on fresh listings, which can be an expensive, arduous task.

“Destinations that are big and have reached critical mass are profitable, but we’re expanding to lots of new places at any one time and that’s what really costs the money — but that’s what gives us so much growth,” he says.

“We could decide tomorrow that we’re happy with the existing destinations we have and become much more profitable, but we still think there is huge room for growth, so we want to capture the opportunities.”

Focus, focus, focus

For now, however, that need to grow is tempered by the desire to keep quality up — his obsession with quality. That means that although cities outside Europe, like New York, are growing fast, the company is primarily sticking to what it knows best.

“I think Europe will still be our focus in the medium term. This market is a European market, and if you conquer Europe you can conquer the world.”

For all the drama and talk of competition between HouseTrip and Airbnb and the rest of them, though, it’s only a small part of a very large story. Holiday rental is a big industry — big enough to support a public company like Homeaway, which is currently valued at around $2 billion — but it’s dwarfed by the much larger hotel sector.

And long-term success may require a change in strategy for many of the players in the game. Like others in the collaborative consumption sector, I have spoken to, Bertrand believes that Airbnb is soon going to have to move sideways into some unexpected markets to maintain the growth its investors seek.

After all, there’s a certain kind of pressure that comes from the $220 million that Airbnb has now had pumped into it — maybe more soon, if rumors that Peter Thiel is interested in investing another $150 million pan out. Building a company that can match those expectations may mean expansion into areas like, say, car rental, or a deal with the hotel industry to offload empty rooms.

Bertrand doesn’t think the same sort of pressure will come to bear on HouseTrip, even with the bundles of cash it has taken. For a start, he says with a smile, his wife and co-founder Junjun is the CFO. But more importantly, his business fundamentals are more sound: renting entire homes means that the average booking on the site is higher than many of its rivals. And that, in turn, gives it a stronger position to attack new destinations, new places.

But more than that, it’s a philosophy.

“My whole vision from the beginning is that holiday rental is much better than hotels, more authentic, and a much better way to travel,” he says. “I wouldn’t be able to look at myself in the mirror.”

Still room at the inn

It’s clear that this game still has a long way to go, and the market in two or three years may look very different from today. The vast number of names currently in the mix are likely to consolidate, and perhaps one or two of them will get snapped up by the bigger travel giants.

Still, though, Bertrand says there’s a lot of headroom — even at the most basic levels.

“We’re still focusing on what we call internally the low hanging fruit — on the rental side, that’s people who have been renting out holiday rentals for a long time and are simply looking for a more efficient way of doing it. When you look at that market in Europe it’s 3 million properties, it’s massive and there’s a lot of room to grow in there.”

And how many of those 3 million properties would HouseTrip need to make Bertrand feel comfortable?

“Three million is the answer,” he says, without blinking.

Oh yeah. There’s that ambition again.

Update: This post has been edited and updated to clarify how Housetrip is “beating” Airbnb in Europe. More detail in the comments.

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  1. I’m excited to hear about HouseTrip. Thanks for the article!

  2. Your title is pure link-bait. You offer no specifics AT ALL in your article about how HouseTrip is beating Airbnb. In fact the one metric for success that you list for both company is money raised. If that is your success metric, then HouseTrip is getting demolished by Airbnb.

    Let’s try a different publicly available metric of success. Let’s look at supply in Europe. Let’s compare the offering of ‘entire homes’ in a few major European markets, this number will only compare like properties and remove Airbnb’s shared spaces from the equation. If those had been included, Airbnb’s numbers would almost double in each market.

    London – HouseTrip – 1784
    London – Airbnb – 4329

    Berlin – HouseTrip – 717
    Berlin – Airbnb – 4155

    Paris – HouseTrip – 2991
    Paris – Airbnb – 9096

    Barcelona – HouseTrip – 2175
    Barcelona – Airbnb – 2459

    And for fun,

    NYC – HouseTrip – 1000
    NYC – Airbnb – 10,249

    PS – Airbnb has not already raised $220 million, they have raised just under $120 million.

    1. Interesting to look at things by city; but even more to look by country:

      France – HouseTrip – 16’939
      France – Airbnb – 15’159

      Spain – HouseTrip – 15’942
      Spain – Airbnb – 12’804

      Etc.

      It’s good to have enough depth (and HouseTrip does, who can argue one doesn’t have choice with 3’500 properties in Paris) but even better to have width!

    2. Mike, all good points. I’ve replied below.

  3. I fell for the bait as well…. N disrespect to the new startup, but don’t see how they would overtake AirBnB, as their market is not only entrenched, large, and already well known, but the majority if those looking to let Jt their houses, flats, or rooms have already listed with AirBnB. Just another fluff piece…

    1. I don’t think anyone in this market is particularly large, entrenched or well-known — not to the public at large (who are, after all, the people that count). See my more detailed response below.

  4. Bobbie Johnson Monday, October 22, 2012

    Thanks all: good points, and fair to call me out. I did a worse-than-poor job of explaining what I meant by ‘beating’. Let me have a go here.

    Obviously there are a ton of metrics you can choose to use, and by many of those counts Airbnb is the leader in the European market, with Housetrip in 2nd place (as we have previously reported, though, as pointed out in the piece, it’s a bit of an awkward comparison whichever way you slice or dice it.)

    However, if you zoom out to a regional or national level, the picture is a little different to the one your numbers suggest, Mike. Country by country, in the sector where Housetrip competes directly with Airbnb, you will see that the gap is much smaller and in many cases HT is ahead in the number of listings it runs (I would reference the numbers, but Arnaud already did that). In the cities, Airbnb is out in front, but that’s partly because of the different geographic focus (Airbnb is more concentrated and urban, Housetrip has more rural inventory), which means it has a slightly different user base. In either case, it’s certainly not the full picture.

    In addition, although neither company divulges financials, I am led to believe that Housetrip is more profitable across its European base than Airbnb (in large part because it takes a larger commission and has higher average revenue per booking). And anecdotally, through various conversations with people who list on the sites, those renting through Housetrip find it more valuable because of the tendency for users to book longer vacations, rather than short breaks.

    In those terms, I think it’s fair to say that Housetrip is beating Airbnb in Europe, at least in some ways.

    However, I did not explain that in the story, and apologies if it the result was that the story felt misleading. I’ve added a paragraph or two in to explain so that it’s a bit more clear for future visitors.

    One note: I would never measure whether a company is ‘winning’ or ‘losing’ by how much VC money they have raised. Playing a horse race with funding is never going to tell you much, and is potentially a very dangerous way of measuring success.

    However, as far as referring to Airbnb’s funding as $220m goes, that is my error: I used Crunchbase, which I’ve always found a good, reliable reference for this data — but what I *didn’t* notice was that the Crunchbase listing for Airbnb had pooled money it had actually raised with money that TechCrunch *believed* Airbnb to be raising. I’ve corrected that, and won’t be making that mistake again.

    1. Christopher Chuck Babicka Bobbie Johnson Monday, October 22, 2012

      I think Houstrip is doing a good and honorable job building its business, so want to first applaud that. However I also want to make sure readers are getting a clear picture. Arnaud, your point on depth is well taken so I’ll include other major countries on this side of the pond (Etc.?) for comparisons sake:

      UK – Airbnb – 5,310 bookable homes/apartments (13,378 total bookable listings*)
      UK – Housetrip – 2,796 total listings

      Germany – Airbnb – 8,548 bookable homes/apartments (14,327 total bookable listings*)
      Germany – Housetrip – 2,954 total listings

      The Netherlands – Airbnb -2,747 bookable homes/apartments (3,851total bookable listings)
      The Netherlands – Housetrip – 1,253 total listings

      Russia – Airbnb – 1,455 bookable homes/apartments (2,244 total bookable listings)
      Russia – Housetrip – 199 total listings

      Switzerland -Airbnb – 773 bookable homes/apartments (1,499 total bookable listings)
      Switzerland – Housetrip – 2,864 total listings

      Here you’ll notice that I include a distinction between bookable and total listings. Overtime we have made a concerted effort to improve the quality of our service by turning off thousands of listings when hosts are unresponsive or do not keep their calendars up to date. As such, we don’t measure the success of a market by the number of available listings and instead choose to use the metric of guest nights booked, which takes into account all the dynamics that a marketplace like ours must account for when measuring success (+10M as of June).

      Also included here are the total number of bookable listings on Airbnb, as we, unlike Housetrip also have private rooms available by the night or month. We think this is a great way to create an entry point for the solo, younger or more cost conscious consumers, allowing us to broaden our customer lifecycle in a way that gives our community accommodation options for any type of trip they are taking, particularly for those times when an entire home isn’t needed.

      Finally, over 60% of all our properties are in Europe and accounts for an equal share of our revenue as the United States. We have 7 offices across Europe as a result, in order to serve our community there. And with an average booking extending over 6 nights on Airbnb, the assumption that people only use Airbnb for short stays is error.

      Best regards,

      Christopher
      Marketing & Communications – EMEA
      Airbnb.com

    2. Christopher Chuck Babicka Bobbie Johnson Monday, October 22, 2012

      And if anyone has questions about my reply, feel free to reach out to me via press@airbnb.co.uk

  5. Arnaud I like your response! Seems to me you are very proud about Housetrip! Looks great! I think Airbnb is also very cool (love the name: Airbnb)! Don’t know much about numbers, but these comments give insight at a good level! For me: I love building stuff for people. I built Blabook with the help of my brother. Looking at other sites to see cool design helps a lot. I think succes must be measured in what are you trying to do for the world and its people! Stijn Tebbes Founder Blabook

  6. You are doing an amazing job with HouseTrip ! Well done !

    Me and my husband recently started 2 accommodation websites, region specific : Adriatic region and Africa, it’s hard work !

    Starting from scratch means a lot of unpaid workhours and all your personal time, but we LOVE it !
    It is something we enjoy doing, we spend every free minute we can working on the websites.

    Keep up the good work !

  7. Arnaud Bertrand Monday, October 22, 2012

    Thanks Stijn and Tamara for your kind comments!

    As a quick reply to Chris, first of I’d like to thank you for the compliment which I return, of course, honorable job on your part too ;-) This might be getting a bit petty but you could have also chosen:
    Croatia (HT: 3’835; ABB: 2’913); Belgium (HT: 835; ABB: 695); Austria (HT: 2’091; ABB: 987); Denmark
    (HT: 4’365; ABB: 2’011); Morocco (HT: 1’621; ABB: 586).

    Great point on bookable vs total listings. In fact we are without doubt the strictest of the space in that regard since more than a third of our listings are unpublished for wider “quality” issues which are either related to hosts’ behaviours, the actual quality of the property or the quality of the listings. In fact if you look at total listings we have in France over 30k properties and over 25k in Spain for instance.

    Lastly we are indeed behind on guests nights booked to date but in the lead if you look at our lifestage. We are at 3Mio nights right now: we launched HouseTrip in Jan 2010 –> if you look at ABB, at the same stage after your launch you were at 2Mio guest nights booked if I refer myself to your very well done growth infographic launched in the summer.

    But to conclude, the absolute most important is of course what Stijn mentions: numbers and competition matters very little; what matters at the end of the day is whether we are doing the right things for our users and having a significant impact on people’s lives. In that regard, we both have our own way of looking at things off the back of different visions. My vision is well laid out in Bobbie’s article and stems from my hospitality background; importantly we are also a family affair, having co-founded the company with my wife. ABB’s is certainly more influenced by the design background of the founders and its silicon valley roots. I view this as a very healthy thing (the fact that our respective identities stem from solid visions & experiences; not like some German startups in our space I won’t name :D) as it means we are slowly but surely establishing our own identities that will resonate with our respective sets of users. Hence it is not a winner takes all market; we can both live happily ever after!

  8. Sergey Kemskiy Tuesday, October 23, 2012

    Everyone who looks for a cheap vacation destination should pay close attention to Ukraine. This Eastern Europe country is a perfect place to have joyful free time. Very cheap accommodation and entertainments, cheerful people, beautiful girls which love men from abroad. There are some places to go http://ukraine-vacation-guide.com/publ/cheap_vacation_destinations/6 but this list is not complete, there are much more cities and towns to visit, and recommendations can vary on the season.

  9. Very interesting article, indeed. And fascinating and witty comments from both Arnaud and Christopher. I’ve been hosting on both platforms since August 2012 and since it’s been such a short time, I haven’t been able to decide who is stronger in Prague and Europe; just based on my own experience and being a curious woman I wanted to know and that is why I googled it. I have not only learned a lot, but have also had a good laugh reading the comments. Thanks!

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