It was reported on Friday 3rd November 2017, that Airbnb Inc. is considering making a bid for Wyndham Worldwide Corp’s European vacation-rental business. People familiar with the matter, who have asked to remain anonymous as the details are yet to be made public, have said that first-round bids are due this month and could fetch more than $1 billion. Although it is still in the early stages, Airbnb are contemplating acquiring the business. There is also the possibility that this could gain interest from private equity firms. One of the people have also said that Airbnb could also make a bid by teaming up with a buyout firm.

Representatives for both Airbnb and Wyndham have declined to comment at this time.

Airbnb was founded in 2007 when Joe Gebbia and Brian Chesky, who had met five years earlier at Rhode Island School of Design, were struggling to pay their rent. There was a design conference coming to San Francisco and the city’s hotels were fully booked, so Joe and Brian came up with the idea of renting out three air-beds on their living room floor and cooking their guests breakfast. They created the website, and six days later they had three guests each being charged $80 a night. Their idea was a success but they both believed the idea could be made bigger and better. They discussed the idea at length and decided to target conferences and festivals across America, getting local people to list their rooms and for travellers to book them. They then enlisted Nathan Blecharczyk, Gebbia’s former flatmate and a computer science graduate, to develop the website.

Using various creative marketing campaigns, the company continued to grow and now lists available rooms worldwide. You can even rent a tree-house in Vermont. With the hopes of attracting higher paying travellers, Airbnb have now expanded its luxury supply and in February of this year they acquired Montreal-based Luxury Retreats. Luxury Retreats specialised in high-end villa rentals and concierge services in the Caribbean.

If Airbnb are successful with the acquisition of Wyndham’s European vacation-rental business it would further expand their luxury supply as the inventory boasts of tens of thousands of properties in upscale vacation towns such as Dalmatia, Croatia and Santorini. It would also strengthen its competitive edge against Expedia and Priceline Group Inc.

In recent years, all three of these travel companies have increased their focus on vacation-home rentals as these are more profitable than collecting a fee on transactions for small apartments and hotel rooms.

Wyndham, owners of the Ramada and Days Inn brands, had previously reported in August their plans to spin off its hotel unit, consolidate its timeshare business and also explore alternatives for the European rental brands. Wyndham’s shares have grown by 1.5 percent to $109 in New York since the announcement to sell its vacation rental business.

Posted on: November 20, 2017

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