London based start-up, HouseTrip.com, has recently gone through a Series C funding round and has walked away with $40 million thanks to new investor Accel Partners. The previous investors in the business, Index Ventures and Balderton Capital also took part and chipped in more cash as the collaborative consumption vacation rental start-up aims for 3 million bookings for 2012. The latest injection of funds makes the total money raised an impressive $60 million.
According to Arnaud Bertrand, CEO and founder of HouseTrip, the new found cash will be used to expand operations and try to jump ahead of the many competitors in the arena.
Most people use the service because they want to make some extra cash from their properties. On the other end, holiday makers who want a unique experience or do not want to stay at a hotel can utilize the HouseTrip service. Currently, the HouseTrip inventory includes almost 130,000 properties in 15,000 locations and represents only a fraction of the market. The potential for the business can be ascertained from the fact that there are 3 million properties for rent just Europe alone.
HouseTrip is focusing on a key area when it plans to use the new funds to add properties to its site. The company has realized that content brings in customers much in the same way that Craigslist, eBay or Amazon have used their content to become leaders in their sectors. HouseTrip still has a long way to go especially compared to some competitors like Homeaway, which has 325,000 listed properties.
The collaborative consumption market for vacation rentals is not new but is getting hot right now as many different firms are attacking the segment from several different angles. As an example, Airbnb offers up rooms instead of complete houses and is in the process of raising $100 million in funding. Luxury Retreats deals with the upper end of the market and focuses on more expensive rental properties. HouseTrip has gone a different route and is focusing on making the process of renting simple, straight forward and less expensive than hotels.
Bertrand will also be using the new funds to expand the number of services the site offers. This is all meant to make the experience better for the users and in turn bring them back for more. He also stated that, “There are things you can do when you reach a certain scale, using the data you collect. There are things we can do to help the host in many ways.” This statement points at more services for the host and other streams of revenue that can be developed using technology and good engineers.
Accel’s Sonali de Rycker says that this is why they were attracted to the company, stating that, “They have some very effective systems that they use to rank properties, and we think they have come up with a unique approach. And their algorithms work. Nearly half the hosts in top destinations make money back within three months. It’s not a case of put your photo up and pray.”
The basic question facing HouseTrip is when will it reach critical mass and if it can make money at that point. For the most part this is a problem the entire industry is facing and will need to figure out eventually, surprising considering the incredible eight figure funding rounds being thrown around.
Source: Tech Crunch
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