Online private accommodation booking services have become all the rage lately and VC firms are lining up to fund companies that have a good concept in the sector. Montreal’s Luxury Retreats picked up on the trend early and announced on September 17 that it had secured $5 million from VC’s led by iNovia Capital. Startups like Airbnb and HomeAway have gotten a lot of air time because of their recent successes but Luxury Retreats has been in business since 1999 and has not needed any sort of funding from any other source to stay profitable. The latest numbers showed that the firm was able to deliver $100 million in rental revenues per year. The new influx of cash from the first round of funding is expected to be used to expand the business further.
Cash is not the only part of the deal as the Montreal firm will also be getting some very experienced people as board members starting with iNovia’s Chris Arsenault. Other heavy hitters will be Cirque du Soleil Lifestyle Group founder and chairman of Sid Lee, Bertrand Cesvet and Hugh Crean of General Catalyst Partners and Bing Travel fame.
The latest vote of confidence in Luxury Retreats shows an interesting trend in the market and the fact that the sector is maturing. Services like Airbnb and HomeAway try to give their users cheaper options when compared to commercial hotels. Luxury Retreats does not focus merely on price and instead cater to people that do not mind spending some money. Joe Poulin, the founder and CEO of the firm says that, “Our niche is not price sensitive.” The fact that all these firms can be profitable also points at the fact that the market it fragmenting into different price bands and that firms will now be focusing on different niches within the wider sector.
Luxury Retreats is proving that companies can grow by focusing on technologically underserved sectors of a demographic. That is why Luxury Rentals deals with the higher price bracket in the market which other are not working with exclusively. The company has 2,000 villas in 50 destinations that total $6 billion in real estate value. The staff personally checks out each location to make sure that it meets all the requirements and are looking to add 50 more properties. The average rental is about $2000 per day and the company can get a 20 to 30 percent commission on the order. Luxury Rentals also offers pre-rental consulting and post-arrival concierge services to round out their services for clients.
The fact that the company has taken funding so late in its life cycle means that the firm is using this as a strategic move. iNovia’s Arsenault explains that, “Luxury Retreats has been under the radar, growing by word of mouth. But it has big ambitions.” The injection of cash and talent may also give the company the boost it needs to move on up and actually start eating up the smaller players in the market. That would definitely position the company as a category killer.
Source: Tech Crunch
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