Airbnb Inc. is in talks to buy Montreal-based Luxury Retreats International Inc. to help it expand in high-end vacation rentals and travel services, people familiar with the matter said.
The Airbnb board of directors is expected to vote on approving the deal this week, said the people, who asked not to be identified because the terms have yet to be finalized. A sale is expected to fetch no more than US$300 million in cash and stock, said one of the people.
“We are always looking to provide our community with access to new and different options, but we have no announcements to make,” Airbnb spokesman Nick Papas said on Thursday. A spokesman for Luxury Retreats declined to comment. Luxury Retreats is expected to operate with its own employees in Montreal, said one of the people.
Luxury Retreats, which has more than 4,000 properties around the world, would be Airbnb’s largest acquisition. Adding more high-end rentals would enable Airbnb to target the sort of clientele willing to pay for its new luxury tourism services. In November, it began offering truffle tastings, mushroom hunting and guided tours provided by local experts. The company is looking to expand into other parts of the travel business and is working on a flight-booking tool.
Airbnb still has practically all of the US$3.1 billion in funding it’s raised from investors, who last valued the business at US$30 billion. Founded in San Francisco in 2008, Airbnb turned a profit for the first time in the second half of 2016, Bloomberg reported last month, and expects to maintain profitability this year.
Luxury Retreats is also profitable, a person familiar with the matter said. And it isn’t the kind of young, scrappy startup typically targeted by Silicon Valley buyers. Founder Joe Poulin started building websites for Caribbean villa owners back in 1999 at the age of 17. Over the next decade, he added new destinations and acquired another Caribbean-focused rental broker in 2011. Luxury Retreats has raised about US$16 million in two rounds led by Canadian venture capital firm iNovia Capital.
The website has a similar feel to Airbnb’s. Its villas, chalets and other fancy homes span 90 markets around the world, generating about US$150 million in gross bookings a year, according to the company. Luxury Retreats has said it carefully vets every property on the site and that fewer than 5 per cent of applicants’ homes get selected.
The Luxury Retreats site also offers customers a concierge service with access to private chefs, bartenders and masseuses — similar to what Airbnb added a few months ago. Airbnb is eager to implement the software Luxury Retreats built to manage those services into its own system, a person familiar with the matter said.
Airbnb has more than 2 million listings, about 1,400 of which are “castles.” The company is also seeing big growth in Luxury Retreats’ homeland. Airbnb said this week that it sees a lot of room to grow in Montreal and other Canadian cities, including Toronto, where listings grew to more than 15,000 last year — a jump of almost 60 per cent.
Luxury Retreats could bolster Airbnb’s brand among wealthy globe-trotters and help the technology startup fend off Expedia Inc. and Priceline Group Inc. Both travel industry giants have increased their focus on home rentals, with Expedia’s HomeAway unit zeroing in on vacation destinations like Florida or the mountain resorts of Colorado — precisely the market Luxury Rentals operates in.