Patrick Andrä, Co-founder and CEO
Patrick Andrä is the co-founder and CEO of HomeToGo, a search engine for vacation rentals with more than 250 employees. It also operates the Wimdu and Tripping.com websites.
Prior to creating HomeToGo in 2014, he was a lawyer in Germany also worked for Rocket Internet and Home24.
The vacation rental sector fared relatively well in 2020 – how did that translate for HomeToGo as far as your revenue and other business metrics?
You’re right, 2020 was a solid year for HomeToGo and the vacation rental sector in general. We fared way better than many other segments of the travel industry. Looking at the numbers - we saw for instance a 77% increase in visits to our .com sites in Q3 2020 compared to the year before.
This has a lot to do with our product - happy to share more on that in a sec - but also with the comparative advantage of vacation rentals as the only really safe travel option there is in these exceptional times.
How did things differ for you geographically?
We see similar patterns with varying timing across all our major markets. Globally, we saw a spectacular increase in rural and domestic travel demand over the summer months of 2020, when travel restrictions were eased.
Then there was some divergence going into the fall and winter, with rural and domestic travel staying strong in the US market. This is in line with booking patterns we tend to see in typical years.
In Europe, we faced a different situation as many ski destinations were closed down resulting in a slow winter travel season.
Looking forward, we can expect more variation among European countries. To illustrate this: the moment the UK government announced plans last month to reopen international travel in May 2021, we saw an increase of 83% in traffic from one week to the next.
With many companies now going to a “work from wherever” mindset, what will be the impact for private rentals for the future? How does the industry adapt for longer stays?
Remote becoming the new normal is a huge game changer for our industry. Let me elaborate a bit on how we look at this paradigm shift. The pandemic accelerated an underlying, latent trend of more workplace flexibility that had already been underway for some years.
Within months, we leapfrogged ten years into the future in terms of “work from anywhere policies” - that’s actually true, not only for our customers but also for ourselves at HomeToGo.
Remote work unlocks potential with new target groups: suddenly, we are adding the corporate employee who wants to work from a beach town for a few weeks to our traditional clientele of travelers and maybe the familiar digital nomad.
We’ve quickly adapted our product to optimally serve this demand. For example, from a qualitative point of view, we make sure to provide as much context as possible about a particular rental, such as distance to the city center or proximity to the closest beach or lake helps the traveler know what they can expect.
Then from a price angle, which is more important for longer stays, we ensure discounts for weekly or monthly stays are highlighted to the customer.
As a side note, we’ve seen more attention being paid by hosts on advertising internet speed in the properties they offer or rent. That’s a development we appreciate as we at HomeToGo always strive to put the traveler’s needs first.
What weaknesses did the pandemic expose in the vacation rental sector?
In many other sectors of the economy, the pandemic showed the importance of digitalization. The vacation rental industry is no exception; in a rapidly evolving environment, with travel possibilities sometimes changing within days, adapting quickly and reacting swiftly is key and technology is the main enabler for this.
Let me give you a concrete example of how we at HomeToGo put technology first to serve our users in these dynamic times. We immediately saw two major needs emerge: one being the ability to change bookings flexibly and the other being the possibility to look for deals on vacation rentals within a longer time frame due to the new flexibility already discussed.
The way we solved this was by rolling out free cancellation filters more prominently and emphasizing our flexible search product. Following the release of the new free cancellation filter in early spring, we observed a 35% increase in guests opting for rentals offering flexible cancellation.
As for the flexible search product: It’s a simple, yet powerful tool allowing people to see great offers within a time range without limiting their search to a specific start and end date. We introduced the flexible date search feature in 2018 already and saw a 600% increase in its use within the past year.
And we keep receiving amazing feedback on this from the travel community that love this easy and quick way to compare multidimensional rentals from thousands of trusted partners over various timeframes.
And what about in travel industry overall?
Here again, the pandemic accelerates trends that have their roots way before COVID-19 started. Travelers, especially in the younger cohorts, give more scrutiny to the environmental impact of long-haul travel. Even though globally, long-distance air travel is set to increase further, the market for domestic travel is still underserved.
Another long-term trend is growing emphasis on more unique accommodations and moving away from cookie-cutter hotel rooms. This is shown every day in the conversations we have with our clients.
Incidentally, both of these macro-trends benefit the vacation rental and alternative accommodation space. Prior to the pandemic, it was already the fastest growing vertical in travel and now got its long-lasting tailwinds on top. Alternative accommodation became a mainstream product in travel last year and this will stay - a belief that we seem to share with Glenn Fogel of Booking Holdings.
How is HomeToGo different than classic metasearch, and can you explain your revenue model – is it cost-per-click or cost-per-acquisition?
You’re right, HomeToGo is not a classic metasearch company. We are proud of the tailored approach we offer our partners. This includes both CPC and CPA arrangements with CPA being the vast majority - powered by unique tech solutions to create fair competition in our marketplace for every partner of every size.
A "one size fits all" approach is not a recipe for success when trying to form partnerships in our segment. Fragmentation is indeed a main characteristic of the vacation rental industry and we’re dealing successfully with partners of all kinds and sizes. In 2020 we hit a milestone of 2,000 partners, of all kinds, integrated on the HomeToGo platform.
Our goal is to create one central hub for vacation rentals and a seamless experience for travelers to find accommodations.
Vacation rental metasearch has had a lot of challenges and casualties along the way. Is there something inherently more difficult with rental meta?
There’s certainly something different about vacation rental metasearch. If you compare it to other metasearch cases: flights are a completely standardized product, down to flight numbers and airport IATA codes. Hotels have clearly identifiable names and often standard quality rating schemes. Or, to mention a non-travel example, hardware products have standardized identifiers.
In contrast, vacation rentals are highly individual, non standardized (which is also a strength of the product) and do not have unique identifiers. But this also presents a challenge because the same vacation rental is often offered through different channels.
So, at HomeToGo we met this challenge with cutting-edge technology. We identify, match, and merge the very same rental coming from different providers and show it as a single search result. And that’s regardless of the different data quality we get from different providers.
Our machine learning algorithms detect and learn what offers are identical from one provider to the next. For our users, this means simplified, easily searchable inventory and full comparison without the hassle on our meta product part.
What is your customer acquisition strategy, and are you exploring any new strategies or channels to help you compete with the marketing power of Booking Holdings and Expedia Group?
We have a healthy mix of paid and organic search traffic.
Last year, we also successfully implemented a new TV campaign, focusing less directly on sales and more on information. Actually we filmed dozens of versions to make sure we always convey the latest information on travel possibilities as the situation evolved.
We have also, very successfully, launched influencer partnerships and out-of-home advertising in several markets to further strengthen our brand.
Today more than ever, it is important for us to inspire people and get them excited about future trips.
On recent earnings calls, both Booking Holdings’ CEO Glenn Fogel and Expedia Group CEO Peter Kern have talked of prioritizing their alternative accommodation products. What does HomeToGo need to do to continue to be competitive as they get work to get stronger in this sector?
It’s good that you mention these announcements. Both companies are among our huge set of strong, highly diverse and valued partners: more than 2,000 suppliers, from boutique ones to large corporates, trusting and working with HomeToGo.
And they have good reason to do so: by making sure our customers see offers that really fit their needs, we send highly qualified traffic to them at a much better price point than generic traffic via search could ever provide.
It’s at the core of our interest to make all of our business partners successful. Therefore, we’re investing a lot in developing solutions to support them and grow our businesses together. This is valued by our largest partners but also and in particular by the smaller providers who are characteristic for the vacation rental space.
Last summer HomeToGo filed an antitrust complaint against Google with the European Commission. Can you explain your concerns and also the current status of your filing?
We are not afraid of competition, but we expect fair competition from all competitors.
Google ranks websites based on a long list of quality factors. All websites need to pass this quality assurance to have a chance to rank organically on top positions and therefore receive traffic. This mechanic results in a whole industry and companies around the world spending significant budgets to compete with each other in this field.
Google, however, decided not to participate in this quality competition at all (!) and puts their own vacation rental search “hardcoded” on top of the organic results - and this even with bright, shiny pictures and a map where everyone else is only allowed a text link. This is highly unfair and is misusing the monopoly power Google holds.
Illustrating this with a metaphor: Think of this situation like two shops being on the same street. One shop is allowed colorful neon signs while the other shop is not even allowed to advertise on billboards. And it just so happens that the owner of the first supermarket is the city's mayor.
Sounds unfair - and it is. And when there is only one store left at some point it is very unlikely that this will lead to better prices for everyone.
Therefore, we filed an antitrust complaint and while I can’t give you updates on the current status at the moment, I can say that we see Google continuing their behavior.
What are your priorities for HomeToGo in the next five years?
We’ve just started our journey: There’s still a great deal of exciting opportunities we have not even started to address. What I can say: we earlier talked about the mega trends influencing and shaping the travel industry.
We’ll continue to heavily invest in technology to capitalize on these trends and transform them into value for our customers. AI and machine learning will continue to drive our capabilities to process the massive inventory we manage.
Still, technology is only a tool. What really drives us is to never leave a search unanswered. The traveler’s needs are where all our thinking starts.
Is there an IPO in your future?
We never comment on specific plans for financing or possible investment.
However, generally speaking, we are considering all sorts of options for HomeToGo’s future and we’ll make sure the company is in all regards well equipped for the opportunities ahead and the travel rebound to come.
What has been the biggest learning for you personally in the last year due to the pandemic?
My biggest learning is probably our shift to remote work at HomeToGo and how well it went from day one. A great team is a great team, regardless of where everyone is working from. The last year was remarkable. I am extremely grateful for everyone who has supported HomeToGo as a whole and me personally in the last 12 months.
The pandemic is an extremely demanding situation for everyone who, like our team, is passionate about travel. Seeing the resilience, creativity and optimism that our team demonstrates every day makes me proud and confident for our next steps as a company.
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