PARIS (Reuters) - AccorHotels (ACCP.PA), Europe’s largest hotel group, has bought British serviced home rental company onefinestay to strengthen its response to Airbnb and further expand its luxury portfolio.
The world’s fifth-largest hotel group, being reshaped by Chief Executive Sebastien Bazin, paid 148 million euros ($168.5 million) for the loss-making start-up and pledged to invest a further 64 million euros by 2018 to help it grow worldwide.
Onefinestay was launched in London in 2010 by four friends Greg Marsh, Demetrios Zoppos, Tim Davey and Evan Frank, who had raised about 200,000 euros from family and friends.
The company which lets out a portfolio of 2,600 properties in London, New York, Paris, Los Angeles and Rome, will remain an independent business unit within AccorHotels and will continue to be led by Marsh.
“I am re-investing in the company. For me this is the beginning of a new chapter, not the end of the story,” Marsh told Reuters after a news conference held in one of the company’s lavish Paris rentals, a three-floor apartment in the swish 7th arrondissement priced at 1,000 euros per night.
AccorHotels has been expanding its reach in the luxury segment after agreeing a deal for FRHI, the owner of hotels such as London’s Savoy last year.
Bazin has long warned that revenue from traditional hoteliers was under threat from companies like Airbnb, who have made it more popular to turn to accommodation other than hotels when on vacation or on business.
Like Airbnb, onefinestay allows owners to rent out their homes but onefinestay itself oversees each rental. It provides a personal welcome on arrival and a team on call 24/7.
In June 2015, the start-up raised $40 million in venture capital, in a round that included Hyatt Hotels. This brought total capital raised to $80 million.
With the help of AccorHotels, onefinestay plans to expand to 40 new cities around the world over the next five years, growing revenue tenfold from around 15 million pounds ($21.4 million) in 2015 and to reach break-even by 2019.
Bazin said that operating losses of 15-20 million pounds for the start-up were “perfectly acceptable”.
“We are accelerating the transformation of our business model to capture the value creation linked to the rise of private rentals and also strengthening our presence in the luxury market with a complementary offer,” he said.
In February, AccorHotels announced the acquisition of a 30 percent stake in Oasis Collections, an American marketplace for private rentals, and of a 49 percent stake in Squarebreak, a French start-up offering high-end rentals in France.
Elsewhere in the industry, Wyndham Worldwide, the parent company of Travelodge and Ramada, has also invested in Love Home Swap, a start-up allowing paying subscribers to exchange homes.
Editing by James Regan and Keith Weir