Having steadily built up a dominant position in the more traditional side of vacation market, Wyndham Vacation Rentals has turned its attention to the fast-growing city breaks sector.

The recent acquisition of German-based Wimdu and the purchase of a stake in upmarket specialist Veeve gives Wyndham much more firepower in an area of the holiday market that has grown in popularity.

CEO Gail Mandel says the move into urban rentals is not strictly a change in strategy but rather a continuation of an existing policy to offer a broad range of properties to consumers.

“We know that there’s an increasing trend for travelers, that they’re combining a resort destination vacation with an urban stay. People are doing those combination trips where they may stay four nights in a Tuscan villa, but then they want to go and stay three nights maybe in Rome,” she says.

“Those are the type of changing trends that we stay on top of in order to ensure that we’re meeting the needs of our consumers,” she says.

Between 2007 and 2014 city trips grew in popularity by 82 percent and accounted for 22 percent of all holidays taken, according to World Travel Monitor figures. A separate study by Mintel found that city breaks had drawn level with beach holidays in 2015.

While Wimdu and Veeve are different companies at different stages, they both offer additional exposure to the urban market. As did the purchase of Barcelona-based Friendly Rentals, which it bought in September.

It can’t be a coincidence that Wyndham’s big urban push comes at a time when the threat of Airbnb is bigger than ever. The best-known home-sharing platform helped change the way consumers think about holidays and opened up areas that had either been inaccessible or over-priced. Whether Airbnb helped drive the growth in city-center rentals or whether it just spotted the trend is irrelevant. The fact is that the holiday market has changed and both incumbents and newcomers need to take notice.

Prior to its most recent deals, Wyndham (and its predecessor Cendant) had spent the best part of 15 years buying up European vacation rental businesses, mainly in areas traditionally associated with going on holidays such as the cottages and villas.

The growing popularity of city breaks and the scale offered by home-sharing platforms has meant that Wyndham has had to act.

Vacation rentals aren’t new

It must be strange for Wyndham employees to see the sharing economy being referred to as a modern invention, given that one of its brands, Hoseasons, has been in business since the 1940s.

The models of Airbnb and various companies within Wyndham are essentially the same: hosts give up a portion of the profit in exchange for distribution.

The difference being that Wyndham takes more of an active role in letting the property out. Arguably there is also less flexibility in terms of length of stay but this is something Wyndham claims to be working on.

“We look at ourselves as pioneers in the sharing economy. For us our competitive advantage, as we see it, is our peer-to-peer plus, where we’re providing that additional service, that no hassle experience where our consumers can vacation with confidence and the homeowners can also have confidence that their homes on their precious property is taken care of,” Mandel says.

Mandel says that Veeve was invested in because it offered a similar “peer-to-peer plus” model with that “additional layer of service.” She adds: “It’s not just a classified ad or a matching of… people to homeowners.”

Wimdu (which is still subject to German regulatory approval) is a slightly different acquisition.

“We look opportunistically at what’s available and the opportunity came and the thing about Wimdu is it does provide us another took in the toolkit, where we can expand our distribution for our homeowners,” Mandel says.

“If you think about it, 85% or about 85% of our distribution is done through our proprietary channels. We’re very proud of that because we’ve done a very good job of leveraging our channels and that’s where I see Wimdu fitting.”

The deal is also odd because Wimdu was only very recently bought by fellow Airbnb clone 9flats.

What about Airbnb?

For a long time Airbnb operated simply as a very pretty and effective marketplace but in recent months it has indicated that it wants to be more as a traditional travel company. It has added an offering called Trips, which offers in-destination tours, and is planning to launch flight booking facilities.

Whether a listings site like Airbnb can turn itself into an OTA like Expedia remains to be seen. But what it does signal is a desire to further encroach on the space that Wyndham occupies.

“Look I think that this is the thing, Airbnb’s model is very different from ours. They’re a distribution plank, they’re not providing a full vacation experience, which is what we’re doing everyday with the peer-to-peer plus model,” says Mandel.

“They’re trying to get into that space: the question is will they get into it the same way that we are in it? Only time will tell.”

Photo Credit: A street in Chelsea, London. Wyndham has invested in Veeve, which offers upmarket properties in the UK's capital. Cristian Bortes / Flickr