Metasearch is hard, and comparison-shopping for vacation rentals and apartment shares is even harder. Tripping and others are having a hard time building their brands in the face of competition from larger players with more ample resources.
Is it a moment of reckoning for vacation rental metasearch, the handful of businesses that enable consumers to comparison-shop for alternative accommodations?
One such sector leader, Tripping.com, confirmed that it has restructured to reduce cash burn, and has laid off 15 employees in its San Francisco office. Skift received a tip Wednesday that the company, which had raised more than $50 million in funding, had parted ways with 30 percent of its staff.
Tripping founders Jeff Manheimer and Jen O’Neal confirmed the 15 layoffs in a statement.
“This week, my co-founder and I made the decision to restructure Tripping.com to reduce our cash burn and focus on profitability,” Manheimer and O’Neal said in an email. “In order to lower our operating expenses, we have reduced our staff by 15 people here in San Francisco. Our office in Buenos Aires is not affected by these changes.”
The two Tripping.com founders said it was a difficult decision, but a necessary one if the company were to become “more profitable.”
“Hitting our revenue and profitability targets is critical and we prioritized positions that are directly tied to hitting these goals and executing on our product roadmap,” the two officials said.
Regarding that cash burn, Tripping spent more than $600,000 on national TV advertising in the U.S. in 2017, according to iSpot.tv, an advertising analytics firm, but closed the advertising spigot in 2018. Rival HomeToGo, which has raised around $27 million in funding, shelled out more than $9 million in U.S. national TV advertising last year, and has upped the ante with more than $3.7 million in U.S. brand marketing in the first four months of the year, according to iSpot.tv.
Despite the downsizing, O’Neal and Manheimer said Tripping.com “is off to a very strong start in 2018.” The two founders said Tripping, which has more than 12 million vacation rental listings globally, “exceeded our revenue forecast every month this year and increased revenue per visitor by 33 percent in the past 60 days alone.”
Tripping enables consumers to search for vacation rentals, and then compare rates from companies such as VRBO, TripAdvisor, Wimdu, Booking.com and Agoda, for example. When users want to book a property, they navigate to one of these sites in classic metasearch style to complete the booking.
While some have speculated that some vacation rental metasearch sites have been poised to be bought by larger players, there are plenty of skeptics. Unlike hotel rooms, there is an even wider disparity of property types in vacation rentals and apartment shares, making comparisons harder. Kayak co-founder and CEO Steve Hafner has said the sector is too small a slice of hospitality to carve a viable niche, although the sector is certainly growing.
Chris Hemmeter, managing director at Thayer Ventures, said the developments at Tripping indicate something about the state of search as well as the competitive environment.
“Here’s what we know, the private accommodations asset class is organizing; Sonder, Oasis, BookingPal and Hostmaker are just some examples,” Hemmeter said. “At the same time, the big spenders; Booking Holdings, Expedia and Airbnb are doing battle at the top of the travel funnel making it very difficult, and expensive, for startups like Tripping to compete.
Hemmeter argued that Tripping’s struggles speak to the difficulties of search. “I don’t think this says much about the sector specifically as it does about the competitive challenges in search,” Hemmeter said. “As early stage venture capitalists focused on travel and transportation, we love the dynamics at play in this massive asset class yet at the same time, any travel adventure that depends on discovery in search sends shivers through our spines. We’re like the surfer who loves the break at Waikiki but won’t ever enter the water at Mavericks.”
At the same time, vacation rental metasearch players, including Tripping.com, HomeToGo, Munich-based Holidu, AllTheRooms, Hundredrooms, and FewoFerien/Holiday Homes, for example, have to compete not only against their supplier partners but also against emerging players such as Google, which is beginning to offer vacation rental search.
Trivago CFO Alex Hefer recently commented about vacation rental metasearch startups, saying his company wouldn’t be interested in buying one for their brands or their search technologies, but might be interested if they have a deep well of advertising relationships.
In the face of intense competition, brand-building has been very tough for these players, although HomeToGo, for example, has been spending a lot of money trying to do so.