Here's yet another sign that alternative accommodations are becoming sophisticated businesses just like hotels.
OTA Insight, a London-based startup that helps hotels track competitors’ rates, said Thursday it is acquiring Madrid-based Transparent, which gathers business intelligence on vacation rentals and short-term rentals.
The companies didn’t disclose the merger terms, which they said they had already completed within regulatory rules. In November, OTA Insight secured $80 million in funding from private equity firm Spectrum.
“OTA Insight acquiring Transparent highlights the continued convergence of the hotel and short-term rental sectors,” said Wouter Geerts, senior research analyst at Skift Research.
“With around 55,000 hotels using OTA Insight’s rate shopping and market intelligence tools [according to the Skift Research Hotel Tech Benchmark], the company is a leader in providing market data and intelligence to hotel operators,” Geerts said.
Transparent, for its part, aggregates and cleans up data on more than 35 million vacation rental and short-term rental listings.
“This deal is, more than anything, a reflection of where the lodging market writ large is heading,” said Drew Patterson, executive chairman and co-founder of Transparent.
“The lines between the rental and hotel categories are blurring,” Patterson said. “The short-term and vacation rental segments are growing up and getting institutional capital. On the hotel side, Marriott has made big investments with their Homes & Villas product.”
Lines are blurring so much across the spectrum of short-term rentals, serviced apartments, hotel extended-stay suites, and vacation rentals that it’s getting tricky to categorize units.
“If it has a kitchen, I’ll track it,” joked Pierre Becerril, CEO of Transparent.
Yet behind the scenes, the software tools used by property managers in the alternative accommodations segment are broadly different from the tools used by hotel revenue managers.
“We feel there’s just a ton of synergy,” said Sean Fitzpatrick, CEO of OTA Insight. “We can help both hoteliers and short-term rental providers make good commercial decisions just by starting to leverage the data sets across both segments.”
A Crossover View
A full-spectrum business intelligence product may help with a crossover view.
“This acquisition might be an indication that hoteliers are no longer happy to just rely on their comp set and rate shoppers to set their best prices,” Geerts said. “It makes sense for hoteliers to know the demand and supply for rentals in their area, to filter this into their pricing decisions.”
Other players also see opportunity. Vendors with tools that overlap in functionality with OTA Insight’s offerings include IDeaS, Amadeus’ Hotel Business Intelligence Solutions (which are integrating rental data), Duetto, ProfitSword, M3, HotelIQ, and Accor’s D-Edge. Some skeptics at these companies counter that OTA Insights is using investor capital cash to poach sales agents and run performance marketing to, in essence, buy market share at an unsustainable expense.
Yet one of OTA Insights’ lead investors, F-Prime — affiliated with Fidelity Investments — has high hopes for the startup because of its loyal client base.
Flipping Old Models on Their Heads
Until recently, many hotel benchmarking tools relied primarily on historical data to guide decisions about pricing and which channels, such as direct or indirect, to use.
“But the huge tech platforms like the OTAs [online travel agencies] and Google, etc., flipped that on its head,” Fitzpatrick said. “They used forward-looking demand signals, such as search traffic patterns, to inform their decisions.”
“So we’ve incorporated a lot of forward-looking data, such as flight bookings and metasearch hotel interest,” Fitzpatrick said. “We look at trends in the upper funnel in addition to on-the-books performance as a way of identifying opportunities.”
For example, Martin’s Hotels, a Belgian brand of 14 luxury hotels, is an OTA Insight customer. It said the startup’s tools helped improve the brand’s rate positioning and boost the total money generated to better than before the pandemic.
“I have made extensive use of the “booking window” module to modify my prices at the best moment,” said revenue manager Samuel Deladrière. “While it’s difficult to put a number on it, between 2019 and 2021, my transient ADR [average daily rate] has increased [by about $27, or €25, thanks to the tools].”
OTA Insight aims to take customers that began with its rate intelligence tools and to cross-sell them into other software, too.
“We’ll become a next-gen commercial platform that helps hoteliers not just with pricing decisions but also promotional placement decisions to give them a competitive edge in boosting bottom-line revenue,” Fitzpatrick said.
The acquisition represented a happy payday for the founders of Transparent.
“Many people years ago thought the market share of vacation rentals couldn’t grow much higher and questioned our business model,” Becerril said. “But it kept growing. And it’s going to keep growing and going thanks to huge tailwinds.”
Photo credit: A three-bedroom home managed by Stay Duvet as a vacation rental in Charleston, South Carolina. The property manager uses tools from the startup Transparent. Source: Stay Duvet.