HomeToGo Got Profitable and Repeat Customers Helped

German vacation rental marketplace HomeToGo recorded profits on an adjusted basis for the first time in a second quarter, and the company claims that it got there by improving its marketing spend, growing its subscriptions business for partners, and attracting repeat business.

Chief Financial Officer Steffen Schneider said the fact that the company offers onsite bookings as an option was an important factor in improved numbers of repeat customers.

The company, which offers price comparisons for short-term rentals as well as booking services, claims its improved marketing efficiency has been a fundamental factor in its path to profitability. That and its subscriptions business offering software services to partners. But here’s the thing: It spent €57 million ($62 million) on performance marketing in the first half of this year on a revenue base of €65 million ($71 million). 

Looking just at the second quarter, that marketing spend represented 72% of revenue — still a sizable portion. What HomeToGo did was decrease it by 21 percentage points compared to the second quarter last year — which is what the management referred to as enhanced “marketing efficiency.”

To put that into perspective, HomeToGo would rank as the second highest marketing spend as a percent of revenue, between eDreams and Hostelworld, in the accompanying graph.

Source: Skift State of Travel 2023

To sum it up, HomeToGo is clearly improving on making its marketing more efficient but there is more room for improvement.

There are some takeaways: HomeToGo did succeed at bringing back customers. And onsite bookings — as opposed to metasearch-style referrals to third-party websites — made up almost half of its total booking revenue. On the investor call, HomeToGo co-founder and CEO Patrick Andrae said Tuesday, “By increasing this amount of repeat booking revenues, we directly benefit from higher margin as revenues for multi-booking customers, as you know, come in with roughly 88% lower acquisition costs compared to first session customers,” he said. In addition, he said, in the second quarter the company increased its “take rate to a new all-time high of 11% after hitting the double-digit percentage range already for the first time in the previous quarter.”

Here’s a snapshot of HomeToGo’s second quarter earnings: Its booking revenue grew 8% from last year’s second quarter to €50.2 million ($55 million). Revenue from its subscriptions business grew 85% to €9 million ($9.8 million). Its cash position was €145.3 million ($159 million), which was up €5.3 million ($5.79 million) from the first quarter, and its take rate at 11% is at the highest it’s ever been.

Oh, and profits on an adjusted EBITDA basis were €1.4M ($1.53 million) versus a substantial loss a year earlier. Those marketing efficiencies and repeat customers were among the factors in turning that around, the company said.

Jurny’s Fundraising Journey

Jurny, a Los-Angeles based startup that sells property management software to vacation rentals, raised $2 million in a crowdfunding round. The company has already received $5.5 million in venture funding and wants to continue being what it says is the industry’s only free property management system. Basic services are free and premium services have monthly fees.

Honolulu Suspends Short-Term Rental Restrictions

After Oahu,Honolulu has taken strict measures in response to the Maui wildfires, temporarily suspending short-term rental regulations. The 30-day limit on rentals is lifted until August 31, aiming to address displaced residents’ housing needs.

July Demand Spikes Bring Respite

A new AirDNA report showed that there were 35.4 million nights stayed in the U.S. in July, beating the previous high recorded in July 2022 by 9.4%. Some key metrics: Revenue per available room declined 2.3% annually to $235.50, occupancy was 1.3% lower annually at 69.5%, and average daily rates declined 1.0% annually to $338.