German vacation rental marketplace HomeToGo recorded profits on an adjusted basis for the first time in a second quarter.
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.
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