While Airbnb may have started off the wave of renting out a room in your house periodically to travelers for some extra income, that industry has blown up to include a lot of other competitors like VRBO.
That’s led to many vacation rental owners putting their homes on multiple sites, which has led to the emergence of startups like Beyond Pricing — which helps vacation home owners figure out how to price those rentals. It’s a complex problem to be sure given the very disparate data sets that they might need to better piece together a good pricing algorithm. So it may make sense, then, that multiple startups couple up to get the job done. That’s what’s happening today, with Beyond Pricing picking up Smart Host.
These kinds of pick-off acquisitions happen all the time, though Beyond Pricing has said it has raised $1.5 million in financing. But there’s a few things to note here. Airbnb has worked to create its own pricing algorithm and use the internal data set that can figure out the best price for an Airbnb rental. It has a lot of data that works well for an Airbnb listing, but a vacation home owner might want to have as big of an opportunity as possible to generate money off their rental — including multiple different providers.
“Having come from the hotel space, where third-party revenue management and dynamic pricing software like iDeaS, Duetto, and TravelClick have existed for decades, I expected the same to exist in vacation rentals,” Beyond Pricing CEO Ian McHenry said. “What we quickly learned was that not only did it not exist, but the central systems vacation rental managers used didn’t even have APIs to allow you to push hundreds of new prices into them every single day. If the equivalent system in hotels (software like Opera from Oracle) wasn’t able to do that, pricing as we know it with hotels wouldn’t exist. So we had to actually work with all the systems to be able to handle the kind of sophisticated pricing we were doing.”
The user behavior and buying that happens on Airbnb — which pretty much invented the space — might not be the same as the behavior you’d find on VRBO or others. And as larger companies try to pick off the opportunity of loading up their sites with listings from these kinds of owners, having a sort of neutral Switzerland may turn out to be a pretty successful company. It’s not an unheard of strategy: you have Pinterest, Google and plenty of other companies building their own visual search products, and then you have a startup like Clarifai building a visual search product for everyone else.
There’s going to be plenty of competition in this space, the least of which being all of these listing sites deciding to go proprietary with their own pricing algorithms that can better leverage their internal data. Facing that kind of future, it may have made sense for a company like Smart Host to wrap up its business and slot it into a larger startup that has a better shot at creating something defensible.
This acquisition will end up manifesting itself as a new part of Beyond Pricing in terms of better figuring out how much money neighbors are charging for their rentals. The company is acquiring the assets and technology of Smart Host, which came out of Techstars, for an undisclosed price, while the team is moving on, the company said.
“As we expanded beyond just Airbnb and into the much larger traditional vacation rental market, we had customers ask us if we could show them what their neighbors were charging,” McHenry said. “While we were focused on our big data, machine learning, predictive analytics price engine to always recommend the perfect price every day, we recognized that users also wanted to more about what was behind the data. Previously, we’d just referred them to Smart Host for that. With the acquisition, and the combination of their technology with our proprietary Health Score listing scoring system, we’re now able to provide that as a nice extra feature. The acquisition also cements us as the clear leader in a rapidly growing space.”
Published at Tue, 25 Jul 2017 12:00:59 +0000