How HomeToGo Uses Travel Market Disruption To Thrive

The global travel industry continues to soldier on through rocky times. After the two-year pandemic slump, it now faces new challenges in the wake of rising fuel costs, geopolitical calamities, and growing inflation — all of which result in lower consumer spending on vacations.

Moreover, people’s travel habits have changed quite a bit. More now choose independent travel over organized tours and stays at all-inclusive resorts. Instead, there’s a growing cohort of free independent travelers (FITs) — people who plan their own trips and travel solo or in small groups.

Eastern Europe, Germany, and Scandinavian countries have the biggest FIT markets. In 2019, 35% of German tourists booked their accommodations independently over using a travel agency.

Other Europeans are increasingly seeking more invigorating travel experiences. A recent poll by Booking.com found that 58% of travelers want to get “out of their comfort zone” during their 2023 trips and 47% will seek out destinations offering completely different cultural experiences to their home country.

These changes in the travel market have already prompted legacy travel brands like Thomas Cook and Eurostar to refresh their brand marketing strategy — and have accelerated growth for challenger brands like HomeToGo.

Despite the ongoing disruptions, HomeToGo has grown into the world’s largest marketplace of vacation rentals. In 2021, the company successfully IPO-ed with a valuation of above $1 billion. As of Q3 2022, HomeToGo continues to display stellar financial performance results with revenue growth of 59.8% year-on-year.

HomeToGo is now set to break even by 2023 across all 25 counties where it is present — that's faster than one of its biggest (and older) competitors, Airbnb (which hasn't reached net positive yet.)

So how has HomeToGo managed to thrive in the tumultuous travel market? Let’s deep dive into the brand’s growth story.

HomeToGo's Success Story: An Experienced Team and Lean Business Model

(HomeToGo Management Board. Left to right: Wolfgang Heigl, Co-Founder & CSO; Steffen Schneider, CFO; Dr. Patrick Andrae, Co-founder & CEO; Valentin Gruber, CCO)

Source: HomeToGo Press Kit

HomeToGo was co-founded in 2014 in Berlin by Wolfgang Heigl and Patrick Andrae — an experienced entrepreneur and an executive. The duo saw an opportunity to improve the vacation rental experience, which most travelers found confusing.

As Andrae recounted in a TNW interview:

“The market of vacation rental used to be really fragmented, way more than, for example, the hotel market. Before HomeToGo, there wasn’t a similar metasearch engine. That’s the void that we tried to fill.“

Andrae and Heigl built a convenient search platform for aggregating, comparing, and booking vacation rentals from all around the web. Think of HomeToGo as Skyscanner, but for holiday homes.

Before co-founding HomeToGo, Wolfgang Heigl created and sold Swoodoo — a metasearch engine for flights. Andrae, in turn, was in charge of business development for home24 — a European online furniture store. They also had another person on board, familiar with the online travel agency (OTA) market.

The team has deep travel market knowledge, experience in online commerce, and technical know-how. So it only took a few meetings to secure their first round of angel investments to launch the website for German consumers.

Cut to 2016: HomeToGo has successfully launched in 9 European markets and the US. Their platform integrated over 250 inventory partners from 200 countries, giving users an ample choice of properties of any type, size, and budget.

And these performance results couldn’t go unnoticed by VC firms. The same year, HomeToGo raised a $20 million Series B from several high-profile investors. Harley Miller, Vice President at Insight Venture Partners, one of the investors, explained his firm’s enthusiasm for this particular project:

“We’ve seen a lot of travel meta-search businesses over the years, but never any with such strong retention as HomeToGo. The strong traction is also due to HomeToGo’s massive investment in brand, predominantly in TV ads, rewarded by a large base of loyal returning users.”

Indeed, HomeToGo was doing a stellar job at generating awareness for its brand. One of their most successful marketing campaigns at that time was with Chris North, better known to some as Mr.Big from Sex and the City series.

Throughout 2018, HomeToGo released a series of short TV promos, each pitching one simple brand value proposition — “one-stop search destination for all rentals”, “biggest selection of inventory”, and “cheap deals in popular locations”. North eventually became the brand’s celebrity advocate, singing his praises for HomeToGo in other interviews with outlets like People, Travel + Leisure, and Forbes, among others.

Though North was an “interested party”, he couldn’t have promoted HomeToGo as vocally as he did if the product wasn’t great. On the tech side, HomeToGo has been relentlessly improving on-site user experience (UX) to help users score the best deals.

There was a kicker, though. As Andrae explained to PhocusWire, unlike hotels, “vacation rentals are highly individual, non-standardized (which is also a strength of the product), and do not have unique identifiers”.

This makes search and comparing properties more challenging for users. HomeToGo solved this issue by creating robust machine learning algorithms for classifying different properties by searchable criteria (e.g. number of bedrooms, special amenities, property type, etc.) and adding other comparison filters to enable easy inventory search for users.

Its strong focus on UX paid off. By the end of 2017, HomeToGo was sending 20 million monthly visitors to its partners’ websites, which earned them a prestigious Gründerszene Growth Award.

Windwhirl product growth continued through 2018 and 2019 with HomeToGo processing over €1.22 billion in gross bookings for the first time. In 2019, the startup also acquired a struggling US competitor, Tripping.com, which strengthened its brand presence in the US.

Yet, HomeToGo growth was hitting a plateau. Its original monetization model relied on Cost per Click and Cost per Lead profits — revenue share from partners for whom they generated rental bookings. That’s how other metasearch engines like Skyscanner, Kayak, and Tripadvisor also operate.

But HomeToGo decided to go another way. Booking.com and Vrbo (formerly HomeAway) directly process user bookings and, therefore, retain more profits and customer information. HomeToGo wanted to operate in the same way.

This was a contrasting strategy to other travel metasearch engines like Google Travel, which eventually abandoned direct bookings. Yet, HomeToGo managed to successfully make this transition, thanks to its strong technology backbone and efficient customer retention mechanisms.

By 2019, 76% of revenue in the DACH region came from “on-site bookings”. Looking ahead, the volume of global onsite bookings for HomeToGo increased by 280% between 2019 and 2022, netting the company €16.3 million in revenue.

The global pandemic slowed down HomeToGo growth, but only temporarily. By the summer of 2020, the booking volumes were climbing again. The company still processed over €1.25 billion in gross bookings in 2020, whereas other online travel agencies saw a 58% weighted average decline.

HomeToGo’s secret to success? The ability to rapidly adjust its product technology to better serve new customer needs.

As Patrick Andrae mentioned in his PhocusWire interview:

“We immediately saw two major needs emerge: one being the ability to change bookings flexibly and the other being the possibility to look for deals on vacation rentals within a longer time frame due to the new flexibility already discussed”.

By early spring, the team rolled out free cancellation filters for booked properties and emphasized flexible date search functionality. Post-roll-out, they saw a 35% increase in guests selecting properties with flexible cancellation policies.

That said, HomeToGo saw issues coming from another angle — namely Google. In 2019, the search engine quietly launched a feature that allowed users to search, compare, and book hotels straight from a destination site (aka Google Travel).

A year later, many travel startups, particularly metasearch engines, noticed some disturbing dips in traffic. As it turned out, Google has started to feature its own results above others. This didn’t feel like fair play to HomeToGo.

Together with other industry players, the startup petitioned the European competition commissioner with an antitrust complaint, arguing that such “favoritism” towards its own products hurts other businesses and is bad for consumers. The legal battle continues.

2021 however, started on a better foot as HomeToGo said it has almost entirely transitioned from an earlier cost-per-acquisition (CPA) model to onsite bookings. “The CPA model aligns the incentives in the right way. It gives our partners a better ratio of what they spend on HomeToGo versus what they earn from an ROI perspective,” Andrae said in a Skift interview.

The same year, HomeToGo went public on Frankfurt Stock Exchange in a €1.2 billion transaction, which marked a new exciting growth chapter for the company.

With movement restrictions lifted in most geographies, the wave of “revenge travel” began — and HomeToGo was well set to profit from it all through 2022. According to the latest investor numbers, the platform’s IFRS 15 revenues grew by €39.2 million per quarter, representing a surge of 302.6% in year-over-3-year growth.

3 Brand Lessons from HomeToGo

Source: HomeToGo Press Kit

HomeToGo has many established direct competitors (like Airbnb or Vrbo by Expedia) and in-direct ones whom they’ve successfully turned into business partners (like Booking.com). They also mustered a massive transition by changing their business model from a metasearch engine to an online travel agency, which further accelerated their growth.

In both cases, high brand awareness among target audiences and an impeccable user experience were critical factors for success. HomeToGo delivered on both of these goals through a smart combination of brand marketing and product development strategies that other markets can also apply.

1. Test Different User Acquisition Channels to Balance the Costs

Brand marketers have no shortage of online and offline channels to test drive.

Spending on brand-building channels like OOH and TV ads can boost the top-of-the-funnel metrics like brand awareness and consideration, which are critical at early stages. Yet, the HomeToGo business model also required cost-effective bottom-of-the-funnel (BoFU) performance.

As Nils Regge, formerly responsible for marketing at HomeToGo, explained to EU Startups:

“The vacation rental market is very cost-intensive, especially in terms of marketing. It is a difficult market to break even in, and so we’re delighted to be able to grow and break even at such an early stage (in 2017)”.

This growth came from HomeToGo’s smart digital marketing strategy — and SEO in particular.

Between 2014 and 2019, HomeToGo's internal SEO team increased hometogo.de organic website visibility by over 50%, placing them well ahead of Airbnb.

Source: Search Engine Journal

The brand’s SEO strategy had two pillars:

• Localized data-driven content for each target market

• Extensive content research and outreach for backlinks acquisition

In 2018 alone, the HomeToGo marketing team created over 100 data-driven content pieces for both domestic (German-speaking) and international audiences. In each case, they pursued a localized angle for each market to engage their ideal target audiences and secure coverage with the local press.

For instance, the Ski Price Index campaign earned the team mentions with the New York Times and MSN.com among other online publishers, which drove a boost in brand awareness. But more importantly, the website’s rankings for relevant keywords increased by as much as 85 positions, which lead to an evergreen source of new traffic and conversions.

The Takeaway: Paid channels are often seen as a “shortcut” to customer acquisition — and a strategy most new brands focus on. Yet, owned channels can bring more lasting marketing impact at a lower cost.

Targeted investments in content marketing, SEO, and organic social media promotion require more time to bear results. But once they do, their cumulative effect significantly overshadows paid media in terms of cost-efficiency and volume results.

2. Put Customer Needs at Focus of Your Technology Investments

HomeToGo operates under the principle of “'we leave no search unanswered”. Whether you’re looking for a castle with a pool in Europe or a remote 6-room farm in the Midwest, HomeToGo will give you attractive options, based on pre-defined criteria like dates, amenities, or number of bathrooms.

Source: HomeToGo

What also sets them apart from others is property result rankings. In contrast to other accommodation booking platforms, HomeToGo doesn’t let property suppliers “auction” for the top listing position. Instead, they rely on different data points (ranging from selected filters to users’ location or past booking history) to maximize booking rates.

Also, HomeToGo doesn’t allow users to rank properties by the lowest price. This discourages suppliers from offering misleading low rates to game the platform’s algorithms.

HomeToGo also aggregates all possible deals on the market, plus touts some exclusive listings from long-term partners. The platform’s high user return rate is a direct result of a strong alignment between the underlying technology and target audience knowledge. This alignment is further emphasized by the brand’s ethos of “easy, fast, and cheap access to the best vacation rentals from all over the world”.

The Takeaway: Strong product and brand marketing alignment is the ultimate recipe for sustainable growth. However, it’s a hard balance to achieve as it requires ongoing education on branding for the product, tech, and even customer service teams.

To ensure your product evolves in line with the customer needs, inform your product development with brand tracking data and consumer sentiment insights — the type of data our brand monitoring software provides. At the same time, educate your brand marketing team on the value and power of the proprietary tech you’re building, so that they could disseminate this knowledge to targets.

3. Turn Proprietary Data Into Unique Brand Stories

Since the early days, HomeToGo focused on data-driven storytelling. As a technology platform, they have visibility into customer vacationing patterns and unique property or location characteristics, as reported by their partners.

Similar to Spotify's “Wrapped” campaign, HomeToGo uses this data to create unique brandable assets, press-worthy reports, and shareable social media stories. Recent campaigns like “2022 best cities to celebrate pride” or “2021 travel trend report” have landed HomeToGo free coverage in CNBC, The New York Times, CNN, and other global media.

Source: Travel + Leisure

The media stories, in turn, generate possible buzz on social media, drive organic site traffic, and entertain existing audiences.

That said, HomeToGo could have accomplished an even greater impact by creating social media content based on these data stories (something that Spotify does). Instagram, TikTok, and YouTube are often top sources of travel inspiration for younger consumers. Yet, HomeToGo’s Instagram has rather generic content and barely any engagement.

Including social channels in its data-driven content distribution strategy could help HomeToGo capture the flickering attention of Gen Z consumers, who represent a growing cohort in the travel market.

Takeaway: Brands can generate major organic buzz with unique, compelling, and data-driven stories. But most stories also need amplification to reach the right audiences and achieve the “viral” effect.

Distributing stories to online publishers is a good strategy. However, it can be further enhanced by cultivating an online community of brand fans, who’d then take your message further. Engaged communities can give your brand a truly viral moment (which, when harnessed right – can lead to sizable improvements in ToFU metrics).

So perhaps HomeToGo may want to borrow some community-building lessons from the likes of Strava or Patreon.

Final Thoughts

HomeToGo went through some incredible growth over several years, going from a local search engine for vacation homes to one of the “category leaders” in the travel space. The team’s sharp focus on harnessing technology to meet changing user needs helped HomeToGo achieve early traction — and then turn it into ongoing success, amplified by tactical investments in organic (and paid) marketing channels.

By maintaining lean operations and pivoting their product through turbulent times, HomeToGo couldn’t have been slowed down even by the pandemic. Still, we can’t help but wonder how the startup will continue operating at its peak and engaging new travel audiences as the travel market further evolves. What’s certain though, is that some great new brand marketing adventures are ahead for them!