When GuesttoGuest announced their purchase of HomeExchange.com last week they publicized the plan to keep the two brands separate. While I think this makes sense in the short term, I didn’t see a good reason for this in the long run. I reached out to GuesttoGuest co-founder Emmanuel Arnaud to get more details on their plans and the history behind this acquisition that gives GuesttoGuest control of about half the home exchange market.
As part of the fundraising for this acquisition, last week GuesttoGuest closed $35 million in funding, led by MAIF, a French insurance company. MAIF has been involved with GuesttoGuest over the past few years, both providing funding and also underwriting the insurance offered to house swappers on that network. With the recent acquisitions GuesttoGuest now has over 400,000 members across it’s home exchange networks.
ShareTraveler: What’s the back story behind this acquisition?
Emmanuel Arnaud: The story is that my partner Charles-Edouard Girard and I are part of a group of entrepreneurs. They organized a trip to New York in November 2015 and the idea was to meet with American and French entrepreneurs who were successful in the U.S. That trip was an eye opener on the size of the U.S. market. And we thought, ok why don’t we try to acquire HomeExchange, it would be amazing in terms of synergies and we can be funded by MAIF. We had our first talks in early December 2015.
ST: You say you are “combining these communities” but if the brands stay totally separate then you aren’t in fact combining them. Could you elaborate on what it means to say that the combination of teams will “boost the development of our two companies”?
Emmanuel: The way we’re going to be keeping the companies apart is by having two separate brands, with one being more premium and one more mainstream. We are going to make it easy for those members who are more on the premium side of GuesttoGuest to join HomeExchange if they want, and make it easy for former/inactive HomeExchange members to join GuesttoGuest.
HomeExchange has a massive database of past users and we think GuesttoGuest is ideally positioned to reactivate some of these individuals and families. These are people who started the process and stopped for a variety of reasons. On the other hand, at GuesttoGuest we have a number of homes which are premium. Some people love it that way but maybe they would want to join a larger segment of premium homes. I think it makes sense when you are the owner of a very nice home to be interested in the opportunities of exchanging homes within the same category. I like the fact that on GuesttoGuest there is diversity. You can have a relatively small home and have a chance to exchange with a larger home. But if you have a very nice home, it is likely that you will prefer to spend your holiday in an equivalent place. And I can understand people who have a very nice home might not be as interested in proposals from less exclusive homes.
We’re going to leave options open and see how receptive members are to them.
On the product side we want to make some improvements. One thing we believe in on GuesttoGuest is apps. It is convenient for exchanging messages and searching homes. A lot of people use GuesttoGuest apps. There’s also the question of insurance and deposit; HomeExchange members are interested in having more comfort about financial protection.
ST: Are there things from HomeExchange.com that you hope to leverage for GuesttoGuest?
Emmanuel: There are many things from HomeExchange that we hope to leverage. For instance, HomeExchange has a better payment system and it is able to handle several currencies. HomeExchange applies different pricing depending on the country. We will be thinking about that.
ST: Will you change strategies if this doesn’t work?
We’re a startup, we change tactics and strategies on a daily basis.
ST: Is there a plan to incorporate your acquisitions from last year: HomeforHome and Trampolinn?
Emmanuel: We will be deciding this year how we manage HomeforHome. It’s a very strong brand in Spain, Italy and France. HomeforHome has a lot of paying members. There are a significant number of people who find it easier to trust other members of the community when they know they joined the same club.
ST: How are you integrating the staff from these acquisitions?
Emmanuel: There is no team for HomeforHome and Trampolinn, they were acquired without the team. The three owners of HomeExchange are on their way out, for the rest of the company they are all staying on board. The plan is to have synergies in terms of growth. We think we’re going to be the next Airbnb. There are millions of users out there ready to do home exchange. So the plan is not to downsize the staff.
ST: What would you say to HomeExchange.com members who are worried about their user experience and customer service becoming worse?
Emmanuel: It’s not going to change at all in the beginning and then all the changes are going to be happening with the HomeExchange team who know the members very well and are extremely passionate about the brand and the members. The changes are going to be on the app and insurance side. We’re not going to extend the GuesttoGuest points system, as the HomeExchange balloon system is a smart way to offer non-reciprocal exchanges. I really think that HomeExchange developed something that is genuinely different and it really works for their community.