Who would have thought that a company that allows strangers to rent their homes to other strangers would be worth $31 billion? Airbnb, Tripping.com, VRBO, HomeAway, Flipkey, and many others are paving the path towards a travel sector dominated by digital marketplaces.

And, once again, another industry has finally realized that the time has come to embrace platform innovation and digital transformation. This time around, it's the hotels industry. RCI, Wyndham Worldwide's timeshare division, has acquired Love Home Swap, a UK-based startup that's building a network for swapping luxury homes.

With Airbnb closing the travel loop and squeezing large hotel chains out of the picture, major hotel chains are finally realizing that it is time to adapt, and it's not only Wyndham Worldwide that's feeling the heat.

Last year, AccorHotels acquired OneFineStay for $170 million. OneFineStay focuses on short-term rentals of luxury homes. Unlike Love Home Swap, only 10% of the homes that apply make the cut. The company also incorporates a lot more of the traditional hospitality process.

OneFineStay handles the cleaning, provides high-quality towels and linens, Kiehls bath products, and, to top it all off, an iPhone for navigation. OneFineStay offers that extra touch of luxurious service that Love Home Swap does not, but each platform caters to slightly different users.

After being in the pipeline for the past year, the Wyndham deal closed this week for approximately $53 million in cash. This is certainly the start of a new trend in the hotel industry.

Large hotel chains are beginning to acquire travel startups in an attempt to catch the new wave of innovation in travel, the very same spearheaded by Airbnb.

$16 for Access to a New Lifestyle

Why did RCI decide to acquire Love Home Swap?

Love Home Swap aims to do for home exchanges what Airbnb does for rentals. It allows paying subscribers to exchange their homes with other Love Home Swap members around the world, creating a new segment in the sharing economy.

Users can easily sign up for $16 dollars a month. They get to list their home and set their own value between 50-300 points, going up 50 points at a time with a recommendation from the company. Besides the monthly fee, it is essentially a cashless transaction.

The classic swap is when members go to each others' homes, either at the same time or on different dates. The point swap allows users who can't match dates and locations to build and use points whenever and wherever.

In reality, a college student and a mother of two will have extremely different accommodation preferences. Love Home Swap caters to older, upper-class people who have a nice property and want to save money by forgoing an expensive hotel booking, but still maintain a high level of luxury comfort when they travel.

Wyndham already invested in the startup's growth and success, taking a stake in Love Home Swap to the tune of about $10 million in 2015.

This acquisition is a very logical move for Wyndham Worldwide. The hotel and casino company is known for its famous chains like Ramada and Travelodge, but has also has a long involvement in the self-catered and family accommodation spaces through another of its business units, RCI.

RCI is the largest timeshare vacation exchange network in the world, and Wyndham has been involved with private home rental since the early 2000s. Alas, RCI never moved into the private home swapping sector, which is exactly what Love Home Swap brings to the table.

By acquiring Love Home Swap, RCI will broaden its appeal to a completely new set of travelers and strengthen its stance as a leader in the market for alternative accommodations.

RCI will not only expand its brand, but also tap into all of the benefits a platform business model offers. Through this deal, RCI will expanded its customer/user base and diversify its geographical spread.

On the other end, Love Home Swap will also benefit. By joining a global brand that has been involved in vacation exchange for the past four decades, Love Home Swap will get access to a more efficient inventory management and analytics system that it wouldn't have been able to develop itself.

It's a Wyn Win

RCI recognizes that it is missing out on something, and building out a new business unit on its own isn't worth it. In the future, Love Home Swap will run as an independent brand and be marketed separately from RCI. However, that doesn't stop the two firms from finding tremendous synergistic benefits.

In a social media-dominated world, people are on the hunt for the latest trends and the cheapest prices. Love Home Swap offers exchanges in niche markets and geographies in ways no ones else, something Wyndham and RCI couldn't offer, much less ignore.

With this purchase, RCI is finally given entry into the private home exchange market. For now, sticking to high-quality listings through Love Home Swap might be the easiest transition, but farther down the line, RCI will ideally look into offering something more.

Perhaps it will move into selling experiences like Airbnb, but tailored towards high-end users. Since Love Home Swap ultimately sells luxury, RCI could offer unmatchable exclusive and opulent experiences, at a caliber above what competitors can offer.

For now, it is clear that instead of trying to beat or turning their backs on travel platforms, hotel chains like Wyndham Worldwide at last realize that it's time to join.

Published on: Aug 3, 2017