This article was published on EU-Startups.
Today Brno-based Flatio (founded in 2015), a mid-term rental platform aimed at professionals and students, today announced it has merged with Lisbon-based NomadX (founded in 2017), an affordable digital nomad housing marketplace.
Both businesses, which have an estimated combined worth of over €11 million, hope the merger will establish them as market leaders and thwart advances from Airbnb into the rapidly-growing mid-term rental sector. The merger will see the companies combine their listings (Flatio has 9,000 across 60 cities and 17 countries and NomadX has 1,700 in Portugal alone) and expand to new territories like the US, UK and Brazil.
After beginning discussions in July, Flatio and NomadX were quick to push through the deal in part due to evolving customer behaviour caused by the COVID-19 pandemic. One change being the rapid increase in remote working, which has seen businesses like Twitter and Facebook encourage staff to work from home until 2021.
The liberation of the workforce has given traditional salaried workers the opportunity to work from anywhere and sparked an upturn in interest in month-by-month rentals, as people look to beat lockdown boredom and work from different properties at home and abroad. While some landlords in destinations like Portugal (where NomadX is based), that had previously relied on short-term holiday bookings, begin to explore longer stays to safeguard themselves against a second wave. Flatio, for example, noticed an 111% increase in the onboarding of landlords in March and has seen another 492% increase in September (compared to February 2020).
Unlike other rental platforms like Airbnb, which reportedly laid off 25% of its staff at the start of the pandemic, Flatio’s business model has been robust throughout having recorded 20% growth in bookings year-on-year and a 100% revenue increase in key cities.
Though Airbnb began listing monthly stays in spring and recently claimed 20% of its bookings were over 30 days, Flatio isn’t concerned:
Airbnb tried and failed to merge into the mid-term rental market four years ago, but their business model isn’t up to it, so we’re not worried. Our business model is much more sustainable than Airbnb’s because we build and develop relationships with individual landlords, which make up 85% of our inventory. We also safeguard our tenants by offering full contractual agreements in native languages.
Airbnb is essentially a middle-man driven by profit. The platform offers ludicrously-priced monthly lets to tourists and drives rental prices up in destinations, which causes damage to local economies and forces natives out. We want to change the perception of rental platforms by offering prices similar to long-term lets and on average 50% less than Airbnb.Flatio’s CEO Radim Rezek explained.
Both Flatio and NomadX have seen positive signs in recent months, recording sharp increases in web traffic. Flatio has seen an 17% increase in website traffic globally and 20% rise in bookings year-on-year. NomadX, which launched in July 2019, on the other hand, has seen traffic double on pre-pandemic levels, though bookings have stalled due to travel restrictions between the UK (and the US) and Portugal. However, NomadX founder Dave Williams is expecting a boom post-pandemic. He said:
At the minute, flights are still closed from the US to Portugal, except for essential business. And UK travel restrictions were recently enforced again meaning British citizens have to isolate for two weeks on returning from Portugal. But when markets start re-opening, especially with all the newly minted remote workers, we’re expecting to see a huge influx in bookings.
As part of the merger, all property listings, management and transactions by both companies will be centralised on Flatio’s technology platform after a transition period, which will last several weeks. The NomadX branded housing marketplace, with over 160,000 unique users from over 140 countries this past year, will continue to exist but will be powered by Flatio and expand to all of Flatio’s markets.
The NomadX housing sales and operations team will be integrated into Flatio and continue providing support to guests and hosts by using Flatio technology and operations. Dave Williams, NomadX CEO and co-founder, will continue to run NomadX and become a strategic advisor to Flatio, advising on existing market growth, global expansion, local Portugal strategy, and digital nomad industry guidance across all Flatio markets.