Mergers and acquisitions in the STR industry

By Cristiana Carpini, Founder and CEO, Tara Home Consulting

Will M&As become more M? Probably. Let's examine the pros and cons. Prada recently announced its merger with Versace, and their respective CEOs stated that their strength would lie in their diversity. The newspapers went wild trying to work out whether Prada or Versace would take over and what might happen to one of these iconic brands. This is not a pure acquisition, as we are used to seeing, but a merger (for the moment). But why a merger and not a direct acquisition?

Why mergers might beat acquisitions in the STR space

Let's look in detail at what a merger is and why it could be the new frontier of the short-term rental industry.

A merger occurs when two companies come together to create a new entity, sharing resources, assets, technology, and know-how. In the vacation rental industry, this can mean a union between two property managers, between a technology company and an operational company, or between operators active in different geographical markets. The objective is twofold: to optimise the offer and improve efficiency. In a sector where size matters – to obtain visibility on OTA platforms, standardise the service, and automate management – mergers can become an opportunity.

From a financial point of view, a merger allows for more flexible structures (such as shareholdings exchanges), avoiding costly disbursements and indebtedness. It also favours the involvement of the management of both companies, reducing the risk of losing key know-how or loyal customers. And in case you were wondering, a merger costs less than a full acquisition – but it does require more work for the parties involved.

Finally, a merger can strengthen the brand and territorial presence in a more harmonious way, creating a more solid and attractive reality for both investors and holiday home owners.

The pros of mergers

• Geographic expansion: merging with a competitor in another location allows you to enter new markets without starting from scratch, benefiting from already established brands and consolidated relationships with owners and suppliers.

  
  

• Optimisation of operating costs: the merger allows for the sharing of operating costs: management platforms, customer care, housekeeping, maintenance, marketing, and technology.

• Greater bargaining power: with a larger portfolio, more favourable conditions can be negotiated with suppliers, OTAs, and insurance partners.

• Value for the investor: a larger, more structured company has greater appeal for real estate funds, institutional investors, or strategic buyers.

The cons of mergers

• Cultural integration: each company has its own operational style and relationship with the owners. Merging these cultures requires attention, time, and leadership.

• Service standardisation: standardising the quality of the guest experience across hundreds or thousands of properties can be difficult.

• Incompatible technology: the integration or transfer of different systems (PMS, CRM, channel manager) can create inefficiencies, especially at the beginning.

• Pre-existing contracts and relationships: each property manager has personalised agreements with the owners. Merging them requires contractual review and expectation management.

In times like now, there is strength in unity and merging could also be the new frontier for vacation rentals, allowing you to scale up by sharing experience, staff, earnings, and debts.

With over 20 years of experience in the vacation rentals industry, Cristiana Carpini is a Host Planet Columnist and the Founder and CEO of Tara Home Consulting.

A delegate of ANBBA, the Italian holiday homes association, Cristiana actively supports the growth of small and emerging businesses in the STR sector. She is also passionate about industry education and regularly organises conferences and events for STR professionals.

Fluent in Italian, French, English, German, and Spanish, Cristiana has worked across many segments of the STR industry, including recruitment, product development, and executive leadership.

Get in touch with Cristiana via email: cristiana@tarahomeconsulting.com.