Limehome launches European expansion

Limehome's expansion plans do not stop at national borders. After the company, which was founded in 2018, has now opened more than 90 locations in Germany, a growth spurt abroad is on the cards for the current year and subsequently for 2023. "In Germany alone, we can realise our concept at 4,000 locations. At the same time, we are focusing on expanding into other European markets after Austria, Spain and the Netherlands," reports Josef Vollmayr, one of the founders of Limehome. The company has around 2,500 flats under contract. The growth plans are ambitious; this year alone, this number is to be doubled.

For Vollmayr, the time is just right for such a wave of expansion. "We have a triple growth in turnover in planning and have meanwhile clearly outgrown the former niche with our segment," he says. The level of service as an argument in favour of hotels and against flats has now massively lost value among customers. "A few years ago, Airbnb cultivated a huge field. And this is now also felt in the customers' wishes and their preferences. Hotels are simply no longer the best provider for the services people want today."

The strategy for the wave of expansion has already been worked out. "Of our roughly 150 employees across Europe, about 35 are data scientists and software developers in Germany. That is the largest team we benefit from in all markets," Vollmayr explains. In new growth markets, Limehome is then primarily dependent on strong expansion teams as well as employees in the operations team who set up local operations. "In Spain, for example, there are currently almost 20 people who cover the entire market for us. For anything that exceeds their capacity, we step in from Germany." In Spain, he says, around 130 flats can be booked through Limehome, with another 500 signed up. "With each location, profitability increases because we need very little additional organisational underpinning in each case."

Spain has almost as much potential as Germany, Vollmayr says. "And then we want to start in another European country this year, but I can't be specific about that yet," the company boss explains. Only this much: Limehome is still exploring the possibilities in France, and the company is already further along in Italy. "There we have 40 cities with more than 100,000 inhabitants, which of course makes Italy super interesting as a destination for us," Vollmayr reveals.

In terms of its growth strategy, Limehome is aiming for a mix between metropolises and smaller cities. "The rough idea is: 40% A-cities, 30% B-cities. The rest are C and D locations," says Vollmayr. In these, not as much turnover can be generated, but the margins are higher and there are hardly any competitors. Depending on the size of the city, the capacity has to be adjusted. "How much we realise at individual locations depends on the location and of course the mix of room categories. Basically, we can operate a location economically from six units onwards."

Financially, the wave of expansion is also to be stemmed with the help of fresh funding from investors. "We are in talks, but there is no time pressure," says Vollmayr. This has to do with the comfortable economic situation of the company. While the classic hotel industry in particular is still suffering from the consequences of the pandemic, the occupancy rate at Limehome was 90% at the beginning of the year. "To be honest, I think that the occupancy rate is taken too seriously as a value in itself," says the Limehome boss. After all, it is ultimately controllable via the price. "We almost always get to 90% if we want to. What is more important is that each booking still generates enough to earn the contribution margin."

For Vollmayr, the outlook and the overall situation of the company are therefore more important than the mere occupancy rate. The former is now clearly positive again. "The advance bookings we are currently receiving again look very much like normality again." And when looking at the overall situation, the corners of Vollmayr's mouth also go up: "If we were to cut back on our efforts to expand further, we would be profitable as a whole company at a stroke. The individual locations are already profitable anyway. In this respect, we basically determine the course of the company ourselves with the help of our growth rate."