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Amy Froelich and her wife, Marla, have been Airbnb, Inc. hosts since 2015. They started in Iowa City, Iowa, and continued on to Madison, Wisconsin, where they own a four-bedroom home in a lush neighborhood within walking distance of trails and shops. On weeks their house isn’t rented out, they open it up for free home swaps through HomeExchange — an online travel hack they stumbled onto three years ago that lets them leverage their place for free accommodations elsewhere.

“We were just in a home exchange outside of Glasgow, Scotland. This beautiful couple, Claire and Michael, greeted us at the door with homemade bread that she’d just pulled out of the oven,” says Amy Froelich, speaking to Bloomberg from the U.K., a day after her stay concluded. The hosts couldn’t vacate on the agreed dates, but they offered the couple up a loft area with a master bedroom and en suite bath. In exchange, they’ll get to stay at the Froelichs’ home at a future date of their choosing. “It’s much more than monetary value,” says Froelich. “We departed as lifelong friends.”

Offering your home in exchange for a stay at someone else’s place is far from a new concept, but this oft-forgotten segment of the travel industry is booming amid high inflation, the normalization of remote work and skyrocketing hotel rates. Also contributing to the trend is increased frustration with short-term rentals and the growing regulation of rental homes in major cities.

In conversations with four home exchange companies, all reported either double- or triple-digit growth in 2023, compared with the previous year, based on the number of members or home swaps made on their platforms.

Kindred, an invitation-only membership platform founded in 2022 with access to 30,000 homes in 100 cities, saw home swaps grow by 800% year-over-year in 2023. The San Francisco-based startup has raised $26 million; early investors include Andreessen Horowitz, the same firm that contributed $112 million to Airbnb’s Series B funding round in 2011. (Bloomberg LP, which owns Bloomberg Businessweek, is an investor in Andreessen Horowitz.)

The model of Kindred is similar to those of pioneers such as HomeExchange and Third Home in that users earn “credits” for hosting other members in their homes; credits can then be redeemed for stays elsewhere. Kindred’s twist is that it doesn’t charge an annual membership fee; it makes money mostly from service fees.

HomeExchange, founded in 1992, experienced a 53% jump in swaps in 2023; it has more than 170,000 members in 140 countries. In 2022, it added a premium tier to its standard $220 annual membership; for $1,000, HomeExchange Collection opens the door to 5,000 luxury homes that average $2.5 million in value. Think urban penthouses, castles and wilderness retreats.

That move challenges ThirdHome’s competitive advantage as a platform exclusively for luxury homeowners; its 17,500 vacation homes in 100 countries are worth a minimum of $500,000 and top out in excess of $50 million, including yachts. Membership costs $295, with service fees for each swap ranging from $495 to $1,395 per week. It, too, has grown: Members increased by 41% and exchanges by 16% in 2013, compared with 2022.

“We’re growing, we’re hiring people and we’ve been profitable for five years now,” says Wade Shealy, who started ThirdHome in 2010 with a portfolio that consisted of a couple of friends’ homes.

Where home swapping struggles is in reputation. Many view it as an unglamorous option for budget-strapped travelers, with risks of property damage. Insiders, however, have realized—and this has propelled the sector’s growth—that the opposite can be true when swapping members are well vetted.

A human connection

Rachel Lipson says her family of four has saved tens of thousands of dollars since she started swapping her Brooklyn, New York, home in 2022. She uses the Barcelona-based, invitation-only home exchange platform Behomm, which charges a €380 ($407) annual membership fee and focuses on the homes of creative people and design lovers.

“I found it a little overwhelming at first,” says Lipson. “How am I going to let some random person stay in my house? It was hard to trust that it was going to be OK.”

When she received an initial swap request from a Behomm member located in Marrakesh, Morocco, the day before her family was to visit Los Angeles, Lipson decided to hear it out. “We did FaceTime just so we could talk — and we felt really good about it, so we said yes,” she says. The family stayed in her home while she was at a hotel in LA. On spring break the following year, Lipson’s family stayed at that member’s house in Marrakesh.

So far, Lipson’s family has swapped homes with members in 16 destinations, including Paris; Montreal; Punta Cana, Dominican Republic; Cancun, Mexico; and Reykjavik, Iceland. When preferred dates aren’t available, Lipson looks at hotels and Airbnb. “Some of these homes, you wouldn’t find them for rent,” she says. “And it’s like staying at a friend’s place while they’re out of town. You really get to know people, and that’s an experience that I’ve never had with Airbnb or hotels. It’s really its own thing.”

An evolving lodging scene

If the economy goes down, ThirdHome sees its inventory goes up, says Shealy. “About half of our members have their vacation homes on short-term rental platforms, and if they’re not renting them out as much, they get more availability to throw it into the system.”

To raise awareness, ThirdHome is now offering a free yearlong membership to people who are buying new vacation homes at, say, Rosewood or St. Regis resorts. Developers report that the perk is helping them close additional transactions. “We get about 500 new members a month right now, just from our (commercial real estate) partnerships,” Shealy adds.

Kindred, by contrast, is more concentrated in big cities; it has enjoyed the most significant growth in Los Angeles, New York and London. “I can’t say if it’s necessarily because of Airbnb getting pushed out,” says Justine Palefsky, who co-founded the company in order to facilitate a multicity lifestyle that didn’t require taking out multiple mortgages.

Even if short-term rentals remain legal in some of these markets, Palefsky says she’s seen members gravitate to Kindred because they’ve grown tired of Airbnb and its competitors. High prices and a desire to get value from their homes “without feeding the beast of the vacation rental,” she says, is forcing consumers to seek out alternatives.

Airbnb Inc. denies that its appeal has become diluted. “With over 7.7 million listings and over 1.5 billion guest arrivals in almost every country across the globe, we believe we give travelers the option to experience local communities in many more places than any other travel site, while providing important safeguards to help protect their trip,” a spokesperson said.

Weighing the risks

As do Kindred, ThirdHome and HomeExchange, Behomm’s founder insists that care is taken to ensure that each member is vetted, from verifying identity documents to screening home photos, among other security measures.

Still, home exchanges can be trying. Finding a home swap in your chosen location can be time consuming, and availability is far from guaranteed.

“I probably spent three hours just sending requests,” says Marla Froelich of her hunt for accommodations in Scotland.

Frequent swappers say mishaps can happen — spilling wine on a designer couch or placing an electric kettle on a stove — but tend to be quickly resolved. The bigger risk in swaps is major property damage or bodily harm while a guest is looking after a home.

A number of home swapping platforms offer host protection, covering up to $100,000 in damages on Kindred to $5 million on ThirdHome. And some homeowners and rental policies include coverage for damage by third parties, as well.

Those who navigate these finer points can find home swapping an open door to nearly free stays in some of the world’s most coveted destinations.

In September, for instance, the Froelichs will head to Bali, Indonesia. A family from Australia that spent a week at their home a year ago via HomeExchange offered a swap at their family’s vacation home in Indonesia. “We told them we couldn’t make it (to Bali) for at least another year, and they were like, ‘We don’t care when you come, just tell us. Our driver will take you wherever you want, we’ll set you up with anything.’” That’s more than even most luxury hotels offer.

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