Owning and managing a vacation rental property is by no means a uniform experience. However, the commonly cited flaws and shortcomings seem quite consistent.
On the other hand, a vacation rental can bring significantly more per night than a standard rental, while still allowing owners to keep the property for occasional personal use.
On the other hand, supervising a short-term rental can quickly turn out to be a hassle. From uneven income streams to difficult guests to damages, there is no shortage of complaints on forums for property owners and managers.
Founders have had limited success in mitigating business model shortcomings in recent years Airbnb decided to popularize 16 years ago as Y Combinator Novice. Contributions from those that have raised capital over the past few quarters include tools for vacation property investors, curated short-term rental offerings and property management software.
To get a sense of where the money has been going currently, we used Crunchbase data to compile a list of 14 firms funded since last yr, with an emphasis on short-term rentals.
Larger funding recipients
Based in Toronto Host, a provider of vacation rental management software, is by far the largest financing recipient on our list. Last yr, the company raised $175 million in a round led by PSG shares.
Founded in 2015, Hostaway offers tools for managing reservations, guests and job offers on various platforms akin to Airbnb, Vrbo AND Reservation.com. Property managers use this software for purposes akin to responding to inquiries, automating repetitive tasks, and analyzing funds.
Overmoon is one other investor favorite, having purchased $40 million in Series A bonds along with $40 million in debt financing in January. The company maintains a portfolio of vacation rentals for families, with most of its current listings situated in beach locations in Florida.
Based in San Francisco RelativesMeanwhile, last yr it accomplished a $15 million Series A deal for a membership-based home rental network that does not exchange money between guest and host. It tempts potential members with artfully staged photos of apartments in places like London, New York and Vancouver.
An industry giant and a string of disappointing exits
We have not seen particularly good disinvestment conditions in the hospitality industry so far this yr, with each the IPO and M&A markets being relatively sluggish for consumer-facing offerings. If past track record is any indication, it is also not the easiest industry to get out of.
Of course, the vacation rental industry can point to one giant startup success story. Category-setter Airbnb is currently a company with a market capitalization of roughly $92 billion, is quite profitable and still growing (albeit perhaps a bit slower than many investors I hoped.)
In the case of other holiday-related ventures, start-up investors had a much tougher task. In particular, several industry stocks that went public during the 2020-2022 market boom didn’t perform as well.
One example is No holdings, an operator of boutique apartments for short-term stays in over 40 cities around the world. Its listings look charming, from an art-adorned urban industrial loft in Philadelphia to a beach-front historic building in Cannes.
However, Sonder’s funds are not impressive. After raising greater than $500 million in enterprise financing, the company went public via a SPAC merger in January 2022. Since then, the stock has largely been on a straight downward trend, with shares down greater than 95%.
Based in London Selina’s hospitality, operator of a global network of getaways aimed at digital nomads, also performed poorly. A heavily venture-backed company whose shares are currently price about a nickel each termination of lease agreements and delayed the submission of the annual report.
And based in Berlin HomeToGosome Insight partnersthe international vacation rental platform we support didn’t perform thoroughly either. Shares have fallen sharply since the company’s 2021 debut on the Frankfurt Stock Exchange.
Vacasa, perhaps the best-known public vacation rental company after Airbnb, has also struggled to gain market favor, with share prices plummeting over the past few quarters. In my earnings announcement last week, the Portland-based company said it was shedding 800 people, or 13% of its workforce, after the number and prices of summer bookings fell below expectations.
Vacation from expectations
Fortunately, in the case of recently funded startups, the current preferences of investors on the public market are not that vital. Even if this proves to be a brutal summer for vacation rental revenues in some markets, there is still strong overall demand for well-appointed vacation spots.
In the coming years, as underperformers reduce their efforts and survivors hone their skills in reducing emptiness or overhead costs, we may see supply and demand dynamics return in a way that can produce much more profitable returns for those that are still on the market. vacation rental game.