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Casai, a Mexico City-based startup that professionally manages short-term rentals mainly for leisure travelers, is expanding into serviced apartments for corporate travelers, with a focus on making Brazil its largest market by year-end. Casai has acquired the Brazilian operation of the serviced apartments offered by the Danish company Q Apartments, the companies said on Friday.

The companies didn’t disclose the terms of the deal and partnership.

“Brazil will be our biggest operating market after we double or triple in size there by the end of the year,” said Casai CEO Nico Barawid. “And despite the prevailing narrative that corporate travel is dead, we’ve actually seen a lot of demand for corporate travel in the short-term rental product in Mexico and Brazil.”

The deal is small, but it has broader implications in what it says about business travel’s comeback in a different way, and about emerging markets that some experts in the U.S. and Europe have overlooked.

Q Apartments had used its staff to manage 140 units in Sāo Paulo. It will now outsource that work to Casai to manage all its listed properties. Brazil’s O Estadão de S. Paulo first reported the news.

Q Apartments lists 65,000 apartments in its portfolio across 81 countries, and local contractors typically run the units. In a related move, Casai will become the primary operating partner for Q Apartments’ business throughout Latin America. So the deal with Casai may portend greater cooperation where the startup steals the contracts from some local managers.

A Bet on Corporate Travel

In the U.S., prospects for a domestic business travel rebound remain a matter of discussion. For example, a survey of 150 travel managers by Deloitte found many executives are cautious.

The dynamics differ in Brazil, where much of business travel was domestic even before the pandemic. A large majority of the country’s businesses are small-to-medium-sized companies, rather than the concentration of large companies that’s more common in Europe and the U.S. Many of these Brazilian companies are returning to business travel already.

“The nature of corporate travel we see in Mexico and Brazil is a little different now than a couple of years ago,” Barawid said.

“You don’t see as much of the Monday-through-Thursday McKinsey and BCG consultancy type travel today,” Barawid said. “But we do actually see longer, extended stays that are either pure business or a mix of business and leisure in a remote working setup.”

Given that many workers are now traveling for longer stays, they tend to want places more comfortable than a 300-square-foot box to be in. Casai said the current occupancy of its apartments in Mexico and Brazil averages above 90 percent.

“We had already roughly benchmarked our ADRs (average daily rates) against the 90th percentile of the typical Airbnb short-term rental segment in Mexico,” Barawid said. “So we were already at a high price point and serving the expectations of travelers for leisure and business in that price point was already roughly the same, such as for consistent, high-quality Wi-Fi.”

In the next three years, the startup plans to exceed 3,000 units in up to 10 cities in Brazil.

It remains to be seen how well Casai can expand from catering to a leisure travel customer who books directly on its website and mobile app to servicing a business travel customer who has a colleague book their trips using third-party channels, such as a corporate booking tool or a manual process of email and faxing. The move means adding a business-to-business skillset to a consumer-facing one.

The Q Apartments partnership could come in handy because that business already has strong relationships and sales muscle in corporate relocation.

Casai also faces competition. Other companies that somewhat overlap with its business model include Housi, a subsidiary of the real estate developer Vitacon that has raised $11 million but is rumored to be up for sale, and Nomah, a subsidiary of Loft, which has partnered with Gafisa, a giant Brazilian residential construction and real estate company.

A Bet on Brazil

Casai said on Friday it is working with Navi, a hedge fund with $1.8 billion in assets under management, in coordination by XP Investimentos, to create a real estate investment trust, or REIT, focused on short-term rentals. The firms expect to float the REIT on the Brazilian stock exchange within six months, which will provide capital for Casai’s expansion in the country.

Today, the startup operates about 600 apartments with hotel-style amenities for leisure and business travel in Mexico and Brazil. It plans to scale that up over the next year while also entering Colombia, Chile, and Peru.

The moves come in the wake of last fall’s news that the startup had raised $23 million in equity funding. Andreessen Horowitz, a venture-capital firm that was an early backer of Airbnb and Facebook, led the round. Kaszek Ventures, Latin America’s largest venture fund, also participated. Other backers included Global Founders Capital.

All three venture capital firms have encouraged Casai to tackle the broader Latin American market beyond Mexico.

“Andreessen Horowitz led the charge in a Latin American strategy,” Barawid said in an interview. “While you’ve likely seen that their Menlo Park neighbors in venture capital have also doubled down on Latin America, Andreessen saw it first.”

As for its short-term rental management business, regulatory issues haven’t been a problem for Casai so far. São Paulo, for example, has essentially given a green light from a regulatory perspective, to short-term rentals.

While the startup began by using a master lease model in cooperation with property developers, it has expanded to use a suite of options with its real estate partners, including property management and revenue share.

The Latin American startup scene is evolving.

For instance, Casai is a customer of another promising startup, Clara, which is a Mexico City-based startup with an “end-to-end corporate spend management solution.” Clara offers a corporate credit card and a bill pay product that make it easier for accountants to track expenses, such as business travel.

Brazil, in particular, is becoming a travel tech hub, with about 220 businesses and an especially strong stable of corporate travel companies, as Skift reported late last month.

“Brazil is far and away the largest economy in Latin America,” Barawid said, explaining his company’s international expansion. “So far, many foreign travel players have neglected Brazil, which is a mistake. That said, we’re still growing in Mexico. We plan to get bigger footholds in both power centers of Latin America.”

UPDATE: A paragraph that referred to a study by Deloitte was revised to present it in an accurate context.

Photo Credit: One of the Brazilian apartments available for booking via travel startup Casai. Casai