WestCap founder Laurence Tosi believes if short-term rental companies haven't already turned a profit, they'll struggle to do so in the future as the sector's boom has peaked.
Laurence Tosi, founder and managing partner of investment firm WestCap, views the short-term rental industry as a major winner coming out of the pandemic. But he thinks the boom experienced in recent years is winding down.
“I think the [era] of hyper-growth for travel … will be moderated growth,” Tosi said during a discussion with Skift founder and CEO Rafat Ali during the Skift Short-Term Rental Summit in New York on Wednesday.
When asked by Ali how public companies like Sonder and Vacasa can become profitable and continue to grow, Tosi responded they’ll need to focus on having sustainable business models.
“So if you aren’t making money over the last couple of years when we had a spike in (average daily rates), you should really look hard at your prospects because it will be a more moderate market going forward. They’re going to have to prove to the world that they’ve got sustainable models.”
Tosi and Ali also touched on the rise of artificial intelligence in the travel industry, with Tosi describing the technology as both an opportunity and threat.
“You should analyze very carefully what it is,” Tosi said. “Now some of our businesses like Hopper, they’ve been using it for years. Their entire engine is built on AI going out and figuring and predicting what the prices will be for certain travel.”
“I think that understanding it, playing with it, embracing it, (and) using it to benefit your business is important. But be careful.”
In addition, the discussion addressed the issue of housing shortages, which Tosi called “absolutely tragic.” But Tosi maintains the the short-term industry is not the culprit.
“I’ve never seen evidence that STRs come at the expense of housing,” Tosi said.
Photo credit: Laurence Tosi and Rafat Ali in discussion a the Skift Short-Term Rental Summit on June 7 Ryan Bourque