A Property Manager and Operating Company Flywheel

Happy Friday, folks! I’m still in rainy London trying to catch up with the news, and meet industry folks in Europe. 

Speaking of catching up with European news, I saw that German software company for B2B travel, Lanes & Planes, raised $35 million in Series B funding. Now this got me thinking about whether tech companies serving the hospitality sector are doing any better (read: raising more money, generating more profits) than, say, a short-term rental upstart.

I took my questions to Philip Lolis, who is an investor at travel tech investor Thayer Ventures and a venture partner at Derive Ventures. Lolis spoke at the STRz summit this week in London. 

Lolis’ view is that it depends on the market and the inflationary and macroeconomic environment we live in.

“Right now, given the increased cost of capital, it’s challenging to make operating business a venture investment,” Lolis said. “The Marriotts and Hiltons of the world took about 30 years to build. Sure, we live in a new era when you can build things faster for sure, but sometimes when you’re building trust, it takes longer than traditional venture capital is willing to wait for.”

Lolis is still bullish on short-term rentals and investing in that market. 

“Short-term rentals versus long-term rentals, there is a cap-rate arbitrage where longer rentals will have lower net operating income but short-term rentals will have a higher net operating income because it’s more hands-on and entrepreneurial,” Lolis said.

Cap rate is an assessment of the yield of a property over one year. But specifically, Lolis is interested in the property management (prop-co) and operating company (op-co) businesses because they complement each other. 

“There is a flywheel, if you have a strong operating company and a long term property managing partner,” Lolis said. “These are some issues Vacasa perhaps has to deal with, with third party owners and they cannot build the quality and consistency of a brand that they otherwise could.”

“Marriott and Hilton have the last names there for a reason.”

Ultimately, Lolis concluded that there is still a lot of opportunity for short-term rental businesses and venture capitalists investing in them, but maintained that growth, scale and building both trust and a brand takes time and patience. 

EnsoConnect Integrates With Airbnb

Canadian guest management platform Enso Connect has integrated with Airbnb. This integration brings Enso Connect’s capabilities, designed to facilitate, configure, and monetize guest interactions, directly into Airbnb messaging and more.

Notable features from this integration include: AI-driven responses, unified inbox integration and improved Airbnb inquiry conversion.

Desert Hot Springs Introduces Short-Term Rental Regulation 

Desert Hot Springs in California has moved to regulate short-term vacation rentals, limiting their numbers and locations. This initiative, initiated last year, led to an updated ordinance in July addressing constraints, noise rules, and platform requirements like Airbnb, the Desert Sun reported.

The city council approved the ordinance with a 4-1 vote. Key provisions restrict short-term rentals to 4% of developed housing parcels and require a 500-foot separation between them. Outdoor noise restrictions have been replaced with general city noise control rules. Owners responding to complaints no longer need to be present in person. The ordinance is set to take effect in December, pending a second council vote.

AirDNA’s New Homeowner Investment Tool

In the challenging U.S. real estate market marked by high mortgage rates and soaring home prices, investors scouting for second homes need certainty and security about the property’s potential as a rental. 

AirDNA’s new feature enables investors to explore a short-term rental market overview, and provides information on available homes for sale and AirDNA’s estimates regarding occupancy rates, average daily rates, and revenue potential as a short-term rental property. 

“So we want people to be able to find the market, find the property, and then manage the revenue for that property all within our web app,”Jamie Lane, AirDNA’s senior vice president and chief economist, told Skift Thursday. “The process before was you find your market on AirDNA, then you find your property on Zillow or Redfin or Homes.com. Then you come back to our site to figure out how much you can earn and what comps you should be using. You buy the property and then use one of our competitors to manage the revenues and prices, and you look at forward pacing and all those things.”

Preventing a New Vacation Rental Listing From Being a Dud — AirDNA’s New Tool For Home Buyers

Air Miles Partners With Expedia

Loyalty program operator Air Miles has partnered with Expedia Group within AirMiles newly launched travel booking platform. This collaboration, a part of Air Miles’ offering since its acquisition by Bank of Montreal, allows its customers to access Expedia’s selection of hotels and vacation rentals worldwide. 

The move aligns with Bank of Montreal’s plan to expand the Air Miles program by introducing new ways to earn and redeem miles. Alfonso Paredes, senior vice president of Private Label Solutions at Expedia, reports strong booking interest during the platform’s soft launch. With nearly 10 million active collector accounts in Canada, Air Miles continues to serve a substantial customer base.

Short-Term Rental Versus Homeowner Associations

The Tennessee Supreme Court made a significant ruling regarding short-term vacation rentals in homeowners association communities, the Knoxville News Sentinel reported. The court unanimously declared that a Nashville doctor could rent his home in a lake resort community on platforms like Airbnb or Vrbo, citing ambiguities in the governing documents of Four Seasons on Center Hill Lake in DeKalb County. Pratik Pandhari Pande contended that the documents didn’t prohibit short-term rentals and the court concurred. Additionally, the court ruled that a later amendment to community rules applied to him, despite his property purchase predating it. Many homeowners associations aim to maintain residential use to prevent business activities within houses.