Airbnb's latest quarter marks its most profitable and highest revenue-generating period to date, with a reported net income of $1.6 billion.
Good morning, readers. I hope you’re having an easy Thursday so far. I don’t know about you, but I am loving the new look of this newsletter, so much so that I sent myself multiple test emails this morning.
Moving on, our top story today is money and how much of it was spent on companies in this sector. Some of that venture capital dry powder is finally dusting off.
- Kasa Living and Samara’s funding rounds
- Sentral’s strategy
- Colorado Short-Term Rental Owners Respond
It’s Raining Money
Kasa Living, which manages rentals for owners of multifamily and boutique hospitality properties, has raised $70 million in a Series C funding round. The round was led by Citi Ventures and FirstMark Capital. New York Life Ventures, Fireside Investments, and existing investors RET Ventures, Zigg Capital, and Ribbit Capital also participated in the round.
- Kasa Living’s core business involves turning investor-owned multifamily apartments, boutique hotels, and single-family homes into professionally managed accommodations.
- It plans to allocate the newly acquired funds towards expanding its operations and broadening its business reach.
Samara, the brainchild of Airbnb co-founder Joe Gebbia, raised $41 million in a Series A round, led by Thrive Capital and participation from investors including 8VC, General Catalyst, New Legacy, SV Angel. Airbnb co-founders Brian Chesky and Nathan Blecharczyk and Dell Technologies CEO Michael Dell also participated in this round.
- Samara, initially conceived as a blue-sky product research and development team within Airbnb in 2016, transitioned into an independent company last spring with funding from Gebbia and Mike McNamara, a former CEO of international product development firm Flex.
- Samara’s focus is Accessory Dwelling Units or ADUs. These include backyard cottages, casitas, and in-law units designed to coexist with homeowners’ primary residences.
- Its flagship product, “Backyard,” spans 420 to 690 square feet, priced between $269,000 and $369,000. With newfound funding, Samara will push its sales and marketing efforts.
There is definitely a trend here: the rising popularity of property management firms that manage multi-family homes in apartment complexes. I recently spoke to Lisa Yeh, president at Denver-based hospitality operator Sentral and the company’s agenda for 2024 is to expand its presence in every major city and to create a network effect among its guests.
Sentral counts Iconiq Capital and Highgate as its investors. Corporate clients include Johnson & Johnson, Tesla and Google. Sentral is an operating company that manages real estate for institutional and private developers, including JP Morgan, with a focus on multifamily assets.
Yeh said that the company’s mission is to add consistency to a branded short-term rental so it becomes the natural choice for guests.
“Sentral is trying to make the short-term rental experience consistent,” Yeh said. “It’s a brand experience we’re creating, whether you stay at our Miami property or Scottsdale one, it’s consistent.”
And how Sentral does it is what differentiates it from Airbnb.
“I think the key difference between us and Airbnb is from the perspective of the property owner, “ Yeh said. “They want somebody on site to manage that experience, because when you get out of control, you have professional hosts that are running Airbnb, and some are great but some aren’t.”
Sentral’s strategy is to operate entire buildings, removing any chance of conflict between guests and long-term residents.
“We’re adamant that we manage an entire building, because you have the ability to get the best customer service, and to treat everybody the same,” Yeh said. “When you start seeing the Airbnb guests, people who check in differently than your long-term residents, that’s where you get yourself in trouble because now you’ve created conflict between the two groups.”
Colorado Property Owners Respond
The public hearing held on the Colorado state proposal to increase short-term rental taxes was met with strong opposition from over 75 short-term rental owners, The Colorado Sun reported.
Short-term rental owners and managers put forth their case in a hearing that was scheduled for 45 minutes but lasted over three hours.
However still, the six-lawmaker committee advanced the measure on a 4-2 vote. Voters in Colorado are also voting on Proposition HH, a 10-year property tax relief plan that imposes higher taxes on second and subsequent homes, including those frequently used for short-term rentals.
Awaze Shutters James Villas
European vacation rental and holiday resorts company Awaze has shuttered its James Villas brand to concentrate on its core portfolio’s future growth. The brand, which featured around 600 guaranteed villas across Europe, ceased bookings as of October 30.
The company will potentially also close the brand’s office in Kent. Existing James Villas customers are being contacted about their bookings. Earlier in April, Awaze sold Landal GreenParks to Roompot after a proposed merger was initially considered two years prior.
reAlpha’s New Product
reAlpha, which went public last week, has launched GENA, an AI tool that generates personalized descriptions that highlight each property’s features, with tailored descriptions for platforms like Airbnb, Vrbo, Zillow, Realtor, and other listing channels.
Airbnb’s Record Profit and Million Listings
Airbnb‘s latest quarter marks its most profitable and highest revenue-generating period to date, with a reported net income of $1.6 billion (excluding a one-time tax benefit) and an 18% revenue growth, reaching $3.4 billion. The company anticipates fourth-quarter revenue to range from $2.13 billion to $2.17 billion, signaling a 12% to 14% increase. However, Airbnb acknowledges increased volatility in the current quarter, citing potential negative impacts from macroeconomic trends and geopolitical conflicts on demand.
This remarkable performance can be attributed to 113 million bookings, a 14% increase from the same period in the previous year. Notably, Airbnb has experienced significant growth in the Asia Pacific region, rebounding to pre-pandemic levels, with a 23% increase in gross bookings compared to the same period in 2019. Chinese outbound travel saw an impressive 100% increase compared to the previous year.
Brian Chesky, Airbnb’s CEO, emphasized the company’s continued investment in international markets, noting that Korea has emerged as one of the fastest-growing countries for the platform, with a 54% increase in gross nights booked compared to 2019.
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