We have some great updates in the STR space this week, including:
Vacasa Reaches Unicorn Status
(“Real estate’s newest unicorn: Vacasa raises $319 million, now valued at more than $1 billion,” HousingWire on Nov 1, 2019)
Another huge congratulations to the Vacasa team, who recently closed a $319 million Series C funding round, putting the company's valuation at more than $1 billion. The company now manages 23,000 vacation homes. CEO Eric Breon commented, “We’re uniquely positioned to assist our homeowners through the entire lifecycle of their vacation home and are dedicated to continued advancement of our technology to meet the needs of our customers.” We look forward to seeing what’s next for Vacasa.
Welcome to the latest of edition of our Short-Term Rental Update. You may have heard that Garvey Schubert Barer merged with Foster Pepper effective October 1st. We are pleased to continue to deliver the latest short-term rental (STR) industry and legal news to you from our larger Foster Garvey platform.
Also, last Thursday, October 24, I was in San Francisco moderating the “Alternative Ways to Stay” panel at Bisnow Bay Area Hospitality Summit. Please feel free to reach out to me if you have any questions about the panel discussion.
A few STR news highlights to note below:
WeWork Nixes Seattle WeLive Location
("WeWork Nixes Planned Seattle WeLive Location," Bisnow - Seattle on Oct 15, 2019)
Seattle would have been the third WeLive location nationwide, but WeWork announced this week that it will not open as planned. The project was slated for Martin Selig’s 36-story tower under construction in the Belltown neighborhood at Third Avenue and Lenora. The company’s WeWork spaces in the Seattle market have, thus far, been unaffected by the company’s recent woes as it refocuses on its core business of co-working spaces.
Big news from our friends at Vacasa in Portland. Vacasa entered into an agreement to directly connect its 14,000 listings (soon to be 20,000+ after the conclusion of its acquisition of Wyndham Vacation Rentals) to Google Hotels. This is the first vacation rental software platform to connect directly to Google with its own application programming interface. Vacasa’s CEO, Eric Breon, expects the company will benefit from first-mover advantage in terms of being the first full-service property management company to tie up with Google.
Vacasa Nearly Doubles Real Estate Footprint
("Vacation rental platform Vacasa will pay $162M to acquire Wyndham Vacation Rentals," GeekWire on Jul 30, 2019)
We learned last week that Portland-based Vacasa plans to acquire Wyndham Vacation Rentals, reportedly increasing its real estate footprint by 9,000 vacation homes to expand its portfolio to approximately 21,000 vacation homes. Vacasa’s CEO, Eric Breon, expects to leverage Wyndham’s “decades of operational excellence” with Vacasa’s “next-generation technology” to deliver the best vacation rental experience for guests. Given this news and their recent announcement that they hired new CFO Jim Grube, we expect to see big things from Vacasa in the coming months and years.
Seattle Delays Registration Deadline for STR Operators. Again.
("Seattle delays deadline again for Airbnb operators to register," Seattle Times on Aug 29, 2019)
The City of Seattle has again delayed the deadline for short-term rental operators to register their units, apparently due to technical difficulties in the online registration platform. Until further notice from the City of Seattle, the new deadline is December 15th. We have heard significant frustration from Seattle-based STR operators who diligently worked to timely register their units by the now-extended September 1st deadline, but faced significant hurdles from the platform. For everyone’s sake we hope the platform bugs are fully fixed in the next three months.
Sonder Reaches Unicorn Status
("Airbnb competitor Sonder says after new funding round it’s now worth $1B," Real Deal - LA Real Estate News on Jul 11, 2019)
Congratulations is well-deserved for Sonder, which just completed a $210 million funding round for a total $1 billion valuation, launching the short-term rental platform into so-called unicorn status. Sonder relies on an asset-heavy model that draws some comparisons to WeWork, which also leases space, outfits them and then rents them to end users. Owning significant real estate assets brings a certain amount of risk, but one way in which Sonder appears to be mitigating against that risk is by partnering with real estate developers on new projects. A reported $15 million of the latest round of funding comes from equity provided by development partners.
Airbnb Goes Luxe
("Airbnb dives into ultra-high-end rentals. Here’s what brokers think," Real Deal - LA Real Estate News on Jun 2, 2019)
Last week, Airbnb announced it was rolling out Airbnb Luxe, a vertical featuring properties that rent for $1,000 or more per night. The properties on the Luxe website must pass a 300+ point inspection, including a strict set of standards, from chef-grade appliances to high end finishes. Renters using the service can take advantage of the services of a trip designer—like a concierge or butler—to arrange tours, transportation, and more. We expect that Airbnb’s foray into the bespoke property market will convert some former skeptics of the model who have historically viewed Airbnb as an accommodation option for cost-conscious travelers.
Disney Works its Magic for STRs
("Anaheim leaders are reversing their ban on short-term rentals that offer an alternative to hotels to tourists to Disneyland and the area," OC Register - Business News on Jun 5, 2019)
The Anaheim City Council is reversing its 2016 ban on short-term rentals after seemingly recognizing that travelers’ lodging demands are not sufficiently met in the area surrounding Disneyland. Although there is some nuance to how the ban reversal will be implemented—including that STRs in communities with homeowners associations will not be authorized—generally speaking, this is great news for STR owners and operators. One City Councilmember rationalized the decision in part by explaining that “Anaheim is supposed to be the city of kindness, not the city of bans.”
New Orleans Looks to Further Restrict STRs
("New Orleans inches toward tighter short-term rental regulations," Curbed - New Orleans on May 20, 2019)
The New Orleans City Council, after years of debating, is within 90 days of taking a final vote on new short-term rental regulations that will result in further restrictions on owners of short-term rental units. The new regulations would outlaw rentals of entire homes in residential neighborhoods and maintain a total ban on short-term rentals in popular neighborhoods including the Garden District and most of the French Quarter. We are interested to see if, upon passing the proposed regulations, New Orleans manages to succeed in enforcing the new law. Some jurisdictions—including Seattle—have found significant challenges in gearing up their enforcement efforts. This is a trend we expect will continue as local jurisdictions try to keep up with explosive STR innovation.
Airbnb poised for a reprieve in the EU
("Why Airbnb Could Escape the Uber Trap in Europe," Fortune Magazine on Apr 30, 2019)
The Court of Justice of the European Union is considering whether Airbnb was breaking the country’s housing laws by operating without an estate-agent license. The question is how much control Airbnb exerts over the transactions between hosts and guests. It appears, based on an opinion issued by the top legal adviser to the Court, the housing laws will be determined to not apply to Airbnb because hosts maintain significant control over each transaction, including decisions relating to rental rates and cancellation policies.
Guesty offers innovative and more streamlines tools for property management side of short-term rentals
("How Automation Technology Is Changing Property Management, Forbes - Innovation on Apr 26, 2019)
("How Automation Technology Is Changing Property Management," Forbes - Innovation on Apr 26, 2019)
Guesty is an innovative company thinking about ways to make the property management side of short-term rentals more efficient and seamless for operators and guests. It offers a unified calendar to manage properties listed on multiple online travel platforms, keyless entry options, task management systems for cleaning and repair teams and pricing tools.
We regularly update clients about changes in real estate law and on industry trends. This includes briefing clients on legislative proposals in the federal tax, housing and other legal areas affecting their businesses. Staying current enables you to anticipate and prevent legal problems as well as capitalize on new developments.