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The news surrounding short-term rentals hasn't been so promising since coronavirus reared its ugly head back in March.
Layoffs hit the sector hard, and VRBO saw bookings drop between 29% and 96% across the world. Airbnb even halted all of its $800 million in marketing efforts, and apparently, swaths of Airbnb hosts are now planning to sell their properties in an effort to minimize losses.
Fortunately, it seems all this doom-and-gloom may run out -- at least that's what private equity firm Silver Lake is banking on. The Silicon Valley-based company just invested big in Vacasa, a short-term rental management platform with more than 23,000 homes across the U.S.
The funding round, which also included investments from Riverwood Capital and Level Equity, topped out at a whopping $108 million. According to reports, Vacasa will use some of the funds to bring back workers who were furloughed or saw their hours cut back in March.
What it all means
Though $108 million is no small number, it pales in comparison to the $319 million funding round that Silver Lake led for Vacasa back in October. Still, it's notable -- and it seems Silver Lake expects the short-term rental industry to surge back in full force at some point.
Silver Lake managing director Joerg Adams said as much, too, stating: "We believe in the team, the business model, and the customers and communities Vacasa serves, and that this investment enables the company to continue to innovate and to maintain its strong growth trajectory."
Vacasa's most recent data certainly points to that strong trajectory -- or at least offers room for optimism. According to the company, the platform saw bookings jump six times over between April and May. The city has also seen reservations extend from just 357 cities at the height of the pandemic to 723 cities as of June 2.
Data from Guesty, which also offers short-term rental management, indicates a promising future for short-term rental investors, too. The platform recently reported a 40% uptick in Christmas bookings (over the year) and a 38% jump in Thanksgiving reservations. New Year's reservations were also up significantly.
The future of STRs
If interest in short-term rentals does pick up, as Silver Lake is banking on, it will be interesting to see if Airbnb or professionally managed platforms like Vacasa and Guesty win out.
Airbnb hosts are responsible for cleaning themselves (or hiring out for it). And given the cleaning and sanitizing that's necessary in a post-COVID world, there's a chance guests may be looking for more professionally managed -- and cleaned -- properties to reduce their risk of infection.
There's no telling, of course, but as shelter-in-place orders continue to lift and more and more Americans venture out of their homes -- and hit the road -- we should find out soon. In the meantime, short-term rental investors should spend time sorting out their cleaning protocols. When those guests do come calling, you'll want to make sure you're in line with all CDC guidelines (as well as Airbnb's latest cleaning policies).
Unfair Advantages: How Real Estate Became a Billionaire Factory
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