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.
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.
This week’s Short-Term Rental Update features a number of interesting topics, including these highlights:
Short-Term Rental Operator Lyric raises $160M
("Airbnb Leads $160 Million Investment in Business-Travel Startup," Bloomberg Quint - Stories on Apr 17, 2019)
Lyric is a small, luxury apartment rental company working to change the narrative around short-term rentals. It prioritizes regulatory compliance in every jurisdiction where it operates. Of note, Airbnb, which has been deeply involved in regulatory compliance litigation nationwide, is leading Lyric’s latest funding round of $160 million. It appears that Airbnb is doing everything in its power to tidy up its house before a highly-anticipated IPO.
Airbnb Back in Court
("New rules don’t seem to be bringing Boston many short-term rental applications," Curbed - Boston on Apr 10)
Earlier this week, Airbnb was in court arguing that the City of Boston’s short-term rental ordinance that took effect in January is “draconian” and violates the Communications Decency Act. A Massachusetts federal judge questioned why the City of Boston shouldn’t be free to impose restrictions on Airbnb’s units as the City sees fit. The judge has yet to rule on the motion. As always, we will continue to monitor.
HomeAway and Airbnb Lose the Battle Against Santa Monica
("Airbnb Loses Major Fight Over California City's Rental Law," Bloomberg Quint - Stories on Mar 13, 2019)
On March 13, the Ninth Circuit ruled against HomeAway and Airbnb in a closely-watched lawsuit the two short-term rental platforms filed against the City of Santa Monica. The lawsuit alleges that Santa Monica’s ordinance regulating the short-term vacation rental market is preempted by the Communications Decency Act and impermissibly infringes upon each company’s First Amendment rights. The ordinance authorizes licensed “home-sharing” (rentals where residents remain on-site with guests) but prohibits all other short-term home rentals of 30 consecutive days or less. It also requires the platforms to collect and remit taxes and regularly disclose listings and booking information to the city. We expect that this decision will bolster the confidence of some local governments that have been watching from the sidelines to determine if strict short-term rental regulations will hold up in court. An obvious corollary is that the industry is likely to invest more resources in jurisdictions that have shown greater hospitality to these platforms. In our view, some regulation is both necessary and reasonable if short-term rentals wish to stake a permanent claim in the travel industry. We will continue to monitor where that line of reasonableness is drawn as the arguments play out in the courts and local legislative bodies.
Short-Term Rentals Continue to Gain Market Share
("Booking Holdings breaks down private accommodation revenues for first time, now at
20% of total," Phocuswire, Feb 27, 2019)
Alternative accommodations, including short-term rentals, accounted for 20% of the overall annual revenue for Booking Holdings, the parent company of Booking.com. Notably, 40% of Booking.com’s active customer base booked an alternative accommodation within the past 12 months. We see no indication that growth in the short-term rental market will slow down anytime soon.
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.