Excerpt from PhocusWire
When Brian Chesky predicted a permanent shift in travel, I don’t think anybody truly took him seriously. Sure, Airbnb was in a hole and he had to talk his own book, but just as many of us didn’t quite realize, 18 months on, that COVID's specter would still be haunting us, none of us quite realized the Belle Époque of hospitality might never come back.
The blockbuster Airbnb IPO was foretold in these pages, but recently Chesky has doubled down and talked about the future of travel that entailed far more nights booked, but in a very different form. Workcations, staycations and weekends that start on a Wednesday are the trend. And then on the other side, there is the mainstay of the city center hotelier – the business trip. From investor roadshows to "on-site" consultants - this is a world that is never coming back.
The realized and expected IPOs of Vacasa, HomeToGo and Sonder are well documented, but the fragmentation of this industry is astonishing. Vacasa has 30,000 homes under management. AirDNA counts 6,000,000 active listings around the world and 0.5% of the market for a mooted $4 billion valuation. Just for managing the properties - they don’t own anything.
Just let these stats sink in. Of course, Vacasa has slightly higher-end properties largely in wealthier countries ($350 average daily rate [ADR] vs. $150 ADR globally), so if we discount that accordingly, managing short-term rentals is a $350 billion industry.
The top 50 property managers in the world control just 5% of total supply. The little guy manages the rest and owns 99% of the properties. If we rate the six million properties at an average value of $200,000, that is a knee-trembling $1.2 trillion of assets.
Short-term rentals are rapidly becoming an asset class that is attracting massive institutional money - ReAlpha just raised $1.5 billion to do just this. But it is a tiny drop in a massive ocean with so much room for everyone else to play.
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