Vacation rental update: Airbnb’s IPO filing key points

Vacation rental update: Airbnb's IPO filing key points
by Brad Cartier, posted in Newsletter

 

There has been nothing sunny 🌞 about the vacation rental market since the onset of COVID. That said, domestic travel is on the rise, and according to Redfin, there are specific short-term rental markets that are benefiting from this.

Popular second-home destinations including the Jersey Shore, Cape Cod, Lake Tahoe, Palm Springs and Bend, OR are heating up and becoming full-time residences for homebuyers who have the luxury of working remotely as people leave New York and San Francisco during the coronavirus pandemic. 

Top vacation rental locations in the US - Redfin

Source: Redfin

Further, Airbnb’s SEC filings for its looming IPO dropped yesterday. This is big news for vacation rental watchers, with Cleveland Research quick to report key points quoted here on the details of Airbnb’s business metrics:

  • Nights & Experiences booked YTD are down 41% (3Q was down 28%) vs 31% growth in 2019.
  • Revenue of $2.5 billion YTD is down 32% (3Q was down 18%) vs 32% growth in 2019.
  • Average daily rates (ADR) have grown 20% y/y since May.
  • Airbnb generated $38 billion in 2019 gross booking volume, with $32B (82%) in host earnings and $5.3B (14%) in service fees (host + guest fees).
  • Airbnb has over 4 million hosts in 220 countries and 100,000 cities, 86% are outside the US.

According to Bloomberg’s Crystal Tse and Olivia Carville, Airbnb is in a much better position than many anticipated heading into their IPO: “Airbnb bounced back faster than expected over the summer. In June, bookings were down only 30% compared with the same month in 2019. The surge in demand was driven by travelers seeking nearby vacation rentals to escape shuttered cities and take advantage of remote work policies.”

According to a recent ValuePenguin study reported in Travel Pulse, despite continued CDC warnings to the contrary, 54% of Americans have used a hotel or vacation rental property since the pandemic began.

Interestingly, Jet Blue announced this week that it is expanding its offerings into short-term rentals, according to Skift. The company announced that it will carefully curate these offerings alongside their current product lines of travel insurance, car rentals, and cruises.

Bigger multigenerational homes

As the costs of senior housing continues to rise, and the pandemic increases health concerns of these types of facilities, a renewed interest in multi-generational homes is brewing. According to a National Association of Realtors (NAR) report (paid), and reported by RISMedia, multi-generational home purchases accounted for 15% of sales after March 2020, compared to 11% for those before that time period.

According to the report, buyers “shopped for larger homes because extra space would allow households to better accommodate older adult relatives or young adults that are now living within the residence. So many sellers were eager to get out of their old home and move to something bigger that would better meet their needs during quarantine.”

Ryan Dezember of the Wall Street Journal (subscription required) reports that the single-family home investment properties have fared well throughout the pandemic, with occupancy as record highs despite the pandemic. Dezember notes that “timely payments are in line with historical rates. Tenants are accepting rent increases instead of moving out. New renters hunting for home offices and outdoor space are paying up to move in.”

Single family home rentals in the US at all time highs - WSJ

Source: WSJ

Smart money is betting on SFHs with a significant amount of wealth managers, private equity firms, REITs, and others jumping into the market. As we reported previously, the big players are back, in a big way!

#PropTech update: Rise in digital lending

Smart money is also moving more and more into property technology firms. No surprise here, the home buying and lending processes are one of the most friction-prone consumer experiences. Here are a few key highlights from the world of #PropTech worth noting:

  • First American Docutech announced a new integration with Encompass LOS by Ellie Mae to allow lenders to implement a suite of digital mortgage and closing solutions (Housing Wire).
  • Tishman Speyer launched a $300 million blank check SPAC to invest in proptech firms (Commercial Observer).
  • Not just Airbnb! LoanDepot, which has a strong reputation for being technology-focused, is finally going public (Housing Wire).
  • Digital mortgage provider Better.com raised an astonishing $160 million in a Series C funding round. Reportedly the company funds $375 million in mortgages a month (Crunchbase).
  • Spruce, an on-demand apartment cleaning and homecare startup, announced last week that it has raised $8 million in funding (Built in Austin).