Another travel startup that found itself scrambling to pivot as the Covid-19 pandemic took off is now announcing a huge round of funding after finding its feet and proving that it can grow, even under adverse circumstances. AvantStay — which has built a platform where it decorates and then lists properties owned by others for people to rent out for vacations or other short-term stays — has raised $160 million in a Series B round of funding. The company saw revenues grow tenfold in the last two years and its total number of properties to balloon to over 1,000, and now it will use the new funding for expansion, specifically adding more properties to its platform; and to continue developing its technology as it expands into more aspects of the property rentals business.
Tarsadia Investments and 3L Capital (which led its Series A) co-led this round, with participation also from previous backers Plus Capital, Bullpen Capital, and Convivialite; new, strategic investors Capital One, Saluda Grade, Coller, Grerenhawk, Stephen Pagliuca, Fred Tuomi, Jerry Coleman and Jay Mckee; and celebrity investors including Paul George and Shawn Mendes.
AvantStay’s basic premise is based around kitting out and then handling the rentals for high-end homes as a viable alternative, or even improvement on, the experience that a typical guest might have had in a five-star hotel; and it has harnessed technology in aid of that. The tools that it has built include Voyage, its proprietary operating system to manage properties; a concierge app to help its guests with services before, during and after stays; its front-end booking platform; and a recently launched real estate platform.
The concierge service is part of AvantStay’s strategy of complementing its rentals as many amenities as guests might have in high-end hotels — and among its tech investment plans, it wants to continue extending the services that can be offered on it. The startup will also continue to evolve the real estate business, where it helps connect vacation property investors with properties, acting as the broker and then the sole agent for renting those homes out. (But to be clear, it does not own properties itself.)
Los Angeles-based AvantStay has been around since 2017 and had only raised $25 million in the last four years. In that context, this funding is significant — and large for a Series B — and underscores some of the traction the company has been having, especially at time when vacationing all but grounded to a halt. The company said that in the last two years it added more than 700 homes and 80 new destinations (some in part by way of six acquisitions that it has made in that time), and it grew revenues 10x.
In all, Sean Breuner, AvantStay’s CEO who co-founded the company with Reuben Doetsch (the CTO), said that 750,000 guests stay in its network of properties, with the average number per homes being seven guests. It’s currently not profitable, but it actually did tip into profitability during the pandemic, cutting lots of costs and also shifting to longer-term rentals aimed at corporates.
Airbnb has created and leads the market for private home accommodation — and it happens to be one of 60 partners that AvantStay has secured for marketing the homes on its platform — but Breuner believes the opportunity to develop a business distinct from that, aimed specifically at the opportunity with higher-end properties, still has a lot of growth left in it in its own right, in part because there are still a lot of consumers and business travelers that have yet to accept that they could have an experience better than what they have at high-end hotels.
“Customers are starting to meet the demand from an experience perspective in rental homes,” he said. “It has always lagged hotels by a wide margin. But the experience now matches the needs and requirements of what a guest is looking for.”
“Since we led AvantStay’s Series A investment over two years ago, we’ve watched the company not only grow their supply and revenue tenfold, but also navigate one of the worst possible macro shocks that occurred in the hospitality industry,” said Jodi Kessler, a partner at 3L, in a statement. “Their incredible execution and resilience, combined with a massive tailwind in the travel sector for AvantStay’s product makes us excited to double down on and support the team as they continue to build both a world-class hospitality brand for travelers, and a vertically integrated platform through which individuals and institutions can invest in short-term rental properties.”