Capital Continues to Flow into the Short-Term Rental Market

The short-term rental (STR) space continues to grow and evolve with a variety of home offerings for business travelers, vacationers—and investors.

AvantStay, a self-described next-generation hospitality platform in the STR industry, has closed on a $160 million Series B funding round. 

This new capital will be used to support the company’s expansion into new markets, advanced technology offerings and the national launch of its brokerage services.

It joins a long list of companies looking to capitalize on the STR segment, including those disrupting the common apartment renting and vacation travel models.

STR Demand Accelerating

Demand for US short-term rentals accelerated in October, reaching the highest growth rate since the onset of the global pandemic, according to Jamie Lane, VP of Research, AirDNA, which tracks data in the sector.

While the growth of overall STR listings grew in 2021 by 9.4%, 2022 is currently expected to outpace all past years with a listing growth of 20.5%, Richard Chandler, Director, Product & Data – Migo, Flexible Living, told GlobeSt.com.

“Occupancy rates actually set records this year as the demand for short term rentals increased 27.5% in 2021 while new listings only increased by 9.4%; more demand than there were listings in most markets,” Chandler said.

Renter Membership Clubs a Desired Amenity

One stat highlighting the demand for this product: According to data from the National Multifamily Housing Council and Grace Hill 2022 Renter Preferences Survey report to be released in January, nearly half of respondents (46%) would consider joining a rental housing membership program that would allow its members the flexibility to move between communities within a brand’s network of properties (similar to a vacation club).

In discussions with Migo, RealPage’s recently launched flexible living product for apartment owners and residents, the company confirmed that some large apartment operators will be allocating a dozen or so furnished units in each of their properties as “flexible living” units where renters can join a membership that would allow them to move about the country as they wish during their lease term under one fixed rent rate.

“We refer to this offering as ‘Subscription Living,’ ”says Todd Butler, senior vice president of flexible living at RealPage. “These units will be stylishly furnished so that renters will not be burdened with owning or moving furniture, and they can live, work, and travel like true ‘digital nomads.’ Furthermore, when these units are not occupied by ‘subscribed residents,’ any vacancies are easily filled via standard short-term rentals facilitated through the Migo platform.”

AvantStay Triples Its Portfolio

Since AvantStay’s Series A funding round of $20+ million in 2019, led by 3L Capital, the company has added 700+ homes and 80+ new destinations. 

This past year, AvantStay has more than tripled its portfolio to 1,000+ properties, increased the number of passionate team members to 400+ and secured strategic partnerships with top brands and celebrities. 

Its latest funding round was co-led by Tarsadia Investments, a Newport Beach-based family office, and 3L Capital, a multi-stage global growth equity firm that invests across tech-enabled consumer and enterprise businesses.