Hostaway, a leading property management system (PMS) and marketplace for short-term rentals, has raised $365 million in funding, valuing the company at $925 million. The funding agreement marks a significant milestone for the company and is likely the largest investment ever made by a specialist in STR (Short-Term Rentals) technology.
Investors and the significance of the deal
The investment came from General Atlantic, a leading private equity firm, in partnership with PSG, a previous Hostaway investor. Both companies will become significant minority shareholders, supporting Hostaway’s growth strategy. According to Matthew Dorr, head of General Atlantic, Hostaway is described as a “class leader” and is poised for continued growth.
From Finland to the global market
Founded in 2016 in Finland, Hostaway has grown into a major player in the short-term rental industry. The funding will be used to:
- Innovate products with a focus on Artificial Intelligence
- Expand into markets such as France, Italy and Spain
- Improve existing products to support its customers
Hostaway’s vision for AI
Marcus Rader, the company’s co-founder and CEO, said that AI (artificial intelligence) will fundamentally change the travel market. However, he acknowledged that no one knows exactly how its use will shape the future. Hostaway plans to invest in AI tools that will improve the way customers search for and book short-term rentals, as well as accelerate the trend of direct bookings.
New Products and Investment Initiatives
In 2024, the company launched four new products:
- Financial services for property managers
- Insurance
- Dynamic pricing
- In-house trust accounting software, for which there is growing demand from customers.
Co-founder Saber Kordestanchi said that Hostaway is considering building or acquiring solutions to meet its needs. At the same time, the company continues its impressive revenue growth, increasing its turnover every year for the past five years.
Challenges and opportunities in the STR industry
Asked what he thinks is wrong with the STR industry right now, Marcus Rader said, negativity.
“It’s a bit of an over-focus on the negative. The fact is that the market share of short-term rentals is growing relative to the global accommodation market. They’ve gone from 6% to 15% in just a few years. It’s a fact that the global accommodation market is growing. Another huge advantage that short-term rentals have had in the last two years is that the number of so-called digital nomads or even remote workers has increased so dramatically.”
“And the restrictive regulations, as he said, already look like they’re going to be overturned. So there are a lot of positives and that’s where a lot of people get it wrong,” he said.
Kordestanchi added that the industry recognises the need for professionalism and technological integration, which will allow for its sustainable growth.
The importance of funding for Hostaway
The new funding represents a turning point for Hostaway, enabling it to maintain its market leadership and make strategic investments. With investors seeing huge opportunities in the sector, Hostaway is well-positioned to capitalize on its prospects.
In mid-2023, Hostaway announced a $175 million funding round from PSG, with the investment then earmarked for technology development, hiring and potential acquisitions.
More recently, Guesty announced $130 million to accelerate its expansion, and just this week, Vacasa founder and former CEO Eric Breon unveiled his startup Fairly, which received $10.1 million in seed funding.
Source: With information from phocuswire.com
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