This morning some interesting news broke about a big investment by an even bigger company. Airbnb is leading a $160 million dollar Series B financing round for a company called Lyric. Their serves of flexible accommodations “combines the productivity of a workspace, the inspiration of an artistic studio, and the amenities of a luxury hotel, along with a deep connection to the community through partnerships with local businesses and makers.”
The connection with the community is something that Airbnb has been pushing for with their Experienes, a part of their service where locals can be hired to give tours or lessons. Last year the companies CEO Brian Chesky said that their “global travel community” was successful, growing faster than there Homes platform did, getting 1.5 million booking a year and about 1,200 host applications per week.
This investment is a way for Airbnb to dig its claws into the business travel segment of the market which is smaller and less volatile than leisure.
It also is a play for the growing freelancer market which, according to a 2018 study by Upwork, have grown to 56.7 million people in the U.S. that put in 1.07 billion hours of work. As flexible work arrangements start to become more popular business travel, and long term business travel in particular, is set to increase. Freelancers are shown to prioritize work-life balance and are willing to relocate for a lower cost of living or a tax break.
Airbnb was not the only high profile investor in Lyric. They also recieved venture capital from Tishman Speyer, RXR Realty, Tusk Ventures and FifthWall. I wanted to understand what it was about Lyric that had so many big name investors lined up to fork over cash. First I asked Jordan Nof, Managing Partner at Tusk Ventures about why they were investing. He said, “we continue to see a few trends unfold across the real estate technology sector that has primarily been driven by changing consumer tastes and preferences. Short term rentals often offer consumers lower prices, larger spaces, local authenticity and unique touches when compared to traditional hotels. Lyric is well positioned to emerge as the leading “brand” of professionally-managed rental units, specifically focused on business travelers.”
Tusk Ventures is known for their strategic advisory when it comes to regulation. I imagine having a business model that revolves around trying to get zoning approved for residential/commercial/hotel uses require quite a bit of regulatory finesse. Having backed Uber, FanDuel, Lemonade and Handy Tusk Ventures is no stranger to companies that depend on favorable legislation. Nof said, “We believe that a major driver of success will be Lyric’s focus on the regulatory landscape that is rapidly changing across urban areas in the U.S.”
I was also lucky enough to get in touch with Roelof Opperman, Principal at Fifth Wall Ventures. He told me that their investors, who are some of the top real estate operators, turned them on to Lyrics’ value, “Lyric is fundamentally breaking down the distinction between the hospitality and multi-family asset classes. We worked with them after our investment to partner with our real estate LPs and they are now working with 14 of the 50 largest landlords in the US. They are adding substantial value to our investors’ buildings with an unparalleled tech-enabled service.
Airbnb pushing into the workplace market has a lot of implications to the travel industry but it could also illicit a response from another other innovative company that now just goes by We. If We Co sees this as a set into their territory they might try to do the same thing by expanding their WeLive offering. With two companies as well funded as We Co and Airbnb it could spark an acquisition war that could create competing global networks of branded flex spaces that would make being a digital nomad even more appealing, further increasing the market.