It remains to be seen whether apartment-style accommodations will continue to play a growing role in managed travel programs, as they were prior to the pandemic, yet it's clear investors are betting that demand for these options will increase. After raising $2 billion in capital this spring, Airbnb filed for its IPO this year and has been valued most recently at $21 billion. Sonder raised an additional $170 million in June in a Series E round.
Another alternative accommodation player Kasa Living announced this month that it had raised $50 million—$30 million in a recent Series B round and $20 million from a previously undisclosed Series A round less than a year ago. Ribbit Capital led the Series B round; FirstMark Capital led the Series A round. Additional participants included RET Ventures, Zigg Capital, Allegion Ventures and BoxGroup.
Launched in 2016, Kasa currently holds management agreements with multifamily and hotel property owners in 35 markets across 15 states. The company also claims that since the beginning of the year, it has maintained occupancy rates of about 75 percent, expanded the units under management by 50 percent, launched in five new cities, and saw monthly revenues climb 50 percent since December.
"We see a generational opportunity to innovate in a beleaguered travel sector," said Kasa founder and CEO Roman Pedan in a statement. "This raise allows us to grow our technology team significantly to power a flexible and distributed hospitality offering that delivers on our mission."
Kasa plans to use the funds to accelerate investment in proprietary technology and build on "its existing suite of product and systems that has enabled the company to manage units across various property sizes and locations."
Prior to the pandemic, about 50 percent of Kasa's bookings came from business travelers, and "we expect that in the long run, business travel will come closer to historic levels," wrote Pedan in an email to BTN.
Since the pandemic began, that share has dropped to about 15 percent, "but it's a bit of a tricky question during Covid times," he said, noting that about 39 percent of room nights are represented by mixed-purpose rentals of three to six weeks.
While Kasa currently is not working directly with corporate travel programs, it is in conversations with a few prospective corporate travel partners, Pedan wrote. "All of Kasa's inventory across 35 cities is managed through a centralized property management and distribution system," he said. "We have found that this wide distribution has led to corporate travel managers booking Kasas for their clients despite a lack of a direct relationship with us. In some ways, this is more seamless and convenient for both the end guest and for the travel partner as we and they do not need to go through a time-consuming and cumbersome process to integrate directly into a partnership."
What differentiates Kasa from some competitors is that it allows rentals for less than 30 days, it uses property management leases as opposed to master leases for its portfolio—meaning owners share in the profits as opposed to collecting a set monthly rent—and it targets a different consumer segment than, say, Sonder, wrote Pedan, adding, "If Sonder is Kimpton, Kasa is Southwest Airlines. The Kasa guest experience is less interested in designer furniture and more interested in ease of booking, contactless check-in and consistent quality amenities at sensible prices."
The company is in advanced conversations with property partners to add several units in the next 12 months, Pedan wrote, but the specific cities "will evolve over time." A few of the potential expansion markets include Cincinnati; Indianapolis; Kansas City; the New York metro area; and Portland, Ore., as well as locations in Canada and Mexico.