Onefinestay

Onefinestay, A High-End Airbnb Rival, Confirms $40M Raise From Intel Capital, Hyatt And More

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As Airbnb closes in on a major round of financing that will reportedly value it at $24 billion, smaller startups riffing on the same model of renting out private homes are also heating up.

Onefinestay, a five year-old business out of London that focuses on renting out private luxury homes, has raised $40 million — a Series D round of funding that the company plans to use to keep growing its business. Today the company lists homes in London, New York, Paris and Los Angeles, and CEO and co-founder Greg Marsh boasts its size is already six times larger than the inventory of The Ritz, The Plaza, Hotel George V and Hotel Bel-Air combined.

The fact that Marsh compares Onefinestay’s size to that of luxury hotels speaks both to the company’s target customers, but also its ambitions to be a hotel replacement. That makes it all the more interesting that a key strategic investor in this round is one of the bigger chains of luxury hotels in the world. Alongside Intel Capital, Quadrant Capital, Index Ventures and Canaan Partners, Onefinestay has brought on Hyatt Hotels as one of its newest backers.

The news of Hyatt backing Onefinestay actually leaked out in May, although it’s only now that the startup is confirming the news and giving more details about the round. Generally speaking, the company doesn’t do much talking at all about the money it’s raised. This $40 million brings the total raised by Onefinestay to $80 million, but included in that is a $25 million Series C that was never announced but Marsh confirmed to TechCrunch.

“Funding is a milestone and a proxy for scale, but doesn’t have any impact on qualiy of customer experience and sometimes feels like it gets in the way,” Marsh told TechCrunch.

The rationale behind Hyatt investing in Onefinestay works on a few different levels. There is the very basic possibility that this is simply about an incumbent knowing his enemy, and for Onefinestay a case of “better the devil you know.”

On the other hand, it sounds like this could help both companies’ businesses, too. For Hyatt, there will potentially be a lot of travellers who might be part of its target affluent demographic who are actually looking for places to stay that are either less sterile, or simply equipped with options like kitchens that are harder to come by in hotels. Investing in a company that offers private but high-end homes, and potentially marketing those properties through its booking services, would mean that Hyatt has a better chance of holding on to its most loyal customers.

Onefinestay, meanwhile, would get more renters and potentially even hosts out of a partnership, as well as more hospitality industry guidance on building out the business. That’s something Onefinestay is clearly looking for at this stage in its life: among a long list of senior appointments that is also being announced in conjunction with the funding is the appointment of a new CFO, Tom Singer, who comes from InterContinental Hotels, where he was group CFO.

This looks like the first time that a hotel company has strategically invested one of the home rental platform startups that are slowly eating away at their business. However, it’s not alone.

The FT is reporting — and we’ve confirmed with our own sources — that Wyndham Hotels, owner of Ramada and Travelodge, has invested $12 million in Love Home Swap — another home rentals platform for private owners and individuals to list and rent homes. In the same article, the FT also notes that Accor regrets not having invested in Airbnb. That makes it sound like the opportunity had been there — although these days Accor seems more like a jilted lover than a lover.

Just as we have seen a number of mini-Ubers emerge that are building app-fuelled private transportation services catering to specific sectors of people — for example Shuddle for young and elderly people — Airbnb may be leading a similar trend in the accommodation industry as played out in the sharing economy.

Onefinestay is not the only one to focus on high-end homes. Luxury Retreats, based out of Canada, recently raised $11 million (and it’s profitable); and HomeAway has been building its own Luxury Rentals brand.

The premise behind Onefinestay is to offer full-homes but on hotel-like terms: the properties are cleaned before and after guests arrive by Onefinestay’s own staff, with their own linens, towels and toiletries as part of the deal; guests are given iPhones to use for local calls and data services; and there is a concierge on call for any requests or help or other services.

On top of this, the whole experience is fairly selective on both sides of the equation: people who are interested in being hosts need to apply for consideration, and Marsh says that for every one property that is accepted, nine are rejected. There is a similar vetting process for guests.

Both Airbnb and Onefinestay embrace the idea of using technology to underpin and redefine the way that people can offer and rent accommodation in cities, disrupting the traditional hotel industry with a technologically efficient platform that handles all aspects of the process from searching and booking to communications and payments. Onefinestay even patented a key-free, software-based smart-lock system called Sherlock that it currently sells to its hosts. That might be one of the reasons that the compay caught Intel Capital’s eye; it means the company is covering a lot of bases, including IoT and security alongside e-commerce.

Both also focus on visitors to urban locations, and a large part of the inventory on both seems to be of homes that are regular residencies rather than second or third properties or properties that exist solely to be used as rentals (note: this seems to be shifting a lot at Airbnb these days). However, the focus on luxury and how it’s executed by Onefinestay are both major differentiators from Airbnb.

“We don’t compete against Airbnb!” Marsh told me emphatically.

(That is, of course, until Airbnb decides to move into this market: the company already offers some pretty extraordinary properties and has been expanding its offerings to hosts to include cleaning and other services, so it seems like a no-brainer that Airbnb might try its own hand at really focusing on high-end services for guests and hosts at some point.)

Despite being a whole lot smaller than Airbnb, it will be interesting to see how and if Onefinestay faces any of the same regulatory scrutiny that Airbnb has been fighting in particular markets like San Francisco. For now, Marsh says that Onefinestay tries to stay cool with local authorities, and makes sure that it pays all occupancy taxes and other fees — one reason that it takes on average a 50% cut on all transactions on its site.

The company is not disclosing valuation in this round or any revenue figures, but Marsh does confirm that it’s “investing in growth” at the moment. Other investors in this round included Joss Kent, CEO of &Beyond and former global CEO of Abercrombie & Kent; Richard Chen, Venture Partner of Ceyuan Venture and CEO of Yifei Investment Holdings; and Mark Dempster, former Marketing Partner at Sequoia Capital.