As U.S. hotel occupancy hit pre-pandemic levels this summer, the hospitality industry is bracing for what is expected to be a rush of activity as people resume travel.
There are some tailwinds pushing those sails: The largest population of future travelers was born after 1979, and after saving more money over the last decade they now have more discretionary spending and want to use it to travel, said Adam Harris, co-founder and CEO of Cloudbeds.
“The pandemic was unwelcoming for everyone, but travel is a $1 trillion industry, one of the top five largest in the world,” he added. “The demand that was there in 2019 is now even stronger because they’ve been cooped up at home for a year and a half.”
Harris and Richard Castle founded San Diego-based Cloudbeds in 2012 to provide hospitality management software to lodging businesses, from independent hotels to vacation rentals, that combines previously siloed business functions, like operations, revenue, distribution and growth marketing, into one integrated, cloud-based tool.
As a result of all that pent-up energy, Harris believes we will soon see travel numbers never seen before. To capitalize on that, the company secured $150 million led by new investor SoftBank Vision Fund 2.
Cloudbeds started a relationship with SoftBank two years ago, and Harris noted the investor is “one of the best travel investors in the world,” most recently infusing capital into travel companies Yanolja, GetYourGuide and Klook.
Andrew Zloto, director at SoftBank Investment Advisers, said via email that in today’s market it was “critical” for hotels to adopt technology so that they can compete, and that the global pandemic was a driver for the accelerated adoption we are seeing.
“We believe Cloudbeds has harnessed this opportunity to fundamentally change how the hospitality industry uses technology,” he said. “Cloudbeds has taken what has traditionally been a siloed, complex web of technology services and combined it into a single platform that’s a great solution for properties of all sizes. By simplifying and consolidating critical business tools, the company is working to level the playing field for independent hoteliers and help them to thrive in a constantly evolving market.”
Joining SoftBank are new investors Echo Street and Walleye Capital and existing investors Viking Global Investors, PeakSpan Capital and Counterpart Ventures. This latest funding round takes Cloudbeds’ total venture funding raised to date to $253 million.
Armed with the new funding, the company will continue to expand on R&D, invest in education and advocacy and grow its teams in engineering, product and sales. The company will also round out its leadership with a focus on having a team in place for a pre-IPO, Castle said.
Harris did not want to disclose growth metrics, but did say that Cloudbeds was one of only a handful of companies that grew last year despite the pandemic. It currently serves over 22,000 global customers across 157 countries.
“We believe the company can be a $20 billion company,” he added. “If you look at the race amongst competitors, we are in the lead. We have to deploy some cash, and that keeps us up at night a bit. We now have predictability in our business model, and the goal is to build an IPO candidate and mature the organization.”