If you can’t beat ’em: Barry Sternlicht invests in Airbnb-like short-term rental company
Company depends on developers setting aside units
A venture capital group, including hotelier Barry Sternlicht, invested in a San Francisco-based company that works with developers who set aside blocks of apartments for short-term rentals.
The group, which also included Fifth Wall Ventures and New Enterprise Associates, made a $15.5 million Series A equity investment in AJJK Inc., the Wall Street Journal reported. The company, which is soon to be renamed Lyric, is seeking to create an upscale short-term rental brand akin to a four- or five-star hotel within a multifamily building.
The idea is that developers will set aside swaths of apartments in their projects for short-term rentals. Airbnb launched a similar program in 2016, “Friendly Buildings Program,” which allows developers to list their rental units on the website. Airbnb claims it has 13,000 units listed. Lyric is setting out to be more of an amenity offered in a luxury rental, a place where guests of residents can stay or where millennial travelers can feel like they are part of the neighborhood.
“If somebody creates a successful business model, plenty [of multifamily landlords] will adopt it,” Conor Wagner, an analyst with real estate research firm Green Street Advisors.
Still, many hurdles lie ahead. In New York City, for example, short-term rentals of fewer than 30 days are illegal in buildings with three or more units, unless the owner is present. The hotel industry is also a fierce opponent to services like Airbnb.
Lyric is aiming to have 1,000 units by the end of this year. [WSJ] — Kathryn Brenzel