The Daily Dirt: Airbnb bet on travel startups, but will it save them?
An analysis of New York's top real estate news
Airbnb poured tens of millions of dollars into travel startups, seeding a sprawling network of companies. But with the hospitality business reeling, it now has to focus on saving itself.
The carnage is hard to ignore. Lyric, which raised $160 million last year from Airbnb, all but shut down last month after coronavirus ravaged the travel industry. Zeus Living, a corporate housing startup backed by Airbnb, laid off 30 percent of its staff. A partnership between Airbnb and a Miami developer recently dissolved in litigation.
Other investors might have bailed out the struggling companies, and some did, E.B. Solomont and Sylvia Varnham O’Regan report. In May, Zeus got a $15 million lifeline from prior backers — just not Airbnb. “At their core, they’re not an investment firm,” Seth Borko, a senior research analyst at Skift said of Airbnb, which saw its valuation fall to $18 billion from $26 billion in March. “If you’re Airbnb, any investment in a company other than your own is no longer necessary.”
But some sources said Airbnb’s firepower didn’t materialize when times got tough. “The ones that were hinging on Airbnb to validate their business model, now they’re stuck,” one investor said.
In May, Airbnb CEO Brian Chesky said the pandemic “sharpened our focus to get back to our roots, back to the basics.” (No, not air mattresses.) By June, an uptick in bookings reignited talk of an IPO this year.
The thing is, Airbnb needs hosts to meet demand when travel resumes. In the U.S., two-thirds of Airbnb’s supply comes from professional hosts, said Makarand Mody, a professor at Boston University. At the same time, Airbnb data shows travel patterns are changing, possibly making urban brands like Lyric and Zeus less valuable to its platform. While overall host earnings have slowed during the pandemic, hosts in rural areas saw a 25 percent bump in June, with earnings over $200 million.
Indoor dining is a non-starter in New York City. So how about an all-outdoor restaurant?
That’s what the Howard Hughes Corporation has in mind at One Seaport. Blockhouse Bar, a waterfront restaurant and bar that was in the works pre-Covid, will be an open space covered only by a wooden roof.
“Consumers are going to want spaces like this,” Jennifer Carpenter, a principal at Verona Capital Architects, told TRD’s Sasha Jones.
She noted that opportunities for other open-air restaurants are limited, and many eateries have made due with what they have. At least 8,000 of the city’s 27,000 eateries have applied to reopen with outdoor seating, and nearly 40 miles of streets have been closed for pedestrian and restaurant use.
Carpenter noted that, “there’s this long-term interest in places like this that allow for more outdoor options, year round.”
Good point — but what happens when the weather turns?
What we’re thinking about: Zoos and botanical gardens will reopen in NYC’s phase 4. Gyms, movie theaters and malls without special filters in their air conditioning units will not. Does anyone want to go to the mall anyway? Send a note to firstname.lastname@example.org.
Residential: The priciest residential closing recorded Friday was for a condo unit at the Quay Tower, at 50 Bridge Park Drive in Brooklyn Heights, at $3 million.
The largest new building filing of the day was for a 53,920-square-foot mixed-use building at 4750 White Plains Road, Bronx. Henderson Braithwaite of Wakefield Grace United Methodist filed the permit application.
NEW TO THE MARKET
The priciest residential listing to hit the market was for a condo at 551 West 21st Street, in Chelsea, Manhattan, at $30 million. Douglas Elliman has the listing.
— Research by Orion Jones
A thing we’ve learned…
BJ’s Wholesale Club has really tried to do right by “frontline team members” working non-stop throughout the pandemic. The warehouse store granted across-the-board pay hikes of $2 an hour. Thank you to Kevin Sun for spotting a retail bright spot.
Elsewhere in New York
— Jamaal Bowman unseated U.S. Rep. Eliot Engel, a 16-term incumbent, in New York’s Democratic primary, becoming the latest progressive politician to win on an anti-establishment platform, reported the Associated Press. In recent weeks, Hillary Clinton and Gov. Andrew Cuomo joined a chorus of politicians who endorsed Engel, chairman of the House Foreign Affairs Committee. But after Engel was caught on a hot mike admitting he only wanted to speak during a Black Lives Matter protest in June because of the tight primary race, voters felt he’d lost touch with his Bronx constituents.
— Police arrested the former personal assistant of Fahim Saleh in the tech entrepreneur’s grisly murder this week, the New York Post reports. The assistant, 21-year-old Tyrese Devon Haspil, worked for Saleh since he was 16, but detectives said Saleh recently discovered Haspil may have stolen $90,000 from him. Saleh’s dismembered body was discovered in his $2.25 million Lower East Condo, with an electric saw still plugged in nearby.
— Book quarantine. That’s probably the best way to describe the New York Public Library’s new policy of setting aside returns, untouched, for 72 hours before returning them to the shelves. At newly reopened libraries, bookworms are confined to the lobby and must make “grab-and-go” appointments to pick up reserved titles, reported the Wall Street Journal. Since March, the library has raced to digitize its collection and in June, 250,000 e-books were checked out, double pre-pandemic levels.