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Deals & Dealmakers

Hyatt invests in upscale Airbnb

Hyatt Hotels seems to be hedging its bets on “the sharing economy.ˮ

The hotel chain, while part of the establishment that opposes services like Airbnb, is dipping its toes on the home-rental industry.

The company has reportedly invested in technology start-up Onefinestay, which allows travelers to rent fancy homes while the owner is out of town.

onefinestay offers fancy home rentals
onefinestay offers fancy home rentals

The service, which calls itself “the unhotel,” currently operates in New York, London, Paris and Los Angeles. It offers a more upscale service compared to Airbnb, renting out a portfolio of 2,500 homes worth more than $5 billion.

The value of the deal has not been disclosed. However, a Wall Street Journal report cited “a person familiar with the matter” who said that Hyatt’s investment was part of a nearly $40 million round of funding completed late last year.

This is in addition to the $12 million the firm raised in series B financing in June 2012. The company’s early investors included venture capital firm Canaan Partners, Index Ventures and PROfounders.

A Hyatt spokesperson confirmed that her firm was “collaborating with onefinestay,” adding that they will “continue to test a variety of offerings, work with a number of companies and make in-vestments to continue innovating the guest experience.”

The investment is at odds with Hyatt’s official stand on the issue of the sharing economy.

Photo by jinkazamah/ Flickr
Photo by jinkazamah/ Flickr

Hyatt Hotels is part of the Hotel  Association of New York City, an  organization that lobbies aggressively  against Airbnb. The group has accused  Airbnb of dodging taxes, taking  revenue from local municipalities and  preventing employers from hiring  more workers. Airbnb has denied this,  and claims that its critics are flip-flopping.

In a blog post published last month, the company said, “Our community wants to pay their fair share in taxes and contribute more to New York. A small subset of hotel lobbyists and officials shouldn’t stand in their way.”

Recently, disputes over rental home services have spilled to the courts. Last week, the condo board at Peregrine Tower (located at 303 East 49th Street) sued Charles Salcetti, the owner of a two-bedroom apartment in the property. The board claimed that Salcetti ran an illegal bed-and-breakfast that charged guests up to $200,000 for a six-week stay.

While Airbnb is sure to occupy hotel lobbyists for a long time, the industry is grappling with a few other issues, most notable of which is the recent City Council vote that imposed a two-year moratorium on converting hotel rooms to residential condos.

The proposal, which passed with eight dissenting votes, requires hotel owners to get permission from the Board of Standards and Appeals before starting any hotel room conversion.

STEVEN SPINOLA
STEVEN SPINOLA

Steve Spinola, the president of the Real Estate Board of New York, criticized the new directive by casting doubts on its validity.
“The legality of this new bill demands questioning,” he said in an op-ed published by Real Estate Weekly.

“Common sense would tell anyone with our city’s best interests in mind to allow the hotel industry to continue to flourish and contribute to New York, and putting restrictions on that growth is unnecessary, unwise, and without any significant benefits whatsoever.”

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