Just days after finalizing the acquisition of the Hotel Tonight app, home-sharing platform Airbnb is investing in Lyric, a San Francisco-based real estate and hospitality company that designs, installs and operates flexible accommodations.
Lyric announced $160 million in Series B financing April 17, led by Airbnb, with new investors Tishman Speyer, RXR Realty, Obvious Ventures, SineWave, Dick Costolo and Adam Bain among other real estate partners. The round also includes participation from existing investors Barry Sternlicht, NEA, SignalFire, FifthWall and Tusk Ventures along with new debt financing.
The new influx is about 50 percent debt, Forbes reported, and brings the company’s total funds raised to $185 million.
In a statement, Lyric said that the financing will help the company expand its operations and support its continued investment in its technology and data platform.
“At Airbnb, we have seen how hospitality entrepreneurs like the team at Lyric can help deliver amazing experiences and help guests feel like they can belong anywhere in the world,” said Airbnb President of Homes Greg Greeley. “Lyric has combined the latest technology, strong partnerships with the real estate community and cutting-edge design, and we are excited to support their work.”
Lyric's Model
Unlike Airbnb, which lets occupiers rent rooms, apartments and houses for travelers—Lyric rents a full floor of apartments at market rate from landlords, furnishes them "to combine the productivity of a workspace, the inspiration of an artistic studio and the amenities of a luxury hotel" and then subleases them for both short- and long-term stays. The profit is in the difference between the company's monthly rent and the guest's total cost.
According to technology website TechCrunch, the main difference between Airbnb and Lyric is that Lyric rooms act as an "anchor tenant" in residential buildings, collaborating with landlords rather than working against them. This ameliorates a regular complaint from residential developers, who have lobbied against home-sharing services in their buildings. If tenants are making money from renting out rooms or full apartments, they argue, why shouldn't the building's owner get a cut?
Residents of the buildings can use the Lyric rooms as guest accommodations, the site noted.
Not all permanent residents of a building want temporary guests in hallways, however, even if these guests are on a dedicated floor. Forbes noted Niido, another Airbnb-backed startup, did not receive a friendly welcome when it took over management of a Florida apartment building last year and encouraged residents to sublet their units to Airbnb travelers for a maximum of 180 days per year. Some tenants of the building complained they "didn't agree to live in a hotel," Bloomberg reported.
Lyric currently has 500 studios, one- and two-bedroom apartments in 13 cities (Co-founder/CEO Andrew Kitchell told TechCrunch the company is operating legally in all of them). Lyric is looking to reach 1,000 units by the end of the year and 2,500 units in 12 months.