WhyHotel, a startup that operates pop-up hotels in newly built apartment buildings, announced today that it has raised $20 million in a series B round of funding led by Harbert Growth Partners, among others, taking the company’s total funding to $35 million.
The company partners with property owners and real estate management firms to transform apartment blocks that have yet to be leased into temporary hotels.
WhyHotel has continued to evolve since its birth in 2017, giving travelers a hotel-like experience with all the comforts of home and offering amenities to the full-time residents of the building its spaces are located in, such as linen services and a lobby filled with snacks and coffee.
The injection of $20 million will allow the company to move into new cities, such as Atlanta and Orlando, beyond their current locations in Seattle, Houston and parts of Virginia.
“How people use space is evolving at a much faster pace than the three to five years it takes to deliver a high-rise building,” said WhyHotel CEO and cofounder Jason Fudin, in a press release. “To address this, we are accelerating innovative real estate offerings for consumers and developers alike.”
Luxury short term accommodations are the meat and potatoes of WhyHotel’s business model, though they also target extended stays, attracting business travelers and people who have just relocated to a new city or area.
The appeal to building owners is twofold. WhyHotel can fill spaces in newly built buildings, making sure the property makes money right from the get go. Additionally, the building owner or landlord is given the option to keep some units open for holiday and vacation rentals, which is another avenue for monetization.
“Unlike major operators that have been hobbled by delivering products that mismatch long-term lease obligation and short-term consumer contracts, our products are designed with an understanding of real estate cycles in mind and the goal of building a sustainable, profitable business,” Fudin added.
Demand for hotels that capture the spirit of home is increasing and venture capital has been flowing into this space. Earlier this year, San Francisco-based Sonder raised $210 million at a valuation of more than $1 billion for vacation apartments that come with hotel-like service. New York’s Domio raised $12 million for a similar concept and Airbnb led a $160 million investment in Lyric, which develops “creative suites” for professionals.
photo credit: whyhotel