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Affluent Americans won’t be cutting short their vacations despite record-high gas prices at the pump.
AvantStay, a luxury short-term rental startup based in West Hollywood, is seeing its business boom. Founded in 2017, the company recently received a $500 million infusion from New York-based real estate investment firm Saluda Grade that will go toward building up its portfolio of swanky homes in America’s wealthiest destination spots—think ski-resort towns in Colorado and Utah, and wine-tasting regions in California.
Those plans are still on track, even with a war waging on in Ukraine and gas prices soaring to historic levels nationally. AvantStay founder and CEO Sean Breuner lives in California, so he acknowledges that gas prices are “through the roof.” Still, he believes that “while oil and gas prices are a leading indicator of inflation, it’s not going to prevent people from traveling, especially domestically, to drive-to markets.”
“Even though it may be more expensive to drive somewhere to start a vacation, it is a component of the overall cost, and is not an inhibitor to that priority,” Breuner said.
Since Russia’s invasion of Ukraine on Feb. 24, oil prices globally have shot up, and have now risen even higher after the U.S. banned oil imports from Russia on Tuesday. Prices at the pump hit a record average of $4.17 per gallon nationally on March 8, breaking their previous record from 2008. The national average for a gallon of gas touched $4.25 on Wednesday, according to AAA.
Even so, there continues to be strong demand for short-term rentals like those offered by AvantStay, according to Jamie Lane, vice president of research at Denver-based rental data and analytics company AirDNA.
“We are still in the realm of minimal disruption to U.S. travel as long as the conflict remains contained to Ukraine, oil keeps flowing out of Russia into Europe and oil prices remain south of $150 per barrel,” Lane said. “Over the past week, we haven't seen a slowdown in the number of nights that Americans have been booking short-term rentals—and actually saw more nights booked last week than any other week in 2022.”
Breuner is also optimistic. In fact, times are so good for AvantStay that he says the company could return to private Wall Street investors later this year, to raise hundreds of millions of dollars more to fund additional luxury property acquisitions. (He ruled out a stock market IPO for the time being, however.)
“We’ll have more than 1,000 [properties] by the end of the year,” Breuner noted. “If there’s a global crisis—which is obviously incredibly unfortunate and sad—the domestic markets will continue to perform.” Breuner cited statistics showing that while international travel is down 13%, domestic drive-to markets have been durable and “very recession-proof” even with rising gas prices and inflation.
While Breuner sees blue skies, Lane offers a big caveat: a prolonged war in Ukraine. “We’re not there yet; we’ll probably see a barrel of oil peak out at $115 or $120,” Lane said. “But if the war goes on significantly longer than a month or so, and we potentially see European countries cut off from Russian oil, that could really push oil prices higher—and that’s where we expect there to be some negative consequences for U.S. travel.”
Under such a scenario, AvantStay might just then feel the pinch. — Pat Maio
Acorns Hits Unicorn Status, Eyes Expansion Into Crypto
Savings and investing app Acorns is now valued at $1.9 billion after closing a $300 million Series F funding round, the Irvine-based company announced Wednesday. The fresh funds come two months after the startup bailed on a plan to go public by merging with a special purpose acquisition company (SPAC).
Menlo Microsystems Raises $150 Million
The Irvine-based maker of electronic switches is looking to expand its domestic manufacturing capabilities, aiming ultimately to replace the world’s aging electrical relay technology.
PledgeLA, GRID110 Seeking Second Cohort
GRID110 is calling for applications for its incubator, which aims to increase diversity, racial equity and community engagement in the L.A. tech scene. In order to apply, a startup must be headquartered in L.A. County, have raised no more than $250,000 and have a founder who identifies as Black and/or Latinx.
Facing Backlash, Disney's CEO Speaks Up
CEO Bob Chapek on Wednesday publicly came out in opposition to Florida’s controversial “Don’t Say Gay” bill—days after the media giant began facing harsh criticism for its noncommittal stance on the anti-LGBTQ legislation, and for donating to lawmakers who supported the bill.
What We're Reading Elsewhere...
- U.S. investigates Barry Diller, David Geffen for stock trades in the run-up to Microsoft's announced merger with Activision.
- L.A.-based blockchain startup Blockdaemon acquires crypto API firm Gem.
- Bird expands to Lisbon, Portugal.
- SpaceX launches 48 more Starlink satellites.
- The Biden administration takes first steps toward regulating cryptocurrencies.
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