WhyHotel, a provider of luxury pop-up hotels, has landed more than $20 million in Series B funding.
The round was led by Harbert Growth Partners, with participation from Camber Creek, Highland Capital Partners, Working Lab Capital, Geolo Capital, Revolution’s Rise of the Rest Seed Fund and Mark Nunnelly, former managing director of Bain Capital Partners.
With the new funding, WhyHotel - named one of PhocusWire and Voyager HQ's Hot 25 Startups for 2020 - has raised more than $35 million over three rounds.
The Washington, D.C.-based brand claims to blur the line between hospitality and home by offering lodging and hotel-like service in newly built apartments during the lease-up phase.
Although WhyHotel currently operates in Seattle and the Washington, D.C. area, the new funds will be used to expand nationally into Houston, Orlando and Atlanta.
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The capital will also be used to hire new employees and to offer additional products and services to guests during stays.
In an exclusive interview with PhocusWire, WhyHotel CEO and co-founder Jason Fudin says that there has “been a rapid influx of venture capital” into the alternative lodging space.
“Real estate developers and owners understand that their assets are not going to forever be single-use assets,” says Fudin. “There's the opportunity to be more dynamic. Consumers are becoming very comfortable with an alternative stay.”
Fudin says that WhyHotel offers a “superior” product for customers, and it helps real estate owners “make use of inventory that’s otherwise vacant.
“What we've tried to do is pair a situation where customers win, and real estate developers win.”
Originally, Fudin says that “technology was a smaller focus than effective business model unit economics, operations and customer product.
“Now that all those things are working swimmingly, there's a huge focus on optimizing everything through technology.”
WhyHotel says that the some of the new funds will be used for tech product development. “That’s everything from pricing to channel management, and to the way we think about the customer experience,” says Fudin.
Business travel is another area that Fudin says is a “big opportunity” for WhyHotel.
“Today's hotel product does a really poor job of serving people that want a home away from home,” says Fudin. “That's really where we've been focusing a lot of our energy on and we will continue to do that because we think it's a largely underserved market.”
Just this week, another accommodation provider in the corporate space, Zeus Living, raised a $55 million Series B round with participation from Airbnb.
By 2022, WhyHotel also hopes to roll out Hospitality Living, its real estate development arm, which will be partially funded by this latest round.
Says Tom Roberts, general partner at Harbert Growth Partners: “With Harbert’s long history in venture and real estate investing, we are in the unique position to evaluate innovation in this market.
“As a capital efficient business with an eye on the revolution of real estate, WhyHotel is set to define a new and tremendous market.”