STR Investments: Why Some Soared and Others Failed

 What’s the real difference between a multi-billion dollar "SPAC" failure like Vacasa and a scaling success like Hostaway? VC partner and industry expert Eugenia Dunaeva joins Sarah and Leo to pull back the curtain on short-term rental investments. We dive into "sticky" tech stacks, the shift from overvaluation to realism, and what operators need to show investors in 2026 to get funded. 

Transcript

SPEAKER_02 0:02

In the last few years, billions of dollars poured into the short-term rental space. Some deals transformed companies, others did not. Today, we're pulling back the curtain on what actually happened and what it means for you as a host or an operator. Today we're super excited to invite Eugenia Danaeva to the podcast. And uh Eugenia comes with a wealth of experience, both kind of on sitting on the board of startups as well as as well as being a founding member of a BC fund that operates in the space. And so we are really glad for her to join us today and help us unpack some of the deals that went well in the space, some of the acquisitions and injections of capital that did not go so well, and what happened. So welcome, Eugenia.

SPEAKER_01 0:47

Thank you. Thank you for having me. And good to be here with you today. Uh, really excited about the topic.

SPEAKER_02 0:52

Yeah, we are as well. Eugenia, just for the audience's sake, why don't you give us a brief overview of kind of your trajectory and uh where your experience and knowledge base comes from?

SPEAKER_01 1:02

Yeah, sure. I think it's it's it should be actually more interesting for your audience than the fact that I'm uh a partner at the VC fund or advise to startups, which I do, but my background is what's called N VC and operator background, meaning that I actually come from the industry. And so one of my first jobs was at the hotel chain. I was sales manager, then sales and marketing director, and then chief revenue officer of a hotel chain. And from there, I actually jumped into the world of RTAs. So I worked for Xpedia for 11 years, let's say some very long time. I left right after the pandemic. I was with Expedia during the time that Verbo, oh sorry, tomaway was acquired, and then it was rebranded into Virgo. And then I left Expedia for another great technology company that was Meta, where I was also uh involved in B2B partnerships and leading um the um yeah technology partnerships for Meta horizontally, not only in travel, but travel was one of the verticals under my team horizontally across EMIA. And then after leading Meta several years later, I actually focused on investing. I have to say that I was have been investing since my time at Expedia, and some of my first angel investments were actually in the travel space, something that, you know, used to be my bread and butter and something that's close to my heart. But in the last, what is it, four or five years, I've been focusing more on investing in the DVC as a fund and other funds where I'm an uh what's called limited partner, so ultimately an investor who provides money and who provides the expertise to the portfolio companies as well. I am uh also like horizontal in terms of the types of investments that I do. I'm not focused specifically on either hospitality or travel, journal technology or prop tech. We're more focused on various B2B verticals than anything AI NML enabled. And there are also a couple of uh my investments that go into impact, that go into decarbonization, and so on. So something that's close to I think the impact that short save rentals or short you know vacation rentals as an industry is also making to the world. And apart from that, I also sit on several boards of travel companies and and non-travel companies as well, which gives me, I think, a great perspective into I have this luxury of you know sitting in the first row of where the industry is heading um at a large scale, not specifically short-term rentals, but travel in general. Yeah, that's that's very exciting. I hope that makes my uh uh point of view relevant for the audience.

SPEAKER_00 3:55

I'd say firstly, I mean, it it shows what a wealth of experience you have. Quick question: do you have any time to sleep? Do you ever sleep? I'm not sure.

SPEAKER_01 4:03

Well, I it's funny because I work a lot with the US, whereas I'm based here in Madrid, in Spain. So I do work evenings quite a bit, and mornings are more like for me. So that's that's the time when I sleep. Short answer to your question.

SPEAKER_00 4:17

No, I like that. I like that. I I do a lot of US as well. I find that the mornings can be quite relaxing if you play them well. Perfect. And then obviously, you such a wealth of experience, such a wealth of insight that that the audience are gonna share, the audience are gonna get the benefit of today. So thanks so much for coming and agreeing to talk to us. We're gonna try and tease out a lot, we're gonna try and do a lot in a short space of time. So let's get into it. I mean, I guess the first thing to ask is obviously you've seen the space from both the operator and the investor side. How would you describe the mood in short-term rental investment world right now compared to say 2021, 2022?

SPEAKER_01 4:50

Oh, those are two very different eras, right? So 2021 and 22, those were the post-pandemic uh breakthrough, like the the rise of uh you know, the travel coming coming back into over reality, and the travel boom, and all the companies that went public at that time or or were acquired in the travel space. The major thing that characterized them was the inflated valuation, the like overvaluation, extra valuation. So this is something that you know the projections were really uh unrealistic for that time, uh, which is probably, you know, that was the the mood that was in the industry, it was the mood of every one of us as well, I would say, right? We were allowed to travel and uh we saw the demand spiking. So why not capitalize on this demand? Why not monetize? Uh there was a very unique time in the in the history of you know uh any any venture capital. So uh of course, back then all the companies that went public, most of them did it uh via spec, so special special purposes uh companies that uh does it make sense that if I explain what spec is at all? Yep, I think it does. Cool. So when when a startup goes public, goes for an IPO in the normal scenario, what happens is that they prepare for that during six or twelve months, they uh make their books in order, they do hire bankers to help them go public, they open up their books, they get really audited before that. So it's a very um time-consuming, resource-consuming exercise. Whereas with specs, the special purpose vehicles that helped companies to go public sometime before COVID and during COVID and after COVID, that was really the season for specs. What happened is that those were completely empty shell companies, so no revenue, no operations, no employees. They were essentially a bank account at an aim that goes out to the market and says, hey, there are plenty of opportunities out there. We are going to choose the best opportunity for you to go for an IPO. But first, you have to believe in us, in our experience and the fact that the markets are skyrocketing, and you know, also with the fact that capital was abundant and capital was cheap. Back then, you investors just have to believe in us and give us money. And that actually that was what was happening. Investors were giving money to those specs, and then specs went out there and they were looking for some companies to invest in. So Vacasa was a great example of it. Zonder was a great example of it. There were plenty of others in travel space and outside of travel space that went public through specs, which allowed them ultimately to do it fast, to do it without being heavily audited, and to essentially not sell to the market the real picture of their finances, of their unit economics, whatever like markets they were tackling and so on, but to sell the projection, to sell something that could not be audited. And that was the reason why so many companies ran public on those extremely high valuations. I think Makasa was valued at 4.4 billion, if I mistake not, at the end of 2021, which was completely crazy. And if you think of it, three or four years later, weren't they sold for 40 something million? So I think that was um uh the the aftermath of this overvaluation where essentially the um tech shareholder value being destroyed. 99% in case of ASA. But back to your thing. So the mood was overly optimistic back then. I think the mood is very realistic now. Now we are in this world of like the transition from subscription models, SaaS business models, to anything that's AI related and ultimately based on the prices of tokens that are shaping the cost structure of any startup and business. And of course, the price of tokens is fairly high. So we're looking at the costs growing within any startup environment in any company, and the revenues not necessarily growing at the same pace. So now we're more I don't want to say really pessimistic, optimistic, probably more realistic, and looking at the businesses that can be more sustainable at this world of token prices being fairly high and revenues are being moderately high. Let's put it this way.

SPEAKER_02 9:36

Yeah. Let's talk about some of the deals that have been done, even at some of the some of them at the height of the boom, that actually have worked. So, you know, like guesty, hostaway come to mind as companies that obviously it wasn't a full acquisition, but it's been a massive injection of capital. What makes those different from what happened with Vicasa or Sonder, for example?

SPEAKER_01 10:00

Yeah, so it's really interesting that you're bringing up those two because they are, despite the fact that they are competitors, I think they are following very different scenario, right? So with Hostaway, I think they followed for a very long time a very bootstrap first culture where the founders were refusing the uh venture funding for a very long time, until I think 23 or 24, but they were focusing rather on getting to know the business, going into the weeds of the business. I think they started by having the vacation, like the short-term rentals themselves and managing them themselves to understand the pains and the wins of the homeowner, which I think it is a great approach. And as an investor, I'm I always admire founders who actually go in the weeds of the business they're building in, especially if they're coming from outside, right? That's the founding team definitely doing their job right. So that's one thing. And in terms of guestie, I think this is this is a company that raised four or five rounds, if I mistake not. So they but follow a completely different path, very much relying on venture funding, which inherently, right, they need to deliver on this. They need to show investors that their money is being deployed in the right way, that they need to show the investors the return on their investment to actually get to the next investment round. So it's that's what we call, you know, the venture pressure, right? So they chose this path uh and they're following it, I think, in a in a in a good, in a successful way. What I see them doing is that they are essentially verticalizing, aren't they? So they they did some uh acquisitions themselves of smaller companies that that helping them verticalize. I don't remember now what specifically they are. Do you have it on top of your mind? But it's it's definitely something that's helping them either manage the guests, uh, communications or or something. So ultimately, the phase that we are now, if you think of STR ecosystem, the first phase of this ecosystem with your ring was more of a consolidation. And those two PMSs and channel management companies appeared, I think, as the winners during this round. But now the second phase is more about um really building more integrations into your platform and verticalizing the entire experience, making sure that you are so heavily embedded in the life of the homeowner property manager, so you're your customer ultimately, that you know you are irreplaceable. That the stickiness of the product, that's this term that's used uh a lot in the NBC world, the stickiness of the product is really, really high. And ultimately, the great, I think, the great mode or the great benefit of those companies, like what worked in their case, is essentially them building this ecosystem within their platform where they have 100 or 200 integrations, which cover ultimately probably 80% of the tools that a homeowner would need to be using, versus, you know, if you think five or seven or eight years ago where there were plenty of fragmented tools and systems that they used to use.

SPEAKER_02 13:20

Yeah. I think that's right. And today, you know, the stickiness as well is is something that is super important. One of the things that Gasty has done really well on top of that, and of course host away, most of the PMSs, but what's made them super successful is their ability to make sure that you really never have to leave. You don't have to leave, yeah, so you don't have to leave host away to manage things that are day-to-day critical to your operation. I mean, I know Leo, you you can tell us, I know you guys are integrated with all of them. Um, but you know, that that's what that's what makes a huge difference is the ability to have that marketplace in many oper in many situations. You can actually um either pay directly to that third party through your get through your guestie account or your hostway account. Um so I think that's absolutely right. And then the cost of switching is also very high. It's a pain to get your data out of your PMS. It's a pain to have to then upload everything into a new one.

SPEAKER_01 14:15

At least purposefully so, right? Because the PMS doesn't want you to leave. So of course they build all these barriers for you to leave. It's part of that.

SPEAKER_02 14:22

Yeah, of course. I think the other thing about these two companies that is is quite unique to me is their founders did stay and have stayed, even you know, with the injections of capital. And that seems to be, for me, part of the success of these two is that they are basically the same companies, just with more money.

unknown 14:40

Yeah.

SPEAKER_02 14:41

Don't mean if you think I'm wrong on that one, but that's sort of how I've I've seen it and experienced it, at least in my time in the industry.

SPEAKER_01 14:46

Yes, for sure. I think it it does make a big difference because essentially it boils down into the DNA within the company. And I think that what happened with, you know, part of the uh failure, unfortunately, of Acasa was the fact that their DNA gets completely like dissolved in all the acquisitions that they made, right? And in all the centralization that they try to make, to make. And in the end of at the end of the day, you see that they are completely not like not on the ground. They don't see what's happening in the market, they're not close enough to the owners, what I think distinguishes Costa and Guesty. I think they're very, very local. Guesty, I think, is super focused. I see a lot of them here in EMIA. I think they're they're super focused in EMIA. So it's really, really good to see that. And it's good to see that they are also they're so clear on what they want to achieve, right? I think a couple of other companies that it's it's not PMSs or channel managers, but I think another interesting story is Home2Go and Holy Do. So also, you know, both EMIA-based companies. And Home2Go actually also went public through through a spec uh back in 2021 or 2022 at the German stock exchange. And they also, I don't want to say they're struggling. I mean, their valuation definitely dropped. I think they were valued over 1 billion and now they're around 200 million, something like this. But they're still very much up and running, and they're also focusing on verticalizing their supply because they bought uh Interhome recently, so they actually have the uh added the properties to Best Tech. Uh they have Home Away Pro, I think. So the whole property management uh part of it, and also obviously they're not at the search level. So that's an example of where they're trying to figure out their way through verticalizing, and the founders are still there very much. Patrick is doing an amazing job. Same with Holy Doo, right? Johannes and his brother, they are very much kind of not public, they are rarely showing up anywhere and you know, rarely talking about what they're doing, but they're also very, very local. Like they have all these local here in Spain, across Europe, and even although they bought some of those smaller websites, local, small OTAs, yeah. Exactly, yes, smaller, smaller OTAs. Yes, yes, yes. It's it's been, I think, their strategy all along, yeah, which is really great. But they it seems to me that they're doing a better job in terms of integrating those smaller local OTAs into you know their ecosystem and stack versus what Pacasa, for example, was doing, right?

SPEAKER_00 17:24

I guess the difference is that they're they're integrating probably marketing only businesses, right? Instead of boots on the ground operations, which I think is I think is more challenging. We've we've we've talked a lot on this pod, actually, Eugenia, about Holodoo and Home2go. They're kind of our poster boys, I think, of how I miss that.

SPEAKER_01 17:43

Cool.

SPEAKER_00 17:44

Yeah, yeah. You're so so you're you you're we're singing from the same hymn sheet in that respect. We're firmly on the in the in the team of thinking that they're doing smart things. And again, what I think they do, certainly what what um holadoo have done in this instance is they're they're syndicating these listings. So traditional vacation rental listings that might not have appeared on the big OTAs, and if they do, the owners still take the majority of their bookings from their local OTA, and they've been doing it for 25, 30 years. And and we all know that Europeans, more than English people and certainly more than Americans, like to go back to the same spot again year on year. So it's like being it's working in partnership with the business you're you're taking you're acquiring to keep their customer loyal while also adding all of the tech stack, the the the deeper integration, the better calendar management in the background. Whereas I think, you know, going back to the Catherine, it is slightly comparing apples and oranges, admittedly, but Vicatra it kind of blew up what was there locally to create that central funnel. Whereas that whereas I think with these two German companies we've just referenced, they're very mindful of, especially, I'd imagine I haven't gotten close to what what Home to Go have done with Interhome, but the Interhome host and guest is going to be a very traditional European traveller and host, and you have to be really careful about sort of um getting getting too firmly into that relationship. So you've got to stand back, I guess, and let and let the good parts of the brand sing while then bringing your tech stick in the background to sort of further syndicate it, right?

SPEAKER_01 19:06

Yeah, I think so. No, but it's a really, really interesting story too. The way it unfolds and following it, I think it's a hugely interesting story. So I'm I'm wishing them really, really well.

SPEAKER_00 19:16

Yeah, I agree. I agree. I think that's so we've talked about some of the poster boys, some of the ones, some of the people that are doing it really well. Let's let's think on Vicata, Sonda, some of the some of the bigger, some of the bigger players that are trying to operate. I think operations at a global scale is is always a challenge. Again, Sarah and I talk regularly about being hyper-local. What's the sentiment, do you think, in the investing community at the moment around what do you think sets you up for success and and the ability to scale and be acquired as an operator? And it's okay for you to say we don't know yet, we're still working it out. I don't know, but you know, do you think we're somewhere near finding a blueprint? Because I think that's the area where as an industry would say we haven't yet found the right approach.

SPEAKER_01 19:57

Yeah, I think we haven't, to be honest. For me, the most successful acquisition, STR-related acquisition in in the industry still is on a way by Expedia. Nothing since then has been at that level of really bringing strategic value to the acquirer and doing so much goodness for uh for the company itself. So I think it's much about like we are figuring out. We're figuring it out. What's definitely super important is what you mentioned, right? We don't really want any operational burden. We really want something asset-light. And that's why all of those, you know, PMS companies, channel management companies, pricing companies like Beyond, for instance, right? And and and the competitors. Or companies like Trumi as well. I mean, that's a great example of focusing, like a focus on a specific niche where you know how to solve this point problem. And that's it. And the integrations into the right tools, right? So this is something that's I think really interesting now for the industry. Someone who is focused enough, someone who knows what they're doing, and someone who can scale it, perhaps even, and that's an interesting one, even outside of travel. So if you've seen um latest round of state 22, a company that's supports, it's a Canadian company, and they are doing affiliation for travel bloggers. So affiliate-based model for travel bloggers, they raised 122 million AI. Um not mistaken, which is huge for someone in travel. Really huge for someone that again asset-like in travel that's purely online, purely digital. That's why that happened. Because they actually showed the investors they that they want to scale it outside of travel to a wider retail industry, to a wider commerce. So that's one great example. And I think another one is um conduit, the one that that used to be called, I think, I, right? And then now they're called conduit, they raised from white combinator and they raised from plenty of other prominent names. Uh purely guest communications, just focused on that and knowing how to solve that. Similar for you, I think, right? It's also guest communications across the touch points. So just you know, doing what they do well, just following their niche, and maybe growing outside of if they started with hotel and they expanded into vacation rentals or the other way around, but it doesn't matter, right? Showing that you can scale outside of like doing your niche well and showing that this can also work for some other niches, scaling outside of it. So I guess that's the that's where we are now. That's the answer for now.

SPEAKER_02 22:45

I think as a as a follow-up to that, I'm curious what if if somebody who was, let's let's say an operator, right? So let's say somebody with 20 properties is trying to get acquired or have some kind of injection of capital to grow the business further. What do they need to be thinking about? And what do they need to include in a pitch deck or have as characteristics of their business in 2026, let's say, that maybe they wouldn't have needed in the 2021 boom era. What's changed there?

SPEAKER_01 23:18

Yeah, I think we're very much looking into unit economics now. So we're actually looking at the financials, unlike in the spec era when no one cared about your financials, really. Everything was around projections. So now we're looking at two things the financials and unit economics. So making sure that also your guests stay with you, not once, but twice. So the retention is there following this, and also looking at your technology stack. It's really important. Because if you don't have any direct booking website, for example, that's really a red flag. In the times when it's so easy, there are plenty, again, there are plenty of startups, plenty of platforms that simplify this direct booking creation, the booking flow, like everything. If you don't leverage this, that's a big red flag. It doesn't mean that you need to, you know, leave the OTAs, right? OTAs are still your, okay, you still use them for user acquisition. But at the same time, for repeat customers, you should be doing it directly. You should be managing this proactively, and you should be looking at how to minimize your customer acquisition costs there. So that's I think those are two kind of baseline things. And also I would say that I, for instance, would always be looking at how creative in a good way you are, but how like you are using the opportunities that or the trends that we see in the industry. Now, for instance, there's so much tailored and curated experiences that's happening. And it's essentially that's one of the things, probably one of the major things that commands that allows you to do premium pricing versus your commoditized pricing. So, what what if you could leverage, I don't know, concierges or any culinary experiences or any other experience? Something that ultimately is not so expensive for you on the cost side of things, but creates a lot of value for your customer, essentially, you know, increasing your margins. So I would love to see more of these businesses, and I think this is something interesting, something that could be really, you know, a game changer.

SPEAKER_00 25:27

I like this, Eugenia. It's really deep, deep dive into guest communication services, ensuring that hospitality is at the heart of what you do. It's all it's all the right things, isn't it? I was also going to add, do you feel that how embedded they are, the company is within their own community? So how deep their relationship is with the host? Because I feel like there's two rental contracts. One one looks the same on paper as the other, but one is worth less if the host feels heavily commoditized and doesn't feel like they're on the journey with the property manager.

SPEAKER_01 25:56

Yes, for sure. Well, I think we can we can talk about like two ways of being embedded, right? One, as we said, is you know, the tech stack, like you as a company, uh super sticky, but also being embedded with within the within the community, as you said, right? I think it's super important. Yes. Yeah, absolutely. No, for experience to be local, very much. Yes.

SPEAKER_00 26:18

Perfect. Eugenia, we could talk to you all day. Um, I've learned so much in such a short space of time. Thank you. Um look, you'll have to come back on the next time an interesting deal goes down in the space. Will you please come and see us again?

SPEAKER_01 26:28

Absolutely. I would love to. I'm so, you know, I'm so sad I couldn't make it to the Short State Summit. I really wanted to see you both in person in London, but it just couldn't work out because we've had to leave for Manchester that day. But I definitely want to join. And yes, absolutely. Always happy to talk to you guys. Amazing. Thanks so much, Eugenia. Thank you. I loved it. Thank you.

SPEAKER_00 26:50

Amazing. Well, look, we've you've agreed now. A verbal contract is binding, so we'll have you back on the next time something interesting happens. Thank you very much. Um, and to all our audience at home, thank you very much. If you've enjoyed today's show, please hit like please hit like, share, subscribe in all the usual social places. And until next time, take care