Fifth Wall backs ‘Lyric’ to develop the next-generation of short-term rentals for Multi-Family partners
Lyric Gains Access to Best in Class Real Estate Owner and Operator Partnerships to Develop the Newest Category of Accommodations
Short-term rentals have grown at an astounding rate over the last decade. The rise of short-term rental marketplaces offer consumers unique accommodation experiences better connected to the cities they inhabit. With those marketplaces come a level of illegitimacy, illegality, and inconsistency in quality. As Airbnb and other short-term rental marketplaces have faced growth constraints due to a nearly fully penetrated vacation and leisure travel market, combating these inefficiencies to fully embrace the larger corporate traveller segment has become paramount. Business travelers demand quality and consistency and the professionalization of the short-term rental category is the only way to deliver on these expectations.
The main short-term rental management players have not adequately filled the gap. They play the role as disruptor by taking the anti-landlord approach, which creates a mess for landlords, tenants, and guests. These companies often ignore local regulations and operate illegally without the knowledge of the property owner. With a focus on growth in unit count and the bottom line over the guest experience and brand, unsurprisingly, the guest experience is often extremely poor.
Enter Lyric (formerly Parallel), a company filling the gaps left by its peers and quickly becoming the W Hotels of the Airbnb / short-term rental ecosystem. The company is the first vertically-integrated professional short-term rental operator, built on top of a data and software stack. Fifth Wall is thrilled to announce we’ve invested in Lyric’s Series A round along with NEA, Barry Sternlicht (Starwood founder and the creator of the “W” brand of hotels), the founders of Casper, as well as existing investors AXA Strategic Capital and NFX Guild.
A partner to landlords from day one, Lyric has made it incredibly easy for Fifth Wall to create integrations with our strategic real estate LPs and network. Lyric has an incredibly strong regulatory analytics engine and team, only operating in jurisdictions that are 100% legal. Confirmed by our diligence, Lyric is unique in the legality aspect as all of the company’s main competitors are running illegal units somewhere in their portfolio. A no shortcuts approach, with a focus on quality over quantity, has lead to a 4.88 (out of 5.0) customer rating and an 80% occupancy level in the portfolio (average for most US hotels is 65%) and the beginnings of a strong brand within the nascent industry.
Lyric is a home away from home for discerning executive travelers. Each unit is carefully crafted by a local design professional and features high-end touches and welcoming furnishings at the level of a luxury boutique hotel. Additionally, units are equipped with best-in-class amenities such as a fully-stocked kitchen, in-unit washer and dryer, high-speed internet, and even Netflix. Lyric has a professionally trained hospitality staff available 24–7 to resolve all guest questions and needs prior to check-in, all the way through check-out.
Lyric is capitalizing on the need for unique distributed inventory, managed like 4–5 star hotels with premium design and décor, adding impeccably designed spaces driving value to both building owners and residents. Units are rented through Airbnb and other major travel OTA’s, unlocking a new kind of inventory where unique experiences and hotel-grade amenities go hand-in-hand. Guest patterns for Lyric-operated units are markedly different from a traditional hotel stay. Guests, which include business and leisure travelers, stay for between 2 and 200 nights or more. The mix of short and long term stays are a powerful dynamic. Lyric has also invested heavily in safely and security processes to ensure high quality residents; a premium service, priced and designed accordingly.
Lyric operates units in multiple markets, including Houston, Dallas, Austin, Pittsburgh, Washington D.C., and Orlando, with aggressive expansion plans for 2018.
Importance to Real Estate Owners and Operators
Lyric is the only operator at scale that allows multi-family landlords to participate in the short-term rental market legally and with a partner having a quality standard consistent with their own. It is no wonder the company is the sole player setting up significant national partnerships with major property owners. Since our investment, we have set up 6 transformative national partnerships, including with Fifth Wall LPs Hines and LMC.
Partnering with Lyric benefits landlords in a number of significant ways. Firstly, Lyric units serve as a desirable amenity for residents by offering professionally managed short-term rentals for tenants’ guests, which increases real estate assets appeal and value. Residents’ guests can stay a floor away in the building, in a higher quality room with a lower price than a traditional hotel. Second, Lyric enables real estate developers to monetize new real estate units from day one compared to the previous scenario of them sitting empty during the full lease-up or sales cycle (which often can take up to a year). Additionally, Lyric operates as a permanent fixture in buildings as a long-term anchor tenant, either through a multi-year master lease or a management agreement (for landlords looking for additional profit opportunities provided by the short-term rental ecosystem). Of incredible value is landlords have access to Lyric’s team of technology experts utilizing the latest innovations in home automation and optimization to almost fully-automate the entire guest booking, check-in and check-out process. Once in a property, Lyric units can be utilized to test and tweek new technologies before full deployment to the rest of the building.
Lyric delivers the optimal solution to deliver legitimacy, legality, and quality to the Airbnb and broader short-term rental market and is alone in its ability to scale. Innovative and forward thinking multi-family landlords are able to participate in this new, large, and fast growing market through partnerships with the company, benefiting both their bottom line and their residents. Fifth Wall is excited to support Lyric as the best in class operator at the nexus of hospitality and residential real estate.