US: Airbnb-style business traveller startup 2nd Address has announced funding of $10 million from GV (ex-Google Ventures) and Foundation Capital, along with Amicus and Pierre Lamond.
The platform provides a solution for business travellers seeking home rentals that extend beyond 30 days, as an alternative to staying in hotels.
The startup says it will invest to improve its technology and expand to more cities.
Where does 2nd Address currently operate?
Its current footprint covers the Bay Area, Los Angeles, New York City, Chicago and Washington, DC, where it claims that a property on its platform typically comes in about 40 per cent cheaper on a per-night basis compared to a business or extended stay hotel. The plan is to extend that to 17 more markets this year.
2nd Address CEO Chung-Man Tam said: “We’ve seen a big change in the way people travel for business – they want the same experience they have as consumers. There have been many platforms built for consumers, but not specifically for business travel.”
The startup currently works with 650 hosts covering 3,200 listings and has raised $42 million to date. It changed its name from HomeSuite to 2nd Address in 2017 and shifted to business travellers.
Who is the startup hoping to target for its platform?
Aimed at people who stay between 30 days and nine months, Tam said a lot of business travellers are looking for more when staying in a city for an extended period, with the option of a kitchen, more living space and other personalised home effects beyond what customers get in a business hotel or extended-stay suite.
Regulation is making it tougher in some markets to work with short-term letting platforms like Airbnb.
Tam said 2nd Address was operating in “what is legally defined as the rentals market” because of the length of stay, is able to understand how to handle this.
He said: “Underneath the transaction we are making sure the booking is complying with all the rental regulations.”
He added that variability “had come to a head” for some hosts who are looking for more predictable guests staying for longer than a night or two.
“They would rather take a business traveller staying for a whole month any day,” he said.
How is 2nd Address faring against competition, particularly from Airbnb?
Despite competition from Airbnb, which has diversified its business traveller offerings with the expansion of Airbnb for Work and the acquisition of Danish startup Gaest, Tam believes 2nd Address still has an advantage over the rest of the field.
Tam said: “If you are looking to book a place in February, a whole property can be out of the running if another guest had already booked that property for just one night in that month. It’s hard to combine long-term and short-term rentals at the same time.”
Investors believe 2nd Address is benefiting from having unique and better technology.
Paul Holland, a general partner at Foundation, said: “We saw an acute shortage of vendors for monthly stays overall, but specifically also for business people. 2nd Address not only proved the concept but are in a perfect position to take the market.”
What is the startup planning for the future?
2nd Address now plans to add additional tools for hosts to help with home management and how they tailor properties in the future. It believes it has spotted a gap in the market to provide analytics and business intelligence around guest preferences in terms of locations, pricing and detailing the interiors.
It also aims to add more integrations with the tools that corporate businesspeople are using to book travel today.
Joe Kraus from GV said: “2nd Address has an $18 billion opportunity in the United States to help working professionals find distinctive homes for extended stays. People have evolved far beyond the stereotypical corporate housing and now expect a more personal, comfortable place to spend their time when they’re not working.”