A New York-based startup that aims to “professionalize the AirBnB space” by renting out apartments like hotel rooms acquired Chicago-based Reserve Rentals, extending its reach to eight American markets.
Domio paid about $1.4 million to acquire the Chicago company and its stable of 32 units across 10 buildings, co-founder and CEO Jay Roberts said. The deal also offers an “earn-out” between $2 and $3 million based on performance, potentially bringing the total transaction volume to $4.4 million.
Reserve Rentals advertises mostly two-bedroom and three-bedroom units in the Loop, South Loop and Gold Coast for short-term use.
Reserve Rentals co-founders Grant Hosking and George Savaricas will join Domio’s real estate wing with a goal of expanding the company’s Chicago holdings to 500 units by early 2020. They’ll have to abide by a 2016 Chicago ordinance that bars the operation of more than six short-term rental units in any single residential building.
Roberts and Adrian Lam launched Domio in 2016 after Roberts, an investment banker, was renting out his home through AirBnB and “saw an opportunity to provide a better experience” by managing vacation rentals through a centralized business, he said.
Backed by Tribeca Venture Partners, Domio this week announced a $12 million haul from its series-A funding round. Last month, the company launched a $50 million joint venture with private equity fund Upper 90 to open up to 25 “apartment-style hotels,” including its first full-service building in New Orleans.
Domio markets most of its units to large groups of travelers, Roberts said. Its median unit includes three bedrooms and measures around 1,500 square feet, and its average booking accommodates five guests.
Reserve Rentals launched in 2017 on a similar, more localized model. The company has since signed long-term leases on 32 units, mostly in buildings owned by CIM and Golub & Company, with dozens more units “in the pipeline,” Hosking said. They advertise their units to vacation and business travelers.
The city’s new short-term rental ordinance might throw up barriers, but Hosking said its “clearly-defined” rules open the door for a professional operator to expand short-term rentals by pursuing special zoning that would allow up to 30 rentals in a building, Hosking said.
The city denied rental applications for more than 2,400 AirBnB hosts this year, exposing them to potential fines if they keep booking travelers, according to the Chicago Tribune.
In north-suburban Highland Park, a group of neighbors sued the owner of a six-bedroom home this year to try and shut down its AirBnB operation.
Online travel booking firm Expedia broke into the short-term rental market last month when it acquired Pillow and ApartmentJet, two AirBnB competitors.