Start-up Casai buys entry into serviced apartments in Brazil business travel game – Skift
Casai, a Mexico City-based startup that professionally manages short-term rentals primarily for leisure travelers, is expanding into serviced apartments for business travelers, with a focus on making Brazil its largest travel market. ‘by the end of the year. Casai has acquired the Brazilian operation of serviced apartments offered by Danish company Q Apartments, the companies said on Friday.
The companies did not disclose the terms of the deal and the partnership.
“Brazil will be our largest operating market after doubling or tripling in size by the end of the year,” said Casai CEO Nico Barawid. “And despite the dominant narrative that business travel is dead, we’ve actually seen strong demand for business travel in the short-term rental product in Mexico and Brazil.”
The deal is small, but it has broader implications in what it says about returning business travel in a different way, and emerging markets that some experts in the US and Europe have overlooked. .
Q Apartments had used its staff to manage 140 units in Sāo Paulo. It will now subcontract this work to Casai to manage all of its listed properties. Brazilian O Estadão de S. Paulo first reported the news.
Q Apartments has 65,000 apartments in its portfolio in 81 countries, and local contractors typically manage the units. In a related move, Casai will become the main operational partner for Q Apartments activities across Latin America. Thus, the agreement with Casai may portend greater cooperation where the startup steals the contracts of certain local managers.
A bet on business travel
In the United States, a debate is brewing between optimistic airlines about the outlook for a rebound in domestic business travel and cautious travel management companies, according to a new survey from Deloitte.
The dynamics differ elsewhere. Other countries will see unique models. Much of the business travel market in Brazil is domestic. A large majority of businesses in the country are small and medium-sized businesses, rather than the concentration of large companies that is more common in Europe and the United States. Many of these Brazilian companies are already returning to business travel.
“The nature of the business travel we see in Mexico and Brazil is a little different now than it was a few years ago,” said Barawid.
“You don’t see as many McKinsey and BCG consulting type trips Monday through Thursday,” Barawid said. “But we are actually seeing longer and extended stays that are either pure business or a mix of business and leisure in a remote work setup.”
Since many workers now travel for longer stays, they tend to want more comfortable places than a 300 square foot box. Casai said the current occupancy rate for its apartments in Mexico and Brazil averages over 90%.
“We had previously compared our ADR (Average Daily Rates) to roughly the 90th percentile of the typical Airbnb short-term rental segment in Mexico,” Barawid said. “So we were already at a high price and meeting the expectations of leisure and business travelers at this price point was already about the same, as with consistent, high quality Wi-Fi.”
Over the next three years, the startup plans to exceed 3,000 units in up to 10 cities in Brazil.
It remains to be seen how well Casai can shift from catering to a leisure travel customer who books directly through their website and mobile app to serve a business travel customer who has a colleague who books their trips in. using third-party channels, such as corporate booking. manual email and fax tool or process. The move means adding a business-to-business skill set to consumer-oriented ones.
The partnership with Q Apartments could prove useful as this company already has strong relationships and a sales force in the area of business relocation.
Casai also faces competition. Other companies that overlap somewhat with its business model include Housi, a subsidiary of real estate developer Vitacon which has raised $ 11 million but is reportedly for sale, and Nomah, a subsidiary of Loft, which has partnered with Gafisa, a giant Brazilian residential and real estate construction company.
A bet on Brazil
Casai said on Friday he was working with Navi, a hedge fund with $ 1.8 billion in assets under management, coordinated by XP Investimentos, to create a real estate investment trust, or REIT, focused on short rentals. term. The companies plan to list REIT on the Brazilian stock exchange within six months, which will provide capital for Casai’s expansion in the country.
Today, the startup operates around 600 apartments with hotel-style amenities for leisure and business travel in Mexico and Brazil. He plans to increase that over the next year while also entering Colombia, Chile and Peru.
The move follows last fall’s announcement that the startup had raised $ 23 million in equity. Andreessen Horowitz, a venture capitalist that was one of Airbnb and Facebook’s early backers, led the round. Kaszek Ventures, Latin America’s largest venture capital fund, also participated. Other funders included Global Founders Capital.
The three venture capitalists encouraged Casai to tackle the Latin American market beyond Mexico.
“Andreessen Horowitz led the charge in a Latin American strategy,” Barawid said in an interview. “While you’ve probably seen their neighbors at Menlo Park in VC have doubled in Latin America as well, Andreessen saw it first.”
As for its short-term rental management business, regulatory issues have not been a problem for Casai so far. São Paulo, for example, has essentially given the green light from a regulatory point of view, to short-term rentals.
While the startup started out using a master lease model in cooperation with real estate developers, it has expanded to use a suite of options with its real estate partners, including property management and revenue sharing.
The Latin American startup scene is changing.
For example, Casai is a client of another promising startup, Clara, which is a Mexico City-based startup with an “end-to-end business expense management solution”. Clara offers a corporate credit card and bill payment product that makes it easier for accountants to track expenses, such as business travel.
Brazil, in particular, is emerging as a hub for travel technology, with around 220 companies and a particularly strong stable of business travel agencies, as Skift reported late last month. .
“Brazil is by far the largest economy in Latin America,” said Barawid, explaining his company’s international expansion. “So far, many foreign travel agents have overlooked Brazil, which is a mistake. Having said that, we are still growing in Mexico. We plan to further establish ourselves in the two power centers of Latin America. “
Photo credit: One of the Brazilian apartments available for booking through travel startup Casai. Casai