Alloggio Takes Private Equity Exit in Path for Struggling Short-Term Rentals

25.08.2023 - 13:49 / skift.com / Srividya Kalyanaraman

Australian short-term rental operator Alloggio will be taken private by private equity firm Next Capital. If approved by a shareholder vote in July, the deal will be worth around $40 million (AU $60 million). 

The New South Wales-based company went public in 2021 and raised AU$16.5 million ($11 million) with a market cap of $33.1 million — this was significantly below initial banker expectations of a $20 million raise and a market cap of $45 million. Alloggio went public to both expand its property management and mid-market hotel divisions and acquire property management rights across Australia.

To insiders, it’s another-one-bites-the-dust scenario where private equity saves the day by swooping up capital-starved companies to keep them afloat and put them back on the path of profitability. 

We saw it happen to Travelport in 2018, Awaze in 2019 and Expedia in 2020. Travelport went private in 2019, Wyndham Destination Network sold Awaze to Platinum Equity in 2019 and private equity investors provided financing to Expedia in 2020 to ensure it had enough capital to get through the pandemic.

Private equity firms’ interest in travel has been well-documented — everything from airlines to casinos, vacation rentals to travel upgrade companies has a large private backer injecting capital and change.

“There is a large appetite in private equity to buy companies,” said Annie Holcombe, co-host Alex and Annie-The Real Women of Vacation Rentals podcast. “Given the economic factors, private equity is waiting to see what they can buy.”

Holcombe also noted that being managed by private equity might make firms agile and run the business better. Holcombe serves as the director of business development U.S. and Canada at Homes and Villas by Marriott.

Sure, private equity can inject much-needed capital to some firms, but it comes with restructuring — furloughs, change of management, shedding parts of the business and more.

Alloggio might be a smaller player, but what does this say about the state of short-term rentals at large?

To be clear, data does point to sustained growth for the sector — there was an “unprecedented explosion” of demand in 2021, large increases in 2022, and pre-pandemic (read as high enough) levels in 2023, according to AirDNA.

But some do wonder if some of these companies went public too soon. 

“Sonder and Vacasa have not been successful as public companies,” said Simon Lehmann, co-founder and CEO of AJL Atelier, a consulting firm specializing in the private accommodation and vacation rental industry. “Both used a special purpose acquisition company route to go public. If not for that, there would have been more due diligence. Both have lost over 90 percent in value.”

Lehmann’s firm recently