Airbnb and Vrbo Struggle With a Supply-Demand Imbalance

Demand for Vacation Rentals Surging

Airbnb (ABNB) and Expedia’s (EXPE) Vrbo are working to entice homeowners in coveted areas to list their properties on their websites. The companies are making it much easier to become a host and are launching referral programs to turn guests into hosts. These changes are taking place as US occupancy rates for short-term rentals hit 61.6% in April—a record for the month.

Demand for home rentals near beaches, national parks, and other rural locations has been surging since the pandemic. That trend is accelerating as COVID-19 restrictions ease and the economy reopens. Making the supply situation more complicated, a number of hosts have taken their homes off the rental markets to use them for personal use during the pandemic.

Airbnb, Vrbo Work to Attract More Hosts

Airbnb is making it easier for new hosts to sign up, reducing the process from dozens of steps to just 10. It has also upgraded its platform to include more help for hosts including one-on-one mentoring. To increase its supply, Airbnb launched a referral program which pays users who get others to list their properties on the platform.

Meanwhile, Vrbo launched its Fast Start program in March, aimed at luring hosts away from its main competitor, Airbnb. The program enables people with Airbnb experience to transfer their ratings to Vrbo. The initiative has been effective, with Vrbo adding thousands of hosts as a result. Vrbo even launched an advertising campaign targeting Airbnb hosts directly.

Hosts Weigh Costs

Hosts are being aggressively courted by both Airbnb and Vrbo. As they make decisions about which platform to use, hosts typically look at how much of a cut is taken, the type of guests the platform attracts, and the effort it takes to get paid back for damages. Airbnb charges a 3% fee while Vrbo charges 5%. The latter also tacks on a 3% payment processing fee.

Demand for hotels is also increasing in cities, but alternative lodging is in the lead outside of urban settings. The pandemic has changed the way Americans vacation, which bodes well for the likes of Airbnb and Vrbo, as long as they can deal with the current imbalance between supply and demand.

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Ranchers Seek Meat-Processing Diversification

Downsides of a Consolidated Meat-Processing Industry

Cattle ranchers and investors are pouring hundreds of millions of dollars into new meat-processing plants in an effort to reduce their reliance on the four main meat processors in the US.

These four companies, JBS USA (JBSAY), Tyson Foods (TSN), Cargill, and National Beef Packing Co., currently control 85% of the market. If these companies run into problems, ranchers are left with nowhere to send their livestock.

This issue was on display earlier this month when a cyberattack against JBS in Brazil and the US impacted close to 25% of US beef production. This left ranchers in a difficult situation. Now, ranchers are voicing concerns about how the meat-processing industry is too consolidated and are looking for solutions.

The Impact of Pandemic Shutdowns

The pandemic also exposed issues in the meat-processing industry. Shutdowns at the leading slaughterhouses during the pandemic hampered meat production last spring, leading to limits at grocery stores and headaches for ranchers. Because ranchers are so dependent on a small number of large processing plants, if one shuts down there can be repercussions across the entire supply chain.

Startups are aiming to address that problem by opening more meat plants, particularly for ranchers who are raising higher-quality beef. With access to a larger number of plants, ranchers won’t have to worry about production coming to a halt when one large facility is forced to close.

Meat-Processing Capacity Increasing

Since the pandemic, at least five new meat-processing plants have opened or are in the process of opening. At the same time, existing plants, including one at JBS, are being expanded. As a result of these efforts, daily meat-processing capacity in the US is forecast to increase by about 5%.

The current market is favorable for new companies opening meat-processing plants. There is an ample supply of cattle, and beef prices are soaring amid strong demand both in the US and abroad. Analysts expect conditions to stay this way for some time. It will be interesting to watch developments in the ranching and meat-processing industry in the coming months.

Friday Fundings: Waymo, Anduril, and Beamery

Google’s Self-Driving Unit Raises $2.5 Billion

Waymo, a self-driving vehicle startup owned by Google (GOOGL), raised $2.5 billion in its second round of external funding. Prior to the capital raise, Waymo was valued at slightly more than $30 billion. Existing investors Alphabet, Andreessen Horowitz, AutoNation (AN), and Canada Pension Plan Investment Board, among others, participated in the round. The only new investor was Tiger Global. Proceeds from the fundraising will be used to expand Waymo’s self-driving and ride-hailing service to more markets. Its autonomous taxis are already available in Arizona.

Investors’ appetite for self-driving vehicles does not end with Waymo. Cruise, a unit of General Motors (GM), just landed a $5 billion credit line from GM’s financial unit so it can purchase self-driving shuttles.

Defense Tech Startup Raises $450 Million

Anduril Industries, a defense tech company, raised $450 million in a Series D round of funding. The deal gives the startup a post-money valuation of $4.6 billion. The valuation is more than double what Anduril Industries was worth last July. The investment was led by Elad Gil, an early backer of the company, and also included participation from Andreessen Horowitz, 8VC, Founders Fund, General Catalyst, Lux Capital, Valor Equity Partners, and D1 Capital Partners.

Anduril’s Lattice platform relies on computer vision, machine learning, and mesh networking to create an autonomous command-and-control platform. The US Department of Homeland Security and the UK Ministry of Defence use the company’s products. Proceeds will go to develop more land, sea, air, and space products for the Department of Defense.

UK Talent Startup Raises $138 Million

Beamery, a UK startup which makes a talent-operating system to help companies attract and retain employees, raised $138 million in a Series C round of venture funding. The fundraising was led by the Ontario Teachers’ Pension Plan Board through its Teachers' Innovation Platform (TIP). It also included participation from Accenture Ventures, EQT Ventures (EQT), Index Ventures, M12, and Workday Ventures.

The fundraising is happening at a time when Beamery is seeing fast growth, ending the year up 337%. In 2020, more than one million roles were filled using the Beamery platform. Proceeds from the round will go to develop new products, accelerate growth in new and existing geographies, and double the firm’s employee headcount.