Venture Capital Shows Growing Interest in New Hospitality Models: What Are the Risks?
To quote a smart venture capitalist, "Just because investment money is pouring in doesn't mean all bets are good bets!" WhyHotel itself may be a well-run business, but the sudden rush of venture money into a full array of hospitality businesses does raise eyebrows overall.
Highland Capital Partners led the round. WhyHotel raised seed funding of $3 million earlier this year, accounting for all of its other venture funding to date.
It's not traditional for venture capital to fund the building of hotels.
WhyHotel is one step removed from being an actual hotel. So far this year it has instead created a series of "pop-up hotels" that are really glorified vacation rentals available by the day, with daily housekeeping service.
The company has worked with professional property owners and developers in Washington, D.C., and Baltimore, to borrow units and split the income.
But WhyHotel would like to expand to open new pop-ups and also create a permanent presence in some places.