SoftBank Invests in Cloudbeds: Hospitality Tech Revival

Hospitality Industry Poised for Growth as Travel Resumes

With U.S. hotel occupancy rates now mirroring those seen before the pandemic, the hospitality sector is preparing for a significant surge in activity as travel plans are reinstated by many.

Several factors are contributing to this anticipated increase. A substantial portion of prospective travelers were born after 1979, and having accumulated savings over the past decade, they now possess greater disposable income and a desire to utilize it for travel experiences, according to Adam Harris, the co-founder and CEO of Cloudbeds.

“While the pandemic presented challenges for all, the travel industry represents a $1 trillion market – ranking among the world’s five largest,” he stated. “The demand observed in 2019 is now amplified, fueled by extended periods spent at home.”

Cloudbeds Secures Funding for Expansion

Founded in 2012 by Harris and Richard Castle, Cloudbeds, based in San Diego, offers hospitality management software designed for a range of lodging businesses.

This software integrates functions that were previously separate – including operations, revenue management, distribution, and growth marketing – into a single, cloud-based platform.

Driven by this pent-up demand, Harris anticipates unprecedented travel volumes in the near future. To support this growth, the company has secured $150 million in funding, led by SoftBank Vision Fund 2.

Cloudbeds initiated discussions with SoftBank two years prior, with Harris highlighting the investor’s expertise in the travel sector, citing recent investments in companies like Yanolja, GetYourGuide, and Klook.

Andrew Zloto, a director at SoftBank Investment Advisers, emphasized the critical need for hotels to embrace technology to maintain competitiveness in the current market. He noted that the pandemic accelerated the adoption of such technologies.

“We are confident that Cloudbeds has effectively capitalized on this opportunity to revolutionize technology utilization within the hospitality industry,” Zloto explained. “By consolidating a traditionally fragmented and complex array of technology services into a unified platform, Cloudbeds provides a valuable solution for properties of all sizes.”

Investment Details and Future Plans

In addition to SoftBank, the funding round included participation from new investors Echo Street and Walleye Capital, as well as existing investors Viking Global Investors, PeakSpan Capital, and Counterpart Ventures. This brings Cloudbeds’ total funding to $253 million.

The newly acquired funds will be allocated to continued research and development, investments in education and advocacy initiatives, and expansion of the company’s engineering, product, and sales teams.

Castle indicated that the company will also focus on strengthening its leadership team in preparation for a potential initial public offering (IPO).

While Harris refrained from disclosing specific growth metrics, he confirmed that Cloudbeds was one of the few companies to experience growth during the pandemic year. Currently, the company serves over 22,000 customers across 157 countries.

“We project the company’s potential to reach a $20 billion valuation,” Harris added. “Considering the competitive landscape, we currently hold a leading position. Strategic deployment of capital is a key focus, and we aim to establish a robust foundation for an IPO and further organizational maturity.”