Airbnb officially closes $1.5 billion funding round despite ongoing controversy
Airbnb have successfully closed their &nbsp;$1.5 billion funding round. However despite Airbnb&rsquo;s recent high valuation ($25.5billion) it seems the company does still face problems such as the on-going debates concerning terms of use and lodging laws in San Francisco among other cities, the company is also engaged in discussions with the city of New York concerning hotel taxes. The company has not raised funds since April 2014 when they raised $10 billion making them the third largest start up in the world, and this year they are expecting $850 million in revenue and $150 million in operating costs.
Mike Nudelman/Business Insider

Home-rental site Airbnb just landed a sky-high valuation at $25.5 billion, after finalizing a $1.5 billion funding round, according to a person close to the company.

The news was reported earlier by the Wall Street Journal.

It's more than the rumored $1 billion round that had leaked two weeks ago, which would have put the company at a $24 billion valuation. It's a still a number higher than hotel chain Marriott ($21 billion) and double the valuation of travel site Expedia.

Airbnb is pulling in such a large round because of its high revenue projections: It sees itself as pulling in $10 billion in revenue by 2020, with profits of $3 billion before interest, taxes, depreciation and amortization.

This year, Airbnb expects $850 million in revenue and an operating loss of about $150 million as it pushes to expand its services to new parts of the world and fights regulators over taxes and lodging laws. The company has seen recent success with its international expansion to Cuba, where there are now more than 2,000 listings on the site in a country with very little internet access.

The company still faces regulatory challenges though.

Many cities do not allow landlords to rent out their rooms as often as hotels do. In San Francisco, for instance, some renters have found themselves subjected to eviction notices if they rent rooms on Airbnb and it's involved in a messy debate over how to regulate short-term rentals in the city. Meanwhile, the company has instead gone on the charm offensive and recently launched a new ad series to highlight its contributions to the city.

Previously, it became technically illegal to use Airbnb in New York City for a period. That was overturned in the courts after an appeal, however. The company is now begging New York City to let it pay hotel taxes like it does in other cities like San Francisco and Washington D.C.

General Atlantic Inc., Chinese firm Hillhouse Capital Group and Tiger Global Management lead the round, according to the source. Also involved in the round are public funds like Wellington Management and Baillie Gifford, which invest in private companies ahead of IPOs.

The home rental company last raised money in April 2014 at a $10 billion valuation. This round makes it the third-highest valued startup out there, after Uber and Xiaomi.