The Series C funding round for Airbnb-rival The House, a boutique hotel brand that has developed software to assist independent hotel owners and operators, was co-led by Kayak and Inovia Capital.
The Series A round, which was led by Tiger Global Management, Thayer Ventures, JLL, Trinity Ventures, Sound Ventures, and Cooley LLP among others, raised $100 million for the company’s total funds since its 2017 inception.
Rami Zeidan founded Life House after nearly ten years in a variety of segments within the hotel industry. Life House began as a hotel brand and operator for small hotels before developing its own software in order to become “the best operator.” Before becoming a technology provider, hotel manager, and boutique hotel brand combination, its mission was to fix “the broken and complicated hotel operational model.”
Today, the firm is announcing that it will raise additional funds as well as offer its software to global hoteliers and operators who want to run their hotels on-site. Life House has effectively transformed from a technology-enabled hotel operator into a (70-person) SaaS business with this shift.
“We’ve been pretty efficient,” said CEO Zeidan. “In the past four years, we’ve spent just a little over $20 million. Now we have three times that, so we’re excited about what that’s going to translate into in terms of product.”
Kayak, one of the globe’s largest travel sites, is among its lead investors. CEO Steve Hafner mentioned that Life House would “reimagine the hotel experience” with its software and operations partner.
“Our investment will help accelerate innovation and the expansion of Kayak’s hotel initiatives,” said Hafner. “We share a vision that independent hotels can improve operations and profitability through better technology — they also have a great team and top-tier VC co-investors. Rami and team are combining hands-on operations with agile software development — it’s a great combination.”
The company currently runs 49 hotels in North America. Branded hotels made up about 50% of the startup’s portfolio at the time of its $30 million Series B in January 2020. Today, Life House owns and manages a majority of unbranded properties (85 percent) rather than third-party hotels that use its technology under a white-label contract.
“Now we’re launching the sale of our SaaS products to third-party hotels that we don’t manage,” Zeidan told.
According to Zeidan, the company’s software has “constantly” boosted its hotels’ profitability by more than 200% and net revenues by over 45% over time.
Life House has expanded over 600% since the start of the COVID-19 epidemic. To put it another way, the firm’s aim is to be a one-stop shop that makes it simple for anyone to own, build, and operate any hotel of any shape or size while still generating a profit. It assists owners with things like revenue management and dynamic pricing, financial reporting and accounting, general operations, as well as branding and design.
“Hotels today are complicated to operate and they’re essentially owned by people or firms as investment assets,” Zeidan told. “And so, the fundamental goal is to deliver profitability and value to the financial asset of the real estate. Our approach to solving this problem is being extremely profitability-centric with the platform that we’re building, so that everything that we sell to hotels directly drives an improvement in profitability.”
The truth is that there are several signs of a healthy business. The firm generates revenue, maintains adequate cash flow, has an annual sales volume of at least $10 million and owns real estate across the United States. It’s got outstanding growth prospects too! This firm is initially focused on small hotels, where it thinks owners are particularly neglected and which accounts for almost half of the market, but it plans to expand out of that in good time.
“We see a world where we ship iPads and we’re initially focused on small hotels where we can grow quickly with minimal competition, but there’s no reason why we can’t eventually be the best solution for any sized hotel,” Zeidan said “Our software really does care about the guest experience and can be used at the most luxurious of hotels. It has now been proven to be extremely helpful, no matter what kind of hotel it is.”
Its lodgings have varied in size from 14 rooms to 375 rooms thus far. It manages a variety of hotels, ranging in price from $2,000 a night in the Berkshires to two budget motels in the Midwest.
The CEO feels that the fact that Life House was a user of its own software has provided significant benefits.“It can take time to build a lot of software in the hotel management ecosystem,” he said. “But we had a really fast feedback loop that allows us to innovate really quickly. Also, we really understand hotels and guests.”
The bulk of the new capital will be spent on hiring, particularly software developers, product experts, and engineers.
While travelers are increasingly drawn to boutique and lifestyle independent hotels rather than commoditized brand hotels, limited technology adoption by such establishments has frequently left them at a disadvantage in terms of pricing, lead generation, and cost management against their larger competitors.
“There is a clear opportunity for Life House to manage these underserved independent hotels and provide a true economic benefit via its end-to-end technology suite,” Tukrel wrote via email.
“Thanks to its strategic real estate and channel partners, LifeHouse has a unique position to become the leader in small independent hotel management. Traditional managers such as Marriott and Hilton are not investing in this end market, as it is not as rewarding in the public markets to try and win share with smaller (50 key) independent hotels versus large standardized properties.”
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