The industry’s leading investors recognize the advantage that Life House’s software-driven platform and scalable authentic brand have in an increasingly competitive hotel landscape. The investment will support the Company’s rapid growth into new markets with a clear path to profitability by 2021.
NEW YORK, Jan. 23, 2020 – Life House, a tech-enabled lifestyle hotel company, announced the closing of a $30 million Series B fundraise. The investment was led by leading travel-tech investors, Thayer Ventures, with Tiger Global, JLL Spark, and Ashton Kutcher & Guy Oseary’s Sound Ventures, among others. Several strategic investors also participated in the round, including the former Chairman of Morgans Hotel Group, David Hamamoto, and Jim Ketai, owner of Detroit’s Shinola Hotel and founder of Bedrock Detroit. The round also included follow-on investments from the company’s prior investors Global Founders Capital, Comcast Ventures & Trinity Ventures.
Life House was founded by luxury boutique hotel veterans and has rebuilt the complex hotel tech stack from the ground up to create a completely new operational model that allows them to deliver award-winning boutique hotels at a fraction of the price. It’s first hotel Life House, Little Havana, has earned many design awards and was recently listed among the top 15 hotels in the USA by Fodor’s Travel for 2020.
After a successful launch, Life House is quickly becoming one of the fastest-growing hotel brands and management companies in North America, with over 800 rooms today and 25 hotels expected to be open and operating by early next year. Despite its scale, the Company has only 30 corporate employees, which evidences its venture-backable business model.
The Company is performing very well with its platform driving increases over 40% to revenue, reducing operating costs as much as 45% and achieving over 65% of its bookings direct on the Life House website. Real estate owners have taken notice and the Company has already secured hundreds of millions of third party real estate capital to continue fueling its asset-light growth. In addition to its growth, Life House is already highly profitable at the unit-level and with this new financing, the Company is poised to grow into new markets, launch new brands in other consumer price segments, continue to innovate to build sustainable competitive advantages, and to reach corporate profitability in the next 18-24 months.
“The hotel industry is broken, leaving hotel owners with painfully unprofitable hotels and travelers with expensive or suboptimal hotel experiences,” said Founder and CEO, Rami Zeidan, who had seen this first hand after a seasoned career in the industry. “Most of these problems are solved with software, but others are solved with sophisticated process innovation and creativity.”
In 2018, after nearly a decade of working for some of the best hotel brands, Zeidan launched Life House to fix the broken and complex hotel operational model through software innovation and the creation of authentically-local lifestyle hotel brands that scale without brand dilution.
The Company has successfully launched two primary products – an accessibly-priced 4-star hotel brand called “Life House” and a white-labeled software-driven management platform that has been driving over 30-40% increases in profitability to its owners without a re-branding or renovation. In terms of software, the Company has already built and launched several proprietary software applications including an automated, algorithmic, and machine-learning driven pricing system, automated financial accounting and reporting, among others.
Life House is also transforming accommodation options for families and groups of friends with its luxury bunk beds. Zeidan’s experience at Freehand led him to design a “luxury bunk” (as dubbed by Conde Nast Traveler) with full-size mattresses and stairs that can comfortably sleep a group of four adults while still offering a luxurious experience, all at a fraction of industry standard pricing. After a successful debut, the brand is opening another six hotels with luxury bunks this spring in three new markets, including Denver, Nantucket, and Tennessee.
Launching an asset-light hotel brand and management company is complex, multi-faceted, and has high barriers to entry. More than its supply growth, what really sets Life House apart is its ability to accomplish all of this in a little over a year and with less than $9 million in venture funding, manifesting its uniquely asset-light and venture-backable business model, which induced the significantly oversubscribed investor demand for this round.
“We, like many other investors, were immediately enamored with the Company and team that Rami has built,” said Chris Hemmeter, Managing Partner at Thayer Ventures. “Our connections and LP-base in the hotel space are deeply rooted and after a thorough vetting, we became even more excited. We’re very excited to be partnering with Rami and his team and we’re pleased that they recognized our value-add and selected us to lead at the prudent terms we offered.”
In addition to its beautiful spaces, the Life House designed a brand and product that is very scalable. For example, the software implementation process for its most recent hotel took less than two weeks, while its latest branded hotel – Life House, Collins Park – underwent a complete renovation in less than 90 days.
“We’ve been extremely impressed with the Life House team’s ability to immediately add value to the hotels we have acquired and completely transform a hotel in such a short amount of time,” said Jason Brown of Blue Flag Capital, an owner of two Life House hotels and investor in the Company.
“We believe there is a massive market opportunity here with the high barriers to entry and decades of technical debt that can be solved with capital-efficient, SaaS-like model that Life House has built. With domain expertise being so important, we are excited to continue backing Rami and his team in conquering this multi-faceted, complex space that is in dire need of a better solution for consumers and real estate owners,” said Ludwig Enthsaler, Partner at Global Founders Capital and Life House Board Member.
The Company is initially focused on small hotels where owners are particularly underserved, which represents nearly half of the entire market, but the team has plans to grow out of that in good time. “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,” said Zeidan. Currently, the company’s largest hotel is 132 rooms, with larger projects in the pipeline.
About Life House
Life House is a New York-based, venture-backed & vertically-integrated hotel brand, management, and software company. Life House has built a proprietary technology stack to power a platform that makes hotels more seamless and more profitable for hotel owners and travel more meaningful and mor accessible for travelers. For more information on Life House, visit lifehousehotels.com.