The traditional hotel industry worldwide has been suspicious at best and fearful at worst of the impact that Airbnb has had on its share of the market but the tide seems to be turning not only in terms of what consumers want in a rented space but also in what developers are willing to move toward. From Airbnb’s own Niido Powered by Airbnb concept to stylish boutique hotels like vacation-rental startup Vacasa, developers seem to be embracing the unique attractions that the alternative hotel market offers and are building new accommodations to suit those customers.
The latest player in this rapidly developing market is New York City-based Domio, which is evolving beyond its successful single unit properties across the country to turn to multi-unit “apart-hotels” — a hybrid between an apartment and a hotel that is “asset-light,” meaning it offers a hotel-like experience without the costly infrastructure that a traditional hotel requires.
The company announced a big boost in its plans this week as private equity firm Upper90 recently ponied up $50 million into a joint venture to launch as many as 25 apart-hotels across the United States in coming years. Unlike most traditional hotels, which are franchised out to owner-operators or hotelier management firms, Domio intends to control the experience from end to end. That means that Domio will enter long-term leases with developers and then brand, furnish and operate the properties.
Domio already has a good thing going with its single unit properties — the company has served more than 60,000 guests since it was founded in 2016 — but this new initiative is intended to target the growing group travel market. Rather than just targeting groups on its original site, Domio intends to focus on those traveling with friends or family, offering more spacious (two to four bedrooms) accommodations at a significant discount from equitable properties at traditional hotels.
Domio has certainly established a profitable track record. Its popular one-click booking platform readily competes with Airbnb and the company has experienced 400 percent growth annually for the past two years with an occupancy rate higher than 80 percent.
“As we’ve hosted tens of thousands of guests at our properties in 2018, we’ve seen increasing demand from group travelers for more spacious accommodations that make travel both more economical and enjoyable,” Domio CEO Jay Roberts said in a statement. “We chose to partner with Upper90 because they bring value beyond capital alone. Their members are top entrepreneurs from consumer technology, real estate, and finance companies who are both actively involved in their portfolio investments and extremely creative with structuring investments and loans that help entrepreneurs meet the nuanced needs of building a business.”
However, Domio is far from alone in this new market space. In addition to Airbnb’s $31 million startup Niido, other hospitality firms entering the group travel space include WeWork’s spinoff WeLive in New York and Washington, D.C.; London’s new brand Locke Apart-Hotels; and Native, which launched 15 apart-hotel properties throughout London.