Life House, a startup hospitality company that both manages
its own branded hotels and provides its technology platform as a white-label
solution for independent hotel owners, has received $100 million in equity
commitments from Blue Flag Partners.
Boston-based Blue Flag is an investment, real estate
development and branding firm that has a collection of hotels in its portfolio.
Life House founder and CEO Rami Zeidan says the company will
use this funding to buy properties that it will convert to the Life House
brand.
It currently has two Life House brand hotels – both in Miami
– and two hotels using its white-label technology platform – and expects to
have 20 hotels open or under construction by 2020 in markets across the United
States including Nantucket, Brooklyn, Denver and Lake Tahoe.
Since its launch in 2017, Life House has also raised $10.4
million in venture capital from investors including Global Founders Capital,
Comcast Ventures and Trinity Investments.
Life House is using that money to pay for staff and technology
development.
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Zeidan says it is that technology that differentiates Life
House. The company has developed seven proprietary software solutions including
a guest-facing mobile app with a social network, an automated financial
accounting and reporting system, a reservation and booking system and software
to manage hotel staff.
“At the core, our brand is about delivering a high quality,
locally-rooted, meaningful experience that’s designed-led at a more affordable
price point,” Zeidan says.
“The social component allows us to drive the quality and the
value of the experience and then a lot of the software is really focused around...
cutting out a lot of the costs required to operate a hotel.”
Proof of concept
Since early May, Life House has been operating one of Blue
Flag’s newest acquisitions, The Roberts Collection boutique hotel in Nantucket, MA.
Life
House says it expects to increase the property’s net operating income by more
than 100% per year, translating to a $15 million increase in the value of the
property.
This fall, work will begin to convert he property into a
Life House brand hotel.
“We selected Life House after a competitive process, and
we've quickly seen the massive value they're able to create,” says Terry
Sanford, co-founder of Blue Flag.
“Since we closed on the acquisition [of The Roberts Collection]
this past spring and in advance to repositioning the asset, they are already
driving approximate 40% higher total revenue with nearly 80% direct web
bookings.”
Life House says it will continue to focus on smaller hotels,
which can be challenging to operate profitably.
“We’re quickly proving to be, along with our real estate
partners, the best buyers of hotels with fewer than 150 keys,” says Bryan Dunn,
Life House’s vice president of acquisitions and business development.
“Our technology-enabled approach to hotel operations allows
us to extract maximum value for our investors from these traditionally
overlooked assets.”