Startup Stage: Stay Open turns empty buildings into pod hotels

Stay Open

Stay Open creates pod hotels in vacant or underutilized office and retail space, while contributing proceeds to help unhoused people. Travelers join Stay Pass, the company’s membership and rewards program, by purchasing an NFT (non-fungible token).

The company has raised $2.8 million to date and has opened a location in Venice, California, with a 240-bed location in San Diego in development.

What is your 30-second pitch to investors?

Stay Open manages and operates pod hotels for digital nomads and travelers in repurposed buildings while setting aside a portion of proceeds to help unhoused people. We convert office and retail properties to hotels and co-living spaces. Our first location is open in Venice Beach, CA and runs at 90% occupancy. 

Stay Pass NFT memberships are one of the first Web3, on-chain hotel rewards programs where NFT holders get the day one utility of discounted stays and free stays plus coworking space. Twenty percent of all Stay Pass proceeds will fund stayDAO, a nonprofit DAO that will help under-housed and unhoused people.  

Describe both the business and technology aspects of your startup.

Stay Open is hired by property owners to repurpose their empty or underutilized buildings into hotels and co-living properties - similar to what Hilton does in the traditional hotel space. We are building a tech stack using Web3 tech as much as possible with the Stay Pass NFT as our first product. We are integrating Web3 into traditional travel flows and using blockchain to make it easy for Stay Pass members to gift or sell the rewards they have accumulated over time. 

Give us your SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of the company.

• Strength: Experienced real estate developers and hotel operators
• Weakness: No one has repurposed buildings into hotels and co-loving properties at scale. This is a new asset class. 
• Opportunity: 16 million-plus digital nomads in the United States and growing, 900 million square feet of office space set to expire by 2025, with hotels and housing as the biggest need in real estate.
• Threat: Regulations around adaptive reuse are inconsistent and vary from city to city. 

What are the travel pain points you are trying to alleviate from both the customer and the industry perspective?

People have the flexibility to travel more now with hybrid/flex work arrangements; however, the cost of accommodations keeps going up, so while people have the workplace freedom, they don't have the financial freedom to travel as much as they'd like. We are here to help democratize travel by having as many affordable, fun and socially engaging Stay Opens as possible. Repurposing existing, obsolete real estate will allow us to expand faster than most hotel brands, creating a network of digital nomad and travel communities all over the world. 

So you've got the product, now how will you get lots of customers?

Growing a strong online community through Stay Pass and stayDAO will help us grow our network and brand and keep people connected even when they are not staying at a Stay Open. 

Tell us what process you've gone through to establish a genuine need for your company and the size of the addressable market.

We knew there was a huge unserved market between brands like Motel 6, hostels, boutique hotels and Airbnb. We opened Stay Open Venice Beach to test product market fit, demand and pricing. 

How and when will you make money?

Stay Open charges property owners a management and franchise fee to run a Stay Open property. 

What are the backgrounds and previous achievements of the founding team?

Hotel finance and development. The founding team financed the Waldorf Astoria Beverly Hills and developed a 400-bed Hyatt by Los Angeles International Airport that is a converted office building. We’ve managed over $250 million in funds, having developed close to $750 million worth of hotels. 

How have you addressed diversity and inclusion within your business?

We want to make sure that travel and access to resources for entrepreneurs are open and accessible to everyone. Affordable beds are a great first step. We have helped female and underserved founders by hosting events at our property and will continue to help those most in need. Twenty percent of our Stay Pass membership sales will go to stayDAO, a non-profit organizations governed on chain that will help under-housed and un-housed people. Three percent of all Stay Open revenue will also fund stayDAO.

As we grow our small team we will make sure to have key people be representative of our guests and communities. 

What's been the most difficult part of founding the business so far?

Finding the right capital to help us grow. We are not 100% tech and we are not 100% real estate. We work with venture capital and private equity investors to fund the operating company (Stay Open, Inc.) and real estate funds to fund property acquisitions. 

Generally, travel startups face a fairly tough time making an impact - so why are you going to be one of lucky ones?

Stay Open provides immense value to several stakeholders - real estate owners with underutilized space, guests/travelers/digital nomads looking for affordable places to stay and cities looking to help repurpose buildings to quickly add hotel and housing stock. We won't be lucky, we will be good. 

A year from now, what state do you think your startup will be in?

We should have another 100-plus pod locations open or close to opening and five properties in our pipeline. 

What is your end-game? (Going public, acquisition, growing and staying private, etc.)

Going public.