Hybrid hospitality meets crowdfunding
Outsidea membership-based hospitality company that focuses on remote workers, raised $1 million through an alternative method: crowdfunding.
The Santa Cruz-based startup turned to Wefunder to raise money, giving investors an equity stake in the company starting at $500. Their investment will convert to equity in a future round of funding, usually led by an institutional investor, or in an exit. The company exposes about 2.5% of Outsite’s $40 million value.
It hit its $1 million goal after launching just a week ago, but CEO Emmanuel Guisset described the decision as a “roll of the dice”.
Indeed, investor appetite has waned since the start of the year, with many travel companies in particular delaying or withdrawing their IPO plans. The buzz around special purpose acquisition companies has also died down.
Outsite’s fundraising efforts also come as global markets grapple with the possibility of a recession. To make matters worse, many of Outsite’s guests operate in the crypto world, which has been rocked by the collapse of cryptocurrency exchange FTX.
Capture the moment
However, 60% of Outsite members said they wanted an opportunity to invest, based on a recent survey. So Guisset took a leap of faith.
“We could have raised $1 million if we had done it in early 2022, before the crisis,” he said. “Now people are watching their money a bit more, and a lot of people have lost money in crypto. We were a little scared of that. But it shows there is an appetite to invest in brands and products.
This success could be a precursor to a major 2023 trend: brands that have courted remote workers could be rewarded next year as travel restrictions ease further, particularly in Asia.
flatioanother hybrid hotel company, posted 48% year-over-year revenue growth, its strongest year since its inception in 2015, the same year as Outsite.
The Monthly Housing Platform for Digital Nomads attributes the $1.24 million in revenue to the boom in remote work and the growth of digital nomadism post-pandemic. It also recorded a “generated rental value” — a measure of how much money the company collects from tenants for its landlords — of $5.4 million.
Overall, short-term rentals are generate more revenue than before the pandemicaccording to Skift Research.
But the crowdfunding model also encapsulates the philosophy of hybrid hospitality: guests want more than a space to sleep and work, they want to feel part of a community.
In a sense, Outsite pulled off a marketing stunt.
“It’s a way of making our members more part of our business and becoming ambassadors, because if you invest, you’re more likely to stick around and spread the word,” Guisset said. “We are also thinking of involving investor members more in the running of the business, such as a council of members where they can give us feedback.”
Incentives and perks have also made their way into Outsite’s investment strategy. For an investment of $2,500 or more, they receive gift cards. The idea of rewarding investors is not new and was discussed in October at Selina’s pre-SPAC merger roadshow.
When asked if Selina plans to offer “any kind of utility reward or exclusivity to prospective retail owners or investors,” the company revealed that it is being considered.
“This is something we have been discussing recently, and we find it extremely interesting and exciting to be able to leverage our community of guests and travelers and convert them into stakeholders, shareholders or owners of the business,” said Chief Strategy Officer Steven Ohayon. in Selina, during a Q&A held on Twitter Spaces on October 20.
“We don’t know how it will play out, we will have to be careful and follow the rules of the regulators in the United States. But I can say that it will make a lot of sense for us to try to reward our community or long-term holders. term of our actions with some kind of reward in our ecosystem.
Outsite, which operates 50 properties, will now keep its “end of year marketing campaign” open for a bit longer – not only to generate money, but also to attract new members, with a potential target of 1, $2 million.
“If it continues to bring in more members and exposure, we’ll let it run a bit more,” Gusset added. “I don’t know of any other hotel, co-living or hospitality company that has done a crowdfunding campaign. It’s quite unique.
Let’s wrap up the year with research from Morgan Stanley that paints a pretty reliable picture for 2023.
To reinforce Skift’s statements in recent months, the travel industry needs to focus on “small” businesses when it comes to capturing business travel spend.
Overall travel budgets show an improvement over previous surveys, with 2023 budgets expected to average 98% of 2019 levels, according to Morgan Stanely. survey of 100 global business travel managers found.
Many respondents also said they believe their company’s travel spend will continue to increase.
This is the surprising part.
Less shockingly, the greatest demand comes from small businesses (although the financial services giant classifies these as earning less than $1 billion in annual revenue).
More than two-thirds (68%) of these “small” businesses expect travel budgets to increase next year, compared to just 41% of companies with annual revenue over $16 billion.
Similarly, 32% of small businesses said travel budgets have already returned to pre-pandemic levels, compared to 23% of large businesses.
“This trend could likely favor low-cost carriers, as smaller companies tend to be more localized and require fewer long-haul trips,” suggested Ravi Shanker, an equity analyst covering North American transportation.
Overall, 18% of business travel will be replaced by virtual meetings in 2023, falling slightly to 17% in 2024. Which begs the question: is that missing 18% just going towards inflated travel costs?
10 second catch up on business trips
Yatra in India expands to UAE via partnership program
Business travel specialist and online agency in India yatra expanded into the UAE after launching an “enterprise platform partner” program.
It has signed a five-year deal with Abu Dhabi-based Nirvana Travel & Tourism and will seek to offer its software to other corporate travel management companies. Nirvana operates in 40 locations and has 600 employees, and is one of the largest corporate travel service providers in the UAE.
The program enables offline and online travel agencies to find “new revenue streams, differentiated offerings, and additional features and functionality for their travel-related products and services,” but gives Yatra a new revenue stream. well before its public listing.
“In today’s business environment, every organization is looking to effectively grow its customer base,” said Dhruv Shringi, CEO of Yatra. “Our program will help business travel management companies achieve this seamlessly with our best-in-class, cloud-based business travel platform that meets all their clients’ requirements.”
U.S. corporate travel agencies retaliate against DOT ticketing proposal
the Travel Management Coalitionwhich includes American Express Global Business Travel, BCD Travel, CTM, CWT, Direct Travel and Internova Travel Group, has submitted comments on the U.S. Department of Transportation’s proposed Airfare Reimbursement and Consumer Protection Rule.
The coalition said it supports the department’s goal of strengthening consumer protections and preparing for public health emergencies that could impact a customer’s decision to fly, but is “concerned that that the proposed requirements do not reflect the role of ticket agents, including corporate travel managers, in the market”.
He argues that travel management companies facilitate transactions between a customer and an airline, thereby requiring them, as ticket agents, to be responsible for a customer’s refund, credit or voucher under of this rule where the airline determines flight times, the assessment and issuance of refunds, credits or voucher requests would create misplaced liability and uncertainty for travel management companies on which they have no control.
Read the full letter here.
Skift Future of Briefing is taking a break next Friday, but will be back on January 6, 2023.