Hostmaker was another VC backed startup that was a tech-enabled vacation rental management in the UK.
They are one of many VC backed firms to show up in the last ten years. They claimed to have leading edge design & revenue management for their properties fueled by their proprietary tech platform.
They were operational in 9 European markets, but ranged from the UK, Spain, & Italy all the way to Bangkok. Anybody familiar with the property management business knows staffing offices in separate locations is very expensive.
Hostmaker has also struck an exclusive deal to be Marriott’s Exclusive vacation rental partner with 340 homes before they launched Marriott Homes & Villas.
Houst has taken on management of their UK properties for $1.3 million and can hopefully capitalize on Hostmaker’s missteps.
How Did They Spend $29 Million
Turns out they spent most of the $29 million in the last two years of their six-year history likely trying to show massive growth to raise another round of venture capital.
Hostmaker (Flying Jamon Ltd) made a pretax loss of $18.4 million (£14.3 million) in 2018, an increase of 159 percent on the previous year. Revenue during the same period increased 141 percent to $15.5 million (£12.1 million). Patrick Whyte, Skift
Building all of your own proprietary technology is expensive & a company can easily spend $10 million developing its own Proprietary Reservation System that can include Websites, Channel Management, Accounting, & CRM capabilities.
They likely spent a lot of money trying to get an exclusive deal with Marriott that fell through. It can be very costly for small companies to partner with hospitality behemoths.
Operating offices across Europe in Asia is also extremely capital intensive in terms of property management. The benefits of scale & technology can also be very difficult to realize.
Different markets may be so different that economies of scale may not actually exist in revenue/marketing management and call center operations.
Will This be a Trend
Time will tell but this is not the first Mega Vacation Rental PM to go bust. We can look back to ResortQuest in the US.
VC Money has also fueled all of these operations of the last decade far so we will see if they can be business that can stand on their own.
Comments