A new lodging concept launching in Miami today seeks to fuse numerous startup and tech industry tropes in order to build a better hotel brand and travel experience.
Life House believes vertical integration is the path to offering a boutique hotel experience at a discount price. Founded by Rami Zeidan, a former Sydell Group, Starwood, and TPG executive, and technology entrepreneur and Chief Technology Officer Yury Yakubchyk, and backed by $70 million in funding, the startup aims to have 20 properties in development across the country by the end of 2019. Life House wants to design and operate properties that offer a “holistic solution to modern travel,” according to Zeidan.
It won’t, however, own them. The Life House platform—akin to what a tech founder might describe as a “software-as-a-service” concept—means property owners turn their buildings over to Life House, which then renovates, reopens, and reintroduces a new “locally rooted lifestyle hotel” to the market. By bringing everything in house, with a single company handling operations and digital marketing, and avoiding online travel agencies (OTAs) such as Expedia, which take a cut of every booking, Life House believes it can offer “a 4.5-star hotel experience at a fraction of the price.”
It would be easy to point out that Silicon Valley’s answer to the hotel, Airbnb, already exists and is, in fact, doing quite well. But Zeidan says that comparison is simplistic and misses what Life House offers travelers. It’s a hotel experience at Airbnb prices. And in a city such as Miami, where Airbnb is strictly regulated, Life House brings affordable units to a very expensive hotel market.
“Our hotels are purpose-built for guests,” he says. “We’re not forcing residential units to serve rootless travelers. We’re solving a hotel problem, where Airbnb is solving a residential use problem.”
The first Life House property, a four-floor, 33-room hotel in Little Havana featuring a rooftop bar and pool, begins accepting reservations today for a December opening, with rooms going for a special promotional price of $109 a night. Going forward, private rooms will start at $149 a night. A second location on South Beach will open in early 2019.
Zeidan believes the concept will not only work but expand quickly because it offers a great deal to property owners. Real estate owners want to own high-value hotels but aren’t interested in the cost of smaller boutique properties. Life House functions as an operating system for lodging; owners simply hold onto the lease, while the startup signs a management agreement, handles the day-to-day, and writes them a check.
Since Life House is backed with Silicon Valley capital, Zeidan says, they can take bets on properties a standard hotel company wouldn’t be interested in, and won’t be bogged down with leases. The first two Life House properties, Life House South Beach and Life House Little Havana, were formerly operating as the Jefferson Hotel and Jazz Hostel.
Life House also believes it can save money with more targeted marketing. Zeidan compares the company to a direct-to-consumer brand. Instead of farming out advertising and marketing to an outside agency, Life House will handle everything in house, and focus its outreach efforts on social media, paid advertising, and influencer marketing. Instead of relying on OTAs, the company will only sell online itself, and will launch a social network to connect guests and encourage them to meet, make plans, and socialize.
“Just buying Google ads isn’t sophisticated enough to compete,” he says. “It requires a more nimble approach.”
Life House will offer two basic room concepts. A traditional hotel room, similar to a boutique arrangement, as well as a “shared room product” with multiple beds in the same room. Bunk beds in shared rooms, aimed at the lucrative group travel market in Southern Florida, will go for $50 a person. When asked if this innovation was in fact, just a hostel, Zeidan said there are key differences. At Life House, users can only rent by the room, not the bed, so guests will only share the space with their friends.
Life House has plans to expand across the country, including two under-construction projects in the Bushwick neighborhood in Brooklyn and Denver’s Lower Highlands, as well as an additional Miami location. Life House will either take over an existing hotel and rebrand it, or find a property in development, ripe for rebranding and repositioning, and acquire it. In both cases, the startup won’t own a lease.