Hyatt Invested $15 Million in Cash-Burning Onefinestay Before Accor Acquisition

Onefinestay, the upmarket rival to Airbnb, lost $21.1 million (£16.6 million) in 2015, its final year as an independent company.

The United Kingdom-based firm was snapped up by Accor $168 million (£117 million) in April this year with the French hotel giant promising to invest a further $77 million (£50 million) in the brand to help it grow internationally.

Group accounts for Lifealike Ltd, which traded as Onefinestay, were recently released at the UK’s Companies House. They show that for calendar year 2015 the company generated substantial losses.

It has been widely reported that Hyatt Hotels, a first-mover in hotel industry collaboration with the sharing economy, had invested in Onefinestay in 2014 but the Companies House filing details for the first time the amount, which was about $15 million.

Turnover at Onefinestay was $20.3 million (£16.1 million) in 2015, up slightly by 3.9 percent on the previous year’s total. Administrative expenses rose by 16.3 percent to $36 million (£28.4 million), however, pushing the company to a loss. Since it was formed in 2009, Onefinestay has accumulated group losses of $66.5 million (£52.5 million).

In their review of the business, the then-directors said that Onefinestay had been “adversely impacted by terrorist attacks in Paris, which resulted in a reduction in trading in both Paris and London during the last 6 weeks of the year… and the early months of 2016.”

They added: “The Group was disproportionately impacted relative to other participants in the travel industry due to the concentration of its business in these two cities and the reliance on long haul leisure guests for whom travel is often discretionary and who cancelled or deferred trips due to concerns regarding the security situation in Europe.”

Onefinestay’s investment history

Since it became part of the Accor family, Onefinestay lost its co-founder and CEO Greg Marsh, who departed in September, only five months after the deal was completed.

When Accor confirmed the deal, the press release issued said that: “Onefinestay will remain an independent business unit within the AccorHotels Group and will continue to be led by Greg Marsh and the key management team.”

Unlike a unicorn such as Airbnb, Onefinestay, founded in 2009, operates in just a handful of cities, including London, Paris, New York, Los Angeles, Rome, and Miami, because of its curation-heavy and labor-intensive business model.

During its existence as an independent company Onefinestay attracted backing from a number of sources and the accounts shed more light on the value of some of these contributions.

Hyatt Hotels Corporation was one of the highest profile backers of the company and through its Nevada-based subsidiary SDI Inc. it purchased 2,513,615 shares, which would have been worth around $15 million.

The round of Series D funding was carried out in 2014 with a small chunk of money subsequently raised in 2015.

Onefinestay also took out a $6.3 million (£5 million) loan in its final year, receiving around $5.4 million (£4.3 million) once fees were accounted for.

With no substantial new funding in 2015, Onefinestay was burning through cash. It’s balance at the start of the period was a healthy $23 million (£18 million) but by the end this had fallen to $7 million (£5.5 million) – a figure that included the new loan.

Skift approached a number of Onefinestay’s investors to ask about the details of their exits.

Both Index Ventures and Intel Capital, which pumped in millions of dollars respectively, declined to give any details.

Hyatt also refused to go into the financial details but said: “We are pleased with what we’ve gained from our relationship with Onefinestay, and we wish our friends there continued success. Working with Onefinestay, we learned a lot about what works and what presents challenges.

“For a business like theirs, service delivery and global scalability are key elements. These lessons, along with those from our other pilots/investments, will continue to inform our approach to thoughtful growth that benefits guests, owners and shareholders.”