The companies, both based in New York, plan to roll out as many as 25 apartment-style hotels across the U.S. over the next few years. They’ll enter into long-term leases with developers, then brand, furnish and operate the properties, ultimately offering short-term leases aimed at travel groups. They’re offering a “high-end, hotel-like experience with the cost benefits that the sharing economy provides” and the consistency of a single operator rather than “properties from millions of different owners,” according to a statement.
Upper90 will provide 90 percent of the capital for the joint venture’s projects and Domio 10 percent. Their first, 100,000-square-foot (9,300-square-meter) property is set to open in New Orleans with two- to four-bedroom units. The property, the first multi-unit project for Domio, is slated to open in November at a cost of about $2 million, Domio Chief Executive Officer Jay Roberts said in an interview.
“The goal is to transform the way hotels are done in the U.S. and make all hotels asset-light,” said Jason Finger, chairman of Upper90 and former Seamless CEO.
Traditional hospitality companies have already begun to adopt versions of that strategy, with the likes of Marriott and Hilton selling off real estate holdings and licensing their brands. Private equity is finding its way into the ventures. Vacation-rental startup Vacasa has said it raised $104 million of such funds last fall.
Finger launched Upper90 this year with CEO Billy Libby, former head of U.S. quantitative execution and market-making sales at Goldman Sachs Group Inc., and Chief Information Officer Alex Urdea, former managing director of Solus Alternative Asset Management. Upper90’s first fund has a $60 million commitment from “a leading group of entrepreneurs and executives that have the ability to increase investment size,” Libby said.
Domio, founded in 2016, boasts “one-click” booking and has accommodated more than 60,000 guests in San Diego, Boston and Honolulu as well as Austin, Texas, and Nashville, Tennessee, according to the statement, while Upper90 “invests in new-economy asset classes being created by technology and data.”
“We believe that the sharing economy is going to continue to accelerate,” Finger said.
©2018 Bloomberg L.P.