Skift Take

Skift has long pointed out that the lines are blurring among formerly separate categories in hospitality. The move to hybrid, or blended hospitality, has only sped up lately, as this latest merger highlights.

DoveVivo, a co-living company, said Thursday it is acquiring Altido, a short-term property management group. The European companies didn’t disclose the terms of the deal that still faces regulatory approval.

DoveVivo, based in Milan, manages about 10,000 rooms as non-residential accommodation. U.S. fund Starwood Capital, managed by Barry Sternlicht and focused on real estate, recently took a minority stake in DoveVivo.

“The combination could be positive for demand generation with their target customers,” said Simon Lehmann, CEO and co-founder of AJL Atelier. “They have a similar type of customer that they could essentially cross-sell to.”

Altido runs more than 2,500 properties as professionally managed short-term rentals. It formed as a roll-up of four property management companies. It had ambitious plans in 2019, believing they could spend more efficiently on other technology and marketing if they pooled their resources together.

But the startup picked Billy O’Sullivan as CEO in 2019. Sullivan appears to have been ill-fitted to managing the group. Altido also didn’t raise external funding, which in hindsight looks like an unlucky decision.

“Until the end of 2019 we were profitable,” said William Parry, the newest CEO of Altido. “We were loss-making in 2020 because of Covid and took government-backed debt. In 2021, we broke even. This year we’re expecting to have our best performance in our history.”

Being acquired by Europe’s largest mixed-use operator may help stabilize the ship. But the merged brands have their work cut out for them.

“If they’re interested in maximizing occupancy, a co-living operator might also adopt a short-term rental model when there’s availability,” Lehmann said.

It would take time for DoveVivo and Altido to build an end-to-end platform that provides a hassle-free way to rent inventory fungibly, be it for a day, a month or a year.

To help with inventory growth, DoveVivo has relationships with institutional investors that may also know of real-estate that could be put to better use through short-term rental.

A Blending of Hospitality Categories

DoveVivo is committed to hybrid hospitality, particularly as the pandemic has heightened interest in remote working and distributed workforces. While giant corporations have practices for relocating workers in serviced apartments, small-to-midsized businesses often have to go it alone — creating an opportunity to fill a gap in real estate offerings typically caught between hotels and long-term leases.

“A segment of customers are moving across Europe and the world frequently and are in need of shorter stays,” said Valerio Fonseca, co-founder and CEO of DoveVivo. “So it’s important we expand our model from co-living to living.”

Co-living is a bit of a mix between a university residence, a private members club, and a kibbutz.

DoveVivo co-living offers private apartments and group housing, all fully furnished, with hotel-like amenities such as Wi-Fi and utilities taken care of. Guests can mingle in common areas, fitness areas, or workstation clusters.

While there may not be a mass audience for co-living, there may be enough demand from young professionals, students, digital nomads, and divorcees to sustain multiple co-living and mixed-use hospitality brands for a long time to come.

Late last year, private equity firm Freo signed a ten-year lease on a mixed-use building in Paris that used to be offices for L’Oreal. It is hiring DoveVivo to create an all-inclusive offering for 95 bedrooms which will include other facilities run by other operators, such as a day-care facility, a co-working space, a gym, and retail shops.

DoveVivo has grown a lot since its founding in 2007 by Fonesca, who left private equity at age 28 and began the company with 20,000 euro. But for its next phase of growth, it needs to grow further.

“To fulfill our ambition to become a large operator, we need to think more like a corporate and think strategically like institutional players do,” Fonesca said.

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Tags: co living, europe, future of lodging, mergers and acquisitions, short-term rentals, vacation rentals

Photo credit: A residence on Jermyn Street in London that's available for short-term rental via booking brand Altido. Source: Altido.

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