Frontdesk's acquisition of Zencity highlights a consolidation trend among property managers, but also the very fragmented nature of the sector.
The acquisition, announced Tuesday, is Frontdesk’s first if you exclude asset pickups from now-defunct companies, such as Stay Alfred and Wanderjaunt. It adds about 200 1-2 bedroom suites in Chicago, Kansas City and St. Louis, to Frontdesk’s roughly 1,000 units under management.
Neither Milwaukee-based Frontdesk nor Zencity disclosed the terms of the acquisition.
Frontdesk CEO Jesse DePinto said the deal enhances the property manager’s move into corporate travel to supplement its existing leisure travel base. “Our product meets a great need” for business travel, he said, adding that the company is working with corporate travel agencies, although he declined to specify which ones.
The deal doesn’t extend Frontdesk’s geographic reach as it was already operating in the three cities where Zencity has a presence.
The Zencity brand will cease to exist although the company’s founder and CEO, Christopher Lawrence, will become Frontdesk’s chief strategy officer. Zencity had around 15 corporate staff, who may be subject to the bulk of job trims from Zencity, and 60-70 field personnel. Frontdesk has a roster of around 200 employees and contractors.
“We continue to see incredible interest and demand for high-quality short-term rental products,” said Jim Lockheed, investment principal at JetBlue Ventures, a Frontdesk investor, in a statement. “We’re excited to support Frontdesk as they continue building a trusted brand and redefine STR (Short-Term Rental) hospitality for the modern traveler.”
Frontdesk has received around $21 million in funding since its founding in 2017, according to Crunchbase.
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Photo credit: Zencity founder Christopher Lawrence (left) and Frontdesk CEO Jesse DePinto pose to mark Frontdesk's acquisition of Zencity. Source: Frontdesk