The hospitality of the Alouette announced Wednesday a joint venture with Hotels in Life House which will create one of the largest independent boutique hotel operators in North America.
Financial terms of the transaction were not disclosed. The companies said the company will have a “nearly billion-dollar portfolio” of small lifestyle hotels with approximately 97 properties in the United States and 3,000 rooms.
Life House, backed by venture capital firms such as Thayer Ventures and Inovia Capital, will remain “a significant shareholder” in the joint venture, but Lark has a majority stake. Around 20 Life House employees will join Lark.
“The joint venture positions Lark to become North America’s premier hospitality choice for hotels under 150 keys,” according to Rob Blood, who founded Lark Hotels in 2012 and now serves as executive chairman of Lark Hospitality. Peter Twachtman is CEO.
The merger combines 50 hotels managed under the Life House brand with nearly 47 Lark-forward hotels managed under multiple brands. Executives expect annual revenue under management to exceed $150 million next year, with a geographic footprint of 27 states.
The merged company has two business models: it will manage hotels under the Lark Hotels, Bluebird by Lark, Blind Tiger, AWOL and Life House brands. It will also manage hotels under the independent names of other companies on a third-party basis.
Expanding Lark Hotels
In an exclusive interview with Skift, Blood said the joint venture provides Lark with strategic geographic hubs in California, the Rocky Mountain region and Texas, creating hub-and-spoke expansion opportunities.
“What this also does to support our scale is it places very important geographic points on the map,” Blood said. “We will be able to establish hub-and-spoke structures in terms of design and development teams in these high-demand and high-growth markets, which will give us more opportunities to support new owners..”
Despite its focus on smaller properties, Lark has demonstrated the profit potential of boutique, lifestyle, and “independent-minded” hotels.
Lark’s loyalty program, which has 100,000 members, generates about a third of the portfolio’s revenue through direct bookings with no commission fees.
Fresh life for the house of life
The deal represents a change in fortunes for Life House, a startup that had raised more than $100 million in venture capital but has recently faced headwinds.
As part of the agreement, Life House’s hotel management operations will merge with those of Lark. Both operators use Alley software as the base system. Life House’s revenue management technology platform, Diamois being spun off into a separate company.
Life House’s high-profile partnership with travel site Kayak to create branded hotels was also canceled last year, and the founder of the startup resigned of the CEO role earlier this year. For a brief period, Booking Holdings Kayak had partnered with Life House to create Kayak branded hotels, starting with Kayak’s first hotel opened in 2021. But at the end of 2022, Kayak chose to exit the business.
Earlier this year, Skift reported that some Life House owners were dissatisfied and wanted to terminate their contracts.
Blood said Life House has done an excellent job of addressing previous challenges in guest satisfaction under new management since March, “getting the properties back on track.”
Making small hotels profitable
Blood said that before Lark, it was thought it was unprofitable to run boutique or “independent-minded” lifestyle properties in one property if they had fewer than 150 keys or guest rooms. hosts.
“If you can bring sophistication to these small assets, tremendous value will be created not only at the asset level but also at the parent company level,” Blood said.
New stakeholders Thayer Ventures and Inovia Capital typically look for classic high-growth, large-scale startups to invest in. But Blood said Lark Hospitality would stick to “sustainable growth.”
It will compete with larger hotel management companies like Aimbridge, Benchmark and Pyramid to operate independent hotels for owners in exchange for fees.
“We have much more experience operating small, independent hotels profitably than other players,” Blood said. “If you are a hotel owner and choosing a management company, it is very important to consider experience. Does the company have hotels in its portfolio that are similar to yours? »
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