Life House Secures $100M from Blue Flag Partners
The companies plan to acquire and manage seven to 10 additional assets.
NEW YORK CITY—Life House, a New York-based hotel brand and management startup company, received $100 million in equity from Blue Flag Partners, a real estate investment firm based in Boston. With debt, this will deliver buying power to acquire $250 million to $300 million of hotel real estate, according to Bryan Dunn, Life House, VP, acquisitions.
Blue Flag has committed to investing this latest funding to acquire seven to 10 hotels in an exclusive partnership with Life House. Together they are targeting opportunities in high-barrier-to-entry seasonal markets such as in the Hamptons and the Hudson Valley, in NY; Martha’s Vineyard, MA; Stowe, VT; Newport, RI; Aspen, CO; Jackson, WY; Carmel-by-the-Sea, CA; Palm Beach, CA and St. Barths, in the Caribbean. Their strategy will focus on smaller, 50 to 125-key boutique hotels.
Also in the New York area, Life House has a deal with a separate capital partner for a hotel under development in Bushwick and multiple other deals being advanced throughout Brooklyn.
Blue Flag will own the properties, with Life House designing and operating them. Currently, Life House is running two hotels in Miami. In Little Havana, rooms start at $119 per night. In South Beach, prices start at $149 per night.
“Since day 1 we have been acutely focused on driving value to our hotel owners through technology advantages and contextually responsive design and we’re thrilled to see that Blue Flag has recognized this value and formalized a long-term partnership with us,” says Rami Zeidan, CEO and founder of Life House. “To date, we have only raised $10 million in venture capital and this partnership further demonstrates our ability to scale a lifestyle hotel brand and management company in a capital-efficient manner to maximize returns for our venture capital investors.”
Life House uses propriety software to improve its profitability by reducing the costs required to operate a hotel through automating and centralizing back office functions, with direct booking and lower cost digital marketing. They have created seven different software products in-house. This includes a guest-facing mobile app with a social network, automated financial accounting and reporting, and an employee-facing app that reduces management staff in hotels.
“Our mission is to create a global network of lifestyle hotels that make travel more meaningful and more affordable, while also making it more seamless and more profitable for hotel owners,” Dunn tells GlobeSt.com. “We fundamentally do this through proprietary software solutions, innovative workflows and our people.”
This latest equity deal follows its recent taking over operations at The Roberts Collection. The historic property includes a manor built in 1846. In April, Blue Flag acquired the Nantucket, MA lodging. Life House will begin restorations in the fall 2019.
Terry Sanford, co-founder of Blue Flag, says they selected Life House with a competitive process. “Since we closed on the acquisition this past spring and in advance to reposition the asset, they are already driving approximate 40% higher total revenue with nearly 80% direct web bookings,” he says. Sanford adds Blue Flag is looking to build their portfolio with Life House across the country.
Life House notes it has venture backing from investors including Global Founders Capital, Comcast Ventures and Trinity Ventures to develop proprietary technology that increases incremental revenue and automates operations to yield higher returns. They are planning a Series B fund raising this summer and by 2020 plan to have over 20 hotels open or under construction.