San Francisco-based hospitality start-up Lyric is downsizing and restructuring its operation. The Airbnb-backed company is laying off 20% of its staff and closing nearly 200 units or a third of its 600 units. It operates in 14 cities around the U.S.
Lyric partners with multi-family landlords to offer short term rentals to business travelers. Founded in 2014, the company has raised $180 million from investors. It raised $160 million Series B in April 2019 from Airbnb, RXR Realty and Tishman Speyer for expansion.
In December, Lyric announced that Kayak will promote a select set of its properties in Kayak’s travel search results.
Over the past year, professionally managed “apartment hotels” startups have been expanding rapidly. Some companies have burned through cash, but are not getting the revenue and profit growth. Now, they have to consider the path forward. In February, Vacasa announced a management shake-up, while UK’s Hostmaker filed for bankruptcy last week.
Lyric announced a restructuring last week, indicating that its current operating model needs an overhaul. Lyric said in a statement that it would change its business model to focus on “larger projects with increased density” in its best-forming cities.
“That means not only restructuring our operations but the teams that support each function, all with aim of creating a sustainable growth model and even better guest experience,” the statement said.
Sources disclosed to The Real Deal that the company will operate in fewer markets:
At an all-hands meeting in January, Lyric disclosed to employees that it missed its 2019 revenue target and would close some locations in order to focus on better-performing markets.
Lyric listed units it planned to “ditch” and “keep.” In all, it planned to close 193 units in Philadelphia, Houston, Dallas, Pittsburgh, Orlando, Minneapolis, Washington, D.C., and Chicago. It planned to keep 418 units in New York City, San Diego, Philadelphia, New Orleans, Miami, Charlotte, Austin and D.C.
Lyric’s New York location, at 70 Pine Street, was among the only locations that is performing well. The company signed a long-term lease for 132 rooms there in May 2019.
This pruning process is difficult but is a natural course for a dynamic young sector. It is smart for companies that have enough cash runway to reassess and question the assumptions of their business. We will see more companies look for a profitable path forward or go out of business.
photo credit: lyric