Stay Alfred, the Washington-based short term rental company which has been temporarily closed since March, will cease operations permanently, reports The Spokesman-Review.
The company had been in talks with investors to get more funding but was unable to raise new capital to keep it afloat.
“They ended up pulling the funding at the last minute, and we had no anticipation that funding wasn’t going to be coming in, and it kind of took the company down,” Jordan Allen, CEO of Stay Alfred, tells The Spokesman-Review.
We noted in early March of the possible vulnerabilities in the short term rental sector. Raising money was never easier and the danger with an abundance of capital is that business fundamentals get overlooked. Another danger of capital addiction is that it causes companies to focus on expediency (boost to sales/top line) rather than longevity (profit growth).
Then Covid-19 halted virtually all travel, which put short term rental companies in a dire situation as bookings vanished. Most of these companies have fixed obligations such as leases and staffing costs. As a result, companies with weaker cash positions find it difficult to survive this crisis.
Even companies like Airbnb, which had about $3 billion in cash, decided to raise more capital to ensure there is enough liquidity to sustain their business until next year.
Stay Alfred had 230 employees and revenue was estimated to reach $100 million this year before Covid-19. The start-up, which differentiated itself by offering short term apartment rentals in walkable locations, grew rapidly, operating 2,200 units in 32 U.S. markets.
The company’s growth was fueled by $47 million in funding it raised from Chicago-based real estate company Nine Four Ventures.
Faced with a number of customer complaints about its cancellation policy during Covid-19, Stay Alfred wasn’t able to weather the crisis. The company is currently liquidating assets, some of which will go toward refunding guests. They will help transition existing reservations to other short term rental companies, according to Allen.
photo credit: Stay Alfred
