United States: AvantStay, the first Los Angeles-based next-generation hotel platform, announced another round of layoffs, cutting its workforce by 144 people [22 per cent of its overall team].
This is AvantStay’s second round of layoffs this year, after it underwent a ‘gradual reorganisation’ of the company in July which saw 43 ‘job cuts’ made at the time.
Writing a letter to affected employees today [9 November]co-founders Sean Breuner and Reuben Doetsch admitted the announcement that nearly a quarter of the company’s workforce was being cut made it “the toughest day in AvantStay’s history” and agreed responsibility for the decisions that preceded the move.
Despite the ramp-up over the past year, including growth through acquisitions and innovations in every department of the company, the founders attributed the layoffs to “overhiring for the world we find ourselves in” and said the timing of a return to the old ways was “uncertain”.
Promising to take steps for controlled growth in the future, Breuner and Doetsch said they had identified two areas where they could have made better decisions to prepare for uncertain economic shocks:
They said: “We have forecast our business growth into a more bullish market without enough slack for downward pressure. We hired for four times the growth and tripled with over $200 million in bookable revenue, but we expected more. While the hospitality industry continues to outperform, we have still not been able to meet our lofty growth aspirations for the hiring plan we have proposed.
“Operating costs have exploded and increased faster than expected. We were aggressively innovating across all areas of the business and realized we were doing too much, consequently leading to operational inefficiencies across the business that we should have addressed earlier.” they added.
Employees affected by the layoffs will be supported by AvantStay during their severance period, including reception severance packages, health coverage until the end of the year, career coaching via a dedicated LinkedIn group and access to an employee assistance program, while all employee travel credits will be extended throughout 2023. Additionally, AvantStay said it was committed to an effort to “eliminate waste and reduce non-essential initiatives,” but that it will would provide advice and other forms of assistance to outgoing staff upon their departure.
After weathering the aftermath of the Covid-19 pandemic and huge shifts in hotel demand, AvantStay has grown its team to over 700 people in the US and around the world.
In early 2022, AvantStay emerged from a $160m Series B funding round and in February the operator closed a $500m PropCo funding round led by real estate advisory firm and asset management company, Saluda Grade, because it prioritized hyper growth and innovation. . Within six months, it had achieved more than three times its year-over-year growth and added more than $100 million in revenue, in addition to “aggressively” seeking acquisition opportunities,… onboard new owners and acquire new properties through its PropCo real estate investment trust [REIT].
Going into the second half of the year, the company said it found itself in “a very different economic climate” than it faced at the start of 2022, such as structural inflation, geopolitical shocks , energy shortages, rising interest rates, shrinking capital budgets and dwindling start-up funding have gripped AvantStay and the broader sectors of short-term rentals, real estate and hospitality.
To meet the current global economic challenges, AvantStay is positioning itself to meet the strong demand for domestic travel by continuing to serve existing owners and guests, while increasing its growth discipline with “efficient and accretive cash flow strategies.”
The company said it had increased revenue by more than 200% in the past year and set a record for booking revenue in the past 30 days, fueling optimism about the continued resilience of the hospitality industry. short term rental after Covid.
Breuner and Doetsch said, “As we have experienced in the past, times of economic uncertainty have made us stronger and will continue to force us to adapt and evolve in any environment. We are ready for the road ahead and have positioned AvantStay to excel in this uncertainty. Storms strengthen tree roots, and that’s what we focus on: strong, powerful roots.
Like AvantStay, other property management companies have made the decision to cut jobs in 2022.
Sonder announced in June that it was laying off 21% of its enterprise team and 7% of its frontline staff, WanderJaunt shut down operations in July and laid off around 85 employees in the process, Frontdesk reduced its workforce by around 3.5% as part of a corporate “restructure”, and Portland-based Vacasa recently cut 280 jobs – around 3% of its total US workforce – following a number of important board changes.
Founded in 2017, AvantStay currently operates in over 100 cities with over 1,500 properties in its diverse portfolio. Over the past three months, the operator has also added former Invitation Homes CEO Fred Tuomi to its board and appointed Ankur Jain as chief financial officer. [CFO] to strengthen his senior team.