The Guild, an Austin-based hospitality startup aiming to bridge the gap between Airbnb and hotels, has closed on a $25 million Series B.
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Traditional VCs Maveron, Convivialite Ventures, MarkVC, and ATX Venture Partners participated in the round, as well as real estate firms RXR Realty, Corigin and Nicol Investment Group. The financing brings The Guild’s total known venture funding to $31.5 million, and follows an October 2018 $8.5 million Series A.
Boutique hotel developer Brian Carrico and tech marketplace founder Chris Herndon founded The Guild in 2016. The pair were former “road warriors” who traveled a lot for their careers. Their aim with The Guild is to give business travelers a comfortable, consistent place to stay. When the suites are empty, those spaces are available for leisure travelers. The startup essentially partners with apartment and office developers to turn full floors into hotel-like, tech-enabled suites, which are then in turn booked by the night to business and leisure travelers.
“We will operate multiple floors of a building as a hotel,” Herndon told me. “We offer a lot of the extra space, local vibe and experience you get with Airbnb but with the amenities and services of a traditional hotel.”
Today, The Guild operates 565 units across 15 properties in six markets: Dallas, Austin, Miami, Cincinnati, Nashville and Denver. Another 235 units are in the latter stages of construction and should come online in the first half of this year. It saw 81 percent occupancy last year. Part of its bookings come from agreements with corporates such as Amazon, Google and Silicon Labs.
The 170-person company plans to use its new capital to launch into six new markets over the next 24 months and continue to invest in improving its platform so that stays can be more “personalized” for its guests.
A guest experience focus
The Guild claims to be different from other high-flying startups in the alternative accommodation space in that it is not out to “grow at all costs” by raising “nine-figure venture rounds at increasingly high valuations amid rapid global expansion plans.”
Instead, The Guild says it is pursuing a more deliberate strategy focused on improving the guest experience, particularly for business travelers. Each property has slightly different unit economics. While the startup is willing to do master lease agreements if it is clearly the better financial option, The Guild says it typically favors asset-lite agreements in which the property manager funds the capital requirements. This, it says, allows for better financial alignment between the property manager and The Guild, allowing the startup to focus more resources on the guest experience.
The Guild doesn’t go in and knock down walls or that sort of thing, but it does hire professional interior designers to provide custom furniture and decor.
Other higher-profile companies in the space include short-term rental provider Sonder, which reached unicorn status last July with its $210 million Series D raise, and Lyric, which raised a $160 million Series B led by Airbnb last year.
The Guild investor and advisor Chip Conley, a boutique hospitality pioneer who founded Joie de Vivre and later became Airbnb’s global head of strategy and hospitality, said the startup is smart to focus more on guest experience rather than number of locations.
Maveron partner Jason Stoffer agrees, noting that The Guild’s “high underwriting standards and operational strength have driven impeccably strong unit economics and high capital efficiency at a time when competitors have focused on growth at all costs.”
Blog Roll Illustration: Li-Anne Dias