Skift Take

Talk about eye candy. In our first-ever list of top hotel design firms, we spotlight the interior designs and architectural masterworks that are making hotels more comfortable, sustainable, and breathtaking.

Sean O’Neill and Carley Thornell, Skift

The hotel industry is emerging from a rough pandemic, so it’s a good time to celebrate a brighter future driven by hospitality innovation. We scoured the globe to find some of the best talents in hotel architecture and interior design. These 15 firms represent a diverse mix of influences and philosophies. Some are up-and-comers, while others are legends. All of them know how to use next-gen innovation to make travelers happier, whether it’s at a limited service property, a luxury resort, or a tented hotel.

Online Travel This Week

Frontdesk, a Milwaukee, Wisconsin-based property manager that’s a fraction of the size of larger rivals Vacasa and Sonder, talks a big game as it labors in their shadows.

“We’re hoping to be a Vacasa, and not a TurnKey,” said Frontdesk co-founder and Chief Product Officer Jesse DePinto earlier this week, referencing the fact that Vacasa acquired rival Turnkey in 2021. In other words, Frontdesk, which has raised $22 million in total funding, has aspirations of being an acquirer.

But DePinto isn’t finished boasting.

“We’re a financially prudent Sonder,” he added, referring to the struggling public company.

Both Sonder and Vacasa have been losing lots of money, and vow to start turning red ink into greenbacks, as soon as next year.

Like Avantstay, Sonder, and Vacasa, to name a few, Frontdesk “restructured” a few months ago, DePinto confirmed, and layed off 3.5 percent of its workforce, about 13 employees or so, as a concession to what might unfold in terms of macroeconomic conditions.

You may never have heard of Frontdesk until now. So why is it worth a column? Because it sheds some light on the challenges of the multitudes of regional property managers who operate out of the spotlight, and sometimes become the targets of the larger players’ “portfolio acquisitions,” which are relatively smallish deals to boost inventory.

Frontdesk manages about 1,000 units at 160 locations in 32 cities. Sonder, which manages many multifamily properties and offers some hotel rooms, said it had around 8,400 “live units” as of June 30. At the same time, Vacasa, which is oriented toward vacation homes in leisure destinations, said it had more than 35,000 units in its management portfolio.

Meanwhile, like it did earlier in the pandemic, Frontdesk, which is an urban-centered property manager of mostly multifamily buildings in second-tier cities like Indianapolis, Indiana, and Milwaukee, picked up some scraps from a defeated peer, Wanderjaunt, that you likewise might not have heard of.

This is what it’s like when you are a local or regional property manager, and escape the notice of much larger rivals and other industry players. Hostfully estimated in 2021 that there are around 140,000 property managers of short-term rentals around the world, and the market, many believe, is ripe for consolidation.

Several weeks ago, Frontdesk assumed management of four Wanderjaunt properties, representing 33 units, in three cities, namely Tempe and Phoenix, Arizona, and Austin, Texas. Wanderjaunt abruptly went out of business in June, giving owners, guests, and employees just a couple of days’ notice, or in some cases, even less. Wanderjaunt is running an asset sale, Skift learned exclusively in July.

Frontdesk’s DePinto doesn’t think Wanderjaunt will be the last property manager to shutter its operations. Of course, it won’t be.

When Frontdesk took over some of Wanderjaunt’s properties to manage it amounted to the repetition of a playbook. In late December 2020, for example, Frontdesk inherited 55 units in New Orleans, Louisiana; Indianapolis, and Pittsburgh, Pennsylvania from property manager Stay Alfred, which had ceased operations about six months earlier.

DePinto argues that Frontdesk, which rode a second wave of tech-enabled property managers coming into existence around 2017, years later than Vacasa, Sonder, and the now-departed Stay Alfred and Lyric, learned lessons from the older generation.

Among them, he claims, long-term leases don’t work at scale, as seen when travel demand fell to near zero at the beginning of the pandemic, and you can’t take hospitality out of the equation in the name of alleged technology prowess. Frontdesk, which started out solely focusing on master leases, still signs leases, but during the pandemic the company shifted toward the revenue share model, DePinto said.

DePinto also said that “tier one markets are almost more trouble than they are worth” given all the competition and heightened regulatory scrutiny.

National players though, aren’t a major concern, he maintained. “No one views this as a winner take all kind of game,” DePinto said.

He said there is plenty of guest demand in second tier cities, which is Frontdesk’s focus, such as Milwaukee and Indianapolis, but “it’s a supply-constrained business,” and there generally is not an excess of properties to manage in downtowns. In these types of locations, the challenge is to develop relationships with institutional investors, real estate investment trusts, and wealthy families who might own the local real estate.

From Airbnb to Vacasa and Sonder, as well as the relatively diminutive Frontdesk, it is a land grab in terms of signing up hosts or owners.

The trick is to balance growth and the bottom line, as Vacasa, Sonder and many others found out as the stock market pummeled their share prices earlier this year.

“In June, we announced our cash flow positive plan, which shifted our focus from hyper growth to steady growth with a strong emphasis on rapidly achieving sustainable, positive free cash flow,” said Sonder co-founder, chairman and CEO Francis Davidson August 10.

DePinto said property management companies can’t grow at all costs. It’s a human business, he said, and smart companies won’t treat short-term rental management like a software business devoid of hospitality.

To that point, Frontdesk, which is a private company, is losing money like most — but not all — of the rest of the big names in the property management sector.

Frontdesk expanded its unit numbers 42 percent year over year, DePinto claims, and is profitable when you exclude “growth costs.”

But isn’t that precisely the conundrum — even in tier two and tier three cities?

In Brief

Airbnb Wins the Sales and Marketing Game, No Contest

When it spent just 18 percent of its revenue on sales and marketing in the second quarter, Airbnb widened the gap a bit in that arena between itself and its biggest rivals, Booking Holdings and Expedia Group. Skift

Trivago Mulls Adding Free Links

Why would a metasearch business like Trivago, which makes its money on advertising, want to add free links (like Google did)? Comprehensiveness, baby. Skift

Vacasa Emphasized Organic Growth Over Acquisitions

Vacasa made lots of small acquisitions in the first six months of 2022, but it now wants to emphasize growth by doing it the old-fashioned way — sales calls and shoe leather. Skift