After establishing itself as a full-service operator in the hotel space, Life House has secured $77 million CAD ($60 million USD) in Series C financing to start selling its software to independent hotels.
“When the pandemic hit … a lot of hotel owners became aware that their operations were really problematic.”
-Rami Zeidan, Life House
To date, Life House has served as a hotel operator, working with hotel owners directly to manage their hotels and increase their profitability.
Life House saw significant growth during the pandemic as hotel owners sought to control costs amid COVID-19 disruptions, and now plans to start selling its revenue management software to third-party hotel operators.
The hotel software company’s round, which closed in November, consisted of about $64.2 million CAD in equity and $12.8 million in debt, and was led by new investors Inovia Capital and travel search engine company Kayak with participation from Tiger Global, Derive Ventures, JLL, Trinity Ventures, Sound Ventures, and Cooley LLP.
Founded in 2017, Life House offers a vertically integrated hotel software and operations platform. The startup currently operates nearly 50 hotels across North America.
Pranit Tukrel, a growth equity investor at Inovia, told BetaKit that Inovia was attracted to Life House’s core business, product, and the opportunity for the startup to start selling its software to hotels it doesn’t manage directly. Tukrel added that the venture capital firm also sees potential for Life House in Europe.
“There’s a lot more independent hotels in Europe that are known as high quality properties than there are in Canada and the US, and so should Life House scale ahead of plan here, we think a natural progression would be to take the business to Europe,” said Tukrel.
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Tukrel views Life House as a “a pretty big bet … for outsized returns” in the early-stage travel space. “We see our ability to come in and help the company develop a team around software, grow its business, grow its product team in Canada, and then also just be a core product in our travel thesis,” he added.
Life House founder and CEO Rami Zeidan told BetaKit that “most of the operational software in the [hotel] ecosystem is focused on usability instead of profitability,” adding that what differentiates Life House from competitors is the startup’s focus on the latter.
During the pandemic, Life House saw its business grow by 600 percent. Zeidan attributed this to the precipitous drop in revenues hotel owners saw when COVID-19 struck.
“When hotel revenues are growing, a lot of hotel owners aren’t aware of the problem they have,” said Zeidan. “The operational problems are kind of masked by the macro revenue growth. And when the pandemic hit … a lot of hotel owners became aware that their operations were really problematic.”
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Amid these conditions, the CEO said Life House got a lot of calls from hotel owners looking to “stop the bleeding, reduce their fixed cost structure, and increase their revenue.”
According to Zeidan, Kayak decided to invest because they noticed a problem in their marketplace: that “consumers want a locally-rooted lifestyle hotel, but because the reliability, technology deficiencies, and prices don’t don’t match, it’s tough for a consumer to make those decisions” to stay at an independent hotel.
“Oftentimes, businesses start with a very narrow product or service and then expand it over time,” said Zeidan. “We’ve essentially started as a complete service model … and now we’re selling components of it outwardly.”
Kayak’s vision for Life House was also attractive to Inovia. “We really liked Kayak’s vision of building up their own hotel portfolio and acting as a distribution partner for [Life House’s] software across the independent hotels that use Kayak,” said Tukrel.
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To start, Life House plans to market its revenue management system software towards independent hotels, which Zeidan described as “really underserved,” and roughly half of the hotel market. The startup also intends to use some of its fresh funding to continue to scale and improve this product.
According to Tukrel, Inovia really likes the travel and hospitality space. The VC firm has backed a variety of tech startups that change the way travel companies access customers and run their businesses, including Sonder, Hopper, and Snapcommerce, and Tukrel said Inovia thinks Life House can be “a core product” in its travel thesis.
In the hospitality software space, Zeidan claims that what differentiates Life House from competitors is that it offers hotel owners and operators “a direct sense” of impact on profit and loss. The CEO added that Life House is interested in getting paid in connection with this, by taking a percentage of direct bookings through its revenue platform.
Tukrel said Inovia thinks Life House can be “a core product” in its travel thesis.
Ultimately, Zeidan said Life House wants to make hotels a more institutional and reliable asset class for people to invest in, adding that the company’s big picture vision is “to become the all-in-one software solution for hoteliers.”
Forty of Life House’s 60 employees are currently based in Canada. Tukrel said that from a grants, human resources, and talent perspective, the fact that Life House has a presence in Montréal was key for Inovia, which aims to help the startup grow its team.
Life House aims to triple the size of its team over the next four months, with a particular focus on adding to its product, engineering, and sales teams.
Life House plans to focus its initial expansion efforts on English-speaking markets in North America. Although most of the company’s current business is in the US, Life House has three hotels in Mexico, where it is looking to grow its presence, and is expanding to Canada “as we speak.” Longer-term, Zeidan said the startup plans to turn its attention to English-speaking countries in Europe.
Feature image of Rami Zeidan by Daniel Dorsa, courtesy of Life House