US: Los Angeles-based premier next-generation hospitality platform AvantStay has announced a further round of job cuts, reducing its workforce by 144 people [22 per cent of its overall team].
It represents AvantStay’s second round of redundancies this year, after undergoing a “gradual reorganisation” of the company in July, which saw 43 “job reductions” made at the time.
Writing in a letter to affected employees today [9 November], co-founders Sean Breuner and Reuben Doetsch admitted that the announcement to cut almost a quarter of the company’s workforce had made it “the most difficult day in AvantStay’s history” and accepted responsibility for the decisions leading up to the move.
Despite building momentum over the last year, including growth through acquisitions and innovation across each department of the company, the founders attributed the layoffs to “over-hiring for the current world we’re in” and said that the timing of a return to the old ways was “uncertain”.
Promising to take steps forward for controlled growth in the future, Breuner and Doetsch said that they had identified two areas where they could have made better decisions to prepare for uncertain shocks to the economy:
They said: “We forecasted our company’s growth to a more bullish market without enough slack for downside pressure. We hired for four times growth and grew at three times with more than $200 million+ in bookable revenue, but we expected more. While the hospitality industry continues to outperform, we were still unable to meet our lofty growth aspirations for the hiring plan we put forth.
“Operating costs ballooned and grew faster than we expected. We aggressively innovated across all parts of the business and realised that we were doing too much, consequently driving operational inefficiencies across the business that we should have addressed sooner,” they added.
Employees affected by redundancies will be supported by AvantStay during their departure period, including receiving severance pay, healthcare coverage until the end of the year, career support through a dedicated LinkedIn group and access to an Employee Assistance Programme, while all employee travel credits will be extended throughout 2023. In addition, AvantStay said that it had engaged in an effort to “remove waste and cut back on non-essential initiatives”, but that it would provide counselling and other forms of assistance to outgoing staff members during their off-boarding.
After weathering the after-effects of the Covid-19 pandemic and huge shifts in hospitality demand, AvantStay scaled its team to more than 700 people across the United States and around the world.
By early 2022, AvantStay emerged off the back of a $160 million Series B funding round and in February, the operator closed a $500 million PropCo funding round led by real estate advisory and asset management firm, Saluda Grade, as it prioritised hyper growth and innovation. In the space of six months, it had achieved more than three times year-on-year growth and added more than $100 million in revenue, on top of “aggressively” pursuing acquisition opportunities, onboarding new homeowners and acquiring new properties through its PropCo real estate investment trust [REIT].
Moving into the second half of the year, the company said that it had found itself in “a very different economic climate” to the one it had faced at the beginning of 2022, as structural inflation, geopolitical shocks, energy shortages, higher interest rates, reduced investment budgets and decreased startup funding took hold on AvantStay and the wider short-term rental, real estate and hospitality industries.
To navigate the ongoing global economic challenges, AvantStay is positioning itself to meet the robust demand for domestic travel by continuing to serve existing homeowners and guests, while increasing its growth discipline with “efficient and cash flow accretive strategies”.
The company claimed that it had grown by more than 200 per cent in revenue over the last year and set a record in booking revenue in the past 30 days, fuelling optimism for the sustained resilience of the short-term rental industry post-Covid.
Breuner and Doetsch said: “As we’ve experienced in the past, times of economic uncertainty have made us stronger and will continue to force us to adapt and evolve to any environment. We’re prepared for the road ahead and have put AvantStay in a position to excel through this uncertainty. Storms make trees grow stronger roots, and that is what we are focused on – strong and powerful roots.”
Like AvantStay, other property management companies have made the decision to eliminate jobs in 2022.
Sonder announced in June that it was laying off 21 per cent of its corporate team and seven per cent of its frontline staff, WanderJaunt shuttered operations in July and made around 85 employees redundant in the process, Frontdesk reduced its workforce by around 3.5 per cent as part of a company “restructuring”, and Portland-based Vacasa most recently cut 280 jobs – around three per cent of its total US workforce – following a number of significant changes at boardroom level.
Founded in 2017, AvantStay currently operates in more than 100 cities with over 1500 properties in its diversified portfolio. In the last three months, the operator also added former Invitation Homes CEO Fred Tuomi to its board and appointed Ankur Jain as its chief financial officer [CFO] to bolster its senior team.
