Hotels are short-staffed and reeling as travel demand finally picks up. This startup backed by $40 million in VC funds is aiming to curb turnover and bring automation to the antiquated industry.

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Life House Hotels Nantucket

Life House has a branded hotel in Nantucket, Massachusetts.

Courtesy of Life House Hotels

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    Life House creates software designed to make hotel operations more efficient. 
    Its CEO said its portfolio of partnering hotels grew 250% during the pandemic. 
    Its tech could help hotels to automate more tasks and keep operations lean. 
    See more stories on Insider’s business page.

Life House is not your typical hotel company. 

While it does operate its own small chain of branded hotels, with locations in Miami, Nantucket, and Denver, and more to come in Brooklyn, Bali, and Chattanooga, it has also developed a tech stack that it is selling as a white-label solution to a growing number of independent hotels.

The idea is to offer software that can help hotels run their businesses more efficiently. It can help hotels automate tasks like booking, financial reporting and pricing, and staff training. 

The Covid-19 pandemic has brought with it many financial challenges for hospitality businesses, and those same businesses are now grappling with a labor shortage as much of the US drops its pandemic-related restrictions. 

Life House could be in an ideal position to help with those problems.

“It’s very expensive to operate hotels in the traditional way, and a lot of those costs don’t add value to the guest experience,” founder and CEO Rami Zeidan said in a recent interview with Insider. “If you don’t have a really sophisticated data scientist on your team, it’s hard to determine what’s best to do, and independent hotels have very little sophistication anywhere.

“Our fundamental thesis is: let’s build software that solves those problems.” 

Since Zeidan founded the company in 2017, Life House has raised more than $40 million in venture funding from investors including Thayer Ventures, Tiger Global, Global Founders Capital, and Comcast Ventures. 

Zeidan said that selling the tech stack to independent hotels was the idea behind the company from the beginning, but that it wanted to first develop its offerings using its own hotels, essentially creating a vertically integrated hotel brand. 

Life House’s focus on efficiency has been especially relevant during the pandemic, when demand for travel essentially came to a halt and companies had to trim their costs. 

“I think it also showed hotel owners and operators just how problematic their current operations are,” Zeidan said.

The shutdowns gave hotel companies a chance to reevaluate their businesses, and some turned to Life House for help managing their day-to-day operations. Zeidan said its portfolio grew 250% during the pandemic, and that it is now working with 36 hotels, 70% of which are not Life House-branded. Partner hotels that are now using Life House’s software range from high-end retreats like Wheatleigh in the Berkshires to motor lodges in Salida, Colorado, and Wamego, Kansas.

It also recently partnered with Booking Holdings to open the first Kayak-branded hotel, located in Miami Beach. 

Since the start of the pandemic, Life House has grown booking revenues by 189% and the number of hotel rooms under management by 271%. 

A potential solution to the labor shortage

Life House’s white-label offering is also relevant given a different problem that has arisen in the current stage of the pandemic: the labor shortage. 

US businesses have reported severe worker shortages in recent weeks. On June 2, the US Chamber of Commerce called the shortages a “national economic emergency” that could pose “an imminent threat to our fragile recovery and America’s great resurgence” as it emerges from the Covid-19 pandemic. 

The US Labor Department said Tuesday that there were 9.3 million job vacancies in April, which was a 20-year record. Four million people also quit their jobs in April, another 20-year record. Accommodations and food service were the two sectors that saw the most growth in vacancies.

Zeidan said that he views the labor shortage as a “short-term problem related to the pandemic” but that it could have “lasting effects in wage inflation.” That could lead to financial pressure that would make a Life House operation more appealing to hotels. 

Rami Zeidan is the founder and CEO of Life House.

Courtesy of Life House Hotels

“Of course, the staff positions that are experiencing a shortage are generally not automatable — housekeepers, for example,” he said. “Our software today helps housekeepers work more efficiently and makes their work feel more rewarding and engaging,” which could help keep turnover lower, he added. 

Zeidan continued: “Furthermore, as the hospitality industry has high turnover in these hourly positions, we have built software that automates the training of newly hired staff and soon automates the recruitment and evaluation of such staff, materially reducing the costs of turnover by over 75%.” 

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