Yahoo Finance

Hotel owners have long faced two choices: run independently or become franchisees. But a third path is emerging for owners of smaller, urban properties, thanks to startups such as Numa.

• On April 27, Numa received a vote of confidence in its plan to build a third hospitality model.

• LaSalle, a real estate investment manager that’s a subsidiary of major hotel investing adviser JLL, launched a $525 million (€500 million) pan-European strategy of aggregating branded travel lodging.

• Numa will run the properties as travel lodging.

Numa, based in Berlin, belongs to a wave of similar startups.

• Sonder, a U.S.-based startup, is the largest and recently went public.

• Life House is in a partnership with Kayak.

• Limehome is based in Germany and backed by Lakestar.

• Casai operates in Mexico and Brazil.

• Matsuri is growing in Japan.

• And a few others in the U.S., such as Placemakr, Frontdesk, The Guild, and Mint House.

The model typically has a few parts.

• The brand essentially “borrows” properties owned by investors, developers, and hotel operators.

• It runs the units as either licensed hotels or licensed short-stay apartments. Most guests travel for leisure on short stays or for remote work on visits of up to a few months.

• The companies automate many processes to drastically cut the labor costs to save money and hopefully create more profit.

Numa won LaSalle’s support for several reasons.

• It has contracted more than 2,700 units. Roughly a third are in operation today. The deal with LaSalle will add to that 2,700.

• Numa claimed its occupancy averaged 85 percent in the past year, despite the omicron wave. No building has been unprofitable in the past 18 months.

• It claimed an average revenue per available room (a common hotel performance metric) of $98 (€86). That compares favorably to German averages in the limited-service end of the market.

• Most of its units are in Germany. Germans are notoriously cheap about travel lodging, as third-party data shows. So when the startup expands in France, Spain, and other markets, it should have more pricing power to generate higher margins.

LaSalle’s backing of Numa is significant because it could represent a big push by institutional capital to enter European hospitality.

• Startups like Numa target a segment that the Accors and Marriotts have broadly neglected: small, urban properties with fewer than 100 guestrooms.

• In Europe, a majority of hotels are less than 100 guestrooms.

• Numa represents a potential operating partner that can make these properties adequately profitable for institutional investors.

• Property owners can lease to Numa or sell to the LaSalle-Numa combination.

• Numa has no reception desks. Guests check in virtually, uploading photos of their identification documents. The data, such as name and date of birth, are extracted by software and checked for authenticity. Guests unlock their room doors digitally.

• The startup handles special requests, such as late check-in, remotely.

• About 60 percent of its technology stack, such as its pricing algorithm, was developed by its 40-member technical team, the company said.