How crowdfunding is changing the luxury hotel industry
If a travel jacket raising $9 million on Kickstarter proves anything, it’s that crowdfunding is as good for generating cash as it is for buzz.
And it’s not only startups getting into the “campaigns and contributions” game these days. Now, luxury hotels are sticking their hand into that cookie jar, as well. Of course, it’s not really for the money though.
For some hotels, Crowdfunding has basically become the new version of a hotel rewards program. And pledging money gets you more than a crappy t-shirt or a signed postcard, but also a lifetime of luxury perks and service as a pseudo-hotel owner.
Take for example the Hard Rock, which last year crowdfunded a $1.5 million renovation of its Palm Springs property. For a minimum pledge of $10,000, investors earned better bookings, room-rate discounts and free access to an exclusive poolside cabana.
Steve Cinelli of the home-equity platform Primarq told Bloomberg:
With crowdfunding in the lodging space, what you’re looking to do is not just provide a stake in a hotel but also perks. Besides raising capital, you’re building an audience. That’s why lodging makes so much sense for crowdfunding.
Now New York real estate firm Synapse Development Group is raising money for a high-tech hotel in San Francisco. The new YOTEL property will be converted from a former office building. Synapse CEO Justin Palmer told CNBC that by crowdfunding – but only for less than 15% equity – the firm wants to draw in a “young, millennial, tech-heavy crowd.” He said:
It’s a good way to encourage local buy-in on the project. These people can reap investment benefits as owners and also actually visit the property, go to the restaurant, the roof top bar and get owners’ discounts on room rates.
According to the property listing on the real estate crowdfunding site Real Crowd, a $25,000 investment gets you a limited edition mini poster, t-shirt (OK, fine. I guess some places still think you want that crappy T-shirt) and a member card good for all YOTELS. For $250,000, you get an annual private rooftop party, invitations to exclusive hospitality event and a cocktail named after you.
If Synapse’s campaign is successful, hotel crowdfunding could start happening a lot more often. But for a taste of ownership that rich, you’re probably better off backing some new gadget or a travel pillow.
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