What Happened To Stay Alfred & Why Did It Fail?

Stay Alfred was a short-term rental company offering upscale vacation rentals in urban locations. Founded in 2011, it quickly expanded to over 2,500 units in 33 cities. However, the COVID-19 pandemic and a failure to secure new funding led to its permanent closure in 2020.

What Was Stay Alfred?

Stay Alfred offered upscale travel apartments in prime downtown locations, blending the comfort of home with hotel reliability. Its unique value proposition lay in providing consistent, high-quality short-term rentals in urban settings. Notably, the company reached $100 million in revenue in 2019 and expanded to over 2,500 units in 33 cities.

What Happened to Stay Alfred?

The story of Stay Alfred is a compelling narrative of rapid growth and sudden decline, marked by several pivotal moments:

• Rapid Growth and Expansion: Stay Alfred experienced significant growth, with revenue jumping from $25.2 million in 2016 to over $100 million in 2019. The company expanded its rental inventory from 1,500 units in 32 cities to more than 2,500 units in 33 cities by the end of 2019.
• Financial Struggles: Despite raising around $60 million in funding, Stay Alfred faced financial difficulties. The global lockdown caused by the COVID-19 pandemic, coupled with a failure to secure new funding, forced the company to close its doors permanently.
• Strategic Decisions: The company attempted to secure up to $30 million in new funding as recently as March 2020. However, the lack of investor interest and the challenges of selling off assets left the company with no viable options to continue operations.
• Market Positioning: Stay Alfred was recognized as one of the fastest-growing private companies in the U.S. by Inc. magazine. The company managed vacation rental properties in exchange for a commission fee, advertising these rentals on various websites.
• Impact of COVID-19: The pandemic had a devastating impact on Stay Alfred, leading to a significant drop in bookings and revenue. The company's business model, which relied heavily on short-term rentals in urban locations, was particularly vulnerable to the travel restrictions and economic downturn caused by the pandemic.

When Did Stay Alfred Shut Down?

Stay Alfred shut down permanently on May 20, 2020, as reported by the Spokane Journal of Business. The company was severely impacted by the COVID-19 pandemic, which led to a sudden halt in revenue and a loss of investor interest.

Why Did Stay Alfred Shut Down?

1. COVID-19 Pandemic Impact:

   The coronavirus pandemic and resulting travel bans abruptly halted Stay Alfred's ability to generate revenue. The company's business model, heavily reliant on short-term rentals in urban locations, was particularly vulnerable to the travel restrictions and economic downturn caused by the pandemic.

2. Failed Funding Attempts:

   In early March 2020, Stay Alfred was in talks with investors to secure up to $30 million in funding. However, the pandemic caused potential investors to withdraw, leaving the company without the necessary financial support to continue operations.

3. Business Model Flaws:

   The reliance on renting properties rather than owning them was identified as a fundamental flaw in Stay Alfred's business model. This approach made the company more vulnerable to market fluctuations and less resilient in times of financial stress.

4. Market Conditions:

   Stay Alfred faced significant challenges in selling off its assets due to a lack of buyers in the market. The unfavorable capital-raising environment and challenging real estate conditions further exacerbated the company's financial struggles.

5. Employee Layoffs:

   The company had to furlough employees and eventually reduced its workforce from 221 to roughly 50 employees. This drastic reduction in staff was a direct result of the financial pressures and operational difficulties faced by Stay Alfred during the pandemic.

Lessons Learned from Stay Alfred's Failure

• Adaptability: Ensure your business model can quickly adapt to unforeseen market changes and economic downturns.
• Diversified Revenue Streams: Avoid over-reliance on a single revenue source to mitigate risks during market fluctuations.
• Investor Relations: Maintain strong relationships with investors and have contingency plans for securing funding during crises.
• Asset Ownership: Consider owning key assets to provide more stability and control over your business operations.
• Market Research: Continuously analyze market conditions to anticipate challenges and adjust strategies accordingly.
• Employee Management: Develop a robust plan for workforce management during financial stress to retain essential talent.
• Financial Resilience: Build a financial cushion to weather unexpected downturns and maintain operational continuity.
• Strategic Planning: Regularly revisit and revise your strategic plans to align with current market realities and future projections.

We Shut Down Startups

Stay Alfred's story is a stark reminder of how quickly a thriving business can face insurmountable challenges. If your startup is facing a similar fate, Sunset can help you navigate the complex process of winding down.

Sunset takes care of all the legal, tax, and operational burdens, allowing you to avoid penalties and reduce liabilities. Book a demo today to see how we can assist you in moving on to your next venture seamlessly.