US: New York-based apartment-hotel hospitality brand Domio has denied that it is planning to shutter permanently and sell off its remaining assets, as two investors in the company and documents viewed by The Information alleged.
Instead, the company confirmed to ShortTermRentalz in a statement that it was “in the midst of a planned financial re-engineering across all facets of its business”. Domio added that the majority of properties would continue to serve its customers and new units will be added, while plans remain in place to open three new properties before the end of the year: Domio Bal Harbor, Miami, Florida; Domio Grand Reserve, PR; and Domio Tulum, Mexico.
Domio CEO Jim Mrha said: “Domio properties are open for business and the Domio team continues to serve our guests and stakeholders.
He added: “The Domio team continues to work tirelessly to serve our guests and stakeholders, maintaining a 74 per cent occupancy rate in October. Domio is grateful for the continued commitment and dedication of our team as we work through the next phase of our business.
The news comes less than two months after its co-founders resigned due to an investigation by Airbnb over alleged malpractice and violation of its trust and safety standards.
Founded in 2016, Domio is believed to have been unsuccessful in its attempts to raise at least $10 million in capital, according to investors with knowledge of the matter. The short-term rental startup made the majority of its team redundant earlier this month and opted to pursue a course of “financial re-engineering” an “Assignment for the Benefit of Creditors [ABC] process, which includes a realignment of its portfolio.
The Information also reported that Domio received a loan of between $2 million and $5 million under the Payroll Protection Program in April.
CEO Jay Roberts and CSO Adrian Lam stepped down in September with immediate effect after a report published the previous month by The Information accused Domio of alleged malpractice surrounding a “sequence of possible shoddy business practices, such as fake host names and misleading Airbnb accounts”. Interviews were conducted with more than 20 then-current and former members of staff, while a review of court records was carried out.
CFO Mrha stepped in as interim CEO.
The company, which designs then rents out aparthotels and furnished apartments on a short-term basis, saw its host accounts and listings delisted from Airbnb in the aftermath of the malpractice allegations. However, the listings were restored once Roberts’ and Lam’s departures were confirmed.
There was no suggestion that Roberts or Lam had carried out any illegal activity themselves, with Domio issuing a statement referring to any illegal activity as not having taken place for a number of years. Airbnb’s statement supported the claim by saying that the incumbent Domio leadership team had joined the company back in 2018, after the “unacceptable activity” had stopped and the hospitality brand had agreed to comply with Airbnb’s standards.
Airbnb was reported to have given Domio a “final warning” and warned that any further breaches of its set standards would likely result in and end to the companies’ collaboration.
Domio had progressively pivoted away from a master lease model towards franchising, and just last month, the startup was scheduled to open the first brand managed project that it was not directly leasing, in Tulum, which would also be its first international property. Prior to that, Domio raised $100 million last December to expand its business in the United States and into 25 global markets by the end of 2020.
The Series B funding included $50 million in equity and $50 million in debt and was led by GGV Capital, with participation from Eldridge Industries, 3L Capital, Tribeca Venture Partners, SoftBank NY, Tenaya Capital and Upper90.
Roberts discussed Domio’s shift to a management and franchising model, as well as the introduction of in-room technology post-Covid-19 and the rebounds of leisure and business travel, when he joined an episode of the ShortTermRentalz podcast back in July, two months before his resignation.
Business casualties in the short-term rental space during the pandemic that have operated using a master lease model include Spokane-based apartment rental startup Stay Alfred, which closed down in May despite having raised around $60 million in funding, while Mint House has taken over the sole remaining Lyric-branded location in New York City.