US: Seattle based hybrid short-term rental firm Loftium has struggled to stay afloat due to the travel drop caused by the global pandemic.
According to The Seattle Times, the company has laid off approximately half of its staff and has begun withholding lease payments to its landlords.
Loftium was founded in 2017 as a platform that would provide discounted tenancies while managing tenants and short-term rentals for landlords. It leased around 700 units in total, mostly in Seattle, but also in Atlanta, Charlotte, Dallas, the Bay Area, and Portland, with plans to expand by the end of the year.
However, the pandemic has led the company to heavily cut expenses, laying off 60 per cent of employees in March and cutting early-stage contracts, reducing its property count to 465. This week, many of the company’s full-time tenants received an email which they interpreted as a potential threat to raise rents.
According to Loftium, these measures, in addition to the lease withholding, are due to the loss of Airbnb income. The company has noted that until now, rent payments had been prompt, and that it was committed to passing rent along to landlords.
Loftium CEO Yifan Zhang said in an email: “[We have] done our best to react quickly in navigating unprecedented situations. I certainly did not foresee the scenario that we’re all now living through, with a pandemic shutting down travel across the world.”
The company has used the CARES ACT, the $3 trillion coronavirus economic support programme, in order to justify limited rent payments. The act protects tenants in properties with federally backed mortgages from eviction, with Loftium claiming that it cannot be evicted as a result.
Business across the short-term rentals industry have had to make major changes due to the impact of the global pandemic. In March, Sonder cut its workforce by a third, while Zeus Living has laid off 156 staff members thus far.