The art of
Big swings are a top reason for Cloudbeds’ success.
The massive global accommodations sector ranges from hostels to motels, boutique properties, large chains, and a growing number of vacation and short-term rentals.
Vacation and short-term rentals, the industry’s fastest growing segment, now represent about 2.5M guest rooms, or about 14% of total.
In 2022, the Americas accounted for nearly half of the industry’s total revenue, followed by Europe (25%), APAC (22%), the Middle East (3%), and Africa (2%).
After COVID-19 cut industry revenue by more than half, the sector has rebounded but remains below its peak.
While “revenge travel,” the desire to travel more post-pandemic, is helping the industry rebound, remote work continues to dampen the recovery in business travel.
As the person overseeing engineering and product teams, Castle knew that building a similar product involved technical challenges. “MyAllocator was as good of a product as there was,” he says. “It had an incredible brand and reputation and was completely bootstrapped.” As he and Harris discussed the deal, they quickly came to a consensus that not going forward with the acquisition might be the greater risk for Cloudbeds. They negotiated a purchase price of $1 million—nearly half their cash on hand. The pair wrote a memo to the board, which unanimously signed off on the deal.
“Remote is a business strategy and how we see putting our strategy into action,” Harris says. If they want Cloudbeds to be everywhere in the world, their people should be free to live and work where they want.
Another gamble that paid off was the decision to anchor an engineering team of around 65 people in Ukraine, despite the risks of operating there since the Russian annexation of Crimea in 2014. While a few members have left the country since the Russian invasion began in February 2022, the bulk of the team remains there and highly engaged in their work, as Cloudbeds continues to support them by paying relocation expenses when necessary or by holding their jobs when employees are affected by blackouts or bombing raids in their region.
Harnessing risk strategically
Ultimately, entrepreneurs have only their instincts. They are focused on what Zloto sees as an “addressable market that today is probably a $3 billion opportunity.” They recognize that hospitality is far behind other major industries, ranking near the bottom of a digitization index created by McKinsey to measure the top 20 world industries, ahead of only agriculture and construction.
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