The bubble has burst

It’s sad to have to report on the ultimate demise of Stay Alfred, even though the news was not unexpected. It’s symbolic of just how hard the pandemic has hit the hospitality industry that companies which have raised spectacular sums in recent years have been forced to fold.

Those who have adopted the master lease model have been particularly badly hit – indeed, Stay Alfred founder Jordan Allen has already said that in hindsight, he would have looked to adopt more of an ownership business model rather than concentrating so heavily on master leases.

Stay Alfred had raised around $60 million in funding, with its most recent round coming in at $47 million around 18 months ago – but with a lot of empty buildings and rent to pay on them, any enforced restrictions on travel spell trouble, and fast.

Back in September, my colleague Paul Stevens wrote a piece on our sister website ShortTermRentalz.com, called The master lease model: is the bubble about to burst? In the article he pointed out some of the inherent risks in the master lease business model, even in normal trading conditions. Unfortunately Stay Alfred is unlikely to be the last of its ilk forced to close. Many of these companies have been formed by dynamic young entrepreneurs such as Allen, and I am sure they’ll dust themselves off and come back stronger.