Inspired, a subscription-based luxury travel company offering vacation rentals and apartment stays around the world, on Wednesday announced its plans to merge with blank check company Thayer Ventures Acquisition Corp.
The transaction would give Denver-based Inspirato an enterprise value of $ 1.1 billion and lead to its public listing on the Nasdaq Stock Exchange under the symbol ISPO.
The merger is expected to be finalized in the fourth quarter. Founder and CEO Brent Handler will continue to lead the company. His brother and co-founder Brad Handler will serve as executive chairman.
Inspirato has approximately 12,500 subscribers on two main products. Executives forecast a 17% compound annual growth rate for subscribers.
Its subscription, launched in 2019, costs around $ 2,500 per month to book travel to vacation homes and hotels. Subscribers can choose from a travel list that typically includes over 150,000 combinations of luxury homes, hotels and experiences.
The company manages and controls these homes and hotel stays through leases and other exclusive agreements, much like a hotel brand manages and controls real estate owned and operated by others. In vacation homes, she sets up her own furnishing staff and manages concierge services.
The company estimated that it spent an average of $ 5,350 to acquire each new subscriber, who pays between $ 30,000 and $ 32,500 per year.
The company also offers a $ 600 per month club membership which allows customers to access reservations at discounted rates per night.
“When we founded this SPAC, we were looking for a partner who cracked the code with a differentiated business model for long-term sustainable growth and uplift,” said Thayer Ventures managing partner Chris Hemmeter at a press conference Wednesday. “We found him.”
The combined company is expected to have a balance sheet of over $ 260 million in net cash, assuming no buyouts by their shareholders.
A private investment in a public capital transaction, or PIPE, will contribute approximately $ 100 million to the transaction. PIPE is led by Janus Henderson Investors and Rodina, and includes additional capital from Kleiner Perkins, IVP, company founders and others. Inspirato had raised around $ 85 million in venture capital.
“While hotel companies pay millions of dollars to entice their guests to travel with them, the reverse is true with Inspirato,” said Brett Handler. “Our subscribers pay us to be able to travel within our platform. “
Resilience for subscription travel during the pandemic
Inspirato took a heavy hit with the pandemic which took a toll on 2020 revenue when it only generated $ 165 million.
“We still managed in 2020 to achieve, on an adjusted EBITDA [earnings before interest, taxes, depreciation, and amortization] base to earn almost $ 10 million and had positive cash flow, ”Handler said. “We were able to do this because of the flexibility offered by this model, allowing us to exit 88% of our leases in one year for convenience and 87% of our leases have force majeure clauses. “
Executives predict a return to pre-pandemic revenue growth this year. In the first quarter of 2021, he booked 50,000 overnight stays.
The company predicted that it would generate $ 149 million in annualized recurring revenue by the end of the fourth quarter of 2022 and that its revenue would grow at a compound annual growth rate of 41% between 2021 and 2025.
Luxury hotel companies love the subscription model as a way to guarantee room occupancy and reduce the ‘spoilage’ or vacancies that could have claimed around $ 39 billion in revenue in 2019 if the rooms had been occupied. at average rates. However, it is not clear to what extent there could be cannibalization between sales in a subscription model compared to a traditional model.
Brent Handler had publicized the company’s breakout subscription model for its ‘pass’ product to change the World Forum 2019 (video, here), and Skift has it covered The traction of Inspirato subscriptions for a while.
Handler said Inspirato believes its “usable addressable market” for luxury subscription hosting in the United States will grow from $ 100 billion this year to $ 175 billion by 2025.
“We passionately believe subscription travel will be a multi-billion dollar category very soon based on our own estimates and third-party research,” Handler said Wednesday. “Travel is one of the last categories of consumers that has yet to be subscribed. “
Photo credit: Inspirato vacation rental property at a resort in Los Cabos, Mexico. Inspired