Airbnb-backed Lyric lays off 20% of staff

Lyric, the Airbnb-backed hospitality startup that caters to business travelers, has laid off nearly 20 percent of its staff, The Real Deal has learned.

The San Francisco-based company, which partners with multifamily landlords to offer apartments to business travelers, laid off at least 25 of its 120 staffers on February 5 amid a “downsizing and restructuring” whereby it also plans to close nearly 200 units nationwide, sources said.

Founded in 2014, Lyric operated nearly 600 units in 14 cities around the country at the end of last year. The layoff comes less than a year after raising $160 million from Airbnb, RXR Realty and Tishman Speyer.

According to sources, the first indication of the layoff was a Feb. 5 calendar invite to staffers, sent by CEO Andrew Kitchell at 9:38 a.m., for a meeting at 10:35 a.m. When they got there, the chief executive didn’t mince words.
“All Andrew said was, ‘I’m not going to sugar coat this. Today will be your last day,’” recalled one former staffer, who said the group was given boxes and told to leave the building by noon. “You could see people crying,” the former staffer said, adding that email and Slack accounts were deactivated by the time they returned to their desks less than 25 minutes later.

In a statement, Lyric said that as it seeks a sustainable business model, it has started focusing on “larger projects with increased density” in some of its best-performing cities.

“That means not only restructuring our operations but the teams that support each function, all with aim of creating a sustainable growth model and even better guest experience,” the statement said.

Among those who were let go include two vice presidents of real estate along with an interior designer, brand manager and several people in finance, according to a document circulated among ex-staffers and reviewed by TRD, which listed the names of those let go.

“I think it was not an easy decision; I think it was one they had to make,” said a former executive, who spoke on the condition of anonymity citing a separation agreement with Lyric. “There’s not much viability if they kept the amount of people they had.”

At an all-hands meeting in January, sources said, Lyric disclosed to employees that it missed its 2019 revenue target and would close some locations in order to focus on better-performing markets.

In a slide shared with employees, a copy of which was reviewed by TRD, Lyric listed units it planned to “ditch” and “keep.” In all, it planned to close 193 units in Philadelphia, Houston, Dallas, Pittsburgh, Orlando, Minneapolis, Washington, D.C., and Chicago. It planned to keep 418 units in New York City, San Diego, Philadelphia, New Orleans, Miami, Charlotte, Austin and D.C.

Sources said Lyric’s New York location, at 70 Pine Street, was among the only locations that is performing well. The company signed a long-term lease for 132 rooms there in May 2019, about a month after closing its $160 million Series B.

To date, the company has raised $180 million from investors including RXR Realty and Tishman Speyer, investor Adam Bain, Fifth Wall Ventures, Barry Sternlicht, NEA and Tusk Ventures. The $160 million round was supposed to allow the firm to double in size from 500 units to 1,000 units nationwide.

Over the past year, startups — including Lyric, Domio and Sonder — and hospitality companies have ramped up professionally managed “apartment hotels.” Airbnb itself partnered with RXR to convert 10 floors at 75 Rockefeller Plaza into short-term rentals. And in January, Austin-based The Guild, which bills itself as a cross between Airbnb and a corporate-stay hotel, raised $25 million for a total of $32 million since 2016.

— Additional reporting by David Jeans

Write to E.B. Solomont at eb@therealdeal.com

Read more

New York

This Airbnb-backed startup is opening a New York location this fall

New York

Airbnb leads $160M funding round alongside RXR, Tishman for hospitality startup

Los Angeles

Startups and hospitality giants are embracing "apartment hotels"