It is being reported that Madrid based specialist rental portal Spotahome is being forced to make drastic cuts in order to survive the global economic crisis. According to lainformacion.com, the company will be consolidating all operations and shutting down all offices outside of the Spanish capital. The measures are likely to mean dozens of redundancies on top of those already enacted in February. Negotiations with employee representatives are said to be ongoing and the number of staff to be let go may well represent a significant percentage of the roughly 250 that the firm has across its European offices.
Among those employees reported to be leaving are many of the C-Level star executives brought in from luminary firms such as Uber, Amazon and Trip Adviser over the last year or so who have been based in Spotahome’s London office. Spotahome CEO and Founder Alejandro Artacho had been on record as recently as the 21st of April as saying that some of these expensive appointments had not worked out.
Apart from the current economic crisis, Spotahome’s investors may well have demanded such harsh cutbacks behind the scenes. The company went cap in hand to investors at the start of 2020 after failing to turn a profit from its 2018 series B round led by Silicon Valley mega-fund Kleiner Perkins. The startup’s financial results for 2018 showed an operating loss of some 12 million euros, and although the results for 2019 have not yet been released, they are not expected to be any better. The dwindling booking numbers over the last couple of months may well have been the catalyst to demand extreme measures for those who have sunk capital into the company.
Although Spotahome is recognised as a pioneer of distanced viewings and digitised transactions long before the pandemic made them must-haves, the fact is that its core business is housing temporary workers and Erasmus students. The downturn in fortunes was on the cards as soon as borders closed. We’ve seen other short term rental companies such as Airbnb try to pivot the business model towards longer-term lettings as they have struggled badly both in terms of consumer demand and inventory. It will be interesting to see if Spotahome does something similar.
