How Selina lost its way

A few years ago, I spent a month traveling around the Alps while trail running and working remotely. My travels took me to Bad Gastein, a village in central Austria. This Austrian spa town (“Bad” means “spa”) sits nestled in a valley of the High Tauern mountains, and is known for its thermal baths, unique architecture, and skiing in the winter. I stayed at a Selina property for a week, a global lifestyle hotel brand that had a focus on “digital nomad” and younger travelers – I utilized their co-working facilities during the day and explored the surrounding trails in the mornings and evenings.

A few weeks ago, Selina effectively ceded control of the company’s affairs, business, and property to administrators. The company faces insolvency after failing to pay interest on a half-million dollar interest payment to a unit of the Inter-American Development Bank. They previously raised over $500 million dollars to fund their millennial focused hotels – nearly all of that...gone. The precipitous collapse raises some interesting questions about travel trend the future of digital nomadism and remote work, and how travel companies choose to scale.

How we got here

Selina is a well-known hotel/hostel brand — they got their start in Central and South America, but over the years made inroads elsewhere, opening locations in Portugal, Greece, Israel, the UK, Austria, the United States, and Australia. The brand positioned itself at the intersection of travel and work; most of their properties have dedicated co-working spaces included or available for an additional fee. Naturally, this was an attraction for me as a solo traveler also working full time. They grew to over 100 properties at their peak, following a tried and true model of adapting older, underserved properties and flipping them into “hip” destinations that attract younger travelers (I’ve previously written about how to flip a hip, outdoorsy motel).

Selina rode the growth of digital nomads and increased travel + tourism, raising millions upon millions of dollars, despite concerns about finances. They were billed by Forbes as the “Digital Nomad Hotel of the Future”. They acquired remote work and travel company Remote Year in 2020 (a soft landing due to COVID related struggles), attributing the acquisition as part of a plan to “double down on its stay, play and ‘work from anywhere’ model”. They eventually went public as a special purpose acquisition company, or SPAC, in 2022, raising $1.2 billion in the process.

Problems in paradise

Selina never owned the vast majority of its properties, which is not an uncommon practice in the hotel space, but it was an anomaly in how consistently it lost money on operating costs. The company also invested heavily in technology, developing its own booking platform, app, and membership model. They tried to take a “tech” growth approach to an old and well understood industry, real estate and hospitality, an industry that is more traditionally known for conservative, measured growth. Their target consumer base of young, digital friendly, long-term stay travelers couldn’t fill the  beds – their occupancy rate in 2023 was around 47%, an increase from the previous year's 33% (a good hotel occupancy rate is usually 60-70%+). Much like WeWork (who’s founder Adam Neuman was also an investor in Selina, and recently bought the magazine Whalebone 🤷‍♂️) losses spiraled out of control and no amount of “tech” innovations could combat that. The stock cratered basically to zero.

Travelers want consistency in accommodation

We’ve seen a shift from short-term rentals back towards traditional hotels in many places. Inconsistent pricing, experience, and unreliable experiences mean that many travelers are returning the security of a traditional hotel over the flexibility of Airbnb. And, while Selina wasn’t an STR company, not only were they offering an inconsistent experience, but it was often *more* expensive than other local lodging options (both short and long term). There’s no doubt that the growth of Airbnb and other unique offerings (like Selina) has forced hotels to up their game. But, they’re catching up. Many now integrate excellent working areas (goodbye to the depressing “business centers”), and as an added bonus, you don’t have to take the trash out, or do the laundry as a “check out” task.

The property I stayed at in Bad Gastein was an interesting example – it’s an old, legacy hotel that had lost much of its charm and luster over the years. Some of that was apparent in the quirkiness of the property and rooms, and the overall quality of the space. The “co-working space” was just a converted dining/ballroom with some mismatched furniture scattered about. Fine for my purposes, but by no means ‘purpose-built’.

Additionally, ski towns in the alps can be quiet in the summer — many restaurants and hotels are closed for the season. Fewer lodging options means a wide range of ages and traveler types at the options that are still open. This would normally be fine, but it was clear that Selina wanted to curate a *particular* vibe. They hosted an electronic music “festival” over the weekend and tried to attract young, hip people from nearby Salzburg (they also kicked me out of the co-working area so they could covert it to space for a DJ). As a 30-something who has migrated away from late-night party traveling, I almost felt like I was *far* from Selina’s target audience, and many of the other guests staying at the property clearly weren’t enthused about the type of hotel they had inadvertently booked.

My perspective wasn't unique, you don't have to search long online to find other digital nomads who were disappointed in the disconnect between how Selina billed themselves (as a great long-term stay spot for remote workers) and the reality of many properties (a pretty cheap, if well branded, backpackers hostel).

Does this have implications for the state of the “digital nomad” space?

When I started digging into this story, I initially thought that it might be an interesting bellwether for the state of travel and digital nomadism. However, now knowing the details, I’m less sure. I wouldn’t say that this has any particular direct correlation with the state of the digital nomad space. The Selina situation reeks of mismanagement and a lack of cohesive vision, and a wandering focus that led to an experience that wasn't great for the people they billed as their target customer.

But, I’m still seeing some contradictory trends emerging with regard to remote work, travel, and “digital nomads. My perspective has long been that most people aren’t cut out to be true “digital nomads” and that we’d see a leveling off or decline of the trend. Also, some millennials (which make up a majority of digital nomads) are getting older and finally choosing to settle down. There’s also an increasing trend towards “back to the office” policies for many companies, who either want people nearby or in-office. “There has been a significant decrease in remote job openings over the last six months of more than 20 percent,” said Evan Sohn, the CEO of Aura, a workforce insights platform (SHRM). Even Patagonia recently moved to a hybrid model after previously promising employees they’d be able to work remotely. They gave some staff 3 days to decide whether they’d relocate or quit.

On the other hand, a tough job market, inflation, and increased inaccessibility of housing prices has affected the other direction as well. Why waste thousands of dollars a month in high rent areas when you could (hopefully) find remote work and spend less money? If you don’t feel like you’ll ever be able to afford a house and put down roots, why bother? Why spend all your income on rent and never be able to travel, when you could just live somewhere more interesting or pursue a more nomadic lifestyle? The younger you are, the more likely they are to want to work from wherever they want. 58% of digital nomads are in either Gen Z (21%) or millennials (37%). And 59% of digital nomads say they plan to continue their lifestyle (Forbes).

Overall, it’s an interesting microcosm of companies identifying a burgeoning trend, finding some success, riding that trend, and then dramatically overextending themselves. And while it may not be the canary in the coal mine that I thought it might be, it’s still a cautionary tale for travel businesses about the dangers of tying themselves too tightly to a particular trend (and failing to adapt or provide a consistent level of experience).

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