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Inspirato’s timely journey

Subscription travel sounds very of the moment as travelers, especially in the luxury class, have little tolerance for unwanted surprises when they actually do escape for vacations. Enter Inspirato, a high-end vacation club established in 2010 focused on providing consumers in North America with better choices, security and value for a sector that founder and CEO Brent Handler said historically has been lacking in innovation.

Handler, with no fundamental hospitality experience, said he started exploring the notion of being able to take his family, including two children, to a 5-star experience without having to book two rooms or one crowded hotel suite. By 2003, before Airbnb or Vrbo and when most villa rentals were only found in Europe and the Caribbean, he started Exclusive Resorts, which simply rented residences. He ended up selling the brand to entrepreneur Steve Case and by 2010 launched Inspirato in Denver, Colorado.

Inspirato is a different model, providing access to vacation homes, hotel rooms and experiences through two subscription memberships: Inspirato Club and Inspirato Pass. Handler spent five years creating the technology behind the brands, which features an algorithm that makes the economics of the pass work because many of the hotel rooms available to members are offered to him by hospitality firms at deep discounts. Inspirato can fill those rooms opaquely as many operators wish to avoid diminishing their brands by making discounted rates public. Members don’t know what the actual rates have been discounted to, but they know that a substantial amount of savings has been passed along to them through their subscription.

Inspirato Club members pay US$600 per month, which provides unlimited pay-as-you-go travel with no restrictions throughout the portfolio with privileges that include a dedicated “care team,” and more last-minute Jaunt access. For an additional US$300 per month, members can include Family Sharing for parents and adult children.

For Inspirato Pass, members pay US$2,500 per month to choose from more than 150,000 trips that are updated daily. They pay no nightly rates, taxes or fees. “It’s the original Netflix model,” Handler explained. “They would send you a disc, you could use it as long as you wanted, but you didn’t get a new one until you sent the disc back. With our Pass, it’s look, book, play, repeat.” There are no long-term commitments with either membership as members can cancel at any time.

Even during a pandemic

With more than 12,000 members, Handler told HOTELS the business is profitable and growing rapidly. He added revenues are “several hundred millions of dollars a year.” By adding the Pass concept on July 15, 2019, Inspirato generated US$75 million of recurring annual revenue from subscriptions by December 31, 2019, according to Handler.

“It's really up to us to decide how much we want to invest in growth and how much we want to invest in profitability. Either way, we’re going to continue to smartly invest in the category of subscription travel.” – Brent Handler
“It’s really up to us to decide how much we want to invest in growth and how much we want to invest in profitability. Either way, we’re going to continue to smartly invest in the category of subscription travel.” – Brent Handler

During this pandemic year, when Inspirato shut down from March through May, it weathered the storm by claiming force majeure on more than 50% of its leased units. “So we didn’t have to pay for inventory that we couldn’t use,” Handler said. “Our expenses were highly flexible and we were able to really thrive during the pandemic… When the city of Vail disallowed travelers that didn’t live there, it was not a big stretch to say, ‘We’re not paying rent.’”

Handler added that the vast majority of Pass subscribers stayed with Inspirato during the pandemic. “It’s back in swing and growing aggressively,” he said. As a result, Inspirato is adding to its inventory, which includes some 500 luxury hotels and more than 300 leased homes, much faster than it ever has.

“Because of the service and certainty and safety that Inspirato just naturally provides, combined with the value that you get by being a subscriber, we’re doing really well in terms of being a travel company,” Handler said. “We’ve had higher occupancy than any other time in the company’s history since reopening. July, August and September have broken all of our occupancy records.”

The case for hotels

Handler likes to brag about being the only truly opaque distribution channel for a hotel. “Every other distribution channel for a hotel has some nightly rate, whether that’s through Expedia, a wholesaler, a tour operator, or through group. There’s always a nightly rate.”

An Inspirato luxury vacation rental in San Diego, California
An Inspirato luxury vacation rental in San Diego, California

He said Inspirato uses buying logic to decide how many days and what room types will be made available for Pass holders, and no one ever sees the rate. “It’ll automatically distribute inventory based upon what that hotel is charging us. So, in Miami, for instance, it could be two nights at the Mandarin for a week from now, or four nights at a Grand Hyatt, and maybe you could get three nights at a Kimpton, but it’s a one-bedroom suite.”

Because the hotel never has to show anybody the rate, Inspirato becomes a mechanism for owners to distribute expensive inventory that too often sits vacant. “We give them a safe way to make that inventory available to a high net worth customer,” Handler said, adding it would not be uncommon for Inspirato to pay a couple hundred dollars a night for rooms that would ordinarily charge US$1,000.

Growth story

Inspirato generally leases a vacation-style home for about five years, furnishes it, provides concierge service and essentially manages the experience at a luxury level.

While its customer base isn’t global, its inventory of homes and hotels is. “If there was not a pandemic, we would have all of Asia, Europe, Australia and New Zealand,” he said. The inventory for Pass also typically includes cruise ships, experiences like rentals in Augusta, Georgia, during The Masters golf tournament, and bicycle trips.

Handler said Inspirato is just scratching the surface on growth as interest in this model grows with consumers and hotel owners. “We have never had more inbound inquiries from hotel owners than we do now,” he said.

Handler likes to compare subscription travel to current phenomena like connected fitness. “Five years ago, when John Foley, the CEO of Peloton, talked about it, nobody knew what he was talking about. Everybody thought that it was crazy because why would anybody want to spend the money on a bike where you could have a live experience?”

Today, the vitals on Peloton are very strong, and the same is true of Inspirato, Handler said. “It’s really up to us to decide how much we want to invest in growth and how much we want to invest in profitability. Either way, we’re going to continue to smartly invest in the category of subscription travel.”

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