Luxury travel company Inspirato is planning to go public through a merger with Thayer Ventures Acquisition Corp. The transaction values the combined company at an estimated enterprise value of approximately $1.1 billion.

 

Background

Inspirato was founded in 2011 by brothers Brad and Brent Handler who had also co-founded destination club Exclusive Resorts before selling it to Steve Case.

The club started out by offering members access to a portfolio of luxury vacation homes that the club leased, managed, controlled and maintained. To help fund growth Inspirato raised approximately $80 million in funding from some leading venture capital and private equity firms.

In 2019 the club launched Inspirato Pass a novel subscription travel program, allowing members unlimited all-inclusive vacations. Then earlier this year they changed the original Inspirato Club membership into a monthly subscription model, but still with additional payments for each trip that a member books with the club. 

According to the investor presentation Inspirato has over 12,500 subscribing members, of which 82% are married and 67% have a household income of over $250,000. Approximately 60% of the members are between 45 and 64 years of age.

These members have access to 385+ luxury residences in 80+ destinations, 500+ partner hotels and resorts and multiple experiences and events. Inspirato says its members have taken over 686,000 nights of travel with the club since it was founded.

Business Model

Part of the appeal of an Inspirato membership is that it can provide access to multiple luxury hotels around the world at member only rates. Inspirato says that there is 32% spoilage in the hotel industry, meaning that 372,000 luxury hotel nights a day, equivalent to 136 million each year go unused. This represents a value of $39bn a year. The hotels do not want to directly discount their rooms, for fear of devaluing their luxury brands. So the Inspirato Pass model, with its flat rate monthly subscription for members, provides the hotels a way to fill their rooms and still offer Inspirato members a potential good deal on this accommodation, without anyone seeing the underlying cost or pricing.

Inspirato notes that it has 170,000+ available Inspirato Pass Trips, across all types of travel, including hotels. The investor presentation says that 55% of Pass reservations are made for travel 3+ months out, 12% are made with a booking window of less than one month and the balance 33% are made for trips 2-3 months out.

The total nights booked and new subscriber additions have rebounded from pandemic lows, says Inspirato, with 50,180 nights booked in Q1’21 and 714 new members joining in this period.

Overall it is expecting revenue of $222m in 2021, up from a covid reduced $165m in 2020 and is forecasting to roughly double membership subscribers by 2025.

Transaction Overview

The transaction values the combined company (Inspirato + Thayer Ventures Acquisition Corp) at an estimated pro forma enterprise value of approximately $1.1 billion and is expected to provide up to $260 million in net cash for the company.

The company says these proceeds from the transaction will be used to accelerate new subscriber acquisition, expand Inspirato’s property portfolio, advance its subscription technology, and invest in product extensions and adjacent luxury lifestyle markets.

The transaction with Thayer Ventures Acquisition is expected to close in the fourth quarter of 2021, when Inspirato stock is expected to be listed on Nasdaq under the ticker symbol “ISPO.”

“We are excited to enter a new chapter of growth and innovation with Thayer. With this announcement, we are well positioned to expand our vision of revolutionizing luxury travel through our simple and intuitive consumer subscriptions,” said Brent Handler, Founder & CEO of Inspirato.

Management

The combined company will continue to be led by founder and CEO Brent Handler, founder and Executive Chairman of the Board Brad Handler, President David Kallery, and CFO Web Neighbor. Chris Hemmeter, Co-CEO of Thayer, will join the combined company’s Board of Directors.

Comment

Inspirato raised a lot of investor funding as it grew, so was expected to go public or be acquired at some stage. This transaction gives it a lot of new money, $260m, to further grow its offerings and increase its membership base., so it will be interesting to see what this growth entails.

It joins Wheels Up, another subscription membership based, high end travel company – in this case in private aviation – that also plans to go public in 2021 via a special purpose acquisition company (SPAC).