Observations from Selina's 2022 Investor Deck
Getting into the weeds with one of the world's fastest-growing coliving brands.
What is Selina and why write about it?
Selina is a rapidly-growing coliving brand with a strong foothold in the Latin American market and a scaling global presence. It’s one of the largest and best-known communities for remote workers and digital nomads.
I stayed in one in Mexico last year and recently was sent their 2022 investor report (you can read all 53 slides here). I’m generally bullish on how they have created a consistent experience that caters to younger travelers. In today’s post, I highlight things that make me excited about their growth prospects, while also identifying a few challenges they may face.
I’m not an investor in Selina but I hope they succeed. It’s a wonderful thing to live in environments that blend work and travel with authentic, local experiences.
Stats Corner:
A few numbers that stood out to me from the report before we dive deeper.
Selina (almost 8 years old at the time the report was published) has 40,000 beds across 155 locations in 25 countries.
They also have $350 million in available capital commitments, with ambitions of tripling their bed space by the end of 2025.
By January 2022, they had hosted one million unique guests, 66% of whom made a new friend.
Selina is able to convert a property in 120 days (from the time they receive the keys) to be ready for folks to visit. That implies that they have built a sophisticated playbook that enables a repeatable renovation process.
Analysis: Bull Case
Beyond the quick stats, here is why Selina could become a massive success.
Their offering is dramatically more appealing than the alternatives (hostels, hotels, short-term rentals).
By designing a space and providing programming specifically for the nomadic remote worker, Selina is more able to provide the full-stack of amenities, programming, and facilitated connection that their customers are seeking, and at a price point that isn’t a non-starter (they’re still decently pricey).
Their target market (Gen Z and Millennials) is ready and able to spend on travel. 78% of that market prefers to spend their surplus capital on experiences rather than things, and they also account for $350 billion in travel spending each year, yet only 2 of 159 brands owned by large hotel brands have been developed for this market segment.
The density of their beds/location has more than doubled since they started, from 125 beds/location to 258 beds/location. This is an intentional choice, which enables there to be twice as many people in a space (usually they lease properties that were formerly hotels/hostels). Guests are twice as likely to have a serendipitous, organic encounter with a stranger/new friend (see more below).
Selina’s reputation among expats and nomads make it a local hub, even for non-customers. When I was in Puerto Escondido last year, I wasn’t initially staying at a Selina, but I still went there every day to cowork or eat lunch, knowing that I’d be much more likely to find a new friend than anywhere else. Making new friends will make me more likely to recommend Selina to other friends (in tech this is often referred to as a “Net Promoter Score”). Consistently delivering on a friend-making experience creates heightened brand loyalty.
Selina’s top-performing properties (by profitability) are in developed markets, but most of their current properties are in emerging markets. As their brand matures and they deploy their fresh capital, they will enter more developed markets where they will be able to benefit from higher profitability and increased revenue per bed.
Their acquisition of Remote Year (another leading coliving + travel brand) can drive community growth and further solidify Selina as a market leader, particularly with strong alignment across wellness and travel programming.
Selina now offers a subscription coliving offering (you can live in any three Selinas each month), which is a comprehensive full-time option for digital nomads (or full-time virtual students). Few brands rival Selina’s breadth of offerings around the world. The starting price point is only $360/month! This will be a great way to draw more people into a nomadic, coliving-fueled adventure.
Analysis: Bear Case
Beyond the stats, here are a few reasons why I hesitate to definitively declare Selina the permanent blended work-travel leader.
A bear market and a looming recession could limit growth. Growth ambitions from this report can’t be fully trusted amid rising interest rates and a turning market. Will their external funding slow amid fears of a recession? Will tech workers (recently laid off by the tens of thousands) still frequent Selina’s properties?
Families and even older couples are much less likely to visit a Selina. This is not necessarily a knock on Selina - families aren’t their target customer. But with Selinas higher price point (compared to a normal hostel or even some Airbnbs), they’ll have to sell their service mostly to more affluent nomads rather than households who are later in their careers with higher income levels.
This is a personal one, but I found it difficult to sleep at Selina (they were hosting parties every night). The always-party culture at some of their locations is fun but not necessarily sustainable for remote workers. I recommend ear plugs for travelers and better sound proofing to any Selina employees reading this.
There’s still uncertainty about the prevalence of remote work. While it certainly will continue to be allowed by some companies, much of the data from this report is based on remote work trends from 2021 and 2022 when the world was still watching coronavirus developments and waiting to make more permanent decisions about remote work policies. Even hybrid office work requirements would dramatically shrink the percentage of people who could feasibly work and travel at the same time.
How permanent is Selina’s sense of community? With such a transient customer base that anybody can join, will customers only ever develop temporary, more shallow relationships with each other? There’s no evidence in the deck that Selina is struggling with this, but it’s probably too early in the company’s lifecycle to understand if something like their subscription coliving offering has staying power. WeWork is an example of a community-based, asset-light company that grew too quickly - can Selina grow more intentionally?
Based on the definition for community above, Selina has done an impressive job of getting over a million nomads enthusiastic about coliving. The next few years will demonstrate if Selina will be a premium hospitality brand that will compete on the world stage for decades.
Thanks for sharing Jackson, really interesting take. I didn't realize that Selina was publicly traded so it's super insightful to read their investors deck and understand the inner workings behind the business.
I reviewed their recent FY2022 deck and there were a few interesting changes:
- EU and NA properties are now the least profitable regions in their portfolio (contrasted with last year where the 'developed' properties were clear winners)
- There's a focus on increasing margin, cutting out underperforming properties (likely NA?), and reaching profitability by next year
- They seemed to really focus on the differentiated customer experience and their unique market position over anything else. Market seems prime for competition.
Clearly Selina has been instrumental in bringing coliving to the mainstream and their marketing efforts benefit everyone in the industry.
I do wonder in the long term if this business model will work. They say they bring authentic local experiences in their locations but how possible is it for a global company to actually do that at scale?