How Stella Stays is changing the hospitality landscape
Many trips and flights from one global business center to another have been a part of Mohannad Zikra’s life for a decade. The former high-profile corporate executive, who started his career at Ericsson and rose through the ranks to become its sales manager in Canada, has stayed in numerous hotels around the world for a decade. It was an experience he did not appreciate.
“I was gone 320 days a year,” says Zikra. “When I go away, whether for a week or a month, I was always stuck in these hotels and when I came back to Canada my friends would say ‘man you are living the dream, it must be awesome to travel’, but I absolutely hated this experience.
After leaving Ericson in 2015, he joined UXP Systems, a technology start-up in Toronto as Sales Director, and has still traveled extensively. However, instead of the high-end hotels awarded to businesses, he this time opted for cheaper options, including Airbnb, which was gaining popularity in North America.
It was a much better experience, providing a personal touch and a sense of friendliness, but at times the services were unprofessional and inconsistent.
“It was a fluke,” he says.
After experiencing both ends of the hospitality spectrum, Mr. Zikra felt there had to be a better way to handle the business of vacation and long-term rental properties. The whole model had to be redesigned to offer customers – whether vacationers, business executives or residents looking for longer-term, hassle-free stays – a much lighter personalized hospitality experience.
“I realized there was a huge opportunity,” he says. “There has been a huge shift in people’s minds and they have turned to furnished apartments instead of hotels.”
This awareness has been the cornerstone of Stella Stays, a Dubai-based hotel startup that offers individually designed and equipped homes and provides end-to-end digital services to guests. It’s a value proposition that, according to its founders, is better than a hotel.
Mr. Zikra, who grew up in Kuwait and moved to Canada at a young age, holds a computer engineering degree. After the acquisition of UXP in 2017, he decided to leave the corporate sector. With a group of friends, he built a portfolio of a few properties in Canada and managed them in 2018 as short term rentals, experimenting with improving hospitality experiences.
However, it was a conversation with an old friend in Dubai, a former colleague of Ericsson, about the emirate being the real estate and hotel capital of the Middle East that convinced Mr. Zikra to bring his role model. personalized hospitality to the emirate.
“Within a week it was myself and one of the co-founders, we jumped on a plane. We didn’t have a plan, we didn’t know what was going to happen,” he said. he declares.
Mohammed Al Ghussein, an Emirati entrepreneur and an old acquaintance of Mr. Zikra, was among the first people in Dubai to hear about the idea of revolutionizing the hospitality industry. A day later, Mr. Al Ghussein, who is now a very involved president of the company, decided to join the team.
The founding team started the business, injecting around Dh1 million ($ 272,479) of their savings into the business. The business was officially launched in March 2019, and like most start-ups, it was not an easy journey.
“Even with Mohammed as the initial investor, it was very difficult to raise funds,” Zikra said. “It was either we were going to do it or break it.”
Running operations from a small office, Mr. Zikra, along with co-founders Hassan Al Saadi, Marc Diab and Hamza Al Saadi, visited many properties trying to convince owners to let the company rent their homes, furnish them and re-let them to tourists in Dubai.
“They [homeowners] thought we were ridiculous. They thought we were crazy and nobody wanted to talk to us, ”Zikra said of the initial hardships when he and his cash-strapped fellow Canadians survived eating the cheapest meals in Dubai.
Stella Stays landed her first penthouse in the marina, when an “entrepreneurial” owner decided to let the company run the property.
“He decided to take a risk on us and so far he’s been very happy. He’s been there from day one,” Zikra said.
At the end of last year, the company had 85 properties in its portfolio and is growing rapidly, now taking up entire floors of buildings, where each unit is individually furnished to avoid the ‘cut and paste’ decor themes of hotels, he said.
Stella Stays has been a major pivot during the pandemic that has brought the global travel and tourism industry to its knees amid travel restrictions. As the number of tourists dwindled, the company turned to residents of the United Arab Emirates looking for managed accommodation to guide the company through the difficult times, Al Ghussein said.
“When you are hit by something unpredictable and unique like a pandemic, there are only two possibilities for every start-up: either the company closes or it is forced to develop a whole new strategy to stay afloat, ”he said.
The company did the latter, and it also revamped its business model, marketing, pricing and “everything in between” to survive the lean season and eventually grew as a business as the markets grew. were recovering and travel restrictions were relaxed, Al Ghussein said.
However, despite growing rapidly, Stella Stays delayed their funding round as much as possible because “getting a meaningful valuation” was difficult, with investors rating Stella Stays as “next to nothing” to begin with.
The now profitable company reinvested income generated from its operations in businesses and expanded to Bahrain earlier this year. It currently has a portfolio of 300 managed properties spread across the UAE, Bahrain and Canada, and plans to increase that number to 1,000 by 2022.
To fund its expansion, the company is in talks with investors for a “big” Series A growth funding round next year, Zikra said, declining to give the potential size of the funding.
Stella Stays is also open to the membership of strategic investors to expand its presence in other regional markets in the Middle East and beyond. Part of the potential fundraising will be invested in improving its technology platform and hiring staff to keep pace with the growth, he said.
Q&A with Mohannad Zikra, co-founder and CEO of Stella Stays
What other start-up would you have liked to launch in place of Stella Stays?
During the initial phase, as we were discussing business ideas, there were a lot of opportunities around real estate and real estate technology. I have always been interested in the idea that technology improves the experience of brokers and agents. This was one of the potential startup projects I was reviewing that would have really solved a critical issue that exists today.
What would you do differently if you had to start over?
Stella Stays is doing pretty well. So we wouldn’t necessarily do much differently, but the one piece of advice we would have been grateful for early on is to never underestimate the growth potential of a business idea, especially in a market that continues to grow. grow. I know a lot of entrepreneurs are afraid to make big decisions early on, but that’s what’s important. Sometimes it’s okay to jump into things you think you’re not ready for, but don’t be afraid. You will be pleasantly surprised with the result.
What skills did you acquire while starting your business?
The most essential skill I have learned in starting the business is selling. Sometimes all you have is two minutes or even 30 seconds to sell your idea. You need to determine and execute a good pitch as quickly as possible, especially when you are in the early stages. The other crucial aspect that I touched on is finance, as it is essential to understand end-to-end finance as a start-up. As entrepreneurs, we understand the product, the company’s operations, and what needs to happen, but the finances are put aside as an afterthought during the initial stages. Eventually you will have to face it and dig deep.
What is the only quality that an entrepreneur should have?
You need to be a salesperson or just have the skills to sell your point of view and idea to someone else, be it an investor, advisor, client and even of the first group of people you hire. If you are doing a great job of selling your product and your dream, then you are ready for something great. If you can’t, this is when you will see your business struggle.
What advice would you give to entrepreneurs in difficulty?
There are several things: focus and prioritize. This is what we have learned as a growing company. Think “what’s the best effort that will give you the best return?” Focus on the small steps, think carefully, and take one step at a time. Don’t look around and just follow trends, calculate your own moves, and create your own timelines. Plus, feedback is crucial. One of the things we do is send updates to our investors, showing them the good and the bad, as well as the really ugly side of things. Entrepreneurs are afraid to talk about ugly stuff, but you have to be able to put it forward to get quality feedback.
Name: Stella stays
Founders: Mohannad Zikra, Hassan Al Saadi, Marc Diab and Hamza Al Saadi
Year started: 2019
Amount collected: Bootstrap Dh1m, plans a Series A round of funding in 2022
Update: November 21, 2021, 5:30 a.m.