On-demand startups are now shamelessly catering to the wealthy elite

A room with a view.
A room with a view.
Image: Hyatt
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Recharge wasn’t always about luxury. When its three cofounders first dreamed up their product—instant, by-the-minute hotel bookings—their intended users were Uber and Lyft drivers in need of a break.

The pitch was simple: the San Francisco company would partner with hotels to rent out their extra rooms by the minute. Like any good on-demand startup, it wouldn’t hold inventory itself, but rather provide the technology to connect hotels with short-term room availability to people looking to book them. And what better prospective users than those already at work in the so-called sharing economy?

“You have all these people who live outside of San Francisco, but they drive in the sharing economy and don’t have a place to take breaks,” says Chris Lo, a co-founder. “The idea was to give drivers these little pit stops.”

That was in December 2014.

“We did start by offering breaks to drivers, and then we realized that, well, everyone needs a break,” says Manny Bamfo, another co-founder.

The team reoriented in May 2015 and, by the time Recharge relaunched last December, it was as “a luxury service for commuters and business customers.” Or, really, anyone who might care to spend $0.66 a minute (about $40 an hour) for a respite in a four-star hotel room in San Francisco.

Whether this is a bigger market is unclear, but it’s almost certainly a more lucrative one—something on-demand startups increasingly seem to be recognizing. In recent months, tech companies that once marketed their services to the masses have refocused on a wealthier segment of the population. Zirx, an Uber for valet parking, shut down its consumer side in February and is now selling to less price sensitive corporate customers. Instacart, an Uber for groceries, has raised prices and is building out its partnership with Whole Foods, a grocery store known for its organic food stuffs and bougie clientele. The Uber-for-X bubble is starting to deflate, if not burst, and thin-margin consumer services (see: Homejoy, Prim) are going first.

Compare that to the companies in the sector attracting fresh funds. On-demand massages, luxury office and living spaces, a startup that delivers gas to your parked car. There is also the gourmet food-delivery boom: Sprig, Munchery, Maple, DoorDash. These companies often say their products are for everyone, but the pricing says otherwise. Lunch on Maple costs about $12. The delivery fee on DoorDash is usually $4 to $7. The former is hardly cheap; the latter on a single order (say, a burrito) can easily seem extravagant. As Tri Tran, co-founder and CEO of Munchery, told me a few months ago: “We’re not for college kids.”

A little-discussed secret of the on-demand economy is economic inequality. Many of these companies launch and thrive in San Francisco, a city that not incidentally far exceeds the regional and national averages for income inequality. They talk about connecting two sides of a market—people with services to provide (e.g., Uber) or assets to share (e.g., Airbnb), and users who want to hire or rent them. Put another way: Those who need to make some extra cash, and those who have it to spend.

(“Income ratio” in that chart is the ratio of the average income of the highest-earning 20% of households to the average income of the lowest-earning 20%.)

Recharge at least dispenses with such on-demand mass-market fictions. The company, which has raised $650,000 in angel funding, is partnering exclusively with four-star hotels in San Francisco, including the Hyatt Regency and Stanford Court. So far, its users include managing partners at law firms and SVPs at tech companies. The average stay is about two hours, and the most popular times are weekends and weekday mornings. (The company declined to provide how many users have signed up and bookings it has made.)

“It’s really just executives that need a moment,” says Brian Aker, Stanford Court’s hotel manager.

Says Bamfo, “We’ve been particular about the brand that we project.”