‘They Just Left Us There’: Startup Remote Year Strands Customers Abroad

(Bloomberg) -- David Kinoranyi had never been to Asia before his plane touched down in Vietnam in early March. He got a rush when he disembarked to see palm trees and a driver at the airport holding a sign with his name on it. Kinoranyi, 28, was starting his four-month program with Remote Year, a startup that promises to help people see the world while doing their day jobs. For a fee, Remote Year Inc. handles the lodging, office space and some meals—everything a long-distance worker needs for a life-changing sojourn abroad.

Kinoranyi, a user experience designer from the Netherlands, had a magical stay in the Vietnamese capital of Hanoi for the first week or so. He worked on his laptop, explored the city and sampled bun cha (grilled meat over rice noodles and pickled vegetables) with the other people in his program. He didn’t worry too much when the World Health Organization declared the coronavirus to be a pandemic on March 11. Remote Year seemed to have the situation under control, Kinoranyi said. That day, the startup told customers in an email that it would find the “safest option” for its participants if the virus threatened to interfere with their trips: “If that option is getting you out of the city, that is what we will do.” 

Kinoranyi felt less assured five days later, when he got another email. Customers could leave immediately if they wanted to, Remote Year said, and rejoin later. Then, on March 20, he received notice: After a global travel advisory from the U.S. State Department, the startup was cutting off all programs, including his, and said it would postpone them to a later date. Suddenly, Kinoranyi was on his own in Hanoi and needed to find a new place to stay by the end of the month. He quickly found that flights home were hard to come by, and expensive. Plus, he’d already sublet his apartment back home until July. Now, more than two months later, he’s still in Vietnam, and he’s not getting a refund on his initial deposit for the trip. 

“It was overall quite sour in the end,” Kinoranyi said. “We were on our own.”

The coronavirus pandemic has upended businesses of all kinds, but travel companies have been among the hardest hit. Remote Year, founded in 2014, has raised at least $17 million from investors including Airbnb Inc. co-founder Nate Blecharczyk. But in March, the company cut the majority of its staff, or about 90 people. And about a month and a half ago, Chief Operating Officer Sam Pessin took over as chief executive officer. Pessin said the change, which has not been previously reported, had been in the works for a few months. The company is now scrambling to introduce new programs in the U.S. this summer.

About 300 people were traveling with the startup when the pandemic hit, Pessin said, and as the company tries to conserve cash, it has taken a hard line on refunds. Some participants in Kinoranyi’s program booked flights out of the country, only to see one after another get canceled as global borders closed and credit card bills mounted. Others decided to ride out the pandemic overseas. But it appears no one got their money back on their first month’s payment or initial deposit for the trip, despite only getting a few weeks into what was supposed to be a four-month stay, and running tabs that reached into the thousands of dollars. The startup has maintained that because the trips were postponed, and not canceled, it’s not obligated to pay them back.

“We, like many other travel operators, are not offering cash refunds right now,” Pessin said. “We are extremely focused, with every fiber in our bodies and on our team, with resuming programs as quickly as possible.”

Kinoranyi learned he was losing his job in the Netherlands after the pandemic struck. When Remote Year called off his program, he spoke with the Dutch embassy about flying home to the southern city of Eindhoven but realized it would be a “financial disaster.” He would need to buy a last-minute (and likely expensive) plane ticket, and find a new apartment. Staying in Vietnam, he realized, cost half as much. “I didn't have a great budget in my pocket to work with,” he said. 

Other people in his group did make it out of the country. Carolina Maturana Monroy booked a ticket back to the U.S. But her first flight got canceled, as did a second—this one to Chile—and then a third. Finally, she was able to land a $2,000 ticket from Ho Chi Minh, with a stop in Brazil, to her parents’ hometown of Concepción, Chile. 

At one point, Monroy, 42, had racked up about $6,000 in pending charges for flights that were canceled on her credit card with a $10,000 limit and worried about whether she’d be able to book a flight to get back. In all, the ordeal—which included a $650 ticket to get to Vietnam and $5,500 in deposits to Remote Year—cost her more than $8,000. Part of the problem, she said, was the company’s reassuring emails as the virus was spreading. Monroy said she wished they’d been more serious about the virus earlier. “Say, ‘Hey guys, we’re two weeks into the program, and we believe by the end of the month, things are going to get worse. We’re thinking of a plan to get you out of there,’” she said. “Instead of keeping on telling us, ‘Oh, don't worry, everything will be fine.’” 

The company did take some measures to try to re-situate its participants. “The last thing that we wanted people to feel is stranded,” Pessin said. The company connected some participants in Remote Year programs to their apartment landlords if they were interested in sheltering in place wherever they were, he said. The startup also offered up its own staff of travel agents to help people find flights. Remote Year does not ordinarily coordinate air travel there and back for its trips.  

Pessin said he conducted a separate webinar with Kinoranyi’s group in Hanoi. Remote Year also kept a local staff member in Vietnam on board part-time through April to offer support to its customers there, he said. The Hanoi group was harder hit than most because their program had just started, Pessin said, and “they were frustrated about the financial situation.”

Like Kinoranyi, Monroy also petitioned to get a refund, with no results. Remote Year is offering a 10% discount on monthly fees if customers choose to join another program later. And if they bought services from the company’s marketplace, which sells things like cooking classes and side trips, they can get credits toward a future Remote Year experience, too.

Monroy said she does not plan to take the company up on its offer of another trip in the future. “Forget it,” she said. “They just left us there.”

Even before the pandemic, not everything was going right at Remote Year. The company started out as a pioneer of what people called the “digital nomad” lifestyle. It promised to unshackle office workers from fluorescent lights and high urban rents, in exchange for an office abroad in places like Croatia, Peru and South Africa. In terms of name recognition and press attention, it led the pack of a group of companies with names like We Roam (now defunct) and WiFi Tribe Co. trying to capitalize on millennial ennui by hosting trips overseas. 

But, like many startups, the company wasn’t profitable, according to a person familiar with the matter. Two people with knowledge of the company said it had held layoffs in previous years in an attempt to cut overhead costs. A potential acquisition by WeWork early last year fell through, according to two people, all of whom asked not to be identified discussing private information. The deal talks have not been previously reported. Pessin declined to comment on the company’s finances and the failed sale, but he did say that when the coronavirus started to shut down global travel, it had a disastrous impact on business.

“We went from having a really healthy customer base and revenue base to zero revenue overnight,” he said. “Actually literally zero in April and May.” Remote Year laid off about 90 employees in March, got out of contracts it had in various cities where it hosted participants, and then “cut off every single dollar of other spending we could,” Pessin said.

The debate over refunds has reverberated throughout the travel industry as the virus has forced workers indoors and decimated vacation plans. “There have been hundreds of thousands, maybe millions, of airline customers who have been fighting in recent weeks to get refunds,” said William McGee, who advocates for travelers as an aviation adviser to Consumer Reports. “There's no justification for this company to hold onto consumers’ money under these circumstances.”

Contracts that are nonrefundable shouldn’t be considered valid if the government tells people to stop traveling, McGee said. “An awful lot of people need money for things like rent and groceries,” he added. “Saying, ‘Well, you’re going to get the product down the road’—it’s unacceptable.”

Not every Remote Year customer is fighting the company on repayment though, particularly people on longer trips that started earlier. Ashley Lengen started a yearlong program in Croatia in September, and said she thought the startup “did as good as they could have done given the fact that we've never seen something like this before.” Lengen was on the Thai island Koh Tao and preparing to embark on a scuba diving certification program in mid-March when she realized the safest decision for her would be to fly home to Denver.

“I can appreciate the unprecedented nature of something like this,” she said. “I would like to continue to travel with them if there’s an opportunity to do so.”

Megan McCulloch, a 38-year-old freelance corporate attorney based in Denver who was also in Kinoranyi’s Vietnam group, said that “to Remote Year’s credit, everything was super awesome until it wasn't.” But she said that if the company had let on that the pandemic could affect their trips sooner, she could have planned more effectively. “The really frustrating part was just the breakdown in communication between them saying ‘everything’s fine, all our cities are fine, everything’s great.’” McCulloch said. “Then, all of a sudden, it's not so great. Everything’s done and you’re on your own.” 

McCulloch attempted to dispute some of Remote Year’s charges with her credit card company, incensed at the startup’s insistence in emails that her trip wasn’t “canceled,” just “postponed.” 

“My problem with that, any reasonable person’s problem with that, is that they canceled the program in everything but name,” McCulloch said. She bought a $3,000 plane ticket to fly back to Denver at the end of March. And she had given up her apartment before the four-month trip, so she had to arrange to put down a security deposit on a new place when she got back. “Meanwhile, the company has $5,000 of my money for services not rendered that they’re refusing to give back.” 

The irony of Remote Year’s woes is that as work-from-home mandates spread across the U.S. and the world, the average employee was better-positioned than ever to detach from office life. Mark Zuckerberg has said that 50% of Facebook Inc. employees could be remote in a decade, after working from home during the pandemic showed that people are as productive outside the office as they were in it. 

Currently Remote Year is working to adjust its offerings to a more flight-averse set of travelers. The startup is planning to soon launch a stateside alternative to its usual international trips, Pessin said. The company will start with two U.S. cities, attach a theme to each program and give people more flexibility on how long they want to spend there. “We’re obviously going to have some Covid-specific community norms and safety procedures in place,” he said.

Meanwhile, Kinoranyi is still in Vietnam. When he decided to leave Hanoi for the coastal city of Hoi An, about 500 miles south, he needed to apply for an extension to his 30-day visa, which meant handing his passport over to a travel service. Unable to fly without his passport, he waited. When Kinoranyi did get his passport back, he embarked on the 14-hour journey to Hoi An by car to avoid the hassle of finding a flight. He was greeted at the city’s border by local police, who were no longer allowing foreigners in. So he waited in Da Nang, about an hour north, for three weeks. He finally reached Hoi An the third week of April. 

There, every day involved a walk or a bicycle trip around town, after a morning of freelance work. He crashed at a homestay hosted by a former chef and a tour guide—a convenient combination, he said. After a few weeks he relocated to Saigon. And most recently he landed in Nha Trang, another palm tree-lined coastal city in the south of the country. He’s planning to return to the Netherlands on July 4.

“I joined this program to get into deep water and get out of my comfort zone,” Kinoranyi said. “In the end, the whole situation resulted in that.”

©2020 Bloomberg L.P.