Sep 1 2021
With rental periods ranging from a year or two – or sometimes longer – some apartment developers have found how to monetize their empty, not yet rented units by turning them into short-term hotel rooms.
One of the latest to embrace the pop-up hotel concept is the Kiley, a new 315-unit building that has just started renting in Washington DC’s Capital Riverfront neighborhood, where UIP Cos. donated 125 units to a local company to operate as short-term rentals.
“We’re here to fill the void,” said Bao Vuong, co-founder of WhyHotel, a fully-staffed hotel operator.
For UIP, the benefits are twofold, said director Peter Bonnell. It creates energy when the building is in its infancy.
“With more people around, it brings the building to life. Otherwise, it will still be vacant, ”Bonnell said.
But at the same time, it generates income during the rental period. Bonnell expects to rent about four units per week at the Kiley, which offers a host of eco-friendly amenities that together have earned it LEED Silver certification from the US Green Building Council. It will therefore take more than a year to complete it.
Under UIP’s agreement with WhyHotel, the two companies will share the start-up expenses and the revenue generated by the hotel units will be used to reimburse these costs. Any profit after that will be shared between them. Due to a nondisclosure agreement, Bonnell said he couldn’t reveal what percentage of the profits each company will receive.
WhyHotel will relinquish its apartments in the Kiley as they become available. The units will be returned to the developer ready for rental. When all of its units are leased, the company will close its store and move on.
Created in 2017 by former apartment developers, WhyHotel could just as easily be called WhyNot, as it offers one of those rare win-win situations for developers and consumers alike. Developers use it to generate income and business, while occupants get the value and space of a home similar to what Marriott and Airbnb offer in the short-term home rental industry, as well as the consistency and service of a hotel.
The Kiley, for example, has a wide range of apartments, ranging from studios to three-bedroom and two-story lofts. And the list of equipment is just as wide. Among other things, there’s a rooftop pool and recreation area the size of two football fields, a 24-hour concierge, a garage with charging stations for electric vehicles, and contactless elevators. A separate fitness center with a yoga studio, sports simulators, and a playground can be found on the lobby level.
Potential hotel guests are not just tourists wishing to stay for a week or a weekend. An ideal prospect would be someone who is considering moving to a building full time but would like to test the location or neighborhood before signing a long term lease.
Another candidate could be someone who is already committed to the property and needs a place to stay while their apartment is ready for occupancy. And a third could be a road warrior who comes to town during the week and returns home for the weekend, repeating the scenario over and over again.
As part of an agreement with the 700-unit, three-building property of AMLI Residential in Midtown Miami, WhyHotel, which has a number of locations in the DC area and describes itself as a turnkey hotel operator, now extends beyond its roots in Washington. And similar businesses are popping up all over the country: Stay Alfred in Spokane, Washington; Stay Tony in Los Angeles; London-based Yotel and more outdoor group retreats in Denver and PopUp Hotel and Flash Camps in Australia.
The concept works for apartments, especially luxury properties with plenty of hotel-like amenities, but not for condominiums and co-ops, Vuong said. Condo buyers want new, never lived in units, the WhyNot manager explained, while tenants don’t care as long as the place is clean. Additionally, condominiums can sell in advance, while apartments typically don’t begin the rental process until shortly before the building is ready for occupancy.
WhyHotel units are billed like any other hotel, Vuong said. But the rooms are bigger and better equipped. Kiley’s kitchens, for example, feature subway tile backsplashes, stainless steel appliances, and under-cabinet lighting. Each residence also comes with a full size washer and dryer.
WhyHotel’s competitors operate in a similar but different way. Stay Tony, for example, offers to finance rents for qualified residents, without interest for six months or with interest for one year. Launched by Los Angeles real estate agent-turned-developer Tony Diamond in 2012, it would be the first short-term furnished housing company to offer financing rather than asking for money on top of the barrel.
The Stay Tony’s concept works for people who are moving for whatever reason, but it is especially suitable for those who take on temporary work, who are leaving their homes while they are undergoing a major renovation, or who are coming to town for a job. medical reasons. Another possible candidate would be a young university graduate who would move to the area to start a new career.
Diamond believes her MO is a “game changer” because it helps residents save their money.
“One of the most paid points for moving to a new city is the huge upfront cost,” he said.
Diamond’s partner in this venture is Uplift, a travel financier that offers monthly payment options to vacationers.
“People are already funding one-time life events like weddings, medical procedures, and vacations,” he said. “We thought, why not fund the life event of a move? “