Blurring the lines of hospitality, WhyHotel offers developers a chance to generate income during lease-up period while providing guests with the best of both a home and hotel experience. We spoke to CEO and Co-Founder, Jason Fudin, to learn more about the benefits and challenges of operating temporary properties.
Click.: How would you describe the concept of WhyHotel?
Fudin: We like to say that we’re a pop-up hotel. In the United States, at any point in time, there are hundreds of thousands of vacant, new-built apartments. This is due to the units being delivered to market all at once - upon completion of the complex - since residents can’t move into a building that’s still under construction. It then takes about a year for a residential building to fill up. The WhyHotel model takes advantage of this underlying inefficiency, putting vacant apartments to work during the lease-up period.
Click.: How does the model operate?
Fudin: Currently, we have three hotels in operations with around 300 units available for booking. We don’t permanently remove dwelling units from the housing market. It scales with a building’s natural delivery and leasing pace, and winds down its footprint of units in the building based on the pace of lease-up. Once the lease-up period has finished, the apartment building reverts back to residential use. Typically, we secure regulatory approvals that allow for temporary hotel operations for up to 24 months in a given project because it aligns with the industry standard for how long it takes a residential project to achieve stabilised occupancy for the long-term use of the building.
Since we have staff on-site 24/7 we take one floor of the building and two operation units for our exclusive use. This is where our WHY Welcome Lounge is located and where the guest will check in upon arrival.
Click.: What are the benefits of this approach?
Fudin: From the perspective of a real estate developer, we de-risk their projects with significant found income, and early activation of the building/surrounding area. The fact that we handle all aspects of the hotel operation also resonates with developers. Our operations don’t require any bandwidth to be taken from the owner’s property management team, allowing them to focus on leasing-up the property with long-term residents.
We have found that guests - travelling for both business and leisure - love the concept because it provides the space and comfort of a home-share with the consistency and service of a 24/7 onsite-staffed hotel. Being hosted in a brand-new home away from home, with full kitchens, bedrooms, living space, washer/dryers, and additional amenities, provides an elevated and differentiated hospitality experience for our guests.
For the property owner, the pop-up model operates at a certain scale (100+ units for a set term) that covers costs and generates instant additional income.
Click.: Have any of WhyHotel’s guests become tenants?
Fudin: In every building we see a number of our guests become residents. In most cases, it’s someone who is moving to a new city and needs a place to stay for a month or two until they figure out something more permanent. Then they stay in the apartment, end up loving it and sign a lease. We’ve also had a lot of business owners let people try the apartments out. We furnish every unit type, so if you’re about to sign a lease but are having a hard time envisioning how the unit lays out, you can tour one of our apartments.
Click.: What do you look for when scouting buildings?
Fudin: First we look at the strength of the traveller market; we’re looking for destinations where there’s already a strong hospitality demand. Secondly, we look into the existing local regulatory environment, only going into a new building if it has the full backing of the local jurisdiction. And finally, we evaluate projects based on the surrounding market conditions and our anticipated operational life cycle within a given project, doing a deep dive on the scale and amount of multifamily development that is going on in a given city/submarket/neighbourhood.
Click.: Do you see the hotel industry continuing to expand into the serviced apartment market?
Fudin: Although there are already a lot of different models for furnished apartments today, most are tired or operate in a regulatory grey area. I think we will continue to see the lines blur between hospitality and home, with the traditional hotel industry and multifamily residential industry seeing more and more overlap.
You might also want to read:
- The WhyHotel model takes advantage of this underlying inefficiency, putting vacant apartments to work during the lease-up period
- The model operates by scaling with a building’s natural delivery and leasing pace, winding down its footprint of units in the building based on the pace of lease-up
- Blurring the lines of hospitality, the concept combines the best of both a home and hotel experience
- In every building, the brand has seen a number of guests become residents