296 | Flexible Business Model: Apartment-hotels are an emerging trend in an industry in crisis




Lodging Leaders show

Summary: <br> {caption}SERVICED APARTMENTS: WaterWalk Dallas – Richardson, an apartment-hotel development in Richardson, Texas, is among nine franchised properties under WaterWalk International of Wichita, Kansas. The serviced apartment brand is the brainchild of Jack DeBoer, considered the founder of the extended-stay hotel concept. WaterWalk is a hybrid of furnished extended-stay units and unfurnished leased apartments in which renters can enjoy hotel amenities. The apartment-hotel trend is gaining in popularity among travelers seeking safety amid the coronavirus pandemic and among commercial real estate investors in search of asset diversity and pricing flexibility in the subsequent economic downturn.{/caption}<br> Combined lodging assets are recession resistant, say developers <br> Jack DeBoer, the legendary creator of the extended-stay hotel concept, in 2014 opened his first WaterWalk serviced apartment building in Wichita, Kansas. Today, his granddaughter, <a href="https://waterwalk.com/team/mimi-oliver/">Mimi Oliver</a>, runs the company that has nine properties open and five in the pipeline. It is exploring more franchising opportunities in 25 markets.<br> Before the coronavirus pandemic struck the hotel industry, lodging developers had a heightened interest in serviced apartments as well as apartment-hotel concepts that offer flexibility in different lengths of stay, operating expenses and revenue streams. The commercial real estate asset has shown its strength during economic crisis caused by the COVID-19 outbreak.<br> Longer stays have buoyed the short-term rental sector, which experienced an average 5 percent decline in demand from April 2019 to April 2020 while transient hotel demand dropped by an average 29 percent in the same time period, according to a joint report by <a href="https://highland-group.net/">The Highland Group</a> and <a href="https://www.alltherooms.com/">All The Rooms</a>.<br> Such demand is also supporting apartment-hotels.<br> <br> {caption}Flexible Business Model: A common area at WaterWalk International’s recently opened apartment-hotel development in Plymouth, Minnesota. Episode 296 of Lodging Leaders podcast explores the emerging trend of apartment-hotels and the sector’s impact on the lodging industry during the coronavirus crisis.{/caption}<br> Mixed Category<br> The category includes serviced apartments; lodging accommodations with a mix of hotel rooms and serviced apartments; and privately owned condominiums that are part of a hotel complex’s short-term rental inventory.<br> Some accommodations can be classified as short-term rentals in the home-sharing category while others are labeled as extended-stay in the hotel segment.<br> In the extended-stay sector, The Highland Group recently reported that in the third quarter of this year, U.S. extended-stay hotels’ occupancy was nearly 18 percent above the overall lodging industry.<br> In the short-term rental silo, AirDNA and STR <a href="https://str.com/press-release/str-airdna-release-full-analysis-hotels-and-short-term-rentals">recently reported</a> that from January 2019 through June 2020 hotel RevPAR in 27 markets around the world was down nearly 65 percent from the previous period, while short-term-rental RevPAR declined 4.5 percent.<br> <br> {caption}SHORT-TERM RENTALS: A <a href="https://str.com/press-release/str-airdna-release-full-analysis-hotels-and-short-term-rentals">recent study</a> by AirDNA and STR charts fluctuations in occupancy in the global lodging sectors – hotels; “hotel comparable” units or those with studio or one-bedroom accommodations; and rentals with two or more bedrooms – in the first six months of 2020.{/caption}<br> AirDNA and STR also found several changes in travelers’ behavior as a result of the coronavirus pandemic.<br> <br> * The decline in business and group demand severely impacted transient hotels while leisure guests buoyed demand in both short-term-rental and trans...