Revenue and Investment Opportunities in Short Stay Housing
“When you’re an entrepreneur, you keep saying to yourself: There’s got to be a better way.”
That was the opening insight from panel moderator Georgianna Oliver, founder and former CEO of Package Concierge. It was a theme that echoed for the rest of the information-packed first panel of MTEC 2018.
Featuring an array of founders and executives from the short-term rental space, this panel addressed a key multifamily question: How do you maximize revenue and minimize vacancy in the dicey waters of short-stay housing?
Ms. Oliver kicked off the panel by briefly recounting her entrepreneurial history. In doing so, she introduced another panel trope -- that of the restless founder who creates company after company, chasing the high that comes from finding an ingenious solution to a frustrating problem.
“Time is my only enemy,” she lamented.
Ms. Oliver’s companies include EverGreen Solutions (which she sold to RealPage) and Package Concierge (which she sold to Gibraltar). She is currently serving as a vice president at Gibraltar -- a position that has required some adjustment.
“I’m not in my natural habitat,” she said. “My new boss approves all my expenses. We’re in Boston. I’m a Patriots fan, so I did what anyone would do -- I bought t-shirts for all the guys in my company. He rejected my expense for $99! That’s the downside of being in this position.”
Eric Broughton of ApartmentJet introduced himself next. He shared an interesting insight: While attending NMHC a few years ago, he noticed that people kept mentioning AirBnb. And it wasn’t complimentary, exactly -- multifamily executives were using it like a swear word!
This got Mr. Broughton thinking. What is the essence of multifamily? Family. So, for his recently launched startup ApartmentJet, the theme is protection.
ApartmentJet performs background checks to protect people. It partners with Assurant to protect assets. And it ensures compliance with global regulations to protecting business.
Nancy Allen, who founded Stay Alfred with her husband in 2010, introduced herself next. She described Stay Alfred as a nationwide vacation rental business that focuses exclusively on the downtown core of urban markets. Stay Alfred provides the consistency of a 4-star hotel stay in the home stay space. They’re also involved in pre-leasing, and will master lease 50 percent of an apartment community before it’s even constructed.
Erik Eccles of Urbandoor continued the serial entrepreneurship theme, recalling his history creating the company that is now Cisco Spark. Echoing Mr. Broughton’s comments about multifamily executives taking a cue from AirBnb, Mr. Eccles brought up the WeWork model.
“People walk in and get a lease for office space same-day,” he said. “How does this affect multifamily?”
The idea for his current company, Urbandoor, grew out of a desire to make multifamily “stretch into more than an unfinished box for a year.” Mr. Eccles realized that his company’s true north was providing people with a place not only to live, but to be inspired by. That’s why Urbandoor offers comprehensive services ranging from furniture insurance to background checks.
“You can go through the whole customer journey as a renter without ever coming to the property,” Mr. Eccles explained.
Next, Jason Kamen of Why Hotel described his company’s value proposition: It operates turnkey pop-up hotels in the lease-up space. Why Hotel is full service, offering 24/7 coverage as well as a GM, AGM, concierge and more for each property.
“We help provide significant found income in that time of operational deficit, and we provide a service wrapper for residents,” he said.
Finally, Chris Herndon of The Guild joked with the audience by noting that MTEC seemed to draw a very high-end crowd. His company operates full-service boutique hotels inside the mixed-use components of multifamily buildings.
“We can reduce carry costs by up to $2 million a year. We use tech to be more efficient, but we have a lot of humans involved,” he said. “If you want lobster tacos at 1:00 in the morning, we’ll make it happen.”
Because the companies represented by the panel were so interesting, a significant portion of the hour was devoted toward introducing their services.
When Ms. Oliver asked the panel whether each company was bootstrapped, the answers were mixed. ApartmentList had a seed round, and was at the time of the panel closing out a $1.2 million round. Stay Alfred has no equity and no debt and was bootstrapped. They raised a Series A of $15 million with a run rate of about $100 million. Urbandoor went with the venture model, due to Mr. Eccles’ background as an investor. Why Hotel was spun out of Vornado, a REIT. The Guild was bootstrapped, thanks to a bad experience Mr. Herndon had with another company.
“We were very resourceful,” he said. “We wrote our first line of code. We bought a lot of off-the-shelf hospitality software and tied it together with shoestring and chewing gum.”
And then -- he said -- The Guild raised a $9.5 million round of “West Coast money and Mafia money.”
Rounding out the hour, the panel debated the social and economic forces that make short stays more attractive to customers and to the market. Passionate audience members touched upon the friction that can arise from the owner/manager side. Short stay firms and owner/operators can be strange bedfellows, everyone agreed -- and one conference attendee likened the frustration to a “#metoo” movement: “It’s like, AirBnb makes me feel violated as a community manager!”
With moments of humor, everyone agreed: Communication is critical as each side navigates through this exciting, rapidly shifting landscape.