STARTUP STAGE: WhyHotel turns luxury apartment buildings into pop-up hotels

WhyHotel

WhyHotel transforms unoccupied apartment units in brand-new luxury buildings into temporary hotel rooms. The pop-up hotels employ 24/7 on-site staff with the intention of giving guests the "like-home" experience of a home-share with the service quality of a hotel.

Founded in 2017, WhyHotel currently operates 100- to 250-room pop-up hotels in Washington, D.C., and Baltimore.

Describe both the business and technology aspects of your startup.

WhyHotel operates turnkey, pop‐up hotels out of the vacancy of newly built luxury apartments, only during lease‐up. Blurring the line between hospitality and home, WhyHotel operates 100- to 250-room pop‐up hotels with 24/7 on‐site staff. The concept provides developers with a new way to utilize units during lease‐up and provides visitors/guests with a new way to travel.

Originally incubated at Vornado Realty Trust, a large publicly traded real estate investment trust, WhyHotel takes units that have yet to be leased after a large high‐rise apartment building completes construction and adds a modern hospitality service to turn the building into a temporary luxury hotel.

WhyHotel scales its unit count with the building's natural delivery and leasing pace, gradually winding down its footprint as units are leased to long‐term residents and ultimately exiting altogether once all units are leased.

What inspired you to create this company?

WhyHotel’s co‐founders, Bao Vuong and Jason Fudin, were inspired to build a business that solves real estate inefficiencies. But ultimately, WhyHotel unlocks the opportunity to host people in better places by blurring the line between hospitality and home. Thus, in 2017, with the support of their investors, Bao and Jason spun off WhyHotel as an independent company set to change the way urban core developments handle/underwrite/execute their lease‐ups.

Today, where you see cranes in the sky and empty buildings, WhyHotel sees an opportunity for communities to thrive. It’s a curiosity and desire to learn and improve that drives WhyHotel’s team to deliver a better hospitality experience.

Give us your SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of the company.

• Strengths:
  
  • Provide differentiated, best‐in‐class apartment product on the short‐term rental market with product is that is always brand‐new in interesting and up‐and‐coming neighborhoods
  
  • Diversity of customers from traditional hotel channels, vacation rentals and apartment sublets
  
  • Expertise to navigate regulatory landscape across multiple cities and jurisdictions with a product that helps grow the housing stock of cities
  
  • A unique business model that is able to provide a like-home experience and highlight local life
  
   • Temporary nature allows for tremendous operational flexibility for the developers of building
  
  • Provide a unique and unmatched set of long‐term renter amenities
• Weaknesses: 
  
  • To‐be‐discovered/new brand
  
  • Small customer base
  
  • Raising awareness of differentiated WhyHotel product in a crowded market for short‐stay options
• Opportunities:
  
  • Lack of high‐quality, extended‐stay/serviced apartments in the United States
  
  • High‐rise real estate is moving toward a world of the co‐mingled asset. WhyHotel is well-positioned to capitalize on more mixed‐use development projects
  
  • Business consumers have a growing comfort with an “alternative stay” option
  
  • Ample supply side opportunities with all the multifamily product expected over the next 30 years
• Threats: 
  
  • Regulatory hurdles can arise by jurisdiction

What are the travel pain points you are trying to alleviate from both the customer and the industry perspective?

From a customer perspective, WhyHotel delivers a “like‐home” experience for its guests. WhyHotel’s model provides the value and space of a home‐share and the consistency and service of a hotel.

From an industry perspective, WhyHotel was born out of internal needs, the ability to deliver large developments in the most economically efficient way possible - producing interim income and hedging absorption bets so that lease‐up doesn’t necessarily affect the success of an asset.

The WhyHotel concept can be scaled up to address/mitigate lease‐up risk as a universal pain point for high‐rise developments across the nation. With an eye on the resident experience, WhyHotel offers long‐term renters in the building the benefit of an on‐site hotel to host their friends and family at rates that are half the price of booking with a traditional hotel.

The WhyHotel experience is supported by 'round‐the‐clock, on‐site hospitality staff, freeing up the building's property management team to focus on the long‐term residents and leasing up the building.

Tell us what process you've gone through to establish a genuine need for your company and the size of the addressable market.

WhyHotel’s product is perfectly suited for guests looking for a “like‐home” stay. Today, these folks have to rely on old, traditional extended-stay product that is basically a single room with a kitchenette. WhyHotel offers brand-new, full‐size, furnished apartments with full kitchens, washer/dryers, living space, dining space and bedrooms.

With the five million-plus hotel rooms in service in the U.S., and the one million-plus vacation rentals, there is a significant market opportunity for a better way to stay.

Generally, travel startups face a fairly tough time making an impact ‐ so why are you going to be one of lucky ones?

WhyHotel’s product is a win‐win‐win. Developers get additional interim income. Residents get an on-site amenity. Cities get job creation, enhanced tourism, increased economic development and additional hotel tax revenue collections.

What are the backgrounds and previous achievements of the founding team, and why do you have what it takes to succeed with this business?

WhyHotel’s co‐founders have extensive backgrounds in business and project development. They have managed commercial real estate developments in excess of $2 billion, where they managed all facets of the business, including acquisitions, entitlement, financing and building of high‐rise urban assets.

So you've got the product, now how will you get lots of customers?

Since launching, WhyHotel has hosted thousands of customers from around the globe. As the brand continues to develop, WhyHotel has seen an acceleration in adoption from all types of travelers.

How and when will you make money?

For WhyHotel, as a threshold moving forward on any project, it needs to be independently profitable.

What's been the most difficult part of founding the business so far?

Building the right team of great people.