How Common can generate higher returns for hotel owners
The hospitality industry has been one of the hardest hit asset classes in the wake of COVID-19. As travel came to a halt, thousands of hotel rooms across the country were left empty, and owners and operators were forced to adapt. Since March, we’ve seen hotels converted from short-term, nightly stays for travelers to long-term accommodations for healthcare workers, shelter for New York City’s homeless population, and even into coworking spaces. But what does the future of these spaces look like in the years to come?
The answer lies in residential. Common is prepared to work with hotel owners to convert their properties into microunits and coliving suites, providing necessary, attainable housing to the country’s workforce, and ensuring higher returns on properties that would otherwise sit empty. We put together a full report on how this is possible, including:
- How hotel room layouts can be converted for micros and coliving
- The challenges and benefits of conversion
- The potential for amenity spaces
- An inside look at Common’s brand and funnel
Continue reading to learn more about Common’s approach and process from Jenn Chang, Creative Director, and download our full report here.
Interview with Jenn Chang, Creative Director at Common
Why now for conversion? Is this a long term solution for building owners?
One of the hardest-hit industries from this pandemic was the hospitality industry. Occupancy rates are at all-time lows, and 8,000 hotels across the country are at risk of closing without government support. Studies are showing that recovery to pre-Covid levels is not expected for about five years. This sets up a compelling prompt for a conversion strategy. Instead of leaving thousands of pre-furnished rooms sit empty for the years to come – there’s a great opportunity to repurpose these rooms as furnished residential apartments instead. Hotels are often located in prime locations or near transportation nodes, which makes them ideal for conversion to residential. This is a long-term solution that will not only revive these assets but also help increase overall housing supply in these areas.
Would it be possible to create a mixed-use building, part hotel, part residential?
Mixed-use buildings are possible, if zoning allows. In these cases, hotels are typically not permitted to be located above residential floors, so they occupy the lower floors. Depending on the existing design, Common Studio can work with the developer to test the feasibility of different conversion design strategies, regardless of whether the project is hybrid-use.
How is this different from an SRO?
SROs stand for Single Room Occupancy, which is a housing use designation for buildings that have rooms that are rented out individually. These rooms typically contain either a bathroom or a kitchen. There are many distinguishing features, but the major difference between a hotel and an SRO is the lease length: SROs are considered Residential and the length of stay is therefore much longer.
Although we have the capabilities of operating SROs and are big fans of the typology, depending on the area we may or may not be able to convert existing hotels to SROs. This is primarily limited by regulation around SROs from both the local and state levels.
How do you maintain Common brand standards across properties that have been converted from already-branded hotels?
Hotels that are previously branded will need to be de-flagged before the conversion. Owners should work out the details of the deflagging process with their prior Brand Operator based on their agreement. In terms of design, Common Studio can work with the asset to evaluate a bespoke conversion strategy for each individual property. We see the capital already invested in the
FF&E and finishes to be a valuable starting point and will identify areas where Common’s brand can add to provide alignment to the renter market.
If an owner has a hotel they’d be interested in converting into micros or coliving, how can they get in touch?
Email us at firstname.lastname@example.org and someone will be in touch – we’ll start with feasibility and explore the full potential of your property.