Pop-up hospitality company WhyHotel is gearing up for a busy 2021, recently announcing plans to open the WhyHotel Midtown Miami and WhyHotel D.C. National Mall this May and June, respectively. The group, which partners with residential buildings during their lease-up phase to operate temporary apartment-style hotels, has proven relatively resilient throughout the pandemic, buoyed in part by strong extended-stay demand. Hotels editor Christina Jelski caught up with WhyHotel co-founder and CEO Jason Fudin to talk about WhyHotel's unique model and why there continues to be opportunity within the urban apartment-hotel sector.
Q: Can you provide a bit more color on how a WhyHotel pop-up operates and how it differs from other apartment-hotel concepts?
A: When a developer builds a high-rise apartment building, they deliver all the units for leasing, but it can take them a year or two to find the residents. What we generally do is take around a hundred or so units, we furnish them, and when the building opens to residents for move-in, we start running a furnished hotel-like product out of that vacancy. And the way that structure works is that we profit-share with the developer. They get a percentage of the profit that we create during that period. And we're not signing actual leases at whatever price the market is.
Real estate is cyclical, and hospitality, in particular, is highly cyclical. Our business is built around that cyclicality. The whole model is built on flexibility, as in we have flexibility to bring units into and out of the building, depending on how things are going, as does the developer. And that's served us incredibly well during Covid.
Q: How has WhyHotel's business has been impacted by the pandemic?
A: I'm not going to say that Covid hasn't been very difficult. We had layoffs at the beginning, and there were a bunch of pop-ups that never opened. We were probably set to open about a pop-up a month last year, so it was quite a number that didn't open, but those that did were profitable. We had four coming into the pandemic, which all ran their natural course, with the last of them still currently running in Northern Virginia. And those pop-ups moved from predominantly transient-based stays to more longer-term stays, because these are places with full kitchens, full living rooms.
We got a lot of people who needed a temporary home. While pre-Covid, we were probably at around 70% transient, post-Covid we were at 70% 30-day-plus stays. And that helped us actually maintain occupancy at over 85% throughout Covid. What we're seeing now is a transition back to more transient stays. It's starting to rebalance.
We're incredibly bullish about the future. You have all these customers who have gotten even more used to alternative accommodations and apartment-style or home-style lodging during the pandemic. So, it's creating a bit of a perfect storm for us.
Q: Most WhyHotel pop-ups have been located in densely populated urban markets. Is this still part of the company's strategy moving forward?
A: We've always been urban-focused, and today that is no different. Our product works really well when we have a high density [of units] in high-density buildings. And I really think we're going to see a heck of a snapback to urban travel and urban living. Cities have outpaced the growth of nonurban areas for the last 30 years. And while there are so many trends that were accelerated by the pandemic, that's the only trend that's been reversed. And we think it's reversed only because, who wants to be around a bunch of people in a pandemic?
There's been this long march toward urbanization, and our belief is that that march is going to continue once it's okay to be around lots of people. And more than that, you're going to have a ton of pent-up demand and a lot of people that are just waiting to come back to the cities.
Throughout human history, whenever there's been some version of a pandemic or something that caused people to flee cities, cities always come back and then some. And we expect to see the same thing play out once this pandemic is over.