Multifamily Hospitality

Lodgeur’s thought pieces related to Multifamily Hospitality and flexible, furnished rentals.

Jan 22 2023

How renting a home in the UK is different from the US

When Lodgeur’s founder moved to Houston from London in 2018, he was amazed by what he discovered. Following living in eight countries on five continents, his experiences overseas became the cornerstone for creating Lodgeur’s flexible and fully-furnished apartments in Houston.

Here are some of the main distinctions between renting homes in the United States and the United Kingdom:

Furnishings

In the UK, apartments are typically rented fully furnished, with furniture and household items provided by the landlord. In the US, apartments are almost always rented unfurnished, so renters must provide their own furniture and household items. The British don’t have U-Haul or a shared image of a couple eating pizza amid boxes on their moving day.

Leasing agents always tell us that tenants ask to rent the model unit – for some reason, they can’t! Lodgeur is based on the idea that the apartment should be ready to live in when you collect the keys. Moving shouldn’t be a major chore. If people want a moved-in already home, why wouldn’t you offer them exactly that?

(For more info on furnished apartments, check out our post Move People, Not Furniture post.)

Floor plans

In the UK, floor plans are typically included in rental postings, while they’re hardly ever accessible for single-family homes or apartments offered by furnished rental businesses in the US. At Lodgeur we provide both floor plans and virtual tours so you can ensure that the layout fits your needs – even before reserving it!

Lease terms

In the UK, tenants are typically granted a lease for six months whereas in America, it is likely to be twelve. This means that when renting for less than a year, you often have to pay higher rates each month due to potential vacancy between renters.

Life doesn’t always fit into 12-month plans, so we at Lodgeur offer more flexible solutions. Our short term rentals and early termination options on longer stays make sure that your booking fits your life instead of the other way around. We understand that sometimes you need to adjust plans quickly, and our services will help ensure that they are much easier to do!

Professional Landlords

Here in the US, it is not unusual to see single businesses managing several apartment complexes with 200-600 units each. In contrast, most landlords in the UK are residential property owners who invest in 1 or 2 properties at a time.

Moreover, when leasing from professional investors and large organizations within the United States you can often enjoy access to recreational facilities such as gyms, swimming pools and pet amenities! Compared to independent landlords, professional property managers are more likely to provide consistent maintenance and upkeep of their units. That’s not always the case with individual owners, who vary more widely in keeping their properties in good condition.

Utilities

In the US, it is common for renters to be responsible for paying their own utilities, such as electricity, gas, and water. In the UK, utilities are often included in the rent and the chore of connecting utilities falls to the landlord.

With landlords staying in place even as tenancies change, it’s only logical for the landlord to manage the utilities. Likewise, Lodgeur apartments are ready for you to live in – with wifi and all utilities connected too. That means no extra appointments or contracts, and definitely no deposits. By making Lodgeur furnished apartments available with all utilities connected, we take the hassle out of maintenance and make it easier for renters to move in and out quickly.

Maintenance

In the United States, tenants are expected to take care of regular maintenance tasks such as changing air filters or light bulbs, cleaning gutters, mowing lawns, and repairing minor damages. Regular maintenance tasks may also involve preventive maintenance tasks such as checking smoke detectors and ensuring that all appliances are working properly. Landlords are usually responsible for larger repairs such as fixing broken windows or replacing the roof.

In contrast, in the United Kingdom it is typically a landlord’s responsibility to maintain their rental property, including both preventive and repair maintenance tasks. This means that renters don’t have to worry about taking care of any maintenance tasks – landlords handle it all! With Lodgeur furnished apartments, tenants get the benefit of all maintenance needs being taken care of by the landlord, making it easier to move in and out quickly without worrying about who will fix things when something goes wrong.

A subscription for your home

As you can see there are quite a few differences between home rentals in the US and UK. The furnished apartment model of Lodgeur looks to bridge those gaps to create a more intuitive rental experience for those moving in and out of furnished apartments. With furnished apartments, tenants can enjoy the same sense of home from wherever they are, without having to worry about lugging furniture around or haggling with lease terms. It’s like a subscription to a home.

Click here to book a home in Midtown Houston or the Texas Medical Center!

Jan 22 2023

Move people, not furniture

Lodgeur’s founder was quoted in the New York Times, in an article about the circular economy and fast furniture: “‘Fast Furniture’ Is Cheap. And Americans Are Throwing It in the Trash.” Here, we elaborate on why renting furnished apartments reduces environmental waste.

The shift from bulky DVD collections to a focus on digital assets and experiences

As Gen Z and millennials come of age, they are increasingly valuing experiences over things. This shift in consumer behavior is driven by a desire to reduce their environmental impact, embrace minimalism, and prioritize meaningful experiences. These generations want more than just furnished apartments for an extended stay; they want to make sure their money goes toward something that will leave lasting memories. To achieve this goal, many have embraced the concept of circular economy–extending the lifecycle of products and materials to reduce waste and conserve energy. By investing in experiences rather than things, Gen Zers and millennials are helping pave the way for a more sustainable future.

Gen Z and millennials are pioneering a new way of living that puts experiences over possessions. In comparison to previous generations, Gen Zers and millennials buy less stuff. They have Netflix accounts instead of DVD collections. They prefer digital assets and experiences to portable property.

Shift to flexible, furnished apartments

By embracing the concept of circular economy–extending the lifecycle of products and materials to reduce waste and conserve energy–Gen Zers and millennials are helping pave the way for a more sustainable future.

This shift in consumer behavior is further evidenced by the increasing demand for furnished apartments and extended stays. It’s easier on your wallet, back and environment to move people instead of furniture into your next home.

Moving into a fully furnished apartment has numerous advantages over dragging furniture to an empty unit. This blog discusses the big ones.

Convenience is the ultimate luxury

Furnished apartments provide an effortless solution for those who are moving, as they can move in and begin living immediately. The bed is made and the wifi is ready. This is especially beneficial for individuals who may not have the time or funds to acquire and arrange their own furniture when relocating to a new city.

Moving into a furnished apartment can be an incredibly convenient process for those who are relocating. Not only does it save them the hassle of bringing their furniture along, but also the time and money it takes to purchase new pieces.

Furnished apartments come with everything necessary to establish a comfortable and home-like atmosphere, such as fully furnished kitchens complete with housewares, like cookware and dishes, vacuums, bed and bath linens, and much more. All utilities are already set up, helping to save the hassle of setting appointments, signing contracts or paying deposits.

Flexible extended stays – because life is unpredictable

Furnished apartments can be an ideal choice for those in the process of transitioning – such as students, interns and business travelers. These people may not want to purchase furniture for a temporary residence, making furnished apartments the go-to answer that provides them with the flexibility they need.Furnished apartments can be a great option for those who are experiencing change in their lives, such as students, interns and business travelers. In these cases, furnished apartments provide the flexibility individuals need without having to worry about purchasing furniture for what could be a temporary residence.

Renting furnished apartments can also give the freedom to relocate quickly and easily, without being tied down to furniture. This allows for a much more mobile lifestyle and opens up many opportunities – from extended stay to temporary residencies or even just a place to call home during a transition period.

Having the ability to terminate your booking on short notice, allows you to stay as long as you like while you look for your “forever home”. We block the booking calendar so you can extend your booking. And if you find that forever home or your work assignment ends sooner than expected, you can terminate that extended stay on 14 days’ notice.

Renting furnished apartments is more cost-effective for extended stays

Lodgeur’s Digital Nomad Suites are ready for WFH and conference calls.

If you’re looking for an apartment with fewer long-term commitments, opting for a furnished one can be much more budget-friendly than renting an empty space and then buying all the furniture. Moving into a furnished apartment can be an incredibly convenient and cost-effective solution for extended stays or long-term leases. Not only will you save on upfront costs of purchasing items for your home, but furnished apartments also provide savings down the line by eliminating ongoing costs such as installation fees, delivery charges, and storage fees.

Space-optimizing design

Furnished apartments are the ideal choice for those seeking a space-saving solution, as they come fitted with furniture specifically tailored to fit their dimensions. Moving in furniture from elsewhere can take up more room and prove expensive compared to furnished dwellings that already have it all!

The environmental benefits of joining the circular economy

sentence consume less share better spelled in scrabble

By using furnished apartments, you can also take part in a circular economy; this means that the furniture is reused with each new booking. This way, people benefit from furnished apartment rentals while reducing the need for new furniture production and reducing transportation waste.

Together, we’re promoting the reduction of resources consumed and waste produced. It also helps reduce our collective carbon footprint in the long run. So if you’re looking for an extended stay or relocating to a new city, consider furnished apartments for a smart and sustainable solution. Move people, not furniture!

Professional styling vs. mismatched design

Professionally furnished apartments offer all the comforts of home, with an aesthetic charm and particular design that many people lack the time or money to achieve on their own. Instead of working around a few existing pieces of furniture picked over the years, a professionally designed apartment means everything was selected to coordinate together. Not only are these places invitingly cozy, but they provide a sense of ease knowing you don’t have to worry about designing your living space from scratch.

Choose a furnished apartment for your next home

Lodgeur at Mid Main Lofts.

In summary, furnished apartments are a convenient and cost-effective solution for people who are moving, offering flexibility, turn-key solution, space-saving, and professional styling. It can be a great option for people in transition, such as students, interns, business travelers or people relocating to a new city.

By choosing furnished apartments, you can make your move easier – with less stress, more convenience and a cost-saving approach. So don’t worry about hauling furniture from one place to the other; just book a furnished apartment and get moving!

Dec 29 2022

Short-Term Rentals vs. On-Demand Housing: What’s the Difference?

Traditionally, renting a place to sleep always required a fixed term. Whether it was a 3-night night hotel booking or a 12-month lease on an empty apartment, you needed to fit your life around someone else’s calendar.

But over the past decade, two new rental trends have emerged: short-term rentals and on-demand housing. These two models blur the lines between booking and renting, allowing people to rent a furnished place to sleep without having to commit to a long-term contract. But what’s the difference between short-term rentals and on-demand housing?

What are short-term rentals?

Short-term rentals, also known as vacation rentals, are typically booked for a few days or weeks at a time. Think Airbnb or VRBO bookings. They are often furnished and include all the amenities you would expect from a hotel, such as linens, towels, kitchen appliances and utensils, and wifi.

Short-term rentals typically have set booking dates and offer guests the flexibility to rent for a predetermined amount of time. For example, if you’re looking for a short-term rental in a city, you would typically be able to book it only for firm dates.

If you’re looking to book a popular short-term rental for an extended stay, a weekend booking in the middle of your intended dates may thwart your booking, or the ability to extend your stay if you want to stay longer.

What is on-demand housing?

On-demand housing is a type of booking that allows guests to rent a furnished apartment for as as many nights as you need. Like a short-term rental, on-demand lodging is fully furnished and provides all the amenities of a hotel and short-term rental (linens, kitchenwares, etc.).

Unlike short-term rentals, on-demand housing does not require that guests commit to a fixed term. When an extended stay guest (30+ nights) books on-demand housing, the calendar for that furnished apartment is blocked so the guest can extend their stay as many times as they need. It’s open-ended, flexible and designed to help guests whose lives don’t fit into neat boxes.

Lodgeur guests on extended stays are able to terminate extended stays on 14 days’ notice, subject to a 30-night minimum. We call this our Peace of Mind Policy.

A travel nurse whose contract is extended or terminated can easily extend or shorten her booking. A patient at the Texas Medical Center can flex their booking dates as his treatment plan changes. A relocating professional can move into her next home when she’s ready, without the pressure of a fixed move-out date. Lodgeur’s guests have stayed for as long as 13 months in our on-demand housing! This particular guest only initially booked for one month, but extended his stay 12 times.

The world is moving toward flexible, on-demand housing that you can book on your phone like a subscription. It’s a convenient, cost-effective option for people who need flexible, extended-stay housing without having to commit to a specific term. We believe in the future, most people will rent furnished homes on flexible terms.

The bottom line

Short-term rentals and on-demand housing offer flexible booking options that bridge the gap between hotel stays and long-term leases. Whether you’re looking for a place to stay for just a few days or an extended stay, they both provide an affordable way to rent a furnished apartment without having to commit to a long-term contract.

The key difference is that while short-term rentals require guests to commit to their booking dates, on-demand housing allows them to extend their stay as many times as they need with no long-term commitment. Ultimately, the choice between a short-term rental and an on-demand housing booking depends on how much certainty you have around your plans.

Is Lodgeur available for short-term rentals?

Yes! Lodgeur opens up its booking calendar for short-term rentals within the next two weeks. If you’re coming to Midtown Houston or the Texas Medical Center, check out our stylish furnished apartments at Mid Main Lofts and Elan Med Center.

Nov 12 2021

Why Airbnb has a pricing problem, and what to do about it

Airbnb has a pricing strategy problem on extended stays (28+ nights), which make up to 25% of the nights it sells each quarter. The reason for this disconnect is that its service fees are too high compared to the value it brings as an intermediary to hosts and guests on these longer stays.

That may impact its ability to capture $210bn in long-term stays as stated in its IPO prospectus ($48bn in the serviced apartment/corporate housing segment and $162bn or 10% of traditional real estate rentals).

Airbnb has once again reported that a substantial part of its bookings come from extended-stay guests (those staying 28 nights or more). In market updates since Q3 2020, the total number of room nights booked as extended stays has averaged between 15.5-16m each quarter, representing 19-24% of total nights booked on the platform (or the equivalent of nearly 176,000 listings occupied full time). And in certain markets, the figure has been as high as 60% (our own data would support this, as we’re running at 75%).

13. So basically, people aren’t just traveling on Airbnb, they’re now living on Airbnb

— Brian Chesky (@bchesky) November 9, 2021

Back in late May, a headline from The Verge caught our attention: ‘Airbnb’s CEO thinks the platform can replace your landlord’. In the article, Airbnb’s CEO Brian Chesky said that deposits, long-term leases, and proof of income are outdated.

I think eventually in the future people will start paying for rent the way they pay for cable television, or for Netflix, you pay on a month-to-month basis
Brian Chesky
Tweet

And we totally agree with this.

In fact, this is the foundation of our company’s thesis: residential real estate (especially apartment living) isn’t aligned to pillars of the 21st-century economy such as flexibility, convenience, and asset-light lifestyles. But that’s a story for another day…

Why Airbnb won’t be your next landlord

That headline from The Verge has been bugging us for six months now, so it’s time for me to get it off our chest…

Let’s be clear on two things:

Airbnb won’t replace your landlord. It’s like your realtors, apartment locators, or leasing agents since it takes a commission from the property owner for finding a renter.
Airbnb needs to change its pricing model. It needs to change its pricing model to capture this market and likely expand its monetization model.

In this article, we’ll dive deeper into our rationale, based on our experiences running Lodgeur, where 75% of our room nights are rented by extended-stay guests.

How Airbnb makes money

Airbnb makes money primarily by charging a service fee to hosts and guests. This fee is predominantly paid by the guest, adding on average 14.2% to their cost, and 3% by the host (in a few markets, only the host pays the fee, and in others, they can elect to pay the whole fee).

From analysis on our own listings, the average guest service fee is a smidge above 14.1%, but drops by a quarter if you book stays of 28 nights or more, to 10.6% or so. In other words, Airbnb can expect to receive 17.1% of the rent and fees charged by the host on short stays and 13.6% on extended stays. The guest may also pay local occupancy taxes, depending on the market and length of stay.

28 nights is also the magic number at which monthly pricing discounts (if offered by hosts) kick in. But a word of advice – if you see ‘Occupancy taxes and fees’ listed, these are often waived at the 30-night mark (depending on the local county, city, and state – we collect three sets of taxes in Houston). Unfortunately Airbnb’s system doesn’t flag this to guests, but we let them know manually. In fact, booking a stay of 30 nights with us is actually 15% cheaper than booking 27 nights once you add up the monthly discount, the service fee discount, and the occupancy tax waiver.

On the stay of 30 nights then, the guest will have paid $2,775 and Airbnb collects $341 between the host and the guest, which is equivalent to 13.6% of the actual cost charged by the host of $2,509 (of which it receives $2,434)

Screenshots from Airbnb showing the cost of booking 27, 28, or 30 nights

The core value of Airbnb’s platform is brokering trust

Pricing is probably our founder’s favorite ‘P’ of the traditional 4Ps marketing framework because it is so often overlooked. He loved it so much that his master’s thesis at the University of Cambridge focused on consumers’ marginal willingness to pay in short-term rentals. His research showed that while Airbnb provides value by making it easier for guests to find a place to stay and for hosts to attract these guests, the key value it sells to each side is trust.

That’s because using a marketplace platform such as Airbnb involves asymmetric information and risks, made worse by the presence of non-accredited individuals and companies (versus hotels). Adverse selection (famously described as the ‘lemons’ problem when buying a used car by Nobel prize-winning economist George Akerlof) arises when information asymmetries arise in a market. This is made worse in markets where consumers cannot inspect the quality of a service/product prior to purchase.

For experiential products such as booking accommodation, there is a high cost of failure. You can return a faulty product, but you can’t return a bad experience. The risk stretches beyond poor quality accommodation, with crime and a risk to personal safety in extreme cases.

That’s why Airbnb goes to great lengths to help build trust and accountability between potential guests and hosts through a variety of design elements (there’s even a TED talk from Joe Gebbia, co-founder of Airbnb on the subject).

No on wants to stay in an Airbnb like this…

The value of Airbnb’s service rapidly diminishes the longer you stay

The question is, what is the value of this peace of mind provided by Airbnb?

To answer this, take a second to think about a bad experience you’ve had with booking accommodation, be it a hotel or short-term/vacation rental…

How soon did your gut tell you that there was something wrong?

Was it as you were pulling up to a property lacking curb appeal in a dodgy neighborhood?
When you first walked in and saw that the property’s condition didn’t match the photos?
Or after a restless night on an uncomfortable bed being kept awake by excessive noise?

Our guess is that for most people, your mind was made up within the first 24-hours or less.

On a short stay of a few nights, you probably don’t mind a portion of your fees going towards peace of mind – say $40? But on an extended stay, how much are you prepared to pay on an ongoing basis once you’re satisfied with the quality of the product?

Airbnb’s service fee adds 10.6% to the cost of an extended stay, adding hundreds of dollars to the monthly rental cost. If you were going to book a place to live on Airbnb for a year, you could get six weeks free by booking directly with us, the operator. Our longest stay to date, by the way, is a whopping 282 nights. And our average extended stay guest spends nearly 70 nights with us.

The truth is, Airbnb has captured the market for extended stays because people don’t know where else to book a place for a few weeks or months. There is no dominant mid-term stay website that has the same brand recognition or reputation as Airbnb.

But why would you continue to keep paying Airbnb each month? Some people do, but many guests will prefer to book direct, particularly if the host is a professional operator that has the capability of processing direct bookings.

You’d be dancing in your living room too, if you saved hundreds of dollars a month

How should Airbnb change its pricing and monetization strategy?

If Airbnb wants to capture 10% of the long-term rental market for real estate, what needs to happen to its pricing? The simple answer is that it needs to drastically reduce its service fees in accordance with the length of stay. The service fees for both the host and guest need to become so low that it’s not worth the low friction switching costs of booking direct.

What does that service fee burden look like? Well, if apartment landlords are willing to pay a locator one month’s rent and the average tenant stays two years, then that’s equivalent to 4.2%. And remember, the locator is probably spending a few hours accompanying you on various in-person visits, so their costs are far higher than Airbnb’s costs. I think therefore Airbnb needs to aim to get its service fee down to 3% or less for both the host and guest: a total of 6%.

There are a number of ways that it can achieve this, namely by reducing costs, increasing revenues through ancillary products, and by increasing the value of its product.

For example, Airbnb can reduce costs by encouraging a switch of ACH payments or charging a fee for credit card payments. It can earn a commission by offering supplementary insurance products for both parties, from renters’ insurance for guests to home insurance for hosts (they’d also love to see a squatter protection product). It can increase the value of its service by providing a positive rental history and contribute to the guest’s credit history – something potentially very important for international guests who don’t have a credit score and find it very difficult to lease a traditional apartment.

Essentially, Airbnb needs to take a wider perspective of ways to monetize its relationships with both guests and hosts, which we think will come by taking on more of a fintech mindset. And who knows, maybe it can even eliminate the service fee entirely!

While Airbnb has received its fair share of criticism from the hosting community (and is still viewed negatively by many in real estate circles), we are a big fan of the customers it brings to Lodgeur. We don’t mind paying the 3% host service fee, but it gives us a real knot in our stomachs when we see the fees that our extended stay guests pay them, especially those who chose to extend their stays for multiple months. Unfortunately, Airbnb’s terms of service prohibit us from soliciting their business directly, but hopefully, consumers will start to question the economics of booking through online travel agencies such as Airbnb and instead vote with their wallets by booking direct.

About Lodgeur

Lodgeur helps apartment operators boost their occupancy and NOI. We turn empty units into flexible furnished rentals and manage them to attract a new type of resident.

Find out more about partnering with Lodgeur.

A furnished apartment designed by Lodgeur in Houston

May 11 2021

What is multifamily hospitality?

Apartment communities can boost their NOI by meeting the demand for furnished on-demand housing. We explain how to add a Multifamily Hospitality Program to your revenue management strategy.

In my article for the May 2021 issue of ABODE published by the Houston Apartment Association (HAA), we explored changes accelerated by COVID-19 in work, life, and travel, and the challenges and opportunities this creates for the multifamily industry.

Specifically, we identified the opportunity to convert vacant inventory into furnished, on-demand housing to cater to today’s consumers looking for flexibility and convenience.

In this article, we explore the different options available to communities to capitalize on this market opportunity and the operational considerations.

Tomorrow’s renters want flexibility and convenience so that they can focused on experiences and not things

What is ‘multifamily hospitality’?

Renting furnished lodging in apartment communities isn’t new. For decades, corporate housing providers housed company employees and expatriates. More recently, sites such as Airbnb popularized short-term rentals in urban markets as an alternative to staying a hotel for leisure travelers. Today, the lines are increasingly blurred between business and leisure travelers, with the rise of a ‘work from anywhere’ remote workforce. That’s why we call this segment ‘multifamily hospitality’: allocating a portion of a community’s inventory to furnished lodging rented flexibly.

Is your community a fit? Are your apartments desirable?

But what are these renters looking for? Firstly, the golden rule of real estate “location, location, location” applies even more strongly to multifamily hospitality customers. Is the neighborhood desirable and convenient for business and leisure travelers? A good rule of thumb is to see if there are hotels nearby and their respective flags (the more expensive, the greater the opportunity). In Houston, key areas of demand include Downtown, Midtown, the Museum District and Texas Medical Center, and Galleria. Secondly, the communities should be recently built or renovated to high quality, and include desirable amenities such as a swimming pool and gym. Finally, the apartments themselves should offer conveniences such as parking, a dishwasher, a washing machine, a clothes dryer, and fast internet access. And of course, everyone loves quiet units with natural light, nice views, and high ceilings. The only difference we’d note is that temporary residents won’t usually pay a premium for a larger floorplan since they travel light and don’t need the additional space.

Communities with hotel-style amenities such as pools and 24/7 gyms will attract new residents looking for flexibility and convenience

Setting up the furnished apartments

The items that you buy to furnish, decorate, and equip the apartments will have the greatest impact on the revenues that you generate. Our proprietary research shows that how an apartment looks is the greatest determinant of a customer’s willingness to pay. Furthermore, how it is equipped and its overall comfort will impact their review scores which is the second most important revenue driver. On average, there are 125 purchasing decisions that go into equipping a typical one-bedroom apartment: knowing how to allocate each dollar judiciously will help to maximize returns on investment. The three most common mistakes are overspending, sparsely furnished spaces that are uninviting, and not using professional photographers.

Marketing the furnished apartments

Once you have your listing photos, you will need to write enticing copy and price your listing properly. Data providers such as AirDNA and Transparent can help with market data. Revenue management tools such as PriceLabs and BeyondPricing can help to save time and increase income through dynamic pricing tools that automatically adjust rates according to local market supply and demand, seasonality, day of the week, and special events. These tools also allow for custom rules governing the minimum length of stay, length of stay discounts, and advanced customizations based on building or portfolio occupancy. Alternatively, a number of companies provide revenue-management-as-a-service, such as Rented.

If great interior design and photos are key to creating a desirable listing, then distribution is key to getting bookings. This means having your listing appear across the multiple different websites that people use to find and book accommodation. The 800-pound gorilla in this space is Airbnb. It is an incredibly powerful tool to find both short and extended-stay renters in urban markets and will initially help buildings to acquire the majority of their bookings. But there are multiple other mainstream online travel agencies (OTAs) to consider such as Expedia (Hotels.com, Travelocity, Orbitz), VRBO, and Booking Holdings (Booking.com, Priceline, Kayak, Agoda). And there is an ever-growing set of niche sites such as Misterb&b and Furnished Finder, corporate-focused sites such as Reloquest and AltoVita, and furnished rental sites such as Kopa, 2nd Address, and Anyplace. You will need a property management system (PMS) and channel manager to upload your listing information and photos, availability, and prices to each channel. This will save you time and avoid the risk of double-booking.

OTAs will help you rent your units typically within 24-48 hours of going live. They are an incredibly powerful customer acquisition tool, however, the commissions for using these sites can get expensive, up to 15% of the booking value. That’s why having the ability to directly take bookings is important to reduce costs. Over time, direct bookings should drive the majority of your bookings. This can be achieved through search engine optimization, digital marketing, and remarketing to past customers. Larger operators will also want to have a sales team to directly approach relocation companies, corporates, and convention organizers.

Risk management

Keeping your community safe from bad actors is critical, whether you’re renting to long-term tenants or short-term travelers. If you’re struggling with your occupancy, the last thing you want is for your current residents to be unhappy. Short-term rentals sometimes have a bad reputation, however, this is primarily due to amateur hosts, illegal listings, and unprofessional operators. That’s why risk management and customer due diligence are essential elements of a multifamily hospitality program. It’s not sufficient to trust that the OTA has verified the customers they’ve sent you. At my company, we employ a four-step process to keep communities quiet and safe:

Deter bad actors. Fraudsters, criminals, and partygoers go for easy targets. The best defense is to avoid these bookings through deterrence, for example, premium pricing, strict house rules, publicizing your security procedures, and using fraud prevention tools through your payment processor.
Screen renters. In the same way that you need to leave a copy of your driving license to tour a community, renters must supply their ID to book accommodation. Software tools exist to verify the ID’s authenticity and even to employ facial recognition technology to match a selfie to their photo ID. And of course, once you’ve verified a guest’s ID, criminal checks can also be performed.
Secure the property. Self-check-ins grew in popularity during the COVID-19 pandemic, however, these can present risks if controls aren’t put in place. Only screened guests should receive check-in instructions and codes to pick up their keys. Traditional realtor lockboxes are not sufficiently secure, since codes are infrequently changed. We recommend smart solutions with unique codes for each guest. It’s not sufficient to only screen renters: staff and service providers also need to be vetted and have their access carefully managed. Finally, proper commercial insurance must be in place to protect for liability and damages to premises.
Monitor compliance with rules. It’s important to monitor properties to ensure compliance with house rules. There are smart devices such as privacy-compliant noise monitoring and tobacco/marijuana sensors that can send alerts to notify a property manager of infractions. Entryway cameras can also be used to verify that guests comply with occupancy limits and pet policies.

A hospitality mindset in operations

One of the biggest shifts communities need to take to run a successful multifamily hospitality program is around the increased expectations of these renters. Emails and messages should be answered fast: within minutes for high-priority requests. Maintenance issues should be addressed the same day ideally, or as soon as possible for lower priority fixes. Information should be readily available about the community and the surrounding area – similar to a hotel’s guest information book or concierge, but ideally in digital format. Arrival at the community to check-in should be simplified as much as possible: easy parking, 24/7 key pick up, and clear instructions to get to the unit itself.

A hospitality mindset is a critical amenity to create a great resident experience in multifamily communities

What are your options to capitalize on this opportunity?

So far we’ve discussed how to run a successful multifamily hospitality program, but not considered how this should be delivered. There are fives approaches that property owners can take:

Ignore. Some communities may decide it’s not worth the effort or risk, especially if they have very high occupancy rates. If you do, make sure to monitor for illegal subletting by checking lodging websites such as Airbnb, outsourcing to a third party, and checking for lockboxes on site.
Allow residents. Some communities have allowed residents to sublet, however, we do not recommend this because of the inherent risks posed by amateur hosts. Plus, consider if you want tenants that need this additional income to afford their apartments…
Master lease. For decades, communities have rented apartments to corporate housing providers and more recently to short-term rental brands. While this can give you a boost in occupancy and rents, there are good and bad operators – size is often not indicative of professional operations. A corporate lease can also give an illusion of stability for owners: the COVID-19 pandemic resulted in multiple operators going out of business.
Do-it-yourself. This enables operators to maximize potential revenues and control but requires a different set of skills and technology to implement since traditional property managers don’t offer this service. The learning curve and costs may not make it worthwhile.
Partner with a specialized manager. Working with a specialized property manager to manage the furnished lodging can provide a better balance of risk and reward versus a master lease or DIY approach. It can generate more revenue in good times versus a traditional lease and eliminates the risk of a default in bad times. Working with a partner instead of a corporate tenant also provides greater transparency into performance.

About Lodgeur

Lodgeur helps apartment operators boost their occupancy and NOI. We turn empty units into flexible furnished rentals and manage them to attract a new type of resident.

Find out more about partnering with Lodgeur.

Lodgeur can create and manage an apartment community’s Multifamily Hospitality Program

May 10 2021

How we work, live, and travel is changing

Is the multifamily industry ready to capitalize on the opportunity?

Long ago, nomadic hunters and gatherers sought out resources in new lands. Farmers, on the other hand, were tied to one location, much as modern workers became bound by the need to be close to their place of work or office.

In 2021, workers are shifting from a fixed-location lifestyle to a nomadic lifestyle at an unprecedented rate. “Digital nomads”, as they are called, can work from anywhere with an internet connection. Without the traditional fixed job location rooting them in one place, they are beginning to live nomadically. The rise of remote work has freed growing swaths of the economy from the constraint of living near an office.

Unfortunately, housing options still tend to tie people down. We think that needs to change. This article explores why multifamily operators should consider converting a portion of their inventory to furnished apartments and on-demand housing to take advantage of and adapt to changing behaviors and lifestyle.

A more traditional nomad roaming the desert with a camel

COVID Accelerated Trends Toward Remote Work

There’s no denying COVID has transformed the way we work. With everybody staying home as much as possible, companies and employees alike who were nervous about remote work have discovered its many advantages.

However, in reality, COVID only accelerated what was already happening. In 2019, there were already over 26 million Americans — about 16% of the workforce— who worked remotely. Furthermore, in the 10 years between 2005 and 2015, remote work rose by 115%.

Now that so many people were forced into trying it, it’s unlikely the world will ever go back to the way it was before. The popularity of remote work is undeniable with 99% of remote workers saying they would like to continue working remotely, at least part-time, for the rest of their careers.

The benefits of remote work are also undeniable. Employees save time and money by not having to commute to work, maintain extensive work wardrobes, or buy lunch out every day. Businesses reduce their office and workspace costs while gaining access to larger talent pools. Cities are less congested with fewer people on the roads going to work. Although adjustments to a remote work environment require coordination between management and staff, most remote workers (77%) feel more productive at home.

Even though many positions will continue to require an employee’s physical presence, about 55% of businesses globally say they can offer some capacity for remote work. In other words, a lot of people are being freed up from being tied to a specific location for work.

More and more people will work from home or work from anywhere

The US Lags Behind International Trends for Rental Properties

However, mainstream housing options in the US do not typically provide the flexibility that digital nomads demand. Renters typically must sign at least a one-year lease for an apartment. Plus, that apartment will be empty, requiring them to move all their belongings, including heavy furniture, from one home to another when they want to move. Worse, if they’re setting up their first home, they’ll need to spend thousands of dollars even just for the bare essentials to make the apartment livable.

Overseas, renters commonly have more options and flexibility. Furnished apartments can be found on shorter lease terms, giving renters the ability to more easily move from place to place. In cities such as London in the UK, up to 82% of all rented accommodation is rented furnished. The expectation of a costly, time-consuming move is particular to the North American market.

Renting furnished apartments on flexible terms allows apartment owners to take advantage of another market subset as well. Americans have traditionally taken less vacation days, and thus had less opportunity to travel in the past. But flexible work arrangements mean that you don’t need to become a digital nomad to explore. Expect to see surging travel in the US, as the people can “work from anywhere”, even if it is just for a long weekend. And the accommodation they book is changing, greatly accelerated changes by COVID. Instead of staying primarily in hotels as they mostly did in the past, people and companies are booking homes. Airbnb may have captured the zeitgeist of the hotel alternative in cities, but this shift has been emerging over several decades with vacation rentals and corporate housing, and it’s not going to reverse after the pandemic.

Multifamily professionals can take advantage of this trend as well. Unlike leasing a bare apartment, furnished apartment inventory can be more flexibly rented, minimizing vacancy losses. You can not only attract long-term residents but monetize occupancy gaps by attracting demand from people who prefer to avoid hotels when traveling to enjoy the space and privacy of a luxury apartment.

In the future, expect more fully furnished apartments for rent

Convenience and Flexibility Is Disrupting Every Industry

Demand for convenience and flexibility is changing everything we do now. If you want to buy something, you can order it on Amazon and have it delivered quickly to your house instead of driving to multiple retail stores. If you need transportation, you can call an Uber to come to pick you up wherever you are instead of finding a busy street to hail a taxi. If you want to watch a movie, Netflix now allows you to watch what you want on your schedule instead of being boxed into TV times, or worse, picking up a movie from Blockbusters! If you have a minor ailment, your physician can meet with you virtually and send a prescription directly to your pharmacy, instead of requiring you to spend a half day on an office visit.

People are used to having exactly what they want on their terms. They don’t like constraints, hassles, or commitments.

Unfortunately, that’s exactly what most multifamily communities offer.

Multifamily property investing took a nose-dive in 2020. Investors were understandably nervous about what the future would look like. Renters were vacating apartments, especially in larger cities. No longer tied to an office, they sought more space to weather the lockdowns.

With interest rates so low, many renters took steps to become homeowners. If they were going to be stuck at home all the time now anyway, it made sense to purchase their own home. Instead of paying a premium for space in the city center when they couldn’t enjoy the amenities anyway, they might as well build equity in a home.

Though buying a home feels permanent, locking yourself into a one-year lease also has a semi-permanent feel. Life rarely fits neatly into 12-month blocks. Plus, hauling a home’s contents from one place to the next is a cumbersome slog. The cost, rigidity and effort of moving from an apartment to another made the jump from renting to buying a home much easier for renters, especially when they’d already purchased the furniture.

In Houston, our analysis shows vacancy rates rose to 15% in stabilized luxury communities in the Downtown and Midtown markets. That’s an average of 40 empty apartments per community, resulting in a million-dollar annual vacancy loss per building.

While we can point to oversupply and COVID as culprits, the reality is that there’s a product market-fit problem. By furnishing vacant apartments to create on-demand housing, multifamily communities can both diversify their revenue mix and make purchasing a home a less attractive option. Renters want the same convenience and flexibility in housing they get from entertainment, shopping, doctors, traveling and transportation.

Moving Doesn’t Have to Be Awful or Expensive

Moving between apartments is a nightmare, but it doesn’t have to be

With furnished apartments and on-demand housing, moving or setting up a home isn’t such a nightmare. Renters simply pack up their personal belongings, without having to worry about carting or buying furniture, home decor, and other cumbersome objects from one residence to the next. This lighter load makes moving faster, easier and cheaper.

Furthermore, with furnished, professionally decorated apartments, setting up a new place isn’t such a chore. You don’t have to disassemble furniture and reassemble it at the new place, praying you don’t lose any tiny but necessary screws or parts along the way. The bed is already made, and the kitchen is equipped. The utilities are connected, and the WiFi internet is configured. You also don’t have to spend days cleaning and organizing the new space. It’s already been done for you! There are no movers, stacks of boxes, or time lost searching for utility providers.

You can think of it like moving from one hotel to another, but for apartments.

Rising Demand for On-Demand Housing

Remote work, changes in travel trends, and demands for flexibility and convenience have accelerated the demand for on-demand housing. On-demand housing allows people to pack up and move out with minimal notice. Rather than signing leases for prescribed terms that do not align with their real-life plans, renters can use on-demand housing to tailor their housing start and end dates to a particular job contract, internship or other individualized need.

This sounds kind of scary for multifamily companies and investors. One of the reasons for using year-long leases is to ensure income for long periods of time and not having to spend so much time on marketing and finding new tenants. However, rising vacancy rates show this isn’t working. Even during COVID, data shows that converting vacant units to alternative accommodation can increase occupancy and even deliver above market rents, by tapping into short and mid-term rentals.

There’s a reason luxury apartments are sitting empty in so many cities right now: the uncertainties in today’s economy have reduced the market of people willing to lock themselves into a 12-month lease or incur the time and expense of moving.

Revamp Your Multifamily Investment

Forward-thinkers and innovators are the ones who don’t just survive difficult times, they thrive through them. People are looking for flexible housing options — and ultimately are willing to pay for that convenience. Multifamily property operators have an opportunity to adapt their product offering in innovative ways and increase the value of their property. Once you start offering people what they’re really looking for, your vacant apartments fill themselves.

An edited version of this article appears in the May 2021 issue of the Houston Apartment Association’s ABODE magazine.

About Lodgeur

Lodgeur helps apartment operators boost their occupancy and NOI. We turn empty units into flexible furnished rentals and manage them to attract a new type of resident.

Find out more about partnering with Lodgeur.

A Lodgeur furnished apartment for rent in Houston

May 10 2021

COVID-19 is changing the leasing office

An edited version of this article was initially published in the July 2020 issue of the Houston Apartment Association’s ABODE magazine and as an article on LinkedIn posted by the author.

What should the ‘new normal’ look like in a world of social distancing for multifamily leasing offices and staff?

As I write this article, Houston enters its third month of Harris County’s ‘Stay Home, Work Safe’ order. Apartment amenities are starting to open up again, including gyms and pools. Leasing offices are resuming in-person tours. Scientists say that it takes 66 days to establish new habits, so does it mean that will everything return back to ‘normal’? Should it? Or will a ‘new normal’ establish itself?

Out of any crisis comes opportunity, and so I think that a number of practices and workarounds developed to enforce social distancing will prevail. Because the truth is, many consumers would probably be happy for certain standard practices in the multifamily world not to return…

A richer online experience

During COVID-19, owners and operators scrambled to find a way to continue leasing apartments during enforced social distancing. With 90% of apartment renters starting their journey online, high-quality professional photography with a wide-angle lens was already table stakes in the sector. Apartment communities rushed to create virtual tours, typically using Matterport’s 3D platform to create a “digital twin” of any space – something that can now be done in-house with their recently launched Matterport for iPhone app. According to their research, listings with a 3D walkthrough experience lead to three times more online engagement and 87% more views. Users are 95% more likely to call and 90% of agents believe it helps them build a stronger brand in the marketplace. Marketing professionals will also tell you that video can drive engagement and revenues, so consider creating video content that showcases your community.

Technology such as Matterport makes it easier than ever to view a property remotely

Scheduling a viewing

While some people are happy to lease an apartment sigh-unseen, many will not. But that doesn’t mean they need or want a leasing agent to take them around. Or even to have to call to schedule a tour – there are simple tools to manage a calendar online, such as Calendly. Research has shown that 75% of Millenials avoid phone calls because they find them time-consuming and 81% get apprehension anxiety before summoning the courage to make a call. They send emails and often prefer instant digital communications such as Whatsapp. If people don’t like making phone calls, then it stands to reason that many groups of consumers, from Millennials to introverts, don’t enjoy interpersonal interactions with leasing agents. And to be honest, they shouldn’t have to…

Touring a community

There is a range of technologies that make it possible to take a self-guided tour around a community. While realtors have been using lockboxes for 65 years, these present security and logistical challenges. But in the vacation rental industry, it’s now relatively common to be able to do a ‘self-check-in’, even in apartment communities. Travelers receive instructions and a time-limited, one-time code to pick up their keys from a smart lockbox. Keycafe is one such company to offer this technology, which even includes an ID verification service that uses facial recognition to compare a selfie to a person’s identity document to allow them to pick up keys and fobs. Another company called Lynx (previously known as VirtualKey) connects a whole ecosystem of smart devices, such as smart locks on doors, smart lockboxes, intercom systems, garage doors, thermostats and HVAC systems, smart sensors for leaks, motion, and vibration, lights, switches, outlets, water valve controls, and voice assistants from Google and Amazon’s Alexa.

But what other interactions between residents and community staff might disappear for good or become virtual?

Package handling

The rise of e-commerce has been gradually filling apartment offices and lobbies with more and more packages for a number of years now. And during the coronavirus pandemic, online retail orders increased 146%! That’s created a lot of risks for both community staff and residents through increased interactions, not to mention the inconvenience. Even package lockers from Amazon don’t fully solve this problem, due to oddly-shaped or oversized-packages requiring human assistance. Austin-based company Fetch solves this problem by receiving and safely storing all resident packages and allowing residents to schedule a convenient time for Fetch to deliver them directly to their door.

The rise of e-commerce has inundated apartment communities with packages

Resident inquiries and maintenance requests

So what other interactions does your team have with residents? If you don’t know, then you might consider taking a simple log to keep track of these. Consider how many of these in-person interactions were really required. There’s an increasing trend towards self-service: provide access to content that usually sits inside people’s heads online in a knowledge base (take a look at Zendesk Guide and Notion.so for example). You can supercharge this by connecting it to chatbots. Or for residents that prefer to speak to someone, you can still include a phone number or online chat experience (that person doesn’t need to sit in your community’s office though – with access to a well-written knowledge base, they can serve residents of multiple communities). Tools such as Front App can provide a unified inbox experience that handles everything from email to chat, Whatsapp to phone calls. And you can tag inquiries to analyze the reasons prospective renters and residents contact you. I’m still amazed at how many communities continue to handle maintenance requests from residents with pen and paper… The 21st Century replacement is something as simple as an online form from Google Forms, Typeform, or Airtable. Just add a weblink to your community’s website or resident portal, and a few printed signs around the building.

Apartment communities should make it easier for residents to self-serve

A vision of the ‘new normal’

So perhaps in the future, there can be a virtual leasing office option. Renters will search online, view virtual tours and videos of the community, and book a self-guided tour online. They’ll select a time slot (and why limit this to a traditional 9 am-5 pm schedule), and receive instructions and a code to let themselves into the community and selected apartments, once they’ve verified their ID. During their tour, they can send instant messages via Whatsapp with any questions that they have (answered by a chatbot or a virtual leasing office agent), or even ask questions through an Amazon Echo speaker in the apartment, programmed with Alexa Skills to answer any specific questions they might ask a leasing agent (Houston-based company Ask DOSS can help with this). And of course, if they want to lease an apartment, everything can be done digitally. And they can pick up their keys from a smart lockbox, never needing to meet or interact with a physical person. This vision might horrify some in the leasing office, but it would delight many consumers when the world returns to normal… It doesn’t mean that leasing agents will disappear, just that the leasing office should satisfy a broader range of renters purchasing and communication preferences, rather than having a one-size-fits-some process.

About Lodgeur

Lodgeur helps apartment operators boost their occupancy. We turn empty units into flexible furnished rentals and manage them to attract a new type of resident.

Find out more about partnering with Lodgeur.

Lodgeur turns vacant apartments into flexible furnished rentals