Helping address the need for multifamily housing as hospitality recovers and evolves
Though COVID-19 travel prohibitions and mask mandates are relaxing throughout the country,1 industry experts predict that it may take until 2023 or later for the hotel industry to recover to pre-COVID-19 levels.2 Berkadia notes in a 2021 article that “a number of the hardest hit properties in the pandemic were approaching obsoletion well before March 2020,” with many urban destinations already impacted by low occupancies and declining revenue per available room prior to the pandemic. 3
At the same time, alternatives to traditional hotels continue to thrive as economies slowly reopen.4 The National Association of REALTORS® (NAR) noted in a May 2021 report that “Airbnb has 4 million hosts worldwide, about as much as the combined number of rooms managed, franchised, leased, or owned by the Hyatt Hotels Corporation, Choice Hotels International, Intercontinental Hotels Group, Hilton Worldwide Holdings, and Marriott International,” providing considerable competition to traditional hotels.5
Meanwhile, the available supply of housing continues to trail demand,5 especially as pandemic conditions have changed demands for rental housing.6
From 2010-2020, the number of new single-family and multifamily homes that became ready for occupancy was 6.3 million units behind the demand “arising from household formation and to replace housing lost to demolition or obsolescence,” the NAR report notes, leading rental housing to become increasingly unaffordable, especially to low-income tenants.5
Investors are increasingly recognizing the opportunity to meet this demand by converting these obsolete and struggling hotel assets into much-needed multifamily housing.7
Fairway America was excited to have one of our successful hotel-to-multifamily conversion projects featured as a case study in the May 2021 NAR publication, “Case Studies on Repurposing Hotels/Motels into Multifamily Housing.”
The case study focuses on our partnership with co-sponsor Vivo Living on the conversion of Winston-Salem Residence Inn into Vivo Apartments. Visit www.nar.realtor.com to read more, or download the full report here
2 Krishnan, Vik, et al. “Hospitality and Covid-19: How Long until ‘No Vacancy’ for Us Hotels?” McKinsey & Company, 5 Nov. 2020, https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/hospitality-and-covid-19-how-long-until-no-vacancy-for-us-hotels.
3 Coleman, Andrew. “Checking in on Multifamily Conversions.” Berkadia, 2 Sept. 2021, https://base.berkadia.com/blog/multifamily-conversions-hotel-industry.
4 ”Airbnb Surpasses Pre-Pandemic Levels.” BostonGlobe.com, The Boston Globe, 17 Feb. 2022, https://www.bostonglobe.com/2022/02/16/business/airbnb-surpasses-prepandemic-levels.
5 Cororaton, Scholastica (Gay). “Conversion of Vacant Hotels/Motels Can Help Alleviate Shortage of Affordable Multifamily Housing.” National Association of REALTORS®, 14 May 2021, https://www.nar.realtor/blogs/economists-outlook/conversion-of-vacant-hotels/motels-can-help-alleviate-shortage-of-affordable-multifamily-housing.
6 Lovinger, Joe. “Single-Family Rents Grew More than 5% in Past Year.” The Real Deal New York, 16 June 2021, https://therealdeal.com/2021/06/16/single-family-rent-growth-more-than-doubles-in-april/.
7 Papp, Timea-Erika. “Why Hotel Conversions Work as a Long-Term Housing Solution.” Multifamily Real Estate News, Multifamily Real Estate News, 27 Oct. 2021, https://www.multihousingnews.com/why-hotel-conversions-work-as-a-long-term-housing-solution/.