The Case for Pop-Up Hotels

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WASHINGTON, DC—In recent years, the “shared” economy has moved from the economic fringes to the mainstream. The concept resonates with consumers for various reasons but it is worth exploring why it makes sense from a business perspective. The answer is space arbitrage. Space arbitrage enables a business to capitalize on the potential to offer physical space for new alternative revenues without assuming lease risk.

“Space arbitrage offers marketplaces for connecting under-utilized space to tenants/renters to help landlords manage their properties with greater flexibility,” explains Jason Fudin, CEO and co-founder of WhyHotel.

WhyHotel runs pop-up hotels nationwide in newly built, luxury apartment buildings during the lease-up phase. Rather than directly leasing space, WhyHotel partners with owners and offers a revenue share based on the performance of their pop-ups, Fudin tells GlobeSt.com.

“Our residents enjoy staying with us because, with the fully-furnished unit having a living room, washer/dryer, and kitchen in addition to the bedroom, residents are staying in a luxury apartment with the ambiance and services of a hotel,” explains Fudin. “Our units are also significantly larger than a standard hotel room and can accommodate more people.”

Average stays at these pop-up hotels range from 1 night – 9 months. Nurses, for example, may stay for 3 weeks, physicians reside in a pop-up hotel for a 6-week training course and a student may set-up house for 9 months for a language program.

Owners are able to sell the unit since they can show a similar unit, with a different view of course, or can show WhyHotel’s furnished unit when it isn’t occupied.

Pop-up hotels tend to be successful in high-density cities such as Atlanta, Seattle and Houston.

“Our residents mostly tend to be strong business travelers,” says Fudin. “They like the home away from home feeling with hotel services.”

Pop-up hotels will continue to grow across the U.S. in the next couple of years with consumers gravitating towards these upscale hotel-like residences as the short-term rental market continues to burgeon.

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