Apartment-style accommodation provider SoBeNY, which focuses on the business travel market, intends to move forward with expansion plans despite the coronavirus pandemic, albeit at a slightly slower pace than initially scheduled, managing partner Brian Ferdinand told BTN.
The company currently has about 600 units in its inventory and planned to add well over 1,000 more in the next 12 to 18 months. "We are reassessing that and will slow down a little, given the current environment," Ferdinand said. "But we're still moving forward and completing deals we've done and still doing new deals. We are committed to all of them and are moving forward aggressively."
Some other apartment-style accommodation providers, including Lyric, Zeus Living and Sonder, have said they are retrenching during the Covid-19 outbreak.
SoBeNY is the consumer-facing marketing and distribution brand of CorpHousing Group, a real estate business that acquires and holds the master leases for SoBeNY's units. Ferdinand, who owned a trading company before launching this venture in 2017, heads both. About 80 percent of SoBeNY's business comes from corporate travelers, booked mostly through travel management companies, he said.
The company had planned to launch 100 new units in Los Angeles on April 1, but has pushed back that launch to between July 15 and Aug. 15. Additional units also are planned for Washington, D.C., San Francisco, Dallas and San Diego for later this year.
"I think we are working on a 90-day halt here," Ferdinand said. "If it extends past 90 days, then those dates will roll, but if everything is done, if this clears—and we have confidence it will be in 90 days—we think that's a realistic number."
SoBeNY also operates in Denver, downtown Miami, Miami Beach, Seattle, Boston and New York. In D.C. and New York, the company currently allows only 30-day or longer rentals. However, Ferdinand is looking with an investment partner at buying a hotel in New York that has commercial zoning, which would allow the company to offer fewer than 30-day rentals there. The company did that with its Miami Beach property, where it took an old apartment building that had hotel zoning, got the appropriate licensing, renovated it and operated it as an Airbnb, Ferdinand said.
One way SoBeNY differs from other operators in the apartment-style accommodation space is that it does not depend on outside investment rounds. There is Ferdinand and a few partners, he said. Another is that it runs criminal background checks and screenings on guests, even for short-term stays, minus the credit check because bookings are fully paid on or before check-in. A third is its acquisition strategy.
"A lot of our acquisitions are done around major companies," he said, noting the company has units near Google's Chelsea office in New York and near Amazon's Seattle headquarters. "We look at positioning real estate around major corporations with tremendous traffic, then the convention centers, sports parks and arenas, then event venues. Our core focus is on international and domestic business travelers in the U.S. in major, high-density, highly traveled, major metro areas in the urban core. It's only Class A multifamily or standalone buildings."
With travel currently at a standstill, business for the company has slowed, but when it returns Ferdinand thinks people will prefer more lodging privacy than a hotel offers. "We're seeing it now, to some degree," he said. "People who are traveling or who got stranded, or healthcare workers, they are opting for a private residence over a hotel. That is a trend likely to continue with a focus on cleanliness. You have nightly stays [in a hotel], versus people staying for an extended period of time: 30 days to 90 days, we are seeing now. It's not nearly as transient. When you have very stringent background checks and screening like we do, with medical-grade cleaning, it makes for a safer environment. I think there will be a heavy emphasis on that as people start to travel again."
In the meantime, SoBeNY is offering discounted rates to medical staff being temporarily displaced in its New York, Seattle, Miami, Denver and Washington, D.C., locations.