Despite the challenging lodging environment industry due to the coronavirus pandemic, one company is moving forward with launch plans: Dwell Optimal, a company set to offer short-term, apartment-style units, but only to corporate clients. The first units will be filled in late summer in the New York City metropolitan area with clients in the financial services industry, according to the company.
Craig James founded the company after spending more than 20 years in the financial industry, working on Wall Street and in Hong Kong, and the past five years at Delos, a real estate wellness company. While in Hong Kong, James spent about five years in the corporate serviced apartments sector and found a desirable lifestyle.
"You didn't have to deal with utilities, cable, all the monotonies of setting up your own unit, and it had a lifestyle equation that made sense," James told BTN. When he returned to the United States in 2014, Airbnb had begun to take off in the leisure sphere, and James wondered who would tackle the corporate business-to-business opportunity.
Airbnb has struggled lately, having laid off 25 percent of its workforce, with CEO Brian Chesky saying that "it took us 12 years to build, and we lost almost everything in six weeks," and "travel as we knew it is over." And competitor Stay Alfred closed its doors in recent weeks, while Zeus Living, Lyric and Sonder laid off staff and/or reduced their footprints—though the latter also just closed on another $170 million in funding this week.
Still, James is bullish on his business plan of targeting corporations. "Of course, there have been incumbents in the space, but their ethos hasn't necessarily been the business model," he said. "Whereas we are coming from a top-down approach and going directly and only to corporates."
The units will be in Class A doorman buildings from top rental developers, James said, with the target use cases being relocation and project-related travel, indicating stays of 30 days or longer. However, as the company expands—it is looking to open in Austin, San Francisco and Chicago by the end of 2020—it could offer one-week or two-week stays, provided those shorter-term stays are allowed within the constraints of city ordinances.
Still, "we built software that directly answers questions about utilization for corporates, so we do have ongoing talks now with some corporate travel managers," James said.
Among claimed differences between Dwell Optimal and competitors, "[others] are advertising inventory on [online travel agencies]," James said. "We don't do that. If you go to our website, you won't see a booking engine. We set up units only in gateway cities where we are in contract with a corporate. We work directly with companies for one- and two-year leases in partnership with them."
That means corporations negotiate those leases with Dwell Optimal, and developers know the corporation is backing the economics of the deal. "That's an important distinction, because in a post-Covid world, we believe the top priority for any mobility or travel executive is the health and well-being of their travelers," James said. "Precisely because of that priority, we believe the notion of companies taking control of inventory by holding dedicated real estate is not just viable, but might be necessary."
Dwell Optimal also says it's a technology company—though some competitors make the same differentiating claim. "It's fair to say there are plenty in this space that claim to be technology-led organizations, when in fact they are brick-and-mortar businesses with a tech wrapper," James said. "We are technology-led. We started this journey building out a platform to deal with things like travel utilization, so we have dedicated travel-utilization software for corporates. We have an [Internet of Things] platform, which most incumbents have these days, but ours is a proprietary build. We have customization endpoints for the user."
The company offers two levels of customization. In one, Dwell Optimal gives their corporate partners branding elements into the buildout of the units. "A company needs to attract and retain employees, and they're giving their employees a dedicated space," James said. "We want that space to be highly integrated. We want it to be an extension of their brand." The other customization level is for user-specific amenities, such as shopping at Amazon Fresh and having the groceries delivered prior to a guest's arrival, or their choosing to have Kiehl's soap in the bathroom.
James also says he's passionate about the health and well-being aspects of the company. "We didn't build our product for Covid, it just so happens that in a post-Covid reality, some of the engineering we put into the product, like a no-touch check-in process, keyless entry, loaded nutrition, [customized] in-unit exercise so you don't have to go to a gym, the industrial cleaning protocols, we are building all of that in," he said. "All of that speaks to a post-Covid world that allows us to secure business travel. Health and well-being is one of our pillars, and we will compete on that."