The social norms of our modern day times is like nothing we’ve seen before. Millennials are raised in a digital friendly world of the latest technological devices, offering fast paced and quickened responses. Generations of past find themselves trying to keep up with current advancements while some generations have given up trying altogether. Culturly, we are trying to meet a variance of generational lifestyles that are exclusive but still allow for interactive engagements; creating spaces where any generation can feel present and actively involved according to their own preferences. With millennials accounting for the largest percentage of the U.S. workforce the world is continually adapting in order to capture their spending power, while still remaining inclusive of other portions of the population. One particular focus is in the multifamily residential development which is learning from the hotel hospitality industry.
Over the past few years, the hotel hospitality industry has created dual and triple branded hotels. These hotels appeal to a broader range of consumers and are ideal as they cater to business travelers, families seeking a suite for an extended stay and millennials looking for an affordable place to crash. Contrary to popular belief, millennials actually prefer to rent rather than buy a home. A survey conducted on existing home sales reported by the National Association of Realtors showed a lack of interest amongst millennials when it came to the American dream of owning a home. As millennials remain reluctant to buy homes and prefer to rent, developers can use the current dual branded hospitality model and add long term residential apartments to the mix, offering yet another layer of social connectivity for the user and profit for the provider.
4 Ideas the Multi-Family Industry should consider:
Advancements with technology is a modern day benefit to any industry as cell phone apps are more commonly used for every day agendas. Hotels themselves use apps for check in and check outs or rating apps, where guests can rate their service experience. This technology can be applied to apartment complexes for move in and move outs as well as providing tenants a platform to rate their apartment service. Many hotels rely on reviews and guest ratings as potential guests seek high stars and good reviews before reserving their hotel rooms. Some hotel companies have even started reward programs for guests who leave reviews and ratings online. Merging these practical ideas into multifamily developments is something more owners are considering. Social media platforms for example, are used not only for advertising but for residents to connect and feel a more tangible part of their experience; engaging with property managers and even other renters. With our current socio demographics, the digital experience has become more and more user friendly and highly beneficial for rising companies looking to meet the populations variant needs.
Partnerships and Common Spaces
Many hotels have partnerships with spas and retail companies that offer a specific presence within their hotels. Multifamily developments can engage this same idea within their industry providing consumers with unique experiences that they’re already looking for elsewhere. Common areas such as spas, business centers, WiFi lounges and cafes within residential developments will be more engaged than ever and the appeal of a constant mix of people will prove irresistible to the populus demographic. The concept of just hanging out in an active space is the new kind of social interaction. People are often seen in these spaces, checking messages or reading on tablets in the company of people. The idea of marrying the multi family and hotel hospitality sectors; creating a connected, modern day residential living experience with an upscale luxury feel in one single location, is what todays resident is looking for.
Multiple tiers of service such as pools, laundry rooms, gyms, clubhouses, common areas, tanning rooms, etc. at one location maximize efficiencies while benefiting both owners, operators and consumers. With economic surplus coming largely from the millennial generation, it is highly favorable to provide amenities and unique experiences that appeal to this market and still maintain connection points for older generations.
Short Term Rentals
Based on the industry average, multifamily operators have an opportunity to fill revenue gaps left by vacancies by marketing toward consumers seeking short term rentals. Typically, average vacancy rate is 4 to 5 percent, which translates to eight or 10 units on a 200-unit apartment. The idea is that operators can capture lost rent for those unfurnished units sitting on the market by furnishing and marketing them for short term rentals. Being that demand has overgrown supply in the U.S travel market over the last three years and is continuing, converting vacant units into short term rentals is a huge opportunity.
Considering short term rental trends, properties can recover rent that’s typically lost from vacant units without tying up the full month. Apartments and homes in short term rental markets average between 15 and 22 booking nights monthly with average daily rates from $162-$202. A multifamily property that gets $1,500 to $2,000 per month would need to book eight or nine nights monthly to meet revenue expectations. Technology platforms already exist to help advertise available apartment units within vacation rental listings where thousands of world wide travels are searching every day.
There are things that will need to come into play of course for those looking to offer short term rental availability such as quality travel experience which includes similar expectancies like in a hotel, a short term renters screening process for the protection of current residents; protecting residents and avoiding disruption of a current apartments environment as well as offering professional guest experience that isn’t burdensome to permanent residents. This coexisting structure not only fills the gaps of lost rental occupancy but also becomes a marketing tool for renter retention. On top of all this, the idea that units could be used for travelers coming into the area provides opportunity for current renters families to stay in guest units who would otherwise be sleeping on the couch. Ultimately, demand wins and the vision of apartment buildings sitting alongside hotels will one day soon be the standard accommodation practice.