logo

Wake up daily to our latest coverage of business done better, directly in your inbox.

logo

Get your weekly dose of analysis on rising corporate activism.

Select Newsletter

By signing up you agree to our privacy policy. You can opt out anytime.

leonkaye headshot

As More Hotels Close, Some See an Opportunity for Affordable Housing

Words by Leon Kaye
Affordable Housing

The hotel industry is hurting. One trade group recently announced data concluding that almost two-thirds of U.S. hotels had occupancy rates mired at 50 percent or lower. Many will never reopen, whether they are roadside inns or luxury hotels in America’s most expensive cities.

It’s difficult finding any silver linings in this pandemic as it nears its seventh month. But in any crisis, there are opportunities. As for hotels, one advantage they present over other properties such as office parks or shopping malls is that they are easy targets for adaptive reuse — if that change means they can be used for the same purpose: providing a roof over someone’s head at night or, even better, for the long term.

The U.S. was already enduring a housing shortage before the pandemic. And with the threat of mass evictions looming, it could become even worse, especially for those who live paycheck-to-paycheck or have lost their jobs as a result of pandemic-related disruptions.

No one wants to see any businesses close. But what if these shuttered hotels, especially the lower- or mid-range priced properties that usually score two or three stars in the travel guides, could be converted into affordable housing? Many already have the infrastructure that renters would like, including an office for administration and security purposes, ample parking, and communal laundry. Then there are the amenities, the “very nice to haves,” such as swimming pools or space for recreation and barbecues. The one heavy lift would be installing the necessary hookups, cabinets and surfaces so residents could have kitchens, but that is still more seamless than building new housing developments from the ground up.

This isn’t just about affordable housing for America’s most vulnerable: These opportunities would also help renew communities and offer cities an opportunity to salvage some lost tax revenues. Such an effort wouldn’t necessarily have to involve the government, either.

One company that is keen on such adaptive reuse is Repvblik, a Los Angeles-based real estate developer that began such a project in Branson, Missouri, over two years ago. The company’s CEO, Richard Rubin, is one of many observers who sees housing costs decreasing over time as renters look to “shop down.” But many renters are still left out of luck even if a $2,500 rental price is slashed in half. In much of the U.S., affordable housing means a price point of well under a grand.

Repvblik’s solution is transforming a hotel that once hosted country music fans who visited Branson’s theaters into what has become a gated community of over 400 one-bedroom and studio apartments. The studios go for just under $500. The one-bedrooms are $200 more. And for those who need furniture, Repvblik is offering options for a modest monthly fee when compared to the costs of going to a rent-to-own outfit. Some benefits of being in a hotel are still apparent — as in, not fussing over the cost of utilities or water. Additional perks include spaces to play sports and, of course, an outdoor pool.

Rubin is also eyeing a similar opportunity in Topeka, Kansas. With organizations including Freddie Mac suggesting that the U.S. could need as many as 3 million new housing units to meet demand, developments like those occurring in Branson are a seamless path toward ensuring more citizens have an affordable place to live.

Image credit: Men Leo/Unsplash

Leon Kaye headshotLeon Kaye

Leon Kaye has written for TriplePundit since 2010, and became its Executive Editor in 2018. He's based in Fresno, CA, from where he happily explores California’s stellar Central Coast and the national parks in the Sierra Nevadas. He's lived in South Korea, the United Arab Emirates and Uruguay, and has traveled to over 70 countries. He's an alum of the University of Maryland, Baltimore County and the University of Southern California.

Read more stories by Leon Kaye

More stories from Investment & Markets