WhyHotel Inks Deal For Fifth New Location After Pandemic Pullback

Sixteen months ago, D.C.-based pop-up hotel startup WhyHotel had laid off a significant portion of its staff and halted new openings as the coronavirus pandemic upended the hospitality market. 

Today, WhyHotel announced its fifth new deal in the past five months, signing on with Foulger-Pratt to open a pop-up hotel at the Press House development near Union Market at 331 N St. NE.

The hotel will occupy 120 units of the 356-unit development on a temporary basis during the building's lease-up phase. WhyHotel plans to launch bookings this week. 

The deal is the third new pop-up location WhyHotel has announced this year, and it has also signed two deals for its new permanent concept that blends multifamily and hospitality, a business line that WhyHotel CEO Jason Fudin sees as central to its future growth. 

"It’s an incredibly exciting time," Fudin told Bisnow in an interview. "Looking back at where we were in April of 2020 and where we are today, it’s been a roller coaster."

In March, WhyHotel announced plans for its first two new pop-up hotels since the pandemic started: at Urban Investment Partners' Kiley apartment building in Southwest D.C. and another in Midtown Miami. 

The company then rolled out the first two locations of its new business line, branded as Hospitality Living. The concept brings WhyHotel on as a manager, and it turns some or all of a building into a hotel-style offering with stays as short as one night, plus furnished units and new services. 

It announced a deal in May with The Meridian Group to bring its Hospitality Living concept to the Rise and Bolden apartment buildings at The Boro in Tysons, and in June it announced a deal with Bernstein Management Corp. at 2500 Pennsylvania Ave. NW.  

The percentage of the buildings that will be furnished and offer short-term stays will vary with every deal. At The Boro, roughly 10% of the 533 apartments will be operated under that model. At the 2500 Penn building, which was previously a 124-room hotel, all of the units will be fully furnished, and WhyHotel expects there will be a roughly equal mix of 12-month leases and short-term stays. 

The services offered to all residents in the Hospitality Living buildings include on-demand cleaning, linen and laundry services, and customized furniture rental.

Fudin had previously planned to roll out the Hospitality Living concept in 2022, but he said there was enough inventory available to launch it this year. He sees this blending of apartments and multifamily as the future of where the asset classes are headed. 

"Our expectation is that as multifamily and hospitality evolve, these co-mingled buildings where you have that hospitality experience and it's a home-like space, that will end up becoming the norm for ground-up development," Fudin said. 

As it rolls out this new permanent concept, WhyHotel is still growing the pop-up business that got it started, and Fudin said it was surprisingly resilient during the pandemic. 

He said that from April 2020 through the end of the year, WhyHotel averaged 85% occupancy in the four locations it had open (two in Northern Virginia, one in Houston and one in Seattle). He said WhyHotel outperformed the hotel sector because it is renting out apartment units that have full kitchens and are more comfortable for people seeking longer-term stays. 

"We had a lot of people who used us as interim housing, whether a traveling nurse or someone relocating to a region or doing project work," Fudin said. "Covid actually created the need for more temporary housing, so that made up a lot of our customers."

Those four pop-up hotels closed as the apartment buildings filled up with long-term renters before WhyHotel announced the two new locations in March. It had hit pause on new locations at the start of the pandemic when it laid off a portion of its staff, and then it started hiring again as it began to grow. 

Fudin declined to share exact personnel numbers for the layoffs and rehiring effort, but he said the company has more than doubled its employee count between April and July, and it expects to double again by year-end. 

"We are knocking on the door of where we were pre-Covid in terms of the size of the team," Fudin said. 

The company previously occupied space in the WeWork on H Street, but in late 2019, it moved into a new 7,500 office in Douglas Development's Uline Arena building, Fudin said. The office sits one block south of the building where WhyHotel just signed its latest pop-up hotel deal. 

The Union Market area is an ideal location for WhyHotel's customers, Fudin said, because they like to be in dynamic neighborhoods with strong restaurant and retail offerings. Other alternative apartment uses have already come to the area: Common operates a co-living space in another newly built apartment on Florida Avenue, which it took over out of bankruptcy from Quarters.

While the latest deal is a temporary one as Foulger-Pratt leases up the building, Fudin said he hopes to sign on with other buildings in the future, as Union Market has a large pipeline of apartment development. 

"One of the downsides of pop-ups, it's fleeting," Fudin said. "It’s only there for the time that there’s inventory. The good thing about a submarket like Union Market is that there’s a lot of inventory coming, so we plan to continue to grow in the neighborhood."

He said WhyHotel plans to continue to grow in the D.C. area and in other markets with its pop-up concept and its Hospitality Living brand. He said it plans to partner with developers earlier in the construction phase for the permanent concept. 

"The highest and best use for a lot of sites is a strong hospitality and multifamily building that we offer; it creates superior returns for the real estate investor and better product for the residents," Fudin said. "It's a better use of real estate, so we're in the early days of that."