US: The founder and CEO of Apartment Rental Startup Stay Alfred, Washington-based Jordan Allen, confirmed the company`s permanent closure, a month after ShortTermRentalz announced it had ceased trading and closed its social media accounts. Stay Alfred is now in a grey area between the vacation rental and the hotel operator, or as Allen describes the store: “Marriott meets Airbnb.” But Allen sees hotels as competitors rather than Airbnb. Stay Alfred`s catalog of apartments with kitchens and washing machines is aimed at travelers who want to stay more than a night or two, as well as large groups. The rentals were part of a partnership with The M`s owner, Centennial Properties, a subsidiary of Cowles Co., which also publishes The Spokesman-Review. A building at 509 Vine Street, known as the Boekel Building, is transformed into a hotel in the Apartmentstil. All units become short-term rentals – a la Airbnb. And the locals are not happy about it. This is where the potential challenges for individuals lie. Steve Milo, CEO of VTrips, says rental arbitrage will have a negative effect, as real investment trusts [REITs] want to “maximize their income and play specials against competitors to get the best lease on their terms.” It may also notice that its gross margins aren`t growing fast enough before more players flood the category. According to a privileged source, Stay Alfred has left 17 apartments in downtown Savannah, which the company had rented under a long-term master`s lease.
Companies like Stay Alfred, Sonder, Lyric and Domio rent apartments in urban areas under long-term rental (or master-lease) contracts, then install these apartments as a short-term rental for visitors and make them available. With a short-term decline in travel demand, a planned transformation of business travel and an expected shift to leisure markets for holidaymakers, these urban providers are expected to face a difficult path. Lyric and Sonder must comply with strict zoning laws to avoid a possible backlash from Airbnb rentals. Special can`t make monthly rents in San Francisco to meet the city`s rental rules, while in Minneapolis, it was forced to scale back plans after renting 94 units of a 122-unit building to a developer, with neighbors complaining that it took over most of the building. Simon Lehmann, CEO of AJL Consulting, said Stay Alfred, Sonder and colleagues are building consumer-oriented brands with different products for hotels and a “phenomenal” appetite for raising capital. “Wherever real estate investors can get a higher return on investment than for traditional hospital assets or long-term rents, they invest in real estate and look for master property managers. These take more risks but have full control over the availability and quality of the inventory,” he adds. Stay Alfred said he rented 10 floors of a new 45-story apartment tower in Nashville to master rentals.
In a 10-year partnership with developer Tony Giarratana, Stay Alfred will transform 140 out of 350 units in 505 Tower, Tennessee`s tallest building, into short-term furnished rentals. The company helps customers transfer their existing bookings to other short-term rental providers. It is also working to sell some of its assets, along with the funds earmarked for guest refunds, Allen said. . . .