US: ShortTermRentalz spoke to Stay Alfred founder and CEO, Jordan Allen, about the swathe of companies operating under master lease models and the challenges facing platforms in the multifamily industry.
- Please introduce yourself, the Stay Alfred brand and what services the business provides?
I am a former airborne ranger and captain in the U.S. Army, and now I am the CEO and founder of Stay Alfred. Established in 2011 in Spokane, Washington, we are the nation’s pioneer and leading U.S. provider of upscale travel apartments. We offer travellers ‘their place in the city’ with the space and amenities of an apartment and the consistency and reliability of a hotel.
We’ve grown from just one apartment for rent, to over 2,500 units in 33 walkable cities including San Diego, Miami, Denver, and New Orleans. We have hosted more than 800,000 guests and have accrued 700-plus corporate travel accounts over the last two years. We’re focused on prime downtown neighbourhoods in top cities, master leasing blocks of units or entire buildings, custom furnishing and renting them out on a short-term basis to our guests on our site or other online travel booking sites.
Our units range in size from one, two, or three bedroom units. They all include full kitchens, custom design touches, washers and dryers, cleaning services and many of our properties include on-site gyms, pools, common areas and a plethora of other amenities.
- You have just launched your first Rewards programme. What makes it the first of its kind in the alternative accommodation space and how will travellers benefit from it?
In the hospitality industry, travellers today have more choices than ever before from Airbnb to ‘glamping’. Traditional hoteliers, such as the Marriotts and Hiltons of the world, introduced traveller reward programmes — offering guests points towards future stays, occasional upgrades and more. We’re looking to deliver travellers a first-of-its-kind rewards programme in the alternative accommodations space, offering our guests the opportunity to stay where they prefer and still obtain the points they desire, which resulted in our recent introduction of Stay Alfred Rewards.
When travellers sign up for The Stay Alfred Rewards programme, it automatically enrols them in the ‘Green Suitcase Society’. This is the first members-only club in the short-term rental space, offering our recurring travellers more out of their continued stays. Each of our members will earn one free night stay for every ten collected; receive Green Suitcase Society-only benefits, including exclusive trip giveaways, discounted travels, complimentary upgrades; and invitations to secret social events, from complimentary cocktail hours to concerts at our properties nationwide.
- You also recently appointed Steve Helmbrecht as your president and CFO. What does he bring to the role that will help Stay Alfred to flourish?
Since his start in late-May of this year, Steve has been an incredible addition to the team. He is a master at keeping the train running on time, which is an ever-challenging task in the start-up world. As we assess global expansion opportunity, his international and capital markets experience have already been instrumental in leading us into our next phase of growth, including a European expansion on the horizon. His financial acumen is second to none and he continues to aid us in creating better visibility around what’s working and what still needs improvement. Our home-grown roots in Spokane, Washington will always be at our core, and Steve’s role as a respected community leader is well-fitting into our company values and vision.
- Yourself and Lyric are two of the companies operating using the master lease model. Why do you think this model in particular is starting to take off now?
The master lease model is an extremely efficient way to lease blocks of units as it allows both parties to leverage the scale of the transaction to ensure suitable terms. When we lock into a building for three, five or ten years it’s a long term partnership from the onset meaning we’re a hundred and ten percent vested.
For owners/developers, the master lease model is attractive because we allow developers and owners to instantly eliminate vacancy loss for the duration of the lease while guaranteeing monthly rents without the operating expense burden of turns, vacancy loss or marketing. A master lease provides a more profitable operating model that increases net operating income (NOI) by an average of 25 per cent with an annual escalation clause that ensures improved NOI year-after-year. And, when buildings are in lease-up, we offer properties an immediate path to stabilisation which can be a benefit to closing construction loans. During any phase of the property lifecycle, we’re an immediate, sustainable solution to increase portfolio performance.
- What challenges do you think rental platforms will face when partnering with multifamily platforms to lease empty units and diversify revenue streams? Is this an emerging trend that will continue?
The multifamily industry has been working the same way for hundreds of years. The biggest challenge we’ve faced is educating developers about how the model works. In addition to the long-term stabilisation multi-year master leases provide, by embracing hospitality in their buildings, developers are making huge leaps towards things millennial consumers care deeply about: global community, technology and travel.
To set partnerships up for success, Stay Alfred believes in proactive, transparent communication with residents including a ‘Good Neighbour’ programme that provides a complimentary friends and family stay in their building; a ‘Green Ticket’ pass offering 15 per cent off at any Stay Alfred global location for life; a 24/7 hotline to call with any complaints or concerns; and invitations to all Stay Alfred-hosted special events taking place on-site.
- What are Stay Alfred’s priorities for the next year moving forward?
We are laser focused on identifying a responsible global expansion strategy so that our guests can begin enjoying the comforts of Stay Alfred abroad in addition to continuing expansion in several hot U.S. markets including Miami, New Orleans, Chicago and a number of other cities. Sustainable growth means that we continually hone the guest experience to ‘do better’ as we increase our unit count. We have a number of initiatives in play that help us to deliver heightened travel experiences that help guests ‘live like locals’ in every top city we operate in.
For more information, visit the Stay Alfred website here.