Increasing Revenue with Short-Term Stays for a Chicago-Based Multfamily Real Estate Firm
A Chicago-based real estate company that owns and operates multifamily properties was investigating short-term stay opportunities. The executive team was intrigued by the ability to generate additional revenue from vacancies.
Like many multifamily owners and management companies, the firm had real concerns about short-term guests, specifically related to security of long-term residents and the liability of their assets. The potential disruption to their residents by transient guests, the inability to screen guests, and the lack of accident protection were significant barriers. Nevertheless, the company was open to the idea of short-term rentals if security and liability concerns could be managed.
The company’s COO was intrigued by the opportunity to leverage short-term rentals to monetize vacancies. He agreed to pilot our platform to determine if it would address their three main questions:
The following details are from the company’s ongoing 6-week pilot using us at properties located in Columbus, OH and Louisville, KY.
The COO’s security concerns are shared among most owners and operators in the industry. Sites like AirBnB have tens of millions of guests with plenty of peer reviews, but the process to vet a guest’s criminal background isn’t aligned with multifamily’s needs.
We helped ease this concern because the platform is integrated with a multifamily screening provider. Every potential guest must agree to a criminal background check. Our platform does not allow the site to approve (or reject) a guest manually. The results from the screening are applied against a typical multifamily criminal scoring model. The result automatically triggers an acceptance or rejection of the booking request. This met the COO’s needs to understand and approve of the screening process, and it matched a desire to take the decision-making process out of the site’s hands.
The second question raised by the COO and many others within the industry is how to protect the property from damage related to a short-term guest? We managed this issue by partnering with an industry insurance provider. Together they developed a custom short-stay rental insurance policy to protect the guest and the property with up to $100,000 of coverage. A master policy is written for — and provided to — each property so coverages are clearly understood. The COO welcomed the transparency of the master policy and that the cost for each policy is passed to the guest as part of the nightly rate.
The Chicago-based company is only six weeks into the pilot but the early results support the theory that short-term stays can be used to generate revenue for vacant units. The two pilot properties each listed a single guest suite, and in just six weeks we had booked 49 nights with total booked revenue of $4200. All guests have been screened and insurance policies executed.
The COO responded to the early results, “We’re certainly happy, and to be honest, a little bit surprised by the results. Due to the positive results, we’re discussing plans for setting up guest suites at all our communities to take advantage of short-term stays.”
