Principal at HotelSHIFT: Hotel to Apartment Conversion Specialists Chair, Management Department & Associate Professor of Economics at Ferris State University.
Do you combine units when converting a hotel to an apartment building? That is one of the questions I get most frequently. Typically, no. I don’t want to combine units. The main reason: Fewer doors = less income. Combining two studios into a 1 bedroom won’t create more income. However, there are times when combining units makes sense: 1. The hotel has rooms that are REALLY small 2. The hotel has a high room count & there might not be demand in a given submarket for 200 studios (or it might take too long for the market to absorb that many studios). 3. The city demands a mix of units (because of course government knows what my customers want) 4. I need to reduce the unit count because we are short on parking On most hotels I tour, I end up finding a way to increase the room count by about 5% via converting meeting rooms, managers units, and hotel supply storage space to additional units. I don’t follow a “rule” for if units should or shouldn’t be combined - it’s an empirical question - that is, we need to look at the numbers. #hotelconversion #affordablehousing