WaterWalk Hotel Apartments hybrid attracts corporate travelers and $100M investment
Wednesday, December 16, 2015 – A WICHITA, KANSAS-BASED apartment company has set its sights on a different type of resident: extended-stay hotel guests.
WaterWalk Hotel Apartments is a hybrid that offers apartment living with hotel services, said David Redfern, president of WaterWalk’s real estate development and franchising groups.
WaterWalk Hotel Apartments was envisioned by Jack DeBoer, the father of extended stay and creator of Residence Inn, Summerfield Suites, Candlewood Suites and Value Place (now Woodspring Suites). The first WaterWalk property opened in Wichita in November 2014. Redfern said it has run at about 97 percent occupancy in June, July and August.
The WaterWalk prototype has 138 apartments – one, two or three-bedroom. Half of the apartments are fully furnished. Residents receive hotel services such as breakfast, daily housekeeping and soap and shampoo. Renters of the unfurnished suites receive a pared-down selection of hotel services. The business venture requires nine full-time employees.
WaterWalk is growing. UK-based real estate firm Henley has partnered with WaterWalk Hotel Apartments in a $100 million agreement to construct five properties in Albany, New York; North Orlando and Fort Lauderdale, Florida; and Charlotte, North Carolina (which will have two franchises). Construction is planned to start in January.
With the five additional locations, Redfern said 17 WaterWalk properties will begin construction in the next six months. The Wichita location – originally named Value Place Apartments before DeBoer decided to break from the economy-segmented extended-stay brand – is the only one that has opened so far.
Signaling it has intensified its franchising strategy, WaterWalk this week announced it has hired Michael Marquez as senior vice president, franchise development. The franchise target includes current hoteliers as well as multi-family housing and family office owners and developers as well as other real estate investors. Marquez, who was regional vice president at Choice Hotels International, had worked with DeBoer at Candelwood. He is based in Denver.
“What makes WaterWalk an enticing investment for franchisees is the existing real estate portfolio that we offer,” said Marquez. “WaterWalk has already done the difficult work of site selection, entitlements, and land acquisition so properties are in development when the dotted line is signed to transfer the real estate. There are some impressive partnerships that we will be announcing in the next few weeks and I’m happy to be joining Jack DeBoer’s latest mold-breaking hotel concept.”
Redfern said WaterWalk’s hotel-like side attracts many guests from Residence Inn, Staybridge Suites and Homewood Suites. Corporate guests come from these brands because they want an apartment with hotel services, Redfern said. WaterWalk’s rates are daily versus a traditional apartment lease. Prices on TripAdvisor for the Wichita property range from $144 to $229. Redfern said extended-stay corporate guests choose WaterWalk because its apartments have more space than a hotel room and include a washer and dryer, a full kitchen and a spacious living room.
WaterWalk also provides focused service for long-term guests. Redfern said staff have the time to cater to guests’ needs and spend time helping them acclimate to the new surroundings. Staff members walk guests to their apartments and show them around, turn on the lights and bring a bottle of wine. “It’s almost like butler service. The reason is because we can,” Redfern said. “I only have one or two move-ins a day” compared to busier conventional extended-stay hotels.
WaterWalk properties are all new builds. Redfern said the company plans to build about 100 properties across the U.S. in the next decade, and after that, it will look at expanding through a combination of apartment conversions and new builds.
Redfern said WaterWalk could have 452 locations in the top 100 markets, according to a report from the Highland Group, an industry analyst for extended-stay and corporate housing.
“Apartment financing and getting capital is much easier than hotels,” Redfern said, adding banks view apartment projects as less risky than hotels. “The joke goes, and it’s true: When I call my banker for a hotel loan, he hangs up on me. When I call my banker for an apartment loan, he takes me to lunch.” The investment risk is lessened because the length of guest stay is longer than in hotels. Guests stay on average more than 60 nights.
Redfern said corporate guests staying at hotel-like apartments is a growing trend. Corporate housing companies that used to lease apartments, furnish them and sell them to customers now want to build WaterWalk properties, or something like them, so they can better control inventory.
There is also a need from people who do not want to sign a 12-month lease for an apartment but do not want to stay in a hotel for months.
Jack DeBoer’s extended-stay history
1975 – Founded Residence Inn in Wichita, Kansas, in 1975, building or franchising 103 properties before selling to Marriott International in 1987.
1988 – Co-founded Summerfield Hotel Corp. Sold to Hyatt Corp., which renamed the brand Hyatt House.
1995 – Established Candlewood Hotel Co. InterContinental Hotels Group bought the brand and is 130 hotels in December 2003.
2003 – Founded Value Place, which changed its name to Woodspring Suites last spring, and has more than 200 owned and franchised properties in the U.S.
By Adina Solomon, Assistant Editor