Post-Covid Possibilities: Exploring Hotel-to-Housing Conversions

The pandemic has disrupted the typical supply-and-demand dynamic in many industries. In the short term, this is especially true for Hospitality. Thus, the topic of converting “distressed properties” to other uses is receiving a great deal of attention lately.

While speculation around opportunities for distressed hotels will likely diminish with economic recovery, there will continue to be hotels that have become functionally obsolete or simply located where demand has shifted away from the hotel. These underperforming properties may better serve their ownership and the community by being converted to residential. This shift could even have a positive impact on the undersupply of affordable housing across the country.

Converting these properties is not always a simple task. At SERA, we’ve engaged architects from both our Housing and Hospitality studios to research what conditions and limitations should be evaluated as part of a due diligence process when examining potential properties for conversion. In addition to zoning requirements such as allowed use and parking minimums, each property needs to be evaluated individually on aspects like layout, amenities and jurisdictional requirements.

Guestroom-to-unit potential

It stands to reason that the more existing hotel guestrooms look like residential units, the easier the conversion will be. Therefore, an extended stay property with a robust kitchen makes a great candidate. Still, in-unit or shared laundry will need to be addressed.

Typical hotel rooms run a bit small for apartment units, but two rooms can be combined and one of the bathrooms converted to kitchen-and-laundry to make a more comfortable one-bedroom unit.

Micro units are also a possible approach to maintain a high number of units.

Complying with codes

The next level of consideration is focused on technical and building codes. Many code and accessibility requirements map generally well between the two uses. However, differences in regulations between Housing and Hospitality can have a big impact for conversion feasibility. For example, converting every non-accessible hotel unit into an adaptable unit would be costly, but if it could be done on an as-needed basis, the intent of the code can be met without overwhelming initial project costs.

Often special grants, tax relief, or funding sources related to affordable housing carry specific design or amenity requirements. These may include minimum unit square footages or sustainability measures. Identifying these items and researching solutions early, possibly along with building code officials prior to closing, is critical to the success of a conversion.

Flexibility in housing types

After examining the potential and challenges of conversions, we see the ability to be flexible as a key to success. Finding a 1:1 match for hotel-to-residential is extremely difficult. But if the development and design team come with multiple housing type potentials such as market rate, workforce, senior, micro units, co-housing, permanent supportive housing or temporary shelter, there’s a greater likelihood of making the transformation a reality.

It will take innovative approaches to address the housing crisis. Designers, developers, communities, and jurisdictions will need to innovate and work together to bring to market-relevant housing types that increase the supply of affordable housing. Fortunately, there are shining examples of this model already taking shape. In California, Project Homekey and in Oregon, Project Turnkey, were created to fund the conversion of hotel properties into both short- and long-term housing.

It’s exciting to see, and to know that hospitality can play a role in increasing access to housing.

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Gary Golla is a Principal at SERA, with 27 years of experience covering a wide range of project types and scales, primarily focused on hospitality design. Gary’s education in both architecture and development allows him to see the simultaneous functions the built environment serves for the user, owner and community at large.