Stay Open to Test Out Coliving Concept Beginning in California
By Clare Kennedy CoStar News
October 15, 2020 | 5:52 P.M.
In spite of the devastating toll the pandemic has taken on travel and hotels, an unnamed, wealthy European family has agreed to back one rather unusual hospitality venture that hopes to take coworking and coliving to the next level.
Stay Open, based in Los Angeles, got a $2 million infusion of capital to start building a chain of pod hotels, a post-Modern mashup of the traditional hostel and railway sleeper cars. The same family office invested in Stay Open's first U.S. location, a 240-bed hotel in San Diego that is scheduled to go live in late 2021, along another in Los Angeles and potentially others.
Coronavirus infection rates are once again surging around the world and Stay Open's vision is heavily premised on both digital technology and the sort of hyper-communal ethic that dominated real estate design of all varieties right up until the pandemic began, bringing an abrupt halt to most aspects of Americans' social lives.
Nevertheless, Stay Open and its investors are already planning for the day when people can once again safely travel and mingle.
“The timing is perfect," said Steve Shpilsky, Stay Open CEO and co-founder, in a statement. "Retail and office space sit empty as consumer and work habits evolve. Stay Open is uniquely poised to generate newfound income for real estate owners through revenue from daily hotel guests and monthly residents,"
He added that “once the health crisis is contained, people will want flexible and affordable sleep options for travel and long-term stays in prime locations. There will be a global renaissance of people embracing community and social interaction."
Neither Stay Open nor Nuri Katz, founder of Apex Capital Partners and advisor to the family office, responded to a request to elaborate on the statement.
Hotels have faced unprecedented challenges since the pandemic brought business and leisure travel to a near-complete stop early this year. Occupancy and room rates have plummeted, forcing many hoteliers to implement cost-cutting measures including reducing its staff or closing locations entirely.
Some signs of life have begun returned to hospitality industry. The average U.S. hotel occupancy bumped up to half full last week, just the second time to reach 50% since the coronavirus outbreak, according to hotel research firm STR, which is owned by CoStar Group . The first time occurred in August when leisure travelers squeezed in trips before the school year began.
Any new hotel concept will have to contend with the broader financial downturn and sluggish travel demand but a concept such as Stay Open's could offer an unusual appeal.
The San Diego location, the company's first, will be at a 3-acre waterfront site near San Diego International Airport that was offered for redevelopment by the Unified Port of San Diego.
When Stay Open first pitched the project, executives described a model similar to a pod hotel in New Zealand, Jucy Snooze, which offers enclosed beds for $35 a night. Beyond the pod, Stay Open said it would offer food and beverage, common areas for work and leisure, shared restrooms, complimentary WiFi and integration with the company's custom app that "helps match guests and residents, and introduces authentic local experiences."
Private rooms would also be available, they said.
Intrigued, in May 2019 the Unified Port of San Diego chose the proposal for the waterfront site near San Diego International Airport, which was spearheaded by Stay Open and another Shpilsky entity, CaRE Development, or California Real Estate Regional Center, a government-approved entity that serves as an investment bank for international capital from participants in the EB-5 visa program.
The EB-5 provides green cards to investors of certain projects or businesses, to fund real estate projects throughout Southern California.
According to Stay Open's statement, Katz said the investors were sold on the company's "perfect blend of technology, real estate and operations backgrounds.”
“We have known the cofounders for several years and are confident they can take ideas from concept to reality," Katz said in the statement. "Now is the perfect time to disrupt how and where people stay.”
CoStar Staff Writer Lou Hirsh contributed to this article.
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