The hotel industry got adversely affected due to the pandemic. And an alternative use for the hotels is the conversion into multifamily rental units. It’s a current trend that is gaining momentum because it’s aimed at compensating for the shortage of affordable housing units.
Converting struggling motels and hotels into affordable housing provides new reasonably priced housing scopes for those who usually get shut out from certain regions because the rent or buying price is out of their financial or buying capacity. And this demographic comprises lower-income households, seniors staying on fixed incomes, homeless individuals, and young professionals. According to Maxwell Drever, the conversions can assist the individuals whose earnings declined because of the impact of COVID-19 on the economy.
The advantages of hotel conversions
The conversions of hotels will primarily be of help to the people searching for workforce housing. It is the housing for the household that earns between 60% and 120% of the entire area median income. And this bracket, which usually has job profiles as teachers, police officers, construction workers, nurses, and firefighters, finds it challenging to search a housing unit close to the services and employment places that don’t lead to a rent burden. The majority of the affordable housing units are for households beneath 60% of AMI level. On the other hand, the 60% to 120% AMI levels don’t have scope for high-end housing in several markets.
Converting the hotels into small apartments, usually between 300 and 500 square feet, enables this bracket to stay in affordable houses closer to their work areas. It doesn’t result in long commutes.
Decline in business due to the pandemic
The conversions can significantly reduce the housing issues, as an increasing number of underperforming hotels are all up for sale. It’s primarily because of a sharp drop in travel and business because of the pandemic outbreak. According to the latest research, Maxwell Drever says that the hotel occupancy rate in the United States fell to 26.6% because of the massive deaths due to the pandemic.
And while there is currently a rebound in the leisure travel domain, the vaccination program might take almost two to three years for the travel business to reach the pre-pandemic profit levels.
Prevent issues in hotel conversion by joining hands with an appraisal firm
It’s wise for the investors to join in for hotel conversions to join hands with a commercial appraisal firm with great expertise in similar projects. It will help them avert multiple challenges in commencing such projects, such as deciding on the hotel conversion feasibility and moving through a complex zone of stringent business codes, zoning, and other requirements.
Today, these appraisal firms and other service providers can help the property owners and investors in every phase of hotel conversion, comprising zoning analysis, appraisals, environment assessment, and market feasibility essential for such projects. These firms have a team of expert appraisers specializing in multifamily and hotel properties, which comprises affordable housing, accessible to assist clients in addressing their particular issues associated with the hotel to affordable housing conversions.