Choice Hotels Ships Kitchens to Hotel Rooms

Happy hump day, folks! It’s a short week and a skinny newsletter kinda day today. 

Let’s hit it:

• Choice Hotels’ extended stay play
• Sam Altman is back
• New Orleans failed experiment

Just Your Cookie-Cutter Choice Stay

If you’re looking to catch up on the ensuing Choice-Wyndham takeover drama, I recommend you get the deets from Daily Lodging Report. But here we’re talking about its extended stay business. 

Did you know that Choice Hotels ships a kitchen in a box to transform your plain Jane hotel room into an extended stay unit? The company already has four extended stay brands — but its focus is sharp on two of them: WoodSpring and Everhome Suites. And it is ready to not take on, but rather collaborate, with private equity and institutional investors looking to enter this space. 

I spoke to Matt McElhare, senior vice president of extended stay and Ron Burgett, senior vice president of franchise development in Choice’s extended stay business. 

Only juicy tidbits here:

Do private equity firms investing in short-term rentals pose a threat to extended stay brands?

Matt McElhare: In a lot of ways that’s validation for the opportunity that exists in extended stay accommodations. And that’s what’s been driving our investment as a company over the last six years — to build a leadership presence in the extended stay branded solution for long staying travelers.

Right now in the hospitality space, this demand accounts for roughly 20% of overall lodging demand, but supply is only roughly about 10%. Majority of travelers seeking longer stays want consistency, convenience and predictability. Those three factors create a competitive advantage for a branded solution relative to a short term rental where it is much more difficult to create that consistency across the board.

Ron Burgett: Most of our brands are playing in the midscale and economy segment. Private equity firms like TPG — that’s a little more for the affluent traveler. Can you imagine the marketing costs to do that, right? But they don’t have the power of Choice Hotels. 

We have 1,000 hotels that we can attract people to kind of take a look at what we have to offer, but that is a very expensive model. It will work, because demand is twice the supply. We’ll let them have that little piece of the demand at the top for now. But rest assured we’re not you know, assuming that they’re not a competitor we’re watching and we want to see what they’re doing. But I think we can learn faster with our background.

Explain the kitchen-in-a-box concept

Ron Burgett: If we’re talking to developers, and then want to get in this business — What’s the quickest way to do it? 

We could go into the transient hotel room and give them what Matt and his team developed, which is called Kitchen in a box. So we literally ship a kitchen for however many rooms they have to that property and give them a very clear operating model on how to turn that transient room into extended stay. That’s the quickest way to get into the business. 

Matt McElhare: And we have made this process as easy as possible. Through working with architects, general contractors and folks that specialize in renovation, we’ve taken it 85 to 90% of the way. And then we have a system in place that helps solve for the remaining 10% that just reflects the nuance of every hotel, right there’s always going to be some uniqueness based on the existing layout. 

We’ve made it easy in the sense that folks see the clear return on investment to bring it into extended stay and they feel that Choice has given them a clear plan on how they do it. 

And the proof is in the results — we’ve got 30 of these ongoing right now with believe 18 already completed so there’s a lot of adoption of the concept because there are a lot of folks that have traditional hotels that haven’t performed well over the last few years that are sitting in favorable extended state markets.

Sam Altman Returns to OpenAI

After the sudden ousting last week, the OpenAI board has now agreed “in principle” for Altman to return as CEO. A new board is being instituted and will include former Secretary of the Treasury Larry Summers, Quora CEO Adam D’Angelo and the former Salesforce CEO Bret Taylor as the chair.

Sam Altman added: “i love openai, and everything i’ve done over the past few days has been in service of keeping this team and its mission together. when i decided to join msft on sun evening, it was clear that was the best path for me and the team. with the new board and w satya’s support, i’m looking forward to returning to openai, and building on our strong partnership with msft.”

There were murmurs about Airbnb CEO Brian Chesky joining the board. If he were to be considered at all, Chesky would have one such big name as a board appointee, and one who is tight with Altman, and shares much of OpenAI’s vision for the potential of the generative AI revolution.

New Orleans’ Failed Lottery Experiment

In an effort to regulate short-term rentals, New Orleans implemented a unique lottery system, earlier this year, dividing the city into blocks, allowing only one rental property per residential block. However, the rules faced legal challenges and were temporarily halted by a federal judge after just one lottery, Wired wrote.

The city is currently in limbo, not accepting new short-term rental license applications or renewals. The controversy arises from a lawsuit by a short-term rental services company and hosts excluded from the lottery due to narrow licensing rules.

New Orleans, like many tourist cities, has a significant number of short-term rentals, with housing advocates arguing they negatively impact local residents and push them away from key areas. The city has struggled to regulate whole-home rentals, which are perceived to contribute to housing shortages. The legal battle highlights the challenges cities face in regulating the growing short-term rental industry, with concerns about its impact on local housing markets and communities. The outcome of the lawsuit could have implications for Airbnb hosts, and similar regulatory struggles are occurring in other cities worldwide.

What Do They Want? Housing. When do They Want It? Yesterday

​​Survivors of a wildfire in Lahaina, Hawaii, known as Lahaina Strong, are camping on Kaanapali Beach, demanding that the mayor use emergency powers to shut down unpermitted vacation rentals.

They focus on 2,500 vacation rental properties in West Maui that lack the necessary permits but have operated with exemptions granted by the county. The group argues that the mayor should suspend these exemptions to make the properties available for residents who lost their homes in the wildfire, the Associated Press reported.

The shortage of housing in Maui, exacerbated by the fire, has left many survivors without accommodation, with some still residing in hotels. The group is using their Native Hawaiian rights to fish on the beach continuously and has named their action “Fishing for Housing.” 

They argue that the 2,500 units in question could provide housing for a significant number of Lahaina residents affected by the wildfire. The mayor is considering options but notes that a moratorium on short-term rentals could face legal challenges and unintended consequences. Some in the tourism industry support the residents’ protest, acknowledging the importance of local workers for the sector.