WaterWalk spans hotel, apartment segments
07 NOVEMBER 2014 7:25 AM
A new product from brand creator Jack DeBoer cuts across several business models: extended-stay hotels, corporate housing and for-lease apartments.
WICHITA, Kansas—A couple years ago, Jack DeBoer had an idea to fill a void in the marketplace. The result was the launch of his fifth hotel brand: WaterWalk, a hybrid extended-stay hotel/apartment product.
“I’m a yellow-pad thinker,” said DeBoer, who previously founded the Residence Inn, Summerfield Suites, Candlewood Suites and Value Place brands. “I had a few ideas, wrote them down on my yellow pad, fleshed them out, and today we have the new brand.”
DeBoer said the product overlaps three business models: extended-stay hotels, corporate housing and traditional leased apartments.
“We knew a lot about the extended-stay business, and I have a background in apartments from years ago,” he said. “I also looked at the corporate lodging and decided it wasn’t a very good model. You’ve got to do a lot of business to make any money, and the margins are pretty slim.
“We also looked at the apartment business where there is no such thing as franchising. We wondered what would happen if we put those things all together and that became WaterWalk,” DeBoer said.
DeBoer said he views WaterWalk in some ways as an extension of the previous four hotel concepts he created. To him, it’s all about creating better operating models and higher returns on investment.
“Years ago, I was in the apartment business, but it was a struggle. I looked at the lodging business and wondered if I could get hotel rates in a product built like an apartment, and that became Residence Inn,” he said. “The next brands were mutations as we continued to improve the operating models.”
He said the original Residence Inn concept had 120 units and took 18 to 20 full-time employees to operate. At Candlewood the number of employees was reduced to 11 or 12 and Value Place down to four or five.
“WaterWalk has 132 units, and we run it with eight people,” he said. “You can make a lot of money if you can keep the (full-time equivalents) down while providing the same levels of service to your guests.”
The first company-owned WaterWalk property opened earlier this year in downtown Wichita, Kansas, as part of a riverfront mixed-used development also known as WaterWalk.
“Since the first unit was in the WaterWalk development it made sense to call it that,” said David Redfern, president of WaterWalk. “We then looked around at a lot of other names, but we couldn’t find one that accurately describes the product so we stuck with WaterWalk.”
The WaterWalk concept entails two buildings with furnished and unfurnished units, each available with one, two or three bedrooms. The furnished units have hotel-style amenities including free in-room breakfast, housekeeping, satellite TV, free Internet connectivity, on-site storage and gym memberships. Rates start at $89 a night for stays longer than 30 nights. Pricing is available for daily and weekly stays.
The unfurnished units are more like typical apartments with leases as short as six months with no security deposits or application fees.
Redfern said demand is increasing from guests who want to stay for more than seven nights up to 12 months or longer.
“Traditional hotels are going after higher-rated business, which tends to be shorter lengths of stay, and apartments are going after 12-month leases for stability,” he said. “Since apartments want stability and hotels want rate, this leaves a void in the market that’s not capturing this business.”
Growth through franchising
Redfern said while the company is building properties in San Antonio, Texas, and Denver, most of the growth will come through franchising. It has signed deals with franchisees in Charlotte, North Carolina; Indianapolis; Louisville, Kentucky; Houston; and Atlanta.
“A typical franchisee is a developer and someone who understands extended stay,” he said. “If they don’t already have an extended-stay product they probably won’t understand us. We also believe some passive investors may have interest in the product, and we could put together deals for them.”
Suburban and mid-town locations are best suited for the WaterWalk concept, Redfern said. The product has four stories and requires four acres of land if it has surface parking; properties with a parking structure require a little more than two acres.
“A perfect piece of land is close to class A office space where the major corporations in town reside,” he said. “It also needs a livability factor because since people are staying on average between three and 12 months, they need restaurants and retail nearby.”
A 132-unit property costs approximately $11.5 million to build, plus land.