Read the PDF version »
By Chloe Riley
It hasn’t even been a year since Yotel announced the launch of its branded residential component, YotelPad, in January. The brand’s pipeline already has properties set for Switzerland, Dubai, Park City, Utah, and Miami — none of which is yet operating.
Set to open in late 2020, YotelPad Miami is being developed by New York-based Aria Development Group and joint venture partner Kuwait Real Estate Company (AQARAT).
HOTELS spoke with David Arditi, a founding principal at Aria based in the company’s Miami office, about what drew them into the YotelPad concept.
H: What’s your projected ROI in terms of occupancy goals for the first year?
DA: Definitely the projections are in line to match or exceed what the market does from an occupancy standpoint. Because that's traditionally what Yotel does in the market where they're active.
H: And where do you see branded residential heading in the coming year? What is the mix? Is it going to be strictly residential, residential as part of mixed use?
DA: I think it's something that stays. I think if you can make it work, and the Yotel brand seems very open to it, I think it's neither a new trend nor a passing trend. It’s something that will continue, and I think that makes sense in a lot of projects. So, in our case, we have straight hotel rooms, shared amenities, and then the residential program on top. And I think we'll continue to see that business model continue for sure in South Florida in the future because it's logical relative to the demand both local and foreign.
H: We've had a really long up market in hospitality. How do you see that changing in a down market? Assuming a slowdown, how viable is branded residential in a market that might be decelerating?
DA: Well, I think there's two ways to look at it. I think about A, does it drive a premium to other non-branded products to the market? And B, does it help velocity? So, velocity of absorption. In our case, it's driving more velocity and absorption than it is pricing. But again, in the context of a down market, that’s one of the reasons our products start at US$275,000 and our most expensive unit is around US$450,000. I don't think there's anything that's recessionproof. We certainly wanted to do something that skewed that US$500,000 price point, and that was really accessible to a very broad audience, which is we went with (Yotel).
And then generally, as a firm, we tend to capitalize our deals very prudently. So, we do that knowing that the real estate market is cyclical, and has problems, and we want to weather out the storm in that way.
H: Your company is one of the first in the U.S. experimenting with YotelPad. Are you nervous about it, excited? Do you feel confident about the product?
DA: We feel very confident about the product. (Yotel) has a terrific management team and terrific ownership. And obviously that’s first and foremost for us. And then you've got people with the right experience in the right division behind it. Their solo hotel properties that are currently open or that are about to open are performing very well, they're quality products in very strategic locations. They're open in Boston and performing quite well, they're about to open in San Francisco, and obviously New York goes without saying. Their European properties and Middle East properties are also going well, very thoughtfully designed and developed. It was definitely a team that we were excited to partner with.
H: And you’re looking to partner with them again?
H: Can you speak to what areas you're considering?
DA: Our platform is New York, D.C., and Miami historically. So, generally what we've looked at together has been east coast of the U.S.