Jason Fudin, co-founder and CEO of Washington, DC-based WhyHotel, began his career in real estate development because it was, as he put it, “something that was analytically and technically challenging, but also something that was community oriented and had large financial upside.”
Little did he know then that this career path would lead him to the creation of WhyHotel, an alternative lodging service that operates pop-up hotels in newly built luxury apartment buildings. As his career moved along to a real estate development position at Vornado Realty Trust (“I worked my way up from an administrative role to eventually running a couple of billion dollars of development for them,” he noted) and PN Hoffman (now Hoffman & Associates), he returned to Vornado to run a new division focused on innovation.
“One part of my job was to think about how real estate was changing, both from a developer’s and owner’s standpoint, as well as a consumer’s. I really spent time exploring where real estate was going,” said Fudin. “It became really obvious that there was a really large opportunity in the blurring between asset-line comingling uses and moving real estate assets that had been single-use to flexible. So, under Vornado, I was tasked with thinking about how our residential portfolio could improve, and it seemed to me there was a large opportunity in development for something we call the pop-up hotel, making use of underutilized inventory during lease-out and, then, in a permanent way, finding a way to have an asset that could flex between different uses. So, I got permission to run a pilot under Vornado and it worked really well. At the end of that pilot, in the summer of 2017, we spun it out as an independent, venture-backed company.”
He turned to a familiar face to help start the company, Bao Vuong, his old boss at PN Hoffman, who now serves as co-founder and president of WhyHotel.
“Bao was the only person I’ve worked with who I felt like, shoulder to shoulder, we could go build something of serious scale together,” Fudin noted. “So, when I had the opportunity to spin WhyHotel out of Vornado, I only called one person. We divvied up responsibilities and then each of us, both working together and independently, started building the different components.”
WhyHotel currently operates two pop-up hotels near its headquarters, in Arlington and Tysons Corner, VA, and will soon open another in Arlington. The first West Coast WhyHotel opened in Seattle in September.
“There are a thousand-plus buildings that deliver in the U.S. annually that need our model in terms of location and size,” Fudin pointed out. “We started in our backyard—in the DC, Baltimore, Arlington region—and we’ve slowly started moving out nationally. We have a deal in Seattle, announced one in Houston, and there’s a bunch more coming.”
He continued, “Seattle has some of the highest density of cranes and multifamily development coming up. It’s a strong hospitality market, so it was a natural place for us to expand. We had a strong relationship with AvalonBay Communities [the REIT partnering on the project], and given that the market is a great place for us to be in the long term and that we had a marquee partner and a marquee location—a couple of blocks from Pike Place Market—that was a natural fit.”
Fudin said the key to WhyHotel’s success is in the relationships the company has built with developers. “We’re a company built by developers for developers, and we’ve built up a set of inventory and a set of partners by really delivering something that adds value for the development folks,” he said. “One of the most helpful things we did is we worked with the largest groups in the country first to help build the brand in the larger real estate communities. So, we’ve either worked with or have deals with AvalonBay, Equity Residential, Brookfield, Camden Realty Trust and Weingarten Realty—a bunch of large, publicly traded companies. Now, as our team reaches out to regional and family offices, they’re familiar with who we are, and we have a track record.”
WhyHotels can be booked anywhere one can book a hotel or vacation rental, as well as whyhotel.com, according to Fudin. Once they book, he said, “It’s a lot like a hotel. They get a confirmation email, and when they arrive at the building there’s a button at the front door that says WhyHotel, which calls up our sky lobby, a two-bedroom unit on one of the upper floors. We let them in, the elevators are unlocked for that floor and they go to the sky lobby. We take IDs and offer free coffee and snacks. We give them their keys, and our 24/7 on-site staff can answer any questions a guest may have. If they signed up for the hotel product, they get daily turnover service; if they signed up for a vacation product, we just turnover the room when they leave.”
While a majority of his weekdays are spent on WhyHotel business, Fudin finds time to be with his family. “I’m in the office by 6:00 a.m. I probably put in an 11-ish hour day,” he said. “I’ve got two young kids, so I roll on home and do the dinner, bath and bed thing, and then I’m back on my computer. That’s most of the week. I also have to travel to meet with city officials, so I find myself flying a bunch. My weekends are my family time.”
The executive sees a bright future ahead, with WhyHotels popping up all over the world.
“We think that we’re at the beginning of a sea change in the way real estate is built and operated, and that is about moving buildings from single-use to comingled multi-use, and from inflexible to flexible. The way we see WhyHotel growing up and evolving is to be the engine of that for a new set of assets, much like Marriott was in the traditional hotel space or Greystar was in multifamily,” he said.
“We think there’s an even larger opportunity where all those asset collections come together, and we want to be at the epicenter of all of it,” he continued. “When I look 10 to 15 years from now, domestically, our scale should rival that of some of the biggest hotel operators and multifamily folks in the U.S., at least when it comes to new inventory. And, I would expect us to have a large position overseas as well.” HB