Austin case study

Revenue, taxes and SXSW in Austin!

Summary

Hartz Mountain is a real estate owner based in Secaucus, New Jersey. Hartz owns a variety of premier real estate throughout the country including prestigious multifamily properties: The Whitley (Austin, TX); The Estuary (Weehawken, NJ); 3 Journal Square (Jersey City, NJ); and One Superior Place (Chicago, IL). Hartz is often on the forefront of emerging real estate trends, and they’ve been researching and analyzing short-term marketplaces (i.e. AirBnB) for the last few years. Hartz understands sites like AirBnB and HomeAway are here to stay, and they sought a short-term rental solution to test at their communities. Hartz and their management partner reached out to us to pilot their technology for the management and marketing of furnished guest suites on AirBnB.

The challenge

Hartz began the pilot with their Austin-based property, The Whitley. The property is located in downtown Austin and in close proximity to the convention center. The Hartz executive team posed the following challenges for the pilot:

  • Manage local occupancy taxes and permit requirements.
  • Minimize the disruption to our residents.
  • Demonstrate the monthly revenue opportunity with short-term stays.

Occupancy taxes

We are a unique short-term stay platform because it simplifies tax reporting and payments for its clients. We've partnered with the short-term rental tax experts, Avalara MyLodgeTax. We, along with MyLodgeTax, handle the research and filing and payment of local taxes for our clients.

In the case of The Whitley, Hartz applied for a permit for each short-term unit. Once the applications were approved and permits assigned, the listings went live. On a quarterly basis we automatically calculate local occupancy taxes from The Whitley’s revenue, and send it to MyLodgeTax for each listed unit. We then hold funds to cover local occupancy taxes and provide payment to MyLodgeTax who then pays the City of Austin. Hartz and The Whitley team aren’t involved in the process; it’s fully managed by us.

Concierge keeps the site’s focus on residents

The site team needs to remain focused on their residents and long-term leases. To minimize disruption at the site, we build the listings and manage the short-term guest interaction. Additionally, we want to ensure all guests are treated equally. We've partnered with TransUnion to perform a criminal background check on every guest prior to approval, and every reservation is insured through our policy with Assurant.

We only include Whitley’s site team when a guest checks in and out. In the case of The Whitley, adding a personal touch by having guests meet with the leasing team led to a perfect 5-star rating and Business Traveler Ready status.

Short-term revenue & event-based pricing

In just over six months, we booked 239 reservations totaling 833 nights and more than $200,000 revenue for The Whitley. Over $99,000 was paid out for completed stays from December through the third week in June.

Traditionally, multifamily has not been able to capitalize on local events and hyper demand. We open the door for communities to maximize revenue by taking in short-term guests, and pushing rates with event-based and seasonal pricing.

We utilize a yield optimization tool to adjust pricing on a daily basis and maximize revenue based on local events, seasonality, and demand. In the case of The Whitley, it’s ideally located for the SXSW conference. Prior to working with us, Whitley would rent their guest suites at $150 per night even during major events like SXSW. We are maximizing returns, and during SXSW units were booked ranging from $400 to $1100 per night.

Challenge

  • Manage local occupancy taxes and compliance
  • Minimize disruption to residents and site team.
  • Demonstrate revenue that makes this effort worthwhile

Solution

  • We, along with our partner MyLodgeTax, fully manage the filing and payment of occupancy taxes
  • We obfuscate the property’s involvement, and we monitor for resident sharing activity
  • Yield optimized pricing to maximize revenue

Why us?

  • B2B enterprise short-stay marketing platform for owners/operators
  • Offers multifamily-level screening with TransUnion and short-stay insurance by Assurant
  • Nightly and Monthly options for furnished and unfurnished units (furnish on demand)

Results

  • Whitley has booked reservations totalling over $200,000 from Dec 2017 to June 2018 for five units
  • Whitley was paid over $99,000 for stays completed between December thru June
  • Two Bedroom unit has over $71K in current & future bookings, with an average rate of $302 per night. Comparatively, the one bedroom unit has $35K in current & future bookings, with an average rate of $194 per night.
  • Results to date demonstrate two bedroom units outperform smaller units types.
  • Since launch they’ve added three additional communities with nightly stays.
  • To date, the Hartz properties on our platform have generated over $500K in current and future bookings.