MIAMI, FL – Orion Haus, a multifamily management company that creates short-term rental friendly buildings, announced May 17 that it has inked the largest deal in the short-term rental industry since the pandemic when it added 10 buildings and 1,588 units to its U.S. portfolio in and around Austin, Memphis, Houston, Orlando and Atlanta.
Orion Haus capitalizes on the massive growth and demand for flexible housing solutions by renters and alternative hospitality options for travelers.
The deal will potentially help to solve the recent supply issues pointed out last week by Airbnb during its Q1 earnings call when it said it was lacking in the number of hosts it would need to manage the imminent crunch of travelers coming out of the pandemic.
“Subletting, what Orion Haus calls ‘home-sharing,’ drives significant value for landlords as they continue to seek creative ways to boost net operating income,” said Scott Liebman, CFO, Orion Haus.
Orion Haus plans for rapid growth in its portfolio and brand. The branded namesake is used for its luxury communities, but the Orion Haus operating system can work for any class of apartment buildings, and even smaller beach-front multifamily communities.
“We are looking for immediate deal-flow in the Southeast,” Liebman said. “We could easily fill 25 empty buildings this year,” Liebman said.
Multifamily Owners Earn +10% NOI
Orion Haus properties create +10 percent higher NOI through a combination of increased traditional long-term lease income with high hotel revenues. Orion Haus manages the multifamily communities, integrates its technology and operations to provide hotel-style services to residents and guests and sells additional convenience items such as boutique shampoos, lotions and candles.
This transaction gives Orion Haus the opportunity to serve its resident waitlist of over +15,000 renters, who are ready to sign 12-month leases at Orion Haus home-sharing communities.
That supply will likely come in handy given that Airbnb also announced last week that it would soon embark on its first marketing campaign – not to attract guests, but to recruit hosts.
Homesharing vs. Master Lease
Orion Haus now sits just below Sonder in portfolio size for short-term rental inventory. Sonder was valued at $1.3 billion in June 2020, and is planning to go public via SPAC at a $2.5 billion valuation.
Orion Haus has a materially different business model than Sonder, which is less risky for building owners, as they don’t carry major exposure to one large tenant. “Orion Haus is not a master-lease apartment-hotel company,” Liebman said. “Orion Haus is an entire-building system that enables home-sharing for all residents, allowing residents to create personal income and building owners to see double-digit increases in NOI.”
Orion Haus’ business model inspires resident retention based on them experiencing the high level of revenue they earn from their sublets. For example, should a resident’s 12-month lease expire in June, once they see the potential advance rental bookings they could prosper from July through September, they are more inclined to renew that lease – another boon to the owner.
“When a renter sees that they have $7,000 in bookings in the months following their lease renewal — they renew,” Liebman said. “The national average for turnover is 52 percent, but Orion Haus anticipates only 35 percent churn. This reduction in turnover combined with a reduction in vacancy, rent concessions, and marketing costs saves our building owners as much as 62 percent each year.”
The 10 new communities that will be managed by Orion Haus as part of the overall transaction are located throughout the southeast and Midwest, totaling 1,588 units. Fort Lauderdale, Tampa Bay/Clearwater, Charlotte, New Orleans, Dallas, and Charleston are among the markets that comprise Orion Haus’ prospective location list for 2021 and 2022 — of which Orion Haus has over 8,000 signed and verified pre-lease agreements.
The Orion Haus Experience
Residents can post their available units as they choose – overnight, weekend, or extended stay, and with the support of their on-site concierge team.
Orion Haus technology supports residents’ home-sharing efforts by publishing listings, provides photography and messaging automations, digital lock access to guests and alerts the Orion Haus housekeeping team when a guest checks out.
Orion Haus also staffs the properties, delivering home-sharing support to residents and guests, a role Alysha Vogler plays as Concierge Director for Orion Haus.
“We’re there to support the residents and their guests,” Vogler said. “We help them to learn the most effective ways to post their home-shares. And when the guests arrive, we’re there to welcome them, offer them a beverage, help them with their luggage, and get them settled comfortably.”
Vogler said she has a friendly solution to most any rebuttal a resident might make if they are resistant to the home-sharing concept.
“If they tell us that they are worried the guests are going to damage their fine china in the apartment, we send them a link to a simple locked container to keep those valuables away from guests,” Vogler said. “If they say they’re uncomfortable about guests sleeping on their furniture, we explain the cleaning processes, and show them their revenue potential.”
And Orion Haus has a waitlist of over 15,000 renters who are set to sign 12-month leases at Orion Haus home-sharing communities, so they can live flexibly and earn additional income. Per-night home-sharing lodging prices vary based on seasonality and supply and demand, but in her apartment community in Nashville, studio and 1-BR apartments are priced from $500 to $800 per night on average; and 3-BRs in April went for $999 to $1,200 per night, Vogler said.
Flexibility in Homesharing
Residents who choose to home-share have options. They can sublet their full apartment when they are away or make available just a room or two in their larger apartment homes. Others choose not to home-share but appreciate the aura of living in an apartment community with frequent guests who they can chat up in the common areas while living in entertainment districts or vacation towns.