Living the hospitality lifestyle can be available to everyone, every day, says Brian Carrico, co-founder and CEO of The Guild, a tech-enabled hospitality startup delivering community-based flexible living experiences in walkable urban areas. Last week, he told HOTELS his lofty goal: bring more hospitality to both the short-term and US$1.3 trillion long-term rental market, and to build the world’s largest hospitality living platform that gives real estate owners a model that can deliver more revenue.
The Guild made its latest move to fulfill its vision last week when it acquired CREA Management LLC, the property management division of Cypress Real Estate Advisors (CREA), a multifamily developer and investment firm which actually helped The Guild get its start with its first building in East Austin, Texas, in 2016. The deal was consummated with an undisclosed amount of equity and CREA taking a seat on The Guild board, according to Carrico.
The acquisition – which will add more than 5,000 units to The Guild’s portfolio and pipeline – was driven by the companies’ shared desire to create a turnkey platform with hotel-like service and amenities to the full spectrum of renters, especially those identified as Millennials or Gen Z, who relish remote work, desire work-life integration and already rely heavily on technology.As CREA continues to develop projects, Carrico said there is a joint venture structure in place for The Guild to work as its preferred management company. The total building count, including buildings that are active and under construction among the 5,000 new units, stands at about 20. Ten of those are already in operation, according to Carrico.
“CREA likes the idea of being a part of a single platform where we can capture that upside as opposed to just leasing it out to a third-party,” Carrico added.
Since its inception in 1995, CREA has developed and/or owned an excess of 25,000 multi-family homes, master-planned lots for 16,000 single-family homes, and developed over 2 million square feet of mixed-use communities.
“There are really great synergies between the types of buildings that they like to build and where they like to build them, and the types of buildings that The Guild wants to manage as a hospitality living platform,” Carrico said. “So, the deal really started to come together in the second half of 2021.”
The Guild – venture capital-backed, asset-light and predominantly fee based – currently manages over 2,000 units across 12 communities and seven U.S. markets (Denver, Miami, Austin, Dallas among them). It is in the process of raising more capital and currently has more than 10,000 units under development in 25 markets set to open over the next 18 to 24 months. Target markets include Atlanta, Boston, Los Angeles, Nashville, New Orleans, Philadelphia and Washington, D.C.
Currently, Carrico said the Guild portfolio stands at about 15% furnished, short-term rentals and about 85% year-long, traditional leases. As the company scales, he expects to grow the short-term rentals to between 20% and 25% of inventory.
In addition to offering its tech-powered hospitality services to existing long-term residents of CREA Management’s apartment communities, The Guild plans to transition a select number of units at those communities into upscale, furnished flexible-term apartments, creating more flexible options for how to live in those communities.
The acquisition of CREA Management will also add more senior talent to its executive team, including Katya Watson, who will serve as president of Multifamily Operations for The Guild. Additionally, John Burnham, managing director of CREA, will sit on the Board of Directors for The Guild.
When it comes to growth, Carrico said there are three pillars – organic growth with other real estate developers; growth through acquisition of management companies over the next few years with scale similar to what it acquired from CREA; and, again, growth through CREA projects. “Over the next two years, in the top 25 markets, there’s about a million buildings that are either under construction or that are expected to change hands,” Carrico said, adding that there are some 5 million units across the top 25 markets owned by non-institutional investors. “And that’s in the category of building types that we operate in… If you look at the total addressable market, it is pretty massive.”
Carrico added that there is a lot of money flowing from the real estate development side and the venture capital side that are building platforms like The Guild.
The bigger opportunity
The Guild concept features personalized service such as on-demand grocery stocking and housekeeping, paired with access to building amenities like rooftop terraces, outdoor pools, gyms, private members’ clubs and experiential programming – all made accessible through a seamless tech-enabled platform.
Carrico explained to HOTELS that when the deal was announced that 87% of people say that they’re having a bad experience or dissatisfied with their current rental experience. “From a hotel perspective, you can see this great convergence of work, travel and life, and putting them all together in a single platform that delivers a better experience informed by our hospitality backgrounds,” he said. “It also offers a way for people to live at The Guild for days, weeks, months or years – all on the same platform.”
That flexible work environment where people are not working from anywhere in particular is extending into how even corporations book space, Carrico contended, adding that he is continuing to see faster shifts toward this type of product locked up for weeks or months at a time. “Instead of booking those traditional hotels and flying in and out every Monday through Friday, more and more we are seeing an incredible pickup in corporate demand, especially over the past six months… Our portfolio averages 136% penetration against the hotel comp set blended across the entire country in the last couple of weeks. It’s a really interesting example of how travel, work and how people live is becoming increasingly intertwined.”
Elaborating on performance, Carrico said average length of stay is at 7.8 days and The Guild must maintain extremely high activity levels today because there are still a lot COVID-related cancellations, especially on the short-term rental side. “We’ve been able to backfill that with a lot of corporate group business… We have more than made up for the wash outs over the last few months. And, in particular, this month, we’ve jumped out to some especially strong performances in every single market because we have that ability to lock in that type of business.”
For the longer-term rental business, Carrico said the market is strong and renewal rates have been high.
In closing, Carrico said, “The world is becoming more hospitality focused. So, we’re in great position as hospitality professionals to influence that and help create better services and better experiences.”
The move into this alternative lodging space is a signal to the world, Carrico said, that there is a movement into the rental world that combines and creates hospitality living. Yes, there has been luxury residential development but now, he said, but opportunities are moving into the accessible rental space – not just pure luxury. “We want everybody that walks into the building to have a great experience and feel like they’re getting a true hospitality experience that is tech driven, but also personalized and thoughtfully put forth.”