Which Types of Hotels Can Be Converted to Multifamily?

Which Hotels Can Be Converted to Multifamily?

Converting hotels to multifamily housing has become an increasingly popular strategy, especially in markets where housing demand is high, and hotel occupancy rates are low. However, not all hotels are suitable for conversion. Here are the types that typically work best:

1. Extended-Stay Hotels

Why? These hotels already have built-in kitchenettes or full kitchens, which significantly reduce conversion costs.
Examples: Residence Inn, Homewood Suites, TownePlace Suites, Staybridge Suites.

2. Older, Underperforming Hotels

Why? Older hotels with declining occupancy rates may be available at a discount, making them attractive for conversion.
Considerations: Zoning and renovation costs.

3. Limited-Service Hotels

Why? These properties often have fewer amenities (like large conference spaces or restaurants) that would be costly to repurpose.
Examples: Holiday Inn Express, Comfort Inn, Hampton Inn.

4. Motel-Style Properties with Exterior Corridors

Why? While less desirable, these properties can work well for affordable housing or workforce housing conversions.
Challenges: Security concerns, potential stigma, and lack of interior common areas.

5. Full-Service Hotels in Prime Locations

Why? While more expensive to convert, large hotels in prime urban areas can be turned into luxury apartments or mixed-use developments.
Challenges: High renovation costs, existing large-scale amenities (ballrooms, commercial kitchens) that may not be useful in a residential setting.

6. Hotels with Large Room Sizes

Why? Larger rooms (especially in older hotels) make it easier to convert into functional apartments.
Examples: Boutique hotels, older high-end hotels.

7. Hotels with Zoning Favorable for Residential Use

Why? Some cities allow hotel-to-multifamily conversions under existing zoning or with minimal changes, making the process smoother.
Considerations: Verify local zoning, building codes, and parking requirements.

Key Considerations for Conversion

Zoning & Permits: Some areas have zoning restrictions that may limit or prevent conversions.
Building Infrastructure: Hotels with central HVAC, plumbing, and window configurations that align with multifamily needs are easier to convert.
Unit Size & Layout: Hotels with smaller rooms may require combining units to meet multifamily standards.
Common Area Repurposing: Converting lobby space, restaurants, and meeting rooms into residential amenities or additional units.
Financing & Incentives: Some local governments offer incentives for hotel-to-housing conversions, especially for affordable or workforce housing.