Launching a hotel and restaurant chain in the midst of a pandemic — when few people are travelling and inside dining is restricted — may not seem like the best timing, but The Laundry Rooms is off to a solid start.
“Nobody was more surprised than we were collectively when we saw success,” The Laundry Rooms and Kingfisher Group chief executive officer Matthew Opferkuch told RENX.
The goal now is to build Canada’s foremost extended-stay residential hotel brand and reinvent the short-term rental market in the country.
The concept evolved in 2019 while Opferkuch was doing restaurant consulting for HIP Developments’ Circa 1877 mixed-use condominium in Waterloo, just west of the Greater Toronto Area. HIP president Scott Higgins was introduced to Equal Parts Hospitality CEO Jason Cassis, and The Laundry Design Works design studio was then brought in as the fourth partner.
“We realized that this was a significant opportunity and that we could probably scale this business,” said Opferkuch. He cited a “capital-light” business model which leverages amenities a developer has already introduced in a new residential or mixed-use building instead of building from scratch.
Sufficient private equity capital was raised pre-pandemic to get The Laundry Rooms through its first couple of years, which was crucial since there was little financing available last year.
“Everybody was holding their purse strings tight and nobody wanted to think or talk about anything that looked or smelled like a hotel or a restaurant,” said Opferkuch.
Two venture capital groups have recently expressed interest in becoming involved with The Laundry Rooms, according to Opferkuch.
First location in Waterloo
Circa 1877, at 181 King St. S., is now the home of The Laundry Rooms’ first location. It was originally supposed to open last May, but COVID-19 and construction delays pushed that back until September. The launch of its accompanying high-end restaurant has been delayed until later this year due to the damage the pandemic continues to do to the sector.
There are nearly 40 suites in the Waterloo location and Opferkuch is pleased with the 72 per cent occupancy rate it has achieved. He quickly realized extended stays would become a major part of the business as some suites have been booked for up to six months.
“Many of our clients were bringing in highly specialized doctors and engineers from abroad and they would self-isolate with us for two weeks and then go about their business. In some cases they stayed for several more weeks and others found more conventional accommodations.”
The average stay has been two weeks during the pandemic, but demand had been increasing for more transient stays as COVID-19-related restrictions were eased earlier this year. Opferkuch expects average stays will be from five to seven nights once things normalize.
What The Laundry Rooms offers
The Laundry Rooms is promoting itself as an “upper mid-market” brand with AAA, amenity-rich buildings in central, walkable and public transit-accessible locations close to employment, entertainment, education and health drivers.
It offers guests fully furnished residential suites with kitchens, washers and dryers, while also providing hotel-like services and amenities such as swimming pools, gyms, yoga studios, co-working spaces and a ground-floor restaurant.
The Laundry Rooms also incorporates “light touch” management that allows guests to minimize interactions with staff if they choose, including remote check-in, keyless entry, virtual concierge and on-demand housekeeping services.
“These are very design-forward accommodations that have a definite cool factor,” said Opferkuch. “We appeal to millennial travellers, who now represent more than 50 per cent of corporate travellers globally.”
The Laundry Rooms’ competition
While many condo corporations don’t allow owners to make their units available through short-term rental services such as Airbnb, Opferkuch said residents at Circa 1877 have embraced The Laundry Rooms because it doesn’t involve absentee owners renting out their units.
“Airbnb and short-term rentals get kind of a bad rap and, in some cases, understandably,” said Opferkuch. “In our case, you’re renting from us. We’re on site and there’s no monkey business. If there’s an issue, we’re there to deal with it.”
Expansion, alliance with Urban Reform Realty Inc.
The Laundry Rooms will only lease full floors in newly constructed buildings and its next four are on the way in Southern Ontario at:
– HIP’s The Bright Building in Kitchener;
– HIP’s The Gaslight District Condominiums in Cambridge;
“We want to keep them relatively small and we want to keep a high level of service,” said Opferkuch. “We determined that 40 to 80 units is the sweet spot that gives us the scale we need but also allows us to offer some really personalized service.”
The Laundry Rooms recently aligned with Urban Reform Realty Inc. to source more locations across Canada. Urban Reform specializes in helping retailers, lifestyle brands and restaurants create and deploy real estate strategies while also providing strategic vision and leasing services to owners of retail and mixed-use assets.
Urban Reform is targeting additional sites in Hamilton, London, Ottawa, Kingston, Toronto, Mississauga, Montreal and Brampton.
“We started out with condos, but are now moving strictly into apartments,” said Opferkuch. “It’s much easier to be involved in a head lease with a developer for 80 units as opposed to 40, 50 or 80 leases with individual condo owners.”
Expansion forecasts are for between 10 and 12 Canadian The Laundry Rooms locations over the next four years in both primary and secondary markets.
“We are very bullish and want to create a national hospitality business,” said Opferkuch. “We are eyeballing 1,000 units by 2025 and, based on our current trajectory, we’ll probably get there in two years.
“It’s ambitious. There’s no doubt about it. But, we see an opportunity.”