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WhyHotel Lays Off 'Significant Portion' Of Staff, Shifts Business Model Amid Hospitality Crisis

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WhyHotel CEO Jason Fudin

A D.C.-based pop-up hotel startup that had begun to grow across the country is the latest company to feel the pain from falling hospitality demand due to the coronavirus. 

WhyHotel CEO Jason Fudin announced on LinkedIn Wednesday that his company is laying off a "significant portion" of its pop-up hotel team. The staff members who remain will take a pay cut, he said, and the company is altering its business model. 

"For us, both professionally and personally, it is tragic to be losing such incredible and passionate people in this moment to something as unforeseeable as a global pandemic," Fudin said in the post. "We waited longer than others in the hospitality industry, including the hotel flags and other startups, to make this decision to ensure we really understood what was happening in the world and in our business before taking such serious action."

Fudin declined to comment on the number of people the company laid off when contacted Thursday evening. The layoffs come as the global travel market has slowed to a standstill, and hospitality giants such as Marriott International, Hilton Worldwide Holdings and MGM Resorts International have laid off or furloughed thousands of employees. Local hotel owners in the D.C. area have also enacted widespread layoffs.

WhyHotel in 2017 spun off from Vornado/Charles E. Smith, Fudin's former employer. WhyHotel's business model includes partnering with developers of new apartment buildings to turn large blocks of available units into temporary hotels during a building's lease-up phase. 

After inking deals with a handful of D.C.-area developers, WhyHotel in December 2018 closed a $10M Series A funding round led by Highland Capital Partners. In May, it announced it was opening an office in San Francisco to expand its concept nationally, and it then closed deals in Seattle and Houston in the following two months. It also launched a new business line, branded as Hospitality Living, that focused on developing high-rise buildings that offer a combination of multifamily and hotel units.

Fudin in Wednesday's post said the company is shifting its pop-up hotels to have fewer staff members and require a minimum of 14 days per stay to facilitate social distancing. The pop-up hotels will remain open as an option for those in need of temporary housing. He also said it was refocusing a core team on the Hospitality Living concept. 

"We plan to resume our full pop-up hotel operation when it is safe and practical to do so," Fudin said. "In the interim, we are going to continue to focus full steam ahead on hospitality living, our second product that we debuted last year. We will put our energy into bringing new flexible-use assets that can switch between apartment and hotel use to the market."

Related Topics: WhyHotel, Jason Fudin