City Looks Into Unused Hotels for More Affordable Housing Options

• Author: William Asher
• Posted: 2023-11-25

All over the United States, there is a severe shortage of affordable housing. Even if Congress managed to pass a bill that increased the federal minimum wage to $15 per hour, there is no state in which that would be enough money to pay average expenses, including the local going rate for a two-bedroom apartment. The COVID-19 pandemic caused a widespread upheaval in the national and worldwide economy. The housing market got tighter and hotter. At the same time, travel rapidly dropped. There are dozens if not hundreds of hotels and motels sitting empty or mostly empty in every state in the nation. In one city, some enterprising planners have proposed turning those empty hotels into affordable housing units.

Lost Tourism From the COVID-19 Pandemic

Most large cities and other tourist destinations have lost out on a lot of tourism income. However, the hotel industry could provide something else these cities are in desperate need of, which is affordable housing. In Alexandria, VA, the city's economic development partnership and administration said that the local government officials would look at updating and rezoning some buildings in order to help with the transformation of hotels that are not in use. The hotels would be turned into affordable housing units.

Reason for Rezoning Empty Hotels

Hotels are often in city centers, which are hubs for mass transit. They are close to corporate headquarters, convention centers, sports arenas and other places where people work. If a person could live in a downtown area and use mass transit, they could save money on transportation expenses. Living close to work would also help people save time. The city officials think that it makes sense to encourage the conversion of older or even obsolete hotels into affordable housing units.

Economics of Converting Hotels Into Housing Units

The city's proposal of balancing too many hotel rooms that are empty with too few affordable housing units has a few caveats. The community doesn't always like where the housing units will be. For example, the Alexandria school district's board of education unanimously voted against putting affordable housing units on the campus of Minnie Howard High School. That's because the community didn't want the housing units to be there. Earlier this week, the Alexandria City Public Schools' consultant proposed adding the affordable housing units to a community shelter or moving the shelter entirely and using the existing site as a mixed development with part of the space set up for affordable housing.

Hotel Occupancy in Alexandria

In Alexandria, much like other cities, hotel occupancy rates have dropped to historically low levels. The city's mayor, Justin Wilson, reported that hotel revenue fell from $1.1 million for the month of July 2019 to just $200,000 for the month of July 2020. The city could get more tax revenue by converting the empty hotel rooms into rental units. Some hotel owners may realize that the number of travelers will take a long time to increase to pre-pandemic levels. If the hotel is old and obsolete, people might not pick that hotel if other hotels with better amenities have rooms available for close to the same price.

Which Hotels the City Plans to Target

Hotels that are a greater distance away from the top tourist destinations in the city are more likely to have lower occupancy. The city plans to target those hotels for conversion into affordable housing units. The city will look at commercial as well as tourism corridors. The proposal has the support of city council, but it will take a while for the idea to turn into policy.

What One City Council Member Has to Say

One Alexandria city council member said that some hotels aren't going to survive the economic downturn. They would be better off selling their properties while they have the chance. The city or an affordable housing developer could get a good deal buying those buildings, making some updates and getting low-income workers and homeless people into stable, affordable places to live. The city will have to work with the hotel owners to make it happen. Rezoning is usually done on a case-by-case basis. The city has actually gone through this a few times in the past, before the COVID-19 pandemic was a thing. Three hotels were successfully converted into affordable housing units and are now managed by local nonprofits. More than 100 affordable housing units were created as a result of those conversions.