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Building the Apartel: Part 3

2015-12-14

In case you missed it, read Part 1 and Part 2 of the story.

An Experiment in Castelldefels

In early 2014, Ginosi announced expansion to Madrid with the hope of adding Spain as yet another market. Although Madrid would eventually be closed due to a lack of commercial success, Barcelona was targeted as a second location in Spain. With its unique architecture, world-class beaches, and unique culture, Barcelona seemed like the perfect place for expansion.

Finding a good location in Barcelona, however, proved difficult. Eventually, a family member found a building of studio apartments in nearby Castelldefels. Although the apartments lacked some of the features Ginosi usually provides, the building still presented an opportunity. Ratings for the location were poor and the ownership were eager to find a new way to manage the location.

Ginosi took initial steps to get management rights for the apartment building only to find that the company lacked the skills necessary for navigating the Spanish bureaucratic system. In addition, Ginosi Apartments was still a young and unproven commodity, meaning that building ownership wanted proof that Ginosi would be a productive property manager. More than that, the owners wanted Ginosi to seek a banking partner to guarantee their tenancy.

These setbacks seemed like big hurdles for such a relatively small property (fifteen apartments). But the need for a level four proof of concept outweighed the problems at hand. By hiring Spanish legal counsel and cooperating with a bank as a guarantor, Ginosi eventually received the management rights and permitting for the apartments.

But that did not solve all of the problems in Castelldefels. The apartments were older and in need of refurbishment. In addition, the property had extremely poor reviews that Ginosi inherited along with management rights. 

An internal team was set up with the company designer and managers to decide on how much renovation, if any was needed. Again, inexperience led to delays and cost overruns as Ginosi was strictly a travel company without experts in construction project management. Eventually though, the project was completed and Ginosi officially opened its first level four Apartel: The Castelldefels Suites.

Although the apartel was small by Ginosi’s burgeoning standards, it featured all of the aspects that were sought under the level four classification. It had Ginosi’s sign on the building and a front-desk like a hotel. Most importantly, it leveraged Ginosi’s greatest asset, the technology to minimize on-site staff. As proof of concept, Castelldefels was and is a small but concrete success.

Troubled Waters and Silver Linings

As 2015 began, the legal clouds hovering over the short-term rental industry finally enveloped Ginosi. To begin the year, Ginosi opened its largest location yet, at the recently completed Sunset and Gordon. It was an excellent location in the heart of Hollywood and immediately became one of Ginosi’s most popular and highly rated location. Unfortunately, issues with zoning and permitting at the building led to lawsuits against both the property owners and Ginosi.

Articles in Curbed Los Angeles and the LA Times painted not only the property owner, but also Ginosi as enemies of sustainable development in Los Angeles. On another front, city councils in Santa Monica and Los Angeles began discussions on banning short-term rentals in their cities all-together. 

Through these issues, Ginosi has continued to expand. The shift towards more mature products has slowed the massive growth of 2014, but overall, the outlook is good. A successful proof of concept in Castelldefels has bolstered enthusiasm in realizing the dream of a line of fully functioning apartels. Succeeding in this venture will take all of the lessons Ginosi has learned thus far. 

As 2016 appears on the horizon, Ginosi will venture in new directions to solidify their place as the premier Apartel operator in both the US and abroad. Hopefully, news of these projects will post here soon.

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