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# At what point does corporate housing become a hotel?
- URL: https://www.smdp.com/at-what-point-does-corporate-housing-become-a-hotel/
- Published: 2003-10-29T16:00:00.000Z
- Updated: 2026-10-23T03:08:39.000Z
- Author: Guest Author
- Tags: Real Estate & Housing, Santa Monica, #archive-import

*By Guest Commentary By Monica Witt*

In the past, a bright line existed between hotel products and housing products. An establishment was considered a hotel if it facilitated, arranged, offered or provided amenities and services such as maid service, concierge services, room service, food and beverage service, dry-cleaning, valet parking, and bell/porter services. Traditionally, hotel guests occupied their units for less than 30 days and paid transient occupancy taxes.

In contrast, a building was considered housing if it provided nothing more than the services connected with the use or occupancy of the rental unit: repairs, maintenance, landscaping, painting, laundry facilities, elevator service, refuse removal and off-street parking.

Today, however, the hotel industry is in flux, and the line between corporate housing, short-term rental housing, extended stay facilities and hotels is blurred. While some operators of corporate housing require a minimum 30-day stay to support an argument that they cannot be deemed a hotel, the 30-day stay is no longer the measure of what constitutes a hotel. For example, the City of Santa Monica has defined “short-term housing” that is designed for use by individuals who will stay for at least 30 days but who intend their occupancy to be temporary and, in fact, maintain a permanent place of residence elsewhere; and includes services and amenities such as maid and linen service, business service centers and valet parking.

Corporate housing, short-term housing and extended stay facilities are the new darlings of the hospitality industry. For example, the Year End Lodging Econometrics Research Report indicates that in 2000, 180 extended stay products, representing 19,703 rooms, opened in the United States. Similarly, in April 2001, within six years after opening its first extended stay hotel, Extended Stay America, Inc. opened its 400th hotel. The Highland Group recently reported that the number of extended stay rooms available in 2000 represents a 300 percent increase over the number of extended stay rooms available in 1995\. Many extended stay facilities create a better bottom line by not pampering their guests the way a full-service hotel would — they offer weekly maid service in lieu of daily maid service, and they eliminate the concierge, the bell/porter service, and the 24-hour front desk personnel. In other words, this type of product creates a hedge against a down economy and the resulting decreases in occupancy.

At the same time, however, other corporate housing facilities offer some or all of the services and amenities typically associated with a traditional hotel product. For example, Oakwood Apartments offers a lodging product called the “Oakwood Residences,” which are advertised as “combining the spacious comfort of a private home with the services and security of a hotel, including a 24-hour front desk, airport pickup, daily housekeeping and on site restaurant.” Many Oakwood products are available for short-term occupancy, including, for example, the Marina del Rey Oakwood property, which advertises units and daily housekeeping with only a three-day minimum stay.

The blurring of the distinction between short-term housing products and traditional hotel products is perhaps best illustrated by the fact that corporate housing facilities are often approved as multi-family housing, and on property that is not zoned for commercial uses. In connection with their approval as multi-family residential uses, the corporate housing facilities are often able to garner development incentives such as increases in the permitted building height, number of stories and floor area ratio, exemptions from environmental review and discretionary approvals, and relief from onerous development requirements such as guest parking, kitchens, private open space and, in mixed use projects, separate and secure access.

While developers may laud the opportunity to develop hotels in areas that were previously inaccessible to them by virtue of zoning restrictions, many communities now assert that corporate housing facilities are essentially commercial uses which introduce a transitory nature into established residential neighborhoods, lead to a deterioration of neighborhood character and disrupt the quality of life within residential areas. Further, under state law, every community is required to satisfy housing quotas known as “State Housing Fair Share Requirements.” Many communities have used corporate housing units to satisfy their fair share requirements, only to realize that in practice, there is a possibility that the state will not recognize those units as housing and will require the community to replace those credits with true housing units.

Furthermore, the blurring of the bright-line test has the potential to divide the hospitality industry. Many owners paid a premium for their hotel properties on the grounds that zoning restrictions prevented the development of new hotels within the same zone and vicinity. In the current market, however, these owners are finding that new developers are able to sneak into previously inaccessible zones by pulling building permits for multi-family housing and then, as a practical matter, operating like a hotel and marketing their facilities to hotel customers. By avoiding zoning restrictions and transient occupancy taxes, and taking advantage of development incentives, the new brand of corporate housing is able to offer significantly lower rates than the old-guard hotel.

As a result of these concerns, many municipalities are taking steps to define corporate housing as a commercial use which should be restricted to certain districts and not considered a housing development. For example, the Catalina Island community of Avalon permits “transient rentals” in all districts only upon the issuance of a conditional use permit. The City of Santa Monica has imposed a moratorium on the development or conversion of any residential building for short term housing use.

At the end of the day, hotels are operating businesses, whereas housing is simply real estate. Ambiguities in zoning codes may create the perception that development of corporate housing in zones previously inaccessible to hotel uses is an unexplored market niche, or that hotel-like products that are developed under the guise of “corporate housing” can skirt zoning restrictions, obtain housing development incentives, and avoid imposition of transient occupancy taxes. In fact, however, many communities are recognizing that the distinction between corporate housing, short term rental housing, extended stay hotels, and traditional hotel products is nothing more than a continuum. Many communities are now reviewing their zoning codes to support the argument that a developer who has pulled building permits for housing does not have a vested right to facilitate, arrange, offer or provide the services and amenities that are typically associated with a traditional hotel. As a result, the development of corporate housing requires an in-depth analysis of the community in which the development will be located, including all applicable ordinances, development requirements and development restrictions.

*Originally published in the Santa Monica Daily Press print edition on October 29, 2003.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/102903.pdf?ref=smdp.com)