Oops, they did it again. Will the Airbnb-branded apart-hotel developer Niido ever learn its lesson?
The developer behind Niido Powered by Airbnb, the hotel-like concept that was first announced in 2017, is at it again.
Newgard Development Group last week angered the residents of its latest Niido project when it informed them that their luxury apartment complex in Nashville would soon not only allow, but encourage, tenants to rent out their units on Airbnb.
“I would say to Niido, ‘How can I trust you?’,” Cailin Cassidy, a resident of the Olmsted in Nashville, told Skift. “You have taken my apartment home from me, and you are trying to turn it into a hotel to make some money and compete in any market you can sneak your way into.”
In a Niido Powered by Airbnb building, residents are encouraged to rent out their units on Airbnb and, in return, their landlord — Niido/Newgard — collects a 25 percent commission whenever they do. These complexes also feature services that you might find in a hotel, such as a front desk concierge or agent.
While other apartment buildings around the world operate on similar models as part Airbnb’s “Friendly Buildings” program, Niido was the first such landlord to have access to the Airbnb brand itself, and Niido has since collected $220 million in institutional funding to grow its inventory to 14 different apartment complexes by 2019. The relationship between Niido and Airbnb is somewhat similar to how a hotel company lends its brand name to an individual hotel owner. Only in this case, Airbnb is extending its brand name to a multifamily housing developer.
And yet again, as was the case in Kissimmee, Florida, where Niido purchased an existing apartment community, the residents of Nashville’s Olmsted have said they felt “blindsided” when they finally got confirmation that their home would soon become, essentially, a hotel.
That confirmation officially appeared in an email from Niido’s chief marketing officer Cindy Diffenderfer on Friday, August 10.
An hour later, Niido gave an exclusive story to Conde Nast Traveler, which touted the Nashville property as the “first Airbnb-Niido apartment complex.”
When Skift recently spoke to a current resident of Kissimmee’s Domain Apartments, however, he told Skift that he has already seen a number of Airbnb guests staying there as far back as December and January, shortly after Niido bought the community.
“You could already tell people were visiting here back in December and January,” Tony Kolodzej told Skift. “They would only be here for the weekend or a couple of days and that would be it.”
Kolodzej and other residents weren’t officially informed that their home was being changed to a Niido Powered by Airbnb until April. One of the first signs residents received about the change was when they were told that they needed to have brand-new doors with smart locks installed, and were invited to hour-long sessions with the new property manager to discuss the new doors and locks.
A spokesperson for Niido told Skift that “while Kissimmee was slated to be the first opening, the timeline shifted a bit. However, it is still slated to open soon after Nashville.” She added that Domain “is currently in beta, so there have been trial [Airbnb] stays to date.”
While it appears that, at least in Nashville, Niido has been relatively more proactive in terms of informing residents of the Olmsted about the change than it was in Kissimmee, Niido’s communication and outreach strategy in both cities follows a similar pattern.
Both the Olmsted and Domain complexes are fairly new, having both opened within the last year, and both locations are located to major tourism attractions. Both Domain and the Olmsted also had a number of existing residents who signed leases to live in their respective communities that originally prohibited short-term rentals.
Niido’s Bait-and-Switch Pattern
What follows is a timeline of how the residents at the Olmsted slowly discovered that their home was being converted into a Niido Powered by Airbnb. Skift spoke to five Olmsted residents and reviewed communications from Niido in putting this timeline together.
Airbnb declined to comment on this story. Skift contacted Niido CMO Cindy Diffenderfer directly, but our emails were forwarded to the company’s spokespeople at public relations firm DKC.
November/December 2017: Atlanta-based CF Real Estate Services opens the Olmsted in Nashville’s up-and-coming SoBro neighborhood. It’s marketed as a luxury building with amenities geared toward the creative class and young professionals who work in and around the area.
Robert C. Piraino, the owner of the Music City Fencing Club who moved to the Olmsted in February, said he was drawn to the Olmsted because it was “marketed toward this unique maker, local Nashville, like-minded entrepreneurs and trendsetters who are already well established.”
The first residents begin to move in, even though the building remains under construction. The lease that all tenants sign expressly prohibits short-term rentals.
“Airbnb is even stated in the lease,” Ruth Gonzalez, a long-term Nashville music executive at 12 South Entertainment and Olmsted resident since January, told Skift. “Their name is stated on our lease as prohibited. I was very thorough in my reading of the contract to try to avoid this. What’s happening here is just shady.”
Late June/Early July 2018: Residents begin to hear rumors that the building is going to allow Airbnb rentals, first through a mobile app for residents that is no longer functioning.
“I saw that someone posted in our building’s app that an outgoing staff member told them that the building was sold and turning into an Airbnb complex,” said Amber Weinberg, a self-employed web developer and resident of the Olmsted since April. “When I approached one of the staff members that knew me somewhat well, she confirmed the rumors that the building was indeed being sold, but couldn’t confirm the Airbnb rumors.”
Gonzalez and Piraino also saw the same posting in the Olmsted’s app about the ownership change back in late June and early July. Gonzalez said that she saw at least three postings regarding the ownership change and that each one was subsequently erased from the app. That app, Piraino said, has also since been disconnected, as have the Olmsted’s three official social media accounts (Facebook , Instagram, and Google Plus).
Mid-July 2018: Olmsted resident Sam Forcum starts a petition on Change.org to “stop Airbnbs (or any STRPs) in the Olmsted Nashville Complex.” It has since received 196 signatures as of Tuesday night.
August 9, 2018: A slip of paper is placed under the doorstep of each resident’s apartment at the Olmsted. It’s from RAM Partners, the same management group Niido also hired to manage Domain Apartments in Kissimmee, and it’s signed from the new community manager, Kandi Rice. There is no mention on this document of “Niido Powered by Airbnb” or of Newgard. The only thing residents are told is that their “rent process will change” and that RAM has now “taken over management responsibilities at the Olmsted as of Wednesday, August 9, 2018.”
Skift contacted the previous owners of the Olmsted, CF Real Estate Services, to confirm exactly when the Olmsted was sold to Niido/Newgard. CF Real Estate Services vice president of marketing, Ryan Perez, told Skift on Monday: “We are formalizing our press release and it will go out tomorrow or Thursday to the wire. Until that time, I’m not at liberty to give details until our ownership and other partners approve the release.”
The same Niido spokesperson told Skift on Monday, “The deal closed late last week.”
A Nashville Business Journal article notes that the Olmsted was sold to Niido for $90 million, setting a near record for one of the most expensive real estate sales in the city.
August 10, 2018: Residents receive an email from Niido CMO Diffenderfer at 3:46 p.m. The subject line is “Ownership Change at Olmsted Nashville” and it officially informs residents that the Olmsted “will be the first Niido | Powered by Airbnb community in the world to officially open.”
“When I got that email on Friday afternoon, that was a shell shock for me that this is happening and this is how it’s going to go,” Gonzalez said.
The email assures residents that they will not have any rent increases and details how homesharing would work at the property; there’s a 180-day cap and residents can only rent out their primary residence and “no one is required to share their home with travelers.”
It also talks about how the building will undergo “a series of improvements that will make this building better for everyone” that includes a free coffee bar, complimentary bikeshares, free weekly happy hours and barbecues, and “enhanced common spaces.”
Piraino and other residents, however, point out that the coffee bar was already promised long ago from the previous owners, and that the existing common spaces are already more than complete. These transformations are expected to take place over the next 60 days.
“We don’t want ‘renovations’ to our brand-new building. We don’t want an ugly neon front door,” added Weinberg.
The email also noted that Diffenderfer would be “on-site to meet with you and answer any questions you have” on Saturday the 11th and Sunday the 12th.
Gonzalez, however, would prefer that Diffenderfer communicate with residents in writing as well as in person. “That’s nice they want to answer our questions, but I want my correspondence to be in writing.” She, as well as Piraino, and another resident, Michelle Bellamoré, have directly emailed or attempted to message Diffenderfer with their questions, but have not yet gotten any response from her or anyone at Niido.
Residents Are Concerned
Not surprisingly, as was the case with the residents of Domain Apartments in Kissimmee, the residents of Nashville’s Olmsted are genuinely concerned about their community becoming what Niido bills as “a life worth sharing” primarily because of safety concerns.
“There’s no direction that a CMO or marketing executive could spin this for me that this hybrid apartment-hotel that hasn’t been tested is safe,” Gonzalez said. “My safety concerns cannot be assuaged by a marketer. This is an untested hybrid model and I don’t want to be the guinea pig for that. I don’t want to pay my rent while they figure out how to make this model work.”
“My concerns are mainly regarding the transient nature of my community that will likely occur through an influx of Airbnb units and, of course, safety,” said Cassidy. “How am I expected to feel safe in my home while strangers rotate daily?”
Some, like Bellamoré, were expressly drawn to the Olmsted because it prohibited short-term rentals originally. “The whole reason I chose the Olmsted was because they had the complete opposite business model as Niido.”
That Nashville has also become a popular tourism destination for bachelor and bachelorette parties also concerns residents.
“We already have problems with certain residents partying late and trashing the place and not it’s only going to be multiplied,” Weinberg said. “The building is directly across the street from a pedal tavern company, and the people who come to stay at Airbnbs downtown are likely bachelor and bachelorette parties, since that’s what Nashville is famous for right now. I’m extremely concerned about my safety, about noise levels, and about not being able to use the building amenities anymore.”
And although Diffenderfer assured residents in her August 10 email that their rents would not go up, many aren’t so sure, and many feel like they’ll eventually just be pushed out.
Piraino said a resident from Domain Apartments recently contacted him and told him that residents there were told they’d have to pay a penalty if they broke their leases and wanted to move.
Domain resident Kolodzej said that his monthly rent has gone up approximately $100 since he moved in last year, and that he recently resigned his lease simply because he and his wife “have been hard pressed to find a new place.”
There are, however, some people for whom an apartment complex like a Niido Powered by Airbnb would be welcomed.
A recent survey conducted by the National Multifamily Housing Council, for example, noted that more than half of its respondents, ages 25 to 34, and more than 60 percent of those under the age 25 are interested or very interested in the ability to participate in homesharing.
And prior to the announcement of Niido back in 2017, there have already been a number of apartment complexes that have signed onto Airbnb’s Friendly Buildings program. In December, Airbnb said there were more than 10,000 listings on its platform associated with it.
A former Airbnb host himself, Piraino said, “I don’t despise the idea or the business model idea, but I do despise the how [Niido] is going about it, taking over a building that already exists and pushing out residents instead of doing their own thing from the ground up. That seems like the opposite of what Airbnb’s real plan was to be like.” Piraino previously rented out his own private house that he lived in on Airbnb, prior to moving into the Olmsted.
Nashville and the state of Tennessee are also much more welcoming of short-term rentals than other municipalities in the U.S. In May, the state became the sixth in the U.S. to pass legislation that protects short-term rentals. So, even though some residents of the Olmsted are opposed to homesharing, the laws in Nashville don’t necessarily prohibit it from taking place as long as someone has the right permits.
Whatever ultimately happens with the Olmsted and its transformation into the Niido Nashville, it’s clear that Niido followed the same playbook it used for its upcoming Niido Orlando complex.
“It seems Niido didn’t learn from their actions with the previous property, Domain, as we too were blindsided about these changes,'” said Weinberg.
Another Niido spokesperson told Skift, “Niido has plans to convert existing buildings, acquire newbuilds, and also build from the ground up in the future in new markets” as it aims to reach its goal of 14 properties by 2019.
For now, however, the residents of Nashville’s Olmsted and Kissimmee’s Domain, have to consider whether they want to continue living in a soon-to-be apartment hotel, or to live elsewhere.
“They haven’t just taken over a building,” Bellamoré said. “They’ve taken people’s lives into their hands now and disrupted a community. It’s one thing to build or create a building with this model, but to go into an almost full community with the opposite business model is just so discouraging … Had this been a Niido from the start, I would have never rented an apartment here.”
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Photo Credit: A rendering of the Olmsted in Nashville, which is set to become the latest Niido Powered by Airbnb complex. Niido Powered by Airbnb