The Commercial Observer
The Commercial Observer
The King of the High-End Crashpad:
Hotelier Larry Korman Re-imagines the New York Extended Stay
April 6, 2010
by Jotham Sederstrom
Over the past four years, Larry Korman, a
partner at AKA, has helped transform what
was once a niche hotel submarket with a bad
reputation into a successful business model.
Indeed, with four AKA hotels in New York and
tentative plans for two more, Mr. Korman, 46,
has been spending more time in the Big Apple
watching his growing empire. The Commercial
Observer spoke to the Philadelphia native from
his AKA flagship hotel near Central Park about
the future of the extended-stay hotel.
The Commercial Observer: How did you get involved in the extended-stay hotel business?
Mr. Korman: It was an evolution from the furnished apartment, which my father created in 1966, and it was created by mistake. His father had built a circular building in Philadelphia. It was pie-shaped apartments, and they were tough to rent, so my father would rent them on a three-month basis, a six-month basis. Those residents would say, 'Could you get me some furniture, could you get me a coffee maker, a toaster?' And it really evolved. We saw there was a niche needed for something between what a hotel offered for a few days and what an apartment offered for a year.
The term 'extended-stay' was once thought of as kind of a dirty word, wasn't it?
I think there were a lot of dirty words. 'Corporate housing' had a connotation of spaciousness but low-end, an apartment that somebody couldn't rent so they decided to pass it off on the transient traveler. I think extended stay, 10 years ago, was a low-rent hotel. I think what we've done is taken both of those niches, whether it's the extended-stay hotel or the furnished apartment, and added cachet. The first thing to do was to select a great location. Once you had a great location, you had the interest of the people who otherwise wouldn't bother to pay attention. We're right next to the Plaza Hotel, the Ritz Carlton and the Four Seasons.
Does the market for extended-stay housing mimic the hotel market?
I think a true extended-stay hotel rises and falls with the hotel industry because most hotels over the last 10 years have added a suite component to their offers and put it under the umbrella of extended stay. It's hard to define what we are because we're a hybrid of many attributes, but I think most extended-stay hotels are glorified hotel rooms. They're not really much bigger than a true hotel room.
Who stays at your buildings?
I think that has evolved also. I think last year there was a lot of international travel taking place in New York City, and we got a lot of that business as well as traditional hotels. I think the group that has always recognized our attributes, and have liked the anonymity of AKA, is the production companies: from the stars to the directors to the producers to everyone involved with the production. Broadway shows, television shows. Madonna had all her dancers stay here for what she thought would be six weeks, but ended up being nine weeks. I think they liked the fact that they didn't have to go out for meals. They could bring their chefs in and cook in the different two-bedroom kitchens and all eat together as a family. I think that was important to her.
I think there are also individuals going through a renovation and they need a place. They want to be near their house, or condo, while they renovate. Or somebody who's going through a divorce. We have a group here that refers to us as the Heartbreak Hotel.
What is the average stay for most of your residents?
The average stay differs from location to location. We have four properties in New York City. Sutton Place and the United Nations, the average stay may be two or three months. Times Square and Central Park, the average stay is two or three weeks.
Do you consider yourself a residential developer or a commercial developer?
Korman, in general-myself, my brother, my father, my grandfather and my great-grandfather-all would consider ourselves residential developers. You're dealing with where someone is living. We take such passion and pride in what we do because more so than where you eat or what you drive or what you wear, this is where you're staying. And we look at our roots as home builders; but now you're taking that individual who's leaving his home, maybe leaving his spouse, and coming to this crazy city for three months and you're providing that sanctuary. So I think it's even more important than the home itself because they're away from home.
Give me some celebrity gossip.
I think some stars who have been conditioned to stay at the Four Seasons, Ritz Carlton, in order to get their acceptance we're trying something new. We promote the anonymity that AKA offers. We're talking about actresses and actors who have won Oscars and are iconic and they love it here. They're skeptical when they first get here. They're not sure, but they fall in love with it. It's one of those wow effects, but it's a slow wow. Over time, the wow factor grows from week to week to week.
Are there any celebrities here now?
Yes. When we were doing [another interview a few weeks ago], we bumped into one major star that was on the cover of the New York Post that day. When we went into the cafe, there was a major female star that's in a major movie in New York. I won't name any names, but the reporter literally bumped into three high-end actors.
Do you work closely with your family on a day-to-day basis?
Absolutely. My father, my brothers, we're all best friends. My father is a spectacular entrepreneur who has mentored us and at the same time has given us great autonomy to spread our wings. My one brother went to Duke with me and then he went to Wharton. He's probably the brightest financial mind I know, and he is completely involved in his world of finance for growing AKA and AVE and ARK. My youngest brother came back into the business, and he runs our commercial division. But we really are each other's best friends; we have each other's back; and we have complete confidence in one another; and that's allowed us to grow and be innovative.
PDF version >