As Airbnb established a foothold in Austin nearly a decade ago, Kristen Carson noticed the conflict between short-term rentals in quiet neighborhoods and the surrounding residents who complained about the noise.
Carson’s observation planted a seed that grew into Inn Cahoots, a boutique hotel in East Austin that caters to group travelers, such as bachelor and bachelorette parties.
We spoke to Carson about the recent turn of events that has resulted in a sudden halt in travel.
Also, in full disclosure, we got connected to Carson through her husband, Brian Alford, who is 3rd & Lamar’s attorney.
Cover Charge: Episode 4 Transcript
Nick Schenck: [00:00:00] What’s up everyone? Thanks for joining the latest episode of the “Cover Charge” podcast. This week’s guest is Kristen Carson. She’s the founder and CEO of Inn Cahoots, which is a hotel located in East Austin that caters exclusively to groups. So a lot of bachelor parties, a lot of bachelorrette parties. We have a great discussion with her coming up, but before we get to that, I want to do a quick plug.
[00:00:22] If you’re an Austin musician or an Austin band and you want a free music video. Visit 3rdandLamarMedia.com. That’s the site for our agency and production arm. Visit the blog section, and there’s details there on how you can apply to get this free music video. After May 15, which is the deadline, we’re going to select one Austin band or musician to produce a music video for.
[00:00:44] It’s a small gesture for us to give back to the music community. We love music, we love film, we love videos, so we’re really excited about this. We hope we get a lot of applications.
[00:00:53] Alright, let’s get to the interview. I asked Kristen what the past 90 days have been like for her at Inn Cahoots.
[00:01:00] Kristen Carson: Well, we had been doing so well. We were 70% above our target, even for when we were supposed to be fully operational. And we had just [restrict] decided to move out to another market to expand our concept. So within three days, we had raised $5 million to expand to another market. We were under contract, ready to go, and then this hit and the wheels came falling off.
[00:01:26] Nick Schenck: So we met [through] your husband. Brian is the attorney for 3rd & Lamar. He’s a good friend of mine. I emailed him after the quarantine began in mid-March and I just wanted to check in, because I knew that, you, his wife, had this space and I was like, “Things must not be good.” So I just checked in with him and he responded. He said, “Yeah, we’re in crisis mode.” Describe crisis mode, and what was the day when the gravity of the situation hit you?
[00:02:06] Kristen Carson: Well, I think I was afraid of it hitting even back to late February. So we were actually in the other market. We were expanding in Nashville and we were in Nashville. I started hearing rumblings of it coming to the U.S. and started to get more and more worried about South By, which was a really big time of year for us. We make about 15% of our revenue during South By. And so I was pretty on edge for the next two weeks, maybe, or a week, reading all the news.
[00:02:35] And then there was a press conference in which Mayor Adler said we’re not canceling South By, and I thought, “Ooh, well, that’s lucky because pretty sure that things are going to get bad if they do.” And then two days later, they had another press conference and said we’re canceling.
[00:02:52] And that was the beginning. That was like the front two tires, like falling off. And then we just went head over that as we kept going forward and lost all of our bookings.
[00:03:05] Prior to this, we were pre-booked through March, or sorry, through June. We were pre-booked through June and we’ve just been getting cancellations constantly.
[00:03:15] Nick Schenck: So with the cancellations – I don’t know what your cancellation policy is – but did you get to keep the deposit or any of that? Or were you just like, “Okay, we’re going to give everything back?”
[00:03:25] Kristen Carson: So we have a very strict cancellation policy because we cater towards groups. So what we’ve done is, we’ve said we’re going to give you a large percentage back. The rest is in travel credit. Anytime you want to come, you’re welcome to come.
[00:03:41] But yeah, I mean, we had to do that. We had so, so many bookings and, you know, we went from full faucet to like the faucet turned off.
[00:03:55] Nick Schenck: Did you have pandemic insurance? I think that’s something that probably a lot of hotels maybe didn’t even consider before this.
[00:04:03] Kristen Carson: So we had coverage of business loss, and we thought we had pandemic insurance, but it actually specifically does not include viruses. That’s the only, I mean, so we thought we had – we thought we were insured for a good portion of our revenue. And there is some talk, I’ve heard from other businesses, I think in other states about how it may have been illegal to exclude that insurance and business loss. There’s some hope maybe.
[00:04:37] Nick Schenck: So just the past few weeks, I’m sure you’ve applied for the payroll protection loan, grants, everything you possibly. Describe what you’ve applied for.
[00:04:48] Kristen Carson: Literally everything from the PPP to EIDL to even little smaller grants. There’s like the Red Backpack Fund, which is, I think, for women entrepreneurs, Texas Women’s University has a grant. Visa. I mean, I’ve applied for literally everything because our revenues, we’re not even making 1% of what we were.
[00:05:14] Nick Schenck: Have you heard back from any of those banks or organizations about the loans that you applied for?
[00:05:21] Kristen Carson: Yeah, so I think we got the PPP, which is great, and will enable us to do a small pivot that we’re going to have here, to get some money coming in.
[00:05:31] But I haven’t heard back from the other ones yet.
[00:05:35] Nick Schenck: Yeah. I want to talk more about Inn Cahoots in a little bit. This is an amazing space. It’s a hotel concept like I’ve never seen before. And there’s four levels on 6th and Attayac. I don’t even know if I’m pronouncing that street, but it’s like right in the heart of East Austin.
[00:05:54] And I’d love to learn about how you scored this property and everything, but let’s take it back to how you got to this point, because I think it’s an unlikely story. Before you started Inn Cahoots, you had no hotel industry experience at all. In fact, you had worked in consulting prior to getting into Inn Cahoots. You grew up in a small town outside of Allen, Texas. Came to UT. Talk about – from going to UT to where you are now – the steps that you took.
[00:06:29] Kristen Carson: Yeah. So I was lucky enough to go to UT. I loved the university. And I’ve always wanted to be an inventor. Or a mad scientist.
[00:06:41] And so creating a company, it was something that kind of was right on track with something I would want to do. I studied marketing and mechanical engineering. Went into Deloitte to do strategy consulting, which is wonderful. But I was itching to see if an idea that I had would work. And so I jumped off to start my own business.
[00:07:06] Nick Schenck: But before that you in 2011, when you moved to Austin with Brian – you guys had a place near downtown – where was your place in downtown?
[00:07:19] Kristen Carson: Yeah, so our place is on I-35 and 6th street, and we bought it. It was our first home. It’s a four-story townhome.
[00:07:28] It’s so visible from 6th street that we wanted to do a huge graffiti wall. This was before graffiti walls became kind of passe, even before they were cool. We did a huge graffiti wall, which was like a nod to the fact that we were on the East side. And I think MTV, a scout just came by from MTV and started asking us if they could use our townhome for artist interviews. So we started with that. Then we realized – we found out what Airbnb was, and at the time we were planning our wedding. So we decided to put the place up for our honeymoon, and it got booked. It paid for our honeymoon, which was amazing. And then we came back and it kept getting booked at these incredibly high rates.
[00:08:11] And so I just kept dragging my husband to a hotel every weekend while we rented it out to groups. It was really great. We eventually saved enough money to buy our own house and move out of there so that we didn’t have to pack up our belongings every week. And during that time, we just kept thinking about the fact that this would be great if it were a legitimate hotel. And eventually, [we] came up with this concept.
[00:08:40] Nick Schenck: So give me a sense of what you could earn in a weekend by renting out your four-story townhome.
[00:08:46] Kristen Carson: Back in 2012, we were probably doing about $2,500 or $3,000 a weekend, which is amazing because our mortgage was like $2,900. So it was like a no-brainer.
[00:08:58] Nick Schenck: When you left to go to hotels every weekend, were you splurging, going to like The W, or were you just trying to go to the bargain hotels because you were trying to save up money to get another place?
[00:09:08] Kristen Carson: I mean, we would go to the Westin at The Domain, which at the time was like $129, $139 or something.
[00:09:15] So I wouldn’t call it exactly splurging, but it wasn’t like a bargain at the time.
[00:09:20] Nick Schenck: Okay. Was that pre-short term rental tax?
[00:09:23] Kristen Carson: Yeah. Oh yeah. We must have been one of the first properties on Airbnb. And in fact, because we were up, someone saw our property and started buying large homes and doing the same thing that we did, but in neighborhoods. And that person became very, very famous. There ended up being some massive protests in Austin against hosting these large parties in neighborhoods, and it was all kind of modeled after our little house. But that was what kind of gave us the impetus to build a hotel, because we didn’t think that what he was doing – and doing this in neighborhoods – was very sustainable.
[00:10:01] People are obviously not very happy when they’re living next door to a bachelor party every weekend. But also, the parties don’t want to be in a neighborhood. They want to be on 6th street anyway.
[00:10:12] Nick Schenck: Talk about getting over the mental hurdle of somebody sleeping in your own bed, using your bathroom. Was that easier for you than Brian or vice versa? Or were you both like, “We’re making so much money, we don’t care.”
[00:10:24] Kristen Carson: Yeah. I mean, we were just starting out. We were like, this is our first home. We didn’t really care. I mean, of course we had really great cleaning crews, which matters, but I mean, I would leave some of my clothes there. If they want to steal my dress, they can have my dress. They paid enough for it.
[00:10:43] Nick Schenck: So they would check out around like noon. You’d have a cleaning crew come right away. Then you guys would probably have dinner and come back after dinner?
[00:10:50] Kristen Carson: Yeah. So every Sunday night, we’d get back around nine o’clock, maybe, to our house. We’d stay there until, you know, they’d usually check in on Thursdays. So Thursday morning, we’d leave with our luggage.
[00:11:05] Nick Schenck: Who was the coolest artist that MTV interviewed?
[00:11:08] Kristen Carson: Oh, you know, I don’t even know who all they interviewed there. And actually, over the years we’ve had a series of commercials that are filmed there. We’ve had some really incredible bands that have stayed. Some NFL players. I mean, we’ve just had really cool people.
[00:11:24] Nick Schenck: Y’all still have that place?
[00:11:26] Kristen Carson: We do. Yeah.
[00:11:28] Nick Schenck: You book it through Airbnb still, or through VRBO?
[00:11:32] Kristen Carson: Yeah, somewhat. We’ve really started to focus on the hotel. And there’s been so much legislation coming down on how many people you can host in an Airbnb, which is why the hotel has done so well.
[00:11:46] All of our competitors, which are large Airbnbs around, are bound by the law that they can’t have more than 10 people in any one Airbnb. And our hotel is under a different set of restrictions because we’re approved through the fire code, and we have a hotel license. It’s just a different license.
[00:12:04] Nick Schenck: So this Airbnb experience was obviously very positive for you. At the time, you’re still working for Deloitte. But then you started something called Simply International, right?
[00:12:15] Kristen Carson: Yeah.
[00:12:15] Nick Schenck: Which you’re still the CEO of. It’s the sister company of Inn Cahoots. Talk about Simply International and how that came about.
[00:12:21] Kristen Carson: Yeah. I traveled abroad when I was at UT, and I loved being abroad, and came back and just kept thinking about ways that I could continue to study abroad throughout the rest of my life. And eventually [I] came up with an idea that would enable me to interact still with international students when they came to the U.S. And I figured out that they had a problem, which was finding short-term housing.
[00:12:43] So we created a company that enables international students to find short-term furnished housing. And we ended up getting contracts with universities to do, essentially, pop-up hotels. So if a university is bringing in 50 teachers from Mexico for an English language experience, we will find underperforming real estate assets in Austin and convert them into a hotel, and then lease it for whatever period of time UT needs it.
[00:13:12] Nick Schenck: Okay, so it’s like a turnkey solution where you don’t actually own any of these assets, but you’ll find a place and refurbish it for a set period of time. And UT doesn’t even have to worry about anything. Right?
[00:13:24] Kristen Carson: That’s right. Yeah. That’s exactly right. And so it’s very similar to our hotel at Inn Cahoots, because it works with group travel, because it is a pop-up hotel.
[00:13:36] So we have the same cleaners and there’s the same processes in place for both companies.
[00:13:44] Nick Schenck: OK, so when I learned about Inn Cahoots, and I came here – I think it was the one-year anniversary party you guys had here. It was kind of like a light-bulb moment for me. I was like, this makes so much sense, right?
[00:13:54] People come to Austin for bachelor and bachelorette parties even – I’m closing in on 40 – my friends sometimes are like, “Hey, let’s try to meet one time a year to get together as a group.” Hotels don’t necessarily cater to that audience. Yeah, you can go the Airbnb route. But houses that you can rent on Airbnb aren’t necessarily outfitted for like all the things you want to do. Sometimes they are, but they’re in high-demand. You might not be able to book them when you want them.
[00:14:27] This is a hotel that caters to group travel like that. Describe the space and describe like the light-bulb moment where you were like, “Nobody’s doing this. We got to do this.”
[00:14:38] Kristen Carson: Yeah. So it was maybe 2014 or 2015, we started actively looking for space to build the hotel.
[00:14:46] And that was in response to the fact that neighborhoods were getting really upset with having these large groups every weekend in their neighborhood. So we wanted to find something that was in the middle of the action that could be a legitimate hotel. And it took several years to get through the city, because it’s such a unique – it’s architecturally very unique to combine residential spaces with assembly spaces. And to have each unit have five bedrooms. It’s just an incredibly unique product. It took a long time to get through.
[00:15:21] I don’t know if there was necessarily one light-bulb moment.
[00:15:25] Nick Schenck: I would think if I had that idea, I’d be like, “Somebody else has got to be doing this,” and I’d be doing research, like, wait a second, does this exist anywhere else?” Did you spend a lot of time researching? Or were you like, “It doesn’t matter how many other people are doing this. This doesn’t exist in Austin, and I’m doing it.”
[00:15:43] Kristen Carson: Yeah, I’ve always been paying attention to the market and just seeing if there’s anything else like this. But, you know, it’s so much cheaper to buy a house and to put it up on Airbnb than it is to build a hotel and to do what I consider to be the right way.
[00:16:01] So there really wasn’t anyone going this route because it required so much more capital. But also it requires a bank that believes in the concepts, and that’s quite difficult to find a lender that will back something that’s a unique real estate project.
[00:16:19] Nick Schenck: Yeah. I want to talk about the fundraise in a second, but first, you’re the CEO of Simply International. A lot of people would be like, “Alright, this is enough. This is going well.” But you had the ambition to be like, “No, I’m going to add Inn Cahoots to my plate.” Have you always been sort of hard-charging, super ambitious, and why did you think that this wasn’t more – you weren’t biting off more than you could chew?
[00:16:43] Kristen Carson: Oh, I don’t think I ever think about it that way. It’s just always like, “This is really cool. I want to move forward and do this and do it well.” It’s very interesting because Simply International and Inn Cahoots seem quite different because the markets are so different. But in the end, it’s just groups that are traveling together, and we provide a really cool space for them.
[00:17:07] And we kept gravitating towards Inn Cahoots because we could actually find the space and buy it and build something. With Simply International, it’s much harder to get access to that real estate. Yeah. Although we would like to own real estate in that market as well.
[00:17:28] Nick Schenck: Okay. So you have one parent company for both Inn Cahoots and Simply International, and you share resources between them. Give me a sense, in 2019, what percentage of the revenue came from Inn Cahoots versus Simply International, and then like in your budget for 2020 at the beginning of the year, what were you thinking like Inn Cahoots is going to take off. Like 90% of our revenue is probably going to come from Inn Cahoots.
[00:17:52] Kristen Carson: Yeah, so 2019, it was 25% from Inn Cahoots. 2020, we were on track to be probably more around 40% to 50%. But because we own the actual asset for Inn Cahoots, the profit margins are much, much higher.
[00:18:09] And so Inn Cahoots is a really great thing for us to keep building.
[00:18:18] Nick Schenck: Maybe three months ago, you’re spending 50% of your time on Simply International, 50% on Inn Cahoots? And now what’s the percentage?
[00:18:30] Kristen Carson: Oh, you know, I’ve been spending a lot of time on Inn Cahoots for the past two years. Undergoing construction was really a difficult process. And Simply International is something that we have so processed out that we – it doesn’t necessarily need as much attention. So I’d been spending a fair amount of time with Inn Cahoots.
[00:18:53] And that is the section that we had determined that we would like to expand, because it’s much easier to buy the assets.
[00:19:02] Nick Schenck: What was the process like in building a business plan and fundraising? What response did you get, and from the time when you began pitching investors to when you actually closed on the funding, how long did that take and what was the total amount of money you raised?
[00:19:18] Kristen Carson: We raised in the end, around $6.5 million. And that was a mixture between equity and debt. The equity wasn’t that that hard to get actually. I think it was a really great idea. It is still a really great idea. We had a track record of six years of working in the same market.
[00:19:43] And now we just wanted to make it, you know, go a route that we thought would in the future be legal, because legislation was coming down on Airbnb’s. So getting the equity wasn’t actually nearly as difficult as the debt. Banks didn’t recognize short-term revenue. When we went to them, they didn’t think that it was very consistent, even though we had years and years of experience to show. And this was a new product, a new hotel product. So it was quite difficult to find a lender that would trust us.
[00:20:21] Nick Schenck: But you closed and you found the property. I imagine that there was a bidding process for this property. This is like a really hot spot. In your business plan, did you already have this location in mind?
[00:20:35] Kristen Carson: Yeah, so before we ever started raising money, my husband and I bought this property, and so we personally were sitting on it for a year or two before we ever had money from anyone else or the bank.
[00:20:46] Nick Schenck: What was this before you built this up?
[00:20:48] Kristen Carson: It was a really old home that had been here since, you know, 1890s. And we in fact tried to incorporate some piece of it into this building, and in the end, the historic commission was like, “There’s nothing here we can save.” But it was a really old home that had gone through so many – it had some really interesting history.
[00:21:10] It was a bar, I think in 1910. And, in fact, when we went to look under the building, we found that there was a beer bottle hanging up, like holding up the foundation.
[00:21:19] Nick Schenck: It was wedged in there?
[00:21:22] Kristen Carson: It was wedged in, and that was supporting some part of the foundation. We were like, “Well, this is really indicative of our property. It’s funny that they’re using beer bottles as building materials. And, so yeah, it was a really old house that was really rundown.
[00:21:43] Nick Schenck: So you guys never actually like had parties in there? You just sat on it?
[00:21:47] Kristen Carson: No, in fact, we had to demo it almost immediately. It had been condemned by the city multiple times. I mean, it was in – a beer bottle was holding it up – like really bad shape.
[00:21:57] Nick Schenck: So that was maybe 2014, 2015 when you got it?
[00:22:00] Kristen Carson: Yeah.
[00:22:00] Nick Schenck: Okay. So you sit on it for two years. It’s around 2017, you raise the money, around $6 million. You open Inn Cahoots in late 2018?
[00:22:09] Kristen Carson: 2019
[00:22:09] Nick Schenck: Early 2019?
[00:22:12] Kristen Carson: Yep.
[00:22:13] Nick Schenck: And the build-out process took around a year for this place, is that right?
[00:22:18] Kristen Carson: Yeah, and over a year for architectural diagrams and to get through the city and everything. Yeah, so two years, two and a half years just in construction.
[00:22:28] Nick Schenck: Is this your vision or were you like, “I’m going to find an interior designer, and I’m going to have the interior designer just draw plans and go that route.”
[00:22:39] Or – you seem like a really creative person – are your fingerprints all over this?
[00:22:44] Kristen Carson: Oh yeah. No. This is – my mom and I did everything here. Yeah.
[00:22:48] Nick Schenck: Okay. So people who are listening, there’s like a backdrop behind Kristin of speakers on the wall and there’s VHS tapes above it. Patriot Games, Jetsons, Happy Gilmore, Hope Floats.
[00:23:03] A lot of character here. From the first floor up to the rooftop where we are, give our listeners a sense of what’s on each floor and in the layout.
[00:23:12] Kristen Carson: Yeah, so we are a boutique hotel. It focuses on group travel, and we have five units, and each unit has five bedrooms, a living room, and a kitchen. And additionally, we have a lobby, a roof lobby, and a roof deck and a pool. So we have some community amenities.
[00:23:30] Nick Schenck: Sorry. Talk about the – I think the rooftop deck is kind of what stands out here.
[00:23:34] Kristen Carson: Yeah, it’s an incredible feature. The rooftop deck is around 3,400 square feet and just incredible downtown views of Austin. It’s a pretty amazing area up there. We host a lot of private events.
[00:23:49] Nick Schenck: You said to me when we spoke earlier that it’s kind of in our nature to be playful with guests. Like the one-year anniversary party, you had a tarot card reader and a palm reader.
[00:23:58] Kristen Carson: I wish they had told me about coronavirus. Maybe we wouldn’t have had the party.
[00:24:04] Nick Schenck: Why do you like to be playful and what do you mean by being playful with your guests?
[00:24:10] Kristen Carson: Yeah. I think, in general, my husband and I are very playful, fun people and we enjoy laughing. And the guests that come here are all coming with their friends and families or colleagues, and they’re coming here to make memories. And they’re generally really, really happy when they get here.
[00:24:32] And so we love to be kind of a part of that and to help facilitate them making these really fun, playful memories.
[00:24:40] Nick Schenck: Nice. The obvious question I have, not to be a downer, but I’m like, “Okay, bachelor parties are rowdy. They trash the place.” Like what percentage of your budget is spent on cleaning? What type of deposit are people putting down before they stay here?
[00:24:57] Kristen Carson: Well, we don’t really like to nickel and dime people. So for one, unless they’ve broken a lot, we really wouldn’t charge anyone. I don’t think we’ve charged anyone over the past year. But we do have a heavy, heavy focus on cleaning, because we don’t just host bachelor parties.
[00:25:15] One of my colleagues reminded me that last year we had one day where we had bachelor and bachelorette parties checking out. And that same day, we had a full buyout for a priest retreat. It was a priest conference that was coming in. And it’s funny to think about the dichotomy between those two groups.
[00:25:34] But cleaning is incredibly important here. And I think that’s one of the reasons that people would choose us as a hotel versus an Airbnb, is you know that you’re going to get a consistent cleaning experience. So each unit takes 10 hours to 12 hours to clean. And that’s divided up amongst two people or three people, but it’s quite a bit of cleaning. Everything gets taken out, everything that’s terry gets taken out. Now we’re using some virucide fog, so we’re actually fogging the unit every time someone checks out. And we do a big, deep clean on literally everything.
[00:26:14] Nick Schenck: Okay. Alright. If I book a bachelor party here, will you tell me in advance that there’s going to be three other bachelor parties at the same time as you’re going to be here, or there’s gonna be two other bachelorette parties – is it like a camp atmosphere where like everyone’s hanging out with each other?
[00:26:32] Kristen Carson: Sometimes, it depends on the group. Sometimes yes, sometimes no. I mean everyone has their very own unit with a huge living room and a big kitchen. But they also have glass garage doors that they can roll up to open up to the pool. And so if they did want to be a little bit more social, it’s almost like a cabana. Their living room almost turns into a cabana.
[00:26:53] But it just depends on the group. Sometimes they are really happy to have their own little setting and their own private setting. And then they keep everything very closed and sectioned off.
[00:27:04] Nick Schenck: Before coronavirus, what was the hardest lesson that you learned? Was there ever a time where you’re like, “Oh, this is why more people don’t do this.”
[00:27:17] Kristen Carson: Oh, before this hit, one of the things I was trying to figure out is how I can like turn it off because I’m always on call, I’m always looking at what’s happening at this facility. And so we would have at night, we call him a mischief manager. So we always have someone here, but you know, I’m always looking at my phone in case – I never want to miss a call from our mischief manager.
[00:27:46] Nick Schenck: What’s on the job description for mischief manager? How do I get that job? I want to know.
[00:27:51] Kristen Carson: You just kind of hang out, like make sure no one is bringing a huge party back and just make sure everyone’s having a good time.
[00:27:59] Sometimes he would do some private bartending stuff for people, yeah.
[00:28:05] Nick Schenck: That’s great. That’s awesome.
[00:28:08] Kristen Carson: It was funny because we do a happy hour here for our guests. And so the mischief manager is a private bartender and he would actually bartend for everyone.
[00:28:20] So we would joke that he creates the mischief and then he has to manage it all night long.
[00:28:27] Nick Schenck: That’s great. So I’ve read up about other companies, like Away Travel, they got really big when they got a lot of celebrities posting about the luggage, and that’s kind of how they took off. Have you had celebrities stay here, posting on social media about the experience here, and has that led to additional business, or has it not really reached that stage yet?
[00:28:51] Kristen Carson: Well, when we opened our door, we were a hundred percent booked every weekend. Literally, we were booked three days after we opened, and that was up until the coronavirus. So we haven’t had the need to pay for any marketing, but we have had some people stay here that end up like posting on Instagram.
[00:29:14] And so periodically my friends will be like, “Ooh, look this Instagram, celebrity is staying at Inn Cahoots right now.” And it’s always kind of fun to see that. But we haven’t really paid for any marketing. In fact, we paid for photographs here, but otherwise we have spent $0 on marketing.
[00:29:34] Nick Schenck: I think that’s like the definition of product-market fit when you can have like 90% occupancy and not have to spend any money on marketing. That’s pretty incredible.
[00:29:44] If I go straight to your site, I can book there, but do you guys also get bookings from VRBO, Airbnb, etc.?
[00:29:51] Kristen Carson: Yeah. Yeah, we do. And in fact, Airbnb has hosted some major events themselves here. So every quarter, they have a global conference with hosts, and they hosted that in Austin at our hotel. So it’s been really great to work with them. And yeah, we have channels that come in from Airbnb, VRBO, and then also, there are some other event places like Peerspace, because we have such a unique space.
[00:30:20] One thing I haven’t mentioned yet is that the walls between the living rooms and each unit can be removed to create a big event space. And so we also host things like weddings or big corporate retreats where they need a big space and then they need smaller breakout sessions and stuff.
[00:30:39] Nick Schenck: So just to take it back to what we were talking about before, you had $5 million in verbal commitments for additional funding to expand to Nashville. Was any of that money to expand in Austin, too, or other cities? Or was it just going to be in Nashville?
[00:30:55] Kristen Carson: We were going to do Nashville first. In Austin, we already have a round committed to expand here.
[00:31:01] But yeah, we were moving out to Nashville. Now, obviously, we put that on hold. We’re not sure what this is going to do to real estate prices, and we’re especially not sure what this is going to do to hotel prices. I think there might be some hotels that might be needing to sell.
[00:31:19] Nick Schenck: When we spoke earlier, what struck me about you is, you look at this as a defining moment in your career. That’s how you described it to me. And you’re taking an aggressive stance. Like, “Wait a second, instead of scaling back our business, there could be some hotels that we could buy to even expand further and faster.” Describe your mindset right now on that.
[00:31:45] Kristen Carson: Yeah. Well, I mean, first I’ve obviously been crushed by this. I don’t think anyone wants this to happen. And I wish that this pandemic had never happened. But given that it has, I kind of took a step back and had to realize that, yeah, this is like a huge, huge hurdle that I need to overcome. And this is a defining moment or probably the biggest defining moment in my career. And I could either kind of sink back and try to scramble to make this place very successful, which I still will do. But, I think more than anything, I think we have to look at this and find the silver lining. And the silver lining that we could find is that, maybe this’ll adjust some of the prices to enable us to expand.
[00:32:37] And I think one of the things we’ve been so lucky to have is a full year of history, where we can prove that our crazy idea for a hotel actually worked. So we can go to investors and show them that there is a market for this and that travel will resume, and in fact, maybe we’ll even need more space, more of our travel settings, because I think people won’t be working at the office as much anymore and they’ll need to be able to connect in places that can hold a corporate retreat.
[00:33:07] Nick Schenck: Yeah. And in the meantime, you’re also pivoting, right? You never had a bar here before. Yeah, you had a bar, and the mischief manager, which served drinks. But if I weren’t staying here, I couldn’t just show up and sit at the bar and grab a drink. Now you’re trying to transition to that, right?
[00:33:22] Kristen Carson: Yeah. So that’s kind of interesting, because right now it’s not a good time to be in group travel. No one’s traveling and no one is traveling in groups. And so what we’re trying to figure out is, over the next several months, what can we do to get some money here? And so what we’re looking at is, yeah, we are going to open up a bar. We also are probably going to do private dinners with private chefs. It’s just something that we have always done here. And so yeah, it’s a little bit of a pivot for us, to be opening this up. And what’s really been on my mind is how do we maintain our brand and the same feeling of kind of, I don’t know, what is it – je ne sais quoi – like when you walk into our building. It makes you feel happy.
[00:34:15] Nick Schenck: It feels fresh, and not fresh as in new, but I’ve never seen this type of layout before. The type of decor you have, it’s like kind of entering a new world a little bit. That’s how I felt.
[00:34:31] Kristen Carson: Yeah. Yeah. It’s really a fun environment. And I want to make sure that people coming here still feel that, even though our product is a little bit different. So even though our product might be a drink, I still want them to come and have that same feeling about our property.
[00:34:52] Nick Schenck: Right now, do you have any guests staying? And if not, when’s the last time a guest stayed here?
[00:34:58] Kristen Carson: Yeah, so we have been hosting medical professionals. I think we have to. I think I heard that the average hotel occupancy right now in Austin is 3%.
[00:35:10] Nick Schenck: Oh my gosh.
[00:35:11] Kristen Carson: Yeah. And we are considered essential, so we are allowed to be here. But yeah, there just aren’t very many people traveling.
[00:35:19] Nick Schenck: When we spoke a few days ago, you said that you just got three bookings in July and August. So people are still booking in the future. When’s the next time somebody is checking in here for like a bachelor party? And in a typical week now, how many new bookings are you getting versus like the beginning of January.
[00:35:39] Kristen Carson: Well, gosh, booking is seasonal, too. And the world’s in chaos right now. No one knows what’s going on. So it’s hard to say. We still have bookings. To remember, we were fully booked through June, and then we had a lot of bookings all the way into 2021, and so we still have a lot of them on the books. We had someone call today that is having her wedding May 27. And so maybe we’ll have – it’s a very, very small wedding with just her family.
[00:36:14] We’re looking at having in-house A/V, so that maybe we can help people do like virtual conferences and live streaming and stuff. But yeah, so to answer your question, you know, it’s hard because booking is so seasonal, but we have been seeing people book for July and August. And I hope people are traveling by then.
[00:36:39] Nick Schenck: What have your investors told you? Have they been supportive and giving you really great feedback? Or are you sort of like in a hole where you’re just like, “I’m figuring this out with my staff,” and you’re not really in communication with them?
[00:36:54] Kristen Carson: I have really wonderful investors. I don’t want to be a bother to them. So I don’t call them all the time, but anytime I’ve needed advice, they’ve been available, which is wonderful. And we’ve been trying to over-communicate. Like I said, I think right now is a defining moment in my career. And I think one of the things that you have to do in a crisis is truly over-communicate. And so that’s what we’re trying to do.
[00:37:20] Nick Schenck: Yeah. You said that this is the most pressure I’ve ever felt for me to do well. You alluded to that before. What do you do to get away, and are you doing anything to just like take your mind off things?
[00:37:33] Kristen Carson: No, I’m always thinking about this. I don’t know how you stop thinking about this.
[00:37:38] We were doing so, so well, and now we have a product that doesn’t really have a market right now. People are not traveling. Even if we open it up for events, no one’s going to events. There’s very little – even if we open a bar right now, no one’s going to the bars.
[00:37:57] You can’t open a bar right now. So it’s a really tough time.