Jordan Allen’s quickly growing business, Stay Alfred, is located at 123 E. Sprague, where Spokane’s University District meets the city’s downtown core, but it makes its money at the intersection of hotels and vacation rentals. 

The company converts condominiums, typically in major metropolitan downtown sites, into vacation rentals, standardizing the look of each rental the way a hotel operator would. 

The model has worked well for Allen, a 33-year-old former college football player and U.S. Army officer who founded the company in 2011. 

The Journal sat down with Allen to talk about Stay Alfred and its future, both in Spokane and throughout the U.S.

Journal: One of our reporters was out here to talk to you earlier this year. Can you give us an idea of what’s happened since then? 

Allen: Since May, we are now at 60 employees across the company, 54 in Spokane. It was 45 in May. We were at around 170 properties, and now we’re close to 300, so it’s almost doubled since you were here in May. We’ve added Washington, D.C., and San Diego, and we’ve continued to grow our existing markets. 

Journal: When you enter a market like D.C. or San Diego, what does it take to enter that market?

Allen: I wish I could tell you we put a lot of market research into it. There are a couple of market indicators we look at, but we just kind of go for it. We have enough cities now that are pretty stable, so that allows us to go into a market and test it with a couple of properties in a market like Charlotte or Miami or Chicago. 

We started here, and the rule of thumb is, if you can make a profit in Spokane, you should be able to go to a huge tourist city and make it there.

Journal: How many units do you need to get a start in a market?

Allen: Typically, we like to get between five and 10 in a bigger market. It’s like gravity. The more properties you have in a market, it seems like the better you do. 

Journal: What are your revenue trends right now?

Allen: We’re hoping to be in the $25 million to $30 million range in 2016. I think by the end of this year, we’ll be around $16 million. Our goal is to double every year. It could be higher. We’ve got it figured out now to where we can grow at about two to three times faster than we did in terms of profitability.

Journal: Can you tell us some of those things you figured out?

Allen: Operational efficiencies. Purchasing power. Instead of buying stuff retail, which is what we were doing before, we’re buying wholesale. 

Journal: Does that come with the economies of scale of having more properties?

Allen: Yes, and just knowing what we’re doing. We used to buy everything at Costco and Wal-Mart, and we had to pay all the shipping costs to ship in onesies and twosies. Now, we’re buying in bulk. 

Journal: Does employment increase proportionately with revenue?

Allen: It’s kind of like a stepladder. I would say the hardest thing we have in our business right now is the constant reorganization. We used to have everybody in a group. You did reservations, and you did customer service, and you were marketing and you were accounting. Now, we have departments, and as those departments get bigger, it’s a constant restructuring of our business. 

So, no, we’ll be able to double again without adding too many more employees. Because we’re growing so fast, we add people to get to that next level. Then they will be able to handle another 1,000 units. When we get to 10,000 units, we’ll have maybe 300 employees in Spokane. 

Journal: What does the biggest percentage of your employees do?

Allen: Sales and customer service. And I think that will continue to be the biggest department we have.

Journal:  Would you say more of your revenue growth comes from increasing occupancy rates or adding additional units?

Allen: A little bit of both. Hotels have 30 years’ worth of data collection on room rates and market saturation and occupancy rates. There’s no data on vacation-rental space. Our competition is a one-off owner who is trying to list his property and doesn’t have a call center and doesn’t have the marketing we do. We’re a more powerful machine. 

So, we’re using our own data and looking at year-over-year increases and demand and tapping into hotel-type reporting and trying to use it for us. Sometimes it applies, and sometimes it doesn’t. We learn the lesson the hard way a lot of the times. 

Journal: Do you have a sweet spot in terms of nightly rate? 

Allen: You know, every city is different. If Taylor Swift is coming to Nashville, that brings 80,000 people to Nashville, so room rates go up. In January, not a lot of people want to go to Seattle, so rates are lower. It’s market demand. We don’t always hit it out of the park. Sometimes we do. We’re learning over time.

Journal: Do you have any markets you’re in that are performing better than others?

Allen: Every single unit we have is profitable. The bigger cities do well, just because there’s so much demand. Boston does really well for us. Seattle does really well for us. Nashville. New Orleans. They all do great. 

If you’re just in Seattle, it’s like you’re a lawn mowing business. You’re seasonal. Now, we’re like a lawn mowing business and a snow plowing business and a we’ll-rake-your-leaves-up business. We’re adding all of these cities. New Orleans does amazing for us in February and March, through Mardi Gras. San Antonio doesn’t do as well in the summer, so that’s why we have Seattle and Boston. 

Journal: How do you identify what markets you’re going to go into next? 

Allen: We’ll basically go look to see what the competition is like. 

Journal: As in boots-on-the-ground look? You’ll travel there?

Allen: We’ll start off online. We’ll go on some of the vacation rentals websites and see what they have there. Chicago has fewer vacation rentals than Lake Coeur d’Alene, but it’s the third most-traveled city, so that’s hot on our radar. 

There’s a lot of regulation popping up, so we have to do a lot of due diligence on regulations. We have to look at those regulations to make sure our business model isn’t affected. 

Journal: Would you describe the units as typically being high end? 

Allen: I don’t like to use terms like that, because they’re so subjective. 

In Seattle, we’re next to Pike Place market in A Class-type buildings. If you’re going to go to a Marriott and spend $350 to stay in Seattle in July, you’re going to spend $350 to stay with us, but you’re going to get two bedrooms and fit six people and do laundry. You can wake up and have breakfast with your family in your unit. 

Journal: How do you market your units? 

Allen: The Internet. We’re on any website that we can get on. We’ve built a pretty big network. We’re obviously on all of the vacation rental websites, and we’re starting to get on a lot of hotel websites. 

It’s kind of funny. A lot of guests who stay with us don’t realize we aren’t a hotel. They’ll walk around the building with their robe on or something like that. Where’s the front desk? Where’s the concierge? Sorry, we aren’t a hotel. We have the check-in process dialed in now, but that wasn’t always the case. 

Journal: Your check-in is all electronic then? 

Allen: Yes. We have mobile apps. We have PDFs. It’s as tech savvy as you want, or print it off and bring it with you. 

About 15 percent of our guests are 70 and older. There are a lot of retired folks who would rather print it off. They do a lot of research. They book further in advance. Then we have the 30-year-olds driving into Portland and booking a property five minutes before they get there. 

Journal: I would have guessed that a greater percentage of your guests would be retirees. What’s your demographic then?

Allen: The majority of our guests are families. The age range is primarily 30s and 40s. They’ve heard of AirBnB. They’ve heard of VRBO (Vacation Rentals by Owner). They’ve tried to stay with their family in a hotel. When you have three kids, you don’t want to fly home with soiled clothes. They need someplace where they can do laundry. 

There’s just so much more availability of accommodation options. You can stay in a tent. You can stay in a castle. Everything has opened up in terms of options of places to stay. Our uniqueness is that we’re not unique at all. We are consistent with the look and the best locations.

Journal: At this stage, is the business profitable?

Allen: Yes.

Journal: How long have you been profitable?

Allen: We were profitable within the first few months of the business. It’s because we have our six core values, the six H’s, and one of those is hungry. We’re constantly hungry. 

Journal: Have you done any venture rounds? Or are you looking to do any?

Allen: I don’t know. I’m not smart enough to figure any of that out. Never say never, but it doesn’t make sense for us right now. 

Journal: Would you mind recounting the story of how you came up with the idea for Stay Alfred?

Allen: I was in Afghanistan, and my brother was in Iraq, and we were able to coordinate our two weeks’ leave together. We were going to rent five hotel rooms in Denver for all of our family and friends to come down. 

Journal: What branch of the Armed Forces were you in? 

Allen: Army. We were both Army.

Journal: And what were you doing in Afghanistan?

Allen: I was in a small Special Forces compound. I did the whole airborne ranger, artillery thing. 

So, we ended up going to Denver, and we went to the only place you would know to rent a house at the time, which was Craigslist. AirBnB, nobody had heard of that before. 

When we got there, I didn’t know what to expect. I was picturing a hotel room. But we walked in and put our groceries in the fridge instead of putting them in a tub. We were able to make appetizers before we went out, and we didn’t have to eat on the bed. My dad, who snores, he got his own bedroom. We had some people sleeping on a sleeper sofa. A few of us got our own bedroom. We slept six people and paid the same price as a hotel room. It actually blew my mind. 

I called the guy who now is my ex-business partner. At the time, he was my realtor, and I pitched him the idea. We started over here at the Madison Apartment Building, at First and Madison. People started making Hoopfest bookings and it was like, I can’t believe this is actually working. It was a lot of late nights, a lot of early mornings, figuring it out. 

We don’t have a business model we can follow, so we were figuring out things the hard way every time. 

Journal: Did you always see yourself starting your own business after the Army? 

Allen: Yes. In the Army, you’re being told what you can and can’t do all day, every day. I love the Army. It’s one of the best experiences I’ve had, but I just wanted to be able to be in control again. I thought I was going to get into long-term property management. I did get into property management, it’s just more vacation rentals. 

Journal: What do you, as a company, need to do better?

Allen: We need to figure out ways to grow smarter and grow faster. I think we need to listen to what our guests want more. What are the accommodations they want? What are the locations they want? That’s where we go. 

Then look at the corporate culture. We need to maintain the culture we have here. This is a fun place to work. It’s a place to figure it out on your own. You’re not going to go through 15 months of training. You’ll get three months of training, and they figure it out and try not to make too many mistakes. 

I think the future for us is to expand into a city, then connect people to the services they want. Have a chef come in to cook for you. Have airport pickup. Have grocery delivery. We just need to connect our guests with what they want, so they don’t have to get there and flip open their laptop and figure it out. We can give them a complete trip experience.