In the not-too-distant future, you may find yourself staying in a hotel designed by a computer.
As it turns out, crunching numbers is as important to hotel design as getting the “feel” of the lobby just right. But experimenting with layout tweaks and checking how they’ll impact the bottom line is exactly as tedious as it sounds. So Parafin, a new Chicago startup that just joined the Elmspring real estate accelerator program, wants to automate the process altogether.
“In a matter of minutes, we’ll generate a design, a construction cost budget and a financial model for a building,” said co-founder Adam Hengels. “In doing that, we go through thousands of iterations and design configurations, optimizing each for value creation to tell you which design is best.”
To create those designs, Parafin takes a number of inputs, like zoning regulations and estimates about comparable properties’ costs and revenues. The startup is also in the process of adding functionality for calculating construction costs.
Co-founder Brian Ahmes said Parafin got started when he and Hengels were collaborating on a real estate project.
“We were going back and forth with a lot of manual changes, and we started joking about how nice it would be if this were an automated process,” he said. “But then we started hashing out ways in which we might be able to pull it off.”
Parafin’s design strategy is modeled after natural selection. After parameters are added, the platform automatically generates a range of design options. For each option, Parafin creates a value creation estimate, ditching bad options and iterating on good ones until it reaches the optimal design.
“In the beginning, it ends up generating a lot of bad designs,” said Hengels. “But every so often, it creates a really good one.”
The co-founders, a real estate developer and an expert in architecture and computational modeling, declined to dive into how Parafin calculates a property’s value creation potential.
In addition to streamlining current projects, the co-founders say the tool can help real estate industry professionals make better decisions about which projects to do in the first place. For instance, if there are multiple potential lots available for a new hotel, the user can run an analysis for each available lot to find out which one of them has the most potential.
Streamlining this process, said Ahmes, would let companies pick up good properties before competitors finish their assessments. It could potentially increase the number of deals they can perform within a set period of time.
The first version of Parafin is specifically for hotel buildings, and the company is currently working with a major hotel chain as well as a range of property developers. The founders are also exploring opportunities in other real estate verticals like retail, offices and multi-family properties.
Hengels said the company has raised some angel funding, and that it is currently in the process of preparing for another round. At that point, the company will be ramping up on the technology and architectural modeling side.
Image via Parafin.