David Hall lives in a 3,500-square-foot, redbrick home in a quiet suburb of Provo, Utah. In five years, he and his wife, Karen, plan to move into a space of 200 square feet.

“Big houses are lonely,” says Mr. Hall, 69.

The Halls are going to a unit in a 24-room Provo hotel that Mr. Hall is developing. It will be the test case for his far more...