Extended Stay America is intensifying its pitch to corporate
travel buyers, including those with transient hotel needs, as the midprice
extended stay hotel company embarks on brandwide renovation and unification.
Following some rocky years, including a 2009 Chapter 11
bankruptcy filing, Extended Stay America, which owns and operates about 700
hotels across the United States and Canada, pulled in new leadership at the
beginning of this year. Atop the new management team is CEO Jim Donald, an
industry outsider who previously served as Starbucks Corp.'s president and CEO.
"I've taken companies in and out of bankruptcy before"—including
grocery-store chain Pathmark—"and it brings a mentality that is not
productive for business," Donald said. "There's no risk-taking or
driving change, and they're trying to scrimp on investments, running as if they're
still in bankruptcy. You can't get guests to stay with you when you do that."
Through daily voicemail messages, weekly videos and monthly
town hall meetings with employees, Donald has tried to foster a mentality that's
"still [financially] tight but not trying to get the last drop of blood
out of a patient," he said. As such, hotels have been updating carpets,
workplaces, televisions, furniture and bedding, and the renovations will have
touched about 90 percent of chain properties by the end of January 2013, he
said. Properties have undergone about $400 million in renovation since the
bankruptcy, said chief marketing officer Thomas Seddon, who joined the company earlier
this year from the same role at InterContinental Hotels Group.
The company also is unifying its brands. Such previous brand
designations as Extended Stay Deluxe and Homestead Studio Suites are fading in
favor of a single Extended Stay America brand. Crossland will remain as an
economy extended-stay brand, Donald said.
The company is not, however, currently looking to grow its
portfolio, according to Donald.
Buoyed by the renovations and unification, Extended Stay
America is "going after corporations with a whole new energy level,"
"We're starting to see a different market being open to
us," Seddon said. "We're having a big push in the RFP season with BTN Corporate Travel 100-type customers,
being much more appropriate now for the needs they have."
The typical Extended Stay America guest stays three or four
weeks at a time, but the company is looking to attract more guests who stay for
four to five days at a higher price point.
"We're not getting out of our niche," Donald said.
"We think we can still capture the lion's share of extended-stay business,
but through initiatives including renovations, there's another group out there."
The company is pitching its value and distribution as
selling points for corporations. Its chief competitors in the midprice extended-stay
tier are IHG's Candlewood Suites and Marriott International's TownePlace Suites,
both of which are priced about $20 to $30 more on average with a smaller
footprint than Extended Stay America, Donald said.
Extended Stay America's performance on TripAdvisor also is improving,
Seddon said, which helps to court corporate business.
"In April, we had zero hotels with five-star ratings
and 90 hotels with four to 4.5 stars," he said. "Now we have 10 with
five stars and 177 in the four-to-4.5 range. We can see the sentiment start to
change, which is a useful proof point for corporate travel managers who might
Additionally, the company has redesigned its sales team
under executive vice president of sales Jon Wohlfert, who joined the company in
2011, Seddon said. The restructuring has allowed Extended Stay America to
better manage its two sales sides: large accounts and property-by-property
sales efforts, he said.
Results in the current request-for-proposals season so far
have Seddon optimistic.
"We're starting to feel like we're getting good
traction," he said. "There are still conservative travel managers,
but the ones willing to take risks and motivated to control inflationary costs
are interested in our story."
Seddon added he thought the company would benefit if more
travel buyers moved to a hotel program model similar to Google's, in which
travelers operate off a per diem rate and can pocket the difference when they
stay for less rather than get reimbursed directly for hotel costs. Conversely, daily
Extended Stay America rates typically are priced well below U.S federal government
per diem levels, encouraging government travelers to stay at "the nicest
hotel they can get" within their capped limit, he said, as they cannot
retain any leftovers.