BTN U.S. Hotel Chain Survey, 2007: Residence Inn, Homestead Pace Bouyant Ext. Stay

Extended stay brands, running at record occupancy levels in 2006, showed almost across-the-board improvement in buyer satisfaction in the U.S. Hotel Chain Survey, with nearly all brands improving their score compared with last year's survey.

Marriott's Residence Inn placed first in the upscale extended stay tier, which merged the upscale and upper upscale extended stay tiers used in previous years' surveys. Marriott's other extended stay brand, TownePlace Suites—ranked first in the upscale extended stay tier in the 2006 survey—placed second. Third place went to Hilton's Homewood Suites, followed by last year's upper upscale winner, Hyatt's Summerfield Suites, and InterContinental Hotels Group's Staybridge Suites. IHG's Candlewood Suites and Hawthorn Suites rounded out the category.

In the midprice extended stay tier, Extended Stay Hotels' Homestead Studio Suites repeated its 2006 victory, obtaining the high score for every criterion. Extended Stay America, a sister brand to Homestead Studio Suites, finished second.

Upscale extended stay properties reached record occupancy levels last year and all extended stay properties continued to operate at more than 10 percentage points higher than the industry as a whole. With such high occupancy, hoteliers have said that room rates will be the primary method of achieving revenue growth in coming years. Analysts said the tier can do so without driving away demand.

"There's not a substantial risk that you're going to see it deteriorating," said Sean Hennessey, president of New York-based Lodging Investment Advisors. "The segment is differentiated enough in terms of facilities from other hotels that you won't see cannibalization of demand."

Laura Bates, senior vice president of extended stay for Marriott International, said she estimated extended stay demand to be about one-third of the market but less than 10 percent of the supply. Even though most brands have ambitious expansion plans that include many untapped urban markets, it's a balance that will continue to work in the hoteliers' favor.

Residence Inn topped nearly every criterion in the tier, scoring highest for its commission payment systems, staff, physical appearance, amenities, business center and overall value. "We have the highest revenue per available room index of any brand in the industry, and guest satisfaction is in the 80s," Bates said. "That's phenomenal for a brand that's 30 years old."

The brand's ratings reflect its enhanced amenities, including free high-speed Internet access, a new hot breakfast and new bedding incorporated across all Marriott brands, she said. The brand will renovate lobbies and better optimize outdoor space with such amenities as fire pits and grills.

TownePlace Suites scored highest in arranging individual travel. Peggy Fang Roe, Marriott's senior director for extended stay brand management, said the brand is repositioning itself and focusing on providing local knowledge to guests through staff expertise and floor-to-ceiling town maps in all lobbies. In addition, rooms are being redesigned to offer more workspace, she said.

"Seventy percent of the brand is scheduled to be renovated this year, and we'll be completely done by 2009," Roe said. "It's unique for a brand to have that high of a percentage renovating at one time."

On the midprice side, Extended Stay Hotels president Gary DeLapp said his company's Homestead Studio Suites was the first to offer wireless Internet access in all rooms and also has updated room design.

ESH is working to bring that same standard of consistency to the Extended Stay America brand, which is about three times the size of Homestead, he said. ESH has focused more on acquisitions and improving existing properties rather than new builds. "When we bought the company, the previous ownership focused on being developers," DeLapp said. "We're focusing on how we operate the business, and it's a much bigger challenge."