Extended Stay Hotels CEO Gary DeLapp this month spoke with Business Travel News hotel editor Michael B. Baker about company strategy following its acquisition by real estate firm The Lightstone Group (BTNonline, April 18, 2007) and the recent move of company hotel brands—which include Extended Stay Deluxe, Extended Stay America and Homestead Studio Suites—onto third-party travel distribution channels.BTN: What has been the focus for Extended Stay Hotels since the acquisition?
Gary DeLapp: As you can imagine, with Lightstone buying the company in June, this was a very busy time for us, going through the transition of the new ownership. We've spent a lot of time working with Lightstone, acclimating them to the industry and to the extended stay segment, being that this is their first foray into the lodging business. We had two acquisitions in the fall last year in Houston. The other focus has been doing some things we haven't done before, like getting on the third-party channels—Expedia, Travelocity and Orbitz—which we have not been on for five or six years. We've spent a lot of time with our ad agency to do extensive customer research to learn more about our customers and how they view our product and our hotels. We've been working with our designers on doing an upgrade at a number of our assets, particularly the Extended Stay America brand.
BTN: What sort of upgrades?
DeLapp: We're working with them to do a new lobby package, and also we're doing something called "a light touch" in the guest rooms, which will give them more of a warm, comfortable feeling in the room, more like home.
BTN: Do you expect to see more corporate travelers as a result of getting on the third-party channels?
DeLapp: We had just gotten on the third-party channels late last year. The first two we were on were Travelocity and Orbitz, and we'll be in Expedia beginning this year for the full 2008. It seems to pick up just in the fact that it's created a heightened awareness for our brands by being on these third-party channels.
BTN: Are most of your extended stay competitors already on these channels?
DeLapp: I believe that most of them were. We were one of the few that were not on these third-party channels.
BTN: What are you seeing in regard to industry performance?
DeLapp: We're seeing rate opportunity and rate growth in our company, just as the rest of the industry has seen rate growth. We have seen, just as the industry has, occupancy softening over the last two or three months. If you look at it from an index point—how you compare to the other competitors in the market—our index outperforms the competitive set in the market because of the extended stay base, but on an absolute basis, we have seen some softening in occupancy, as the other brands have seen as well.
BTN: What's your growth strategy for this year?
DeLapp: We're still looking at acquisitions. The big focus of this year is the consolidation of the brands. We hope sometime in the first quarter to announce where we are and where we've ended up after all the customer and branding research we've been doing.
BTN: Are you looking at international growth opportunities?
DeLapp: We are starting to look internationally. We'd like to get more product in Canada, and we think there are opportunities in Latin and Central America as well.
BTN: Do any amenities stick out in requests from negotiations for hotel programs this year?
DeLapp: The big thing we keep hearing about is Wi-Fi, which we do provide for all the rooms in the company. What we keep hearing is that everyone wants more bandwidth.
BTN: Is wireless Internet included in the rate for your hotels?
DeLapp: For our company, it's $4.99 per stay. Not per night. Per stay. With an average length of stay at 20 nights, it works out to about 25 cents a night.