Extended Stay Brands To Add Properties As Starwood Readies Entry

Driven by strong occupancy and revenue growth, major extended stay brands are increasing their presence, with many particularly focusing on urban markets or new markets outside of the United States. Meanwhile, multibrand hotel company Starwood Hotels & Resorts is preparing its entry into the extended stay market.

"Development is still a big key," said Robert Radomski, vice president of brand management for InterContinental Hotels Group's Staybridge Suites. "We are about to open our 100th hotel, and we anticipate opening 30 hotels in 2007. In about a three-year period, we'll double our size."

Staybridge's sister brand, the midprice Candlewood Suites, has a similarly ambitious growth plan, with about 114 hotels in its development pipeline, said Gina LaBarre, Candlewood's vice president of brand management. This includes a greater presence in such larger markets as New York, where Candlewood will break ground for a new property this summer in preparations for a spring 2008 opening.

Hilton Hotels Corp.'s Homewood Suites opened more than 30 hotels in 2006 and plans to open between 35 and 40 more this year, including the brand's 200th hotel, set for late February, said Rebecca Wyatt, senior vice president of brand management for Homewood Suites. The brand has about 110 properties in its pipeline, boosted by a new urban design that can work in smaller buildings.

Extended Stay Hotels, now up to 680 hotels compared with 670 last year, didn't see quite the same dramatic increase in numbers of properties, but it spent much of 2006 rolling out its new brand, Extended Stay Deluxe, said company president Gary DeLapp. The work entailed getting more than 100 operating since the brand's introduction in 2005.

"When you do that, it's like opening a new hotel," DeLapp said. "Going to 2007, our focus is on the acquisition of existing hotels. Unless it's the right market, it's very expensive to go out and acquire land, and construction costs are very high."

Marriott also is beefing up its extended stay presence, largely in urban markets, according to Peggy Fang Roe, Marriott's senior director for extended stay brand management. Its upper upscale Residence Inn, now with about 500 properties, has about 50 new properties set for development, and Marriott also is adding about 24 new properties to its TownePlace Suites brand, which now has about 120 hotels.

Hyatt has started renovations of its upscale Summerfield Suites, which it acquired a little more than a year ago, and plans to be through by the third quarter at the latest, said Jim Chu, Hyatt's senior vice president of owner relations and franchise services. Hyatt also is adding new properties to that portfolio through conversions of some acquired Bradford HomeSuites and Hawthorn Suites, as well as two new builds, so the brand soon will represent more than 30 hotels, he said.

Starwood launched its upscale Element Hotels brand in September and will be opening its first hotel in the second quarter of 2008, said Nicholas Lakas, director of the brand. The growth plan calls for 500 properties in about the next decade, largely through new construction, including 100 to be completed within the next five years.

"We did a fair amount of market research, and well over a million Starwood guests stayed at an extended stay in 2005," Lakas said. "Based on 80 percent occupancy, that should provide enough support, and there is a real opportunity to provide a broader set of brands and experiences."

International Designs

Mexico and Canada remain a focus for several extended stay companies. Staybridge Suites now is developing its fourth hotel in Canada. In Mexico, it has one hotel operating and two in development. Homewood Suites will open its first hotel in Mexico in late spring and is looking at three other deals in Canada, Wyatt said.

Extended Stay Hotels' recent acquisitions also have focused on Alaska and Canada, where it has added properties in Ottawa, Toronto and Newfoundland, DeLapp said. "We certainly feel like there's opportunities," he said. "Unlike the U.S., there's certainly not a lot of extended stay out there."

Candlewood Suites also is making its first foray into Canada with a property in Toronto. Midprice extended stay brands generally have not had much presence outside of the United States, LaBarre said.

There's been less extended stay development outside of North America, but some brands are looking at Europe and beyond. Staybridge is ironing out details for properties in the United Kingdom and other parts of Europe, and also might be looking at the Middle East, Radomski said. He said he sees the opportunity to siphon demand from transient hotels and service apartments in those regions.

Homewood Suites also is eyeing a move into Europe, but has no definite short-term plans to make one, Wyatt said.

"There's a lot of room for growth for us here, obviously, and we're not ready for development everywhere in the world," she said. "We feel like any market where you can have an economy of scale quickly, like the U.K., makes sense."