Corporate Apts. Yield Savings, Comfort For Corps.

<B> Corporate Apts. Yield Savings, Comfort For Corps.</B>

By Maria P. Vallejo

The not-so-new idea of corporate housing is beginning to permeate the long term-stay travel business. Whether buyers use their own corporate apartments, work with interim housing companies or use a combination of both, the effects are the same: better cost savings and improved traveler disposition.

"It's much more cost-effective to use an apartment," said Marilyn Teske, Cargill Inc.'s supervisor of corporate relocation. "You're definitely going to come out much more ahead cost-wise and your employees are going to be much more comfortable staying in an apartment."

Cargill Inc. is a corporate client of Cleveland-based BridgeStreet Accommodations. The company primarily uses the corporate apartments for newly hired employees or those who were transferred to the Minneapolis headquarters. The company saves about $900 a month by using the apartments versus a hotel room with an average daily rate of about $70--estimations that do not include savings in food and beverage.

Corporate apartments or interim housing facilities tie together all the intricacies of renting an apartment into a single payment plan, similar to a hotel. Apartments come fully furnished, equipped with telephone activation and all the amenities of an average apartment. They are most often used for travel stays exceeding 30 days. "A traditional hotel is always a second choice because of less amenities," said Jack Witherspoon, Electronic Data Systems Corp.'s corporate travel manager.

Buyers said their travelers reacted positively to the larger-sized accommodations, ability to cook their own food and more comfortable environment.

Analysts attribute the increasing interest in longer-term housing to a change in job descriptions and work values and to advanced technology. The once home-based office worker now lives a nomadic lifestyle, making camp in new cities for 30 or more days at a time. An increasing number of consultants have hit the work force, causing managers to develop new solutions to rising housing costs.

"When a person is in a place for a week or month, they settle in. The need is more for apartment lodging rather than hotel lodging," said Peter Gloodt, managing director of Chicago-based Horwath-Landauer Hospitality Group Inc. "At its price points, it's clearly less expensive than a typical transient hotel."

While many kinds of companies are resorting to consulting methods to complete some of their work load, analysts and industry officials noted significant demand stemmed from the technology industry. Dense facility locations include Boston, Denver, Los Angeles, Phoenix, San Francisco, San Jose and Seattle. Corporate apartments are hovering around those key technology driven markets for reasons ranging from an increased number of fledgling companies growing in Silicon Valley, Calif., to consultants dispersed nationwide to tackle the "Year 2000 Problem," said Howard Treibitz, president of Denver-based Clayton Filmore Publications, which tracks the real estate market and provides quarterly reports on extended stay housing.

"With corporate downsizing, a lot of people are working on a consulting or contract basis, so they have to be more mobile," said Robert Zaugg, chief operating officer of Gaithersburg, Md.-based Execustay. "These corporations are using these facilities at an ever increasing rate."

Emphasis on improving employee performance through regional or national training seminars also has played a role in interim housing acceptance. Companies have invested more in human resources issues by providing courses for employees.

Some of the largest interim housing companies revealed they shifted their focus from leisure to business travelers following the industry's trend.

Execustay began providing temporary housing in 1989 in Los Angeles and Washington, D.C. In the past three years, the company increased its emphasis on accommodating business travelers, Zaugg said. In the past five to six years, the company grew at an annualized rate of 40 to 50 percent. Properties are located in several business destinations, including Atlanta, New York and Philadelphia.

Like most temporary housing providers, Execustay does not own its real estate, but rather leases from other companies and real estate investment trusts. This enables the company to expand or contract its inventory, maintain newer facilities and provide housing in a variety of locations depending on the traveler's preferential location.

Some interim housing companies are working in conjunction with relocation firms to gain a stronger standing with the business community. As one of the largest and most well-known corporate housing facilities, Oakwood Corporate Housing signed a deal with Hunt Valley, Md.-based PHH Inc., part of Cendant Corp., and Caldwell Banker. Oakwood, based in Los Angeles, offers about 2,000 locations in about 1,000 cities in the United States.

Unlike Execustay, Oakwood used a combination of leased and owned apartments in the company's busiest destinations. The hybrid method allowed the more than 20-year-old company to provide temporary housing in almost every location, regardless of sometimes busy housing cycles in certain markets.

This flexibility, coupled with a conscious effort to work with corporations, helped the temporary housing company land about 40 Fortune 500 corporate accounts in the past few years.

Oakwood is creating direct links between its Website and the corporate clients' intranets. The two-way communication, requested by several companies, allows customers to send complaints, concerns or other information regarding their stay directly to both companies.

"We used to spend a lot of money advertising in-flight magazines and our marketing effort was based on walk-in business," said Howard Ruby, Oakwood's chairman. "We have gone out and preached the gospel of this niche, which hadn't really come up on the radar screen. We've been able to work out national contracts with many big companies to the point that several are using us as an outsource."

Some companies outsource their relocation projects to Oakwood, alleviating that burden on their travel departments. Three Fortune 500 service firms have been using Oakwood as a relocation management service bureau for the past two years.

Other corporations are joining the ranks of corporate apartment companies by owning or leasing their own apartments for business traveler use.

Plano, Texas-based EDS has been buying and leasing suite hotels and corporate apartments since 1982, while also utilizing corporate apartment companies. The company owns 474 apartments in Plano, 160 in the metro Detroit area and about 500 units in other locations.

"We've done it consistently because we've been able to show that we can save money in our stays at some business centers and consistently provide rates lower than hotels," Witherspoon said. "This is a segment that we can influence in cities where we have lots of volume on a consistent basis."

A one-bedroom facility costs as little as $37 per night, he said. EDS travelers spend more than 192,000 nights in corporate apartments in Plano and Detroit. They stay about 128,000 nights in other extended stay properties.

Meanwhile, newer interim housing companies also have noticed an increase in business traveler demand.

Two-year-old BridgeStreet Accommodations combines six separate extended-stay apartment/corporate housing entities. Customers include Ameritich, Andersen Consulting, Cargill, Ernst & Young, Ford Motor Company, KPMG Peat Marwick and Proctor & Gamble.

Monterey Bay Property Management expanded its 12-year-old business of renting out vacation homes to currently providing corporate housing for businesses, including CTB McGraw-Hill and University of Southern California Monterey Bay.