Despite The Analysts, All Suite Sector Feels Bullish

<B> Despite The Analysts, All Suite Sector Feels Bullish</B>

By Maria P. Vallejo

While some travel industry experts may believe that the all suite sector is at a standstill, hotel companies are adamant about its strength in the marketplace and the increasing demand for their products.

All suite companies attribute the rising demand to corporate cost cutting techniques, travelers downgrading their hotel room purchases from higher tier transient to lower tier all suite rooms and greater numbers of female travelers conducting business in their rooms.

"The demand for all suites will continue way past year 2000 because consumers' needs have changed," said Pete Jordan, senior vice president and brand manager of Quality Inns & Suites by Choice Hotels International, based in Silver Springs, Md.

Meanwhile, analysts contend that all suite hotels are plodding along on the same steady course they have followed since their inception. "I haven't really noticed a particular change in what's happening," said John Fox, senior vice president of New York-based PKF Consulting. "All suite is a product that's been around a long time. The rest of hotel market is being stratified with this type of product. The traditional demand factor is still the same."

Despite analysts' observations, though, all suite facilities are harboring more guests with greater variations in their reasons for stays. Companies' cost cutting techniques are making all suite accommodations more attractive to travel buyers and their travelers. The rooms provide a larger living and working area that can house two budget-conscious travelers. Often two-bedroom suites also include separate work areas complete with desks, telephone links and other business amenities.

"They've been huge sellers for us because of families on relocation and corporations looking to save money and cut costs," said Tim Sheldon, brand vice president of Residence Inn & TownePlace Suites by Marriott. "You can put two people in there and cut costs."

As another technique to get value-added deals, some travelers are switching from higher tiered transient properties into lower tiered suite properties. Depending on the category of suite, guests can pay as little as $50 or as much as $125 a night. These prices may be comparable to mainstream hotel rooms, but suite rooms provide larger square footage than their mainstream counterparts in the same price tier.

The rise in the number of female corporate travelers is another factor in the growth of demand in the all suite market.

"There are more female travelers than there were a few years ago," said Samuel Hardage, CEO and founder of Hardage Suite Hotels. "A two-room suite serves as a great place to do business because the bedroom is able to be closed off--and that is a big concern by female travelers." Hardage Suites Hotels, based in San Diego, manages and develops Woodfin Suite Hotels and Chase Suites.

Some hotel companies have taken these increases in demand as a sign for restructuring, developing and expanding their products. Marriott International, for example, has launched a new all suite brand to meet the rising needs of its clients. SpringHill Suites will replace all the existing Fairfield Suites, which was originally an extension of Fairfield Inns.

<B>Fairfields Become SpringHills</B>

Townsend said company officials decided to relaunch the brand under a different name after more than 18 months of operation in hopes that the name change will give the upper-midpriced brand greater presence in the marketplace by removing it from under the shadow of its namesake.

"All the work was a result of a success story," Townsend said. "It really exceeded our expectations on many fronts and led us to think it should be a stand alone brand. It did much better in higher rate and customer satisfaction."

To Marriott's surprise, Fairfield Suites, which opened in March 1997, attracted a higher level of clientele than Fairfield Inns. The brand was garnering an average daily rate between $25 to $30 higher than Fairfield Inn, Townsend said. Marriott officials originally expected to charge rates between $60 to $65 per night for Fairfield Suites, but its new rate structure runs between $75 and $95 per night.

During the next five years, Marriott will open 125 SpringHill Suites, including 27 converted Fairfield Suites that already are opened or under construction. Most of the properties will be franchised, though Marriott owns 10 properties. Hotel locations include a mixture of primary and secondary markets, including Charleston, Fort Lauderdale, Houston, Kansas City, Memphis, Phoenix and St. Louis.

Unlike SpringHill Suites, Marriott's other all suite brands, Residence Inns and TownePlace Suites, fall into a second category of extended stay, though demand for the product is not easily separated into demand for suite or extended stay qualities.

"In the past four to five years, we've seen a demand for larger rooms in the moderate tier," said Tim Sheldon, brand vice president of Residence Inn and TownePlace Suites.

After Marriott moved Residence Inn into a higher section of the extended stay-all suite market, it opened up avenues for TownePlace Suites in the midpriced category. TownePlace Suites will add 12 new properties to its current portfolio of 10 hotels by year-end. Between 30 and 33 new properties will open next year.

Residence Inn also is experiencing demand increases, and will add between 30 and 34 hotels to its 285 properties in 1999.

Primarily focusing on the various levels of the midpriced market, Choice Hotels has its own expansion plans for its three all suite brands. Mainstay Suites, a suite brand targeting extended stay travelers, has an average daily rate of about $58. Mainstay, whose clientele is comprised of about 80 percent transient travelers, will add 20 hotels by the end of this year, and open another 20 hotels in 1999, said senior vice president and brand manager Tim Shuy.

Comfort Suites, with an average daily rate of $68, runs about 50 percent transient business. It will add 25 hotels by March, raising its total to 200, said Dan Shoen, senior vice president and brand manager.

Quality Suites has an average daily rate of $81, and will add 10 new properties by year-end 1999, raising the total number to 40 hotels. At about the same price point, Chase Suites by Hardage Suites Hotels is trying to maintain its standing in the midpriced market. The two-year old brand will add five new hotels by the end of 1999 and another five in 2000.

Chase's sister hotel, Woodfin Suites, with 80 percent transient business, will add four domestic hotels and four hotels in Poland within the next year. With an ADR of $104, the company sets aside 5 percent of its monthly revenue for upgrading equipment. It is adding T-1 lines in every suite room and offers 24-hour business and health centers.