Extended Stay Booms Despite Definition Disparities

<B>Extended Stay Booms Despite Definition Disparities</B>

By Bruce Serlen

The newest category in the lodging industry--extended stay--grew so crowded in 1999 that this year BTN broke the category in two: upscale extended stay and midprice extended stay, the distinction being space, overall amenities and rate structure. Combined, the total number of chains represented this year is 13.

Capturing the number one, two and three spots in the upscale grouping were TownePlace Suites by Marriott, Homewood Suites by Hilton and Residence Inn by Marriott. In the midprice ranking, the top three were Wellesley Inns & Suites, Candlewood Suites and Extended Stay America, again in the order they placed.

While executives at extended stay chains acknowledge that the category continued to be poorly defined in 1999, there can be little doubt of its impact on the corporate travel market. Consider that Marriott, a major player in the sector, has committed to opening one new extended stay hotel on average every week for the next five years.

"As a solution to a company's overall lodging needs, extended stay properties are intended to fill an important gap: travelers like consultants on long-term assignment, employees being relocated to a new area or employees being sent to participate in extended training programs," said Tim Sheldon, senior vice president of extended stay lodging for Marriott, who has responsibility for both TownePlace Suites by Marriott and Residence Inn by Marriott.

Typically, extended stay hotels emphasize space and friendly, residential atmosphere since travelers will be living on the premises for a while.

"De-emphasized are some aspects of service--everyday housekeeping--that aren't considered essential," said Sheldon. "In terms of rates, the rationale behind the extended stay concept has always been 'the longer you stay, the less you pay.' "

As it happens, Marriott's involvement in extended stay is part of a larger strategy. According to Sheldon, last year's acquisition of the business now known as ExecuStay by Marriott gives Marriott a foothold in the growing corporate apartment segment. Through ExecuStay, companies rent apartments in residential apartment complexes. The minimum stay is 30 days. "This allows us to talk to companies about the entire range of their corporate travel needs," he said.

But Marriott is hardly the only extended stay player presently in a growth mode. Extended Stay America, for example, had 57 properties at the end of 1999 and expects 30 more to come on line by the end of this year. And at Candlewood Suites, 76 properties now are open in the United States and 24 more are either in construction or under active development. The expansion includes the first Candlewood outside the United States, which will be located in Germany.

Considering the accelerated pace of change underway at many companies, the demand for this kind of facility makes sense. "Over the past three or four years, corporate travel buyers have shown themselves to be much more comfortable with the concept and we expect this acceptance will continue to grow as we move forward," said David Redfern, vice president of sales and marketing for Candlewood Suites.

One source of the present confusion about the concept has to do with how the industry defines extended stay. To many of the chains, extended stay might mean a minimum of five nights. Other chains, though, may take a booking for one night. Confusion like this can have some unexpected consequences.

"If the brand says extended stay, our market research indicates that travelers looking for a one-night reservation won't consider it," said John Leavitt, senior vice president and brand manager for Prime Hospitality. Prime owns the Wellesley Inns & Suites brand, which resulted from the combination last year of Homegate and Wellesley Inns. The average length of stay at a Wellesley Inns & Suites property last year was 2.3 nights.

"It's a niche product that clearly has come into its own," said Daniel H. Lesser, senior director for the hospitality industry practice at Cushman & Wakefield, the real estate brokerage firm. "The question now is whether they can differentiate themselves successfully in the marketplace."

A risk in taking too many one or two night reservations midweek is that it blocks a hotel's ability to book genuine extended stay business. "It makes it increasingly difficult to cover your shoulder (weekend) nights," said Jim Holthouser, senior vice president of brand management for Homewood Suites by Hilton.

As in other hotel segments, extended stay chains are busy introducing special features for the business traveler, not only to build customer loyalty to the concept, but to separate themselves from competing chains. Extra-large work desks, dataport telephones and in-room coffee makers are typical.

Less typical is Candlewood Suites' Candlewood Cupboard concept being introduced at all of its locations. "They provide food items on a 24-hour-a-day basis. But what really distinguishes them is that they operate on an honor system," said Redfern.

Also with convenience in mind, Homewood Suites provides food shopping (and unpacking) for guests with no service charges added.