Extended Stay Companies To Take On Biz Cities
<B> Extended Stay Companies To Take On Biz Cities</B>
By Maria P. Vallejo
Two extended stay companies are targeting gateway cities nationwide, expanding travel buyers' choices for long-term urban accommodations beyond the traditional hotel chains.
Homestead Village Inc. and Staybridge Suites by Holiday Inn, both based in Atlanta, this year will open new hotels in Boston, Detroit, Houston and New York.
"We definitely would need them because our offices are in urban areas," said travel manager Donna Abbott of Houston-based Landmark Graphics Corp., a software and service provider for oil and gas companies. "We want people who are strategically located near our offices."
Categorized for stays of five nights or longer, extended stay hotels have mushroomed in secondary and tertiary markets. Despite the extended stay's prolific growth in those suburban areas, demand for such housing was not fully captured by chains in many urban and gateway cities, travel managers and analysts said. Corporate travelers stayed at independent extended stay hotels, mainstream chain properties and corporate apartments.
"This is an industry that doesn't know how deep the demand is in the suburban locations, but has discovered that it's deeper than anyone thought. There must be a substantial level of demand in urban markets as well," said Bjorn Hanson, PricewaterhouseCoopers' global hospitality industry leader. "These companies are leading in experimentation."
Homestead Village and Staybridge Suites hope to capture new demand and steal existing business away from independent extended stay properties, full service hotel chains and corporate apartments that are now servicing the long term traveler community. Offering cheaper rates, room designs geared for longer term hotel guests and all new construction facilities, the two chains will compete with each other and with mainstream hotels.
"There is no national competitor that has extended stay presence in all of these locations," said Michael Cryan, Homestead's co-chairman and chief operating officer. "We're competing with full service hotels that offer guests five nights or more."
Homestead Village launched its national urban development strategy in late June with four city properties slated to open by 2001. Three hotels will open in New York and one in Boston, while the company is looking for development in Chicago, San Francisco, Seattle and Washington, D.C.
Discounting will not be offered on the average $970 per week rate. Homestead suburban properties cost about $315 per week stay.
The urban expansion concept was developed based on ongoing product demand research using corporate travel managers, business travelers, travel agents and training relocation managers. Starting in mid-1996, the research concluded that 68 percent of Homestead's current customer base needed extended stay facilities in urban and suburban areas. Homestead has 93 suburban properties open, garnering about 80 percent occupancy with 90 percent corporate travel.
In mid-1997, the company conducted focus groups centered on developing the new product to meet the explicit needs of urban extended stay guests. KPMG Peat Marwick concurrently conducted a telephone survey for the same purpose with travel managers in Boston and New York that ended in February.
The urban properties will be equipped with 24-hour security, concierge and bellhop. They will have onsite fitness facilities, meeting space and 24-hour business centers. Urban properties will have about 240 hotel rooms in up to 12 floors, while the suburban properties average about 130 guest rooms within two to three floors.
Guest room layout is under development and testing in an Atlanta warehouse with the input and critique of travelers.
Staybridge Suites, a new brand launched by Bass Hotels & Resorts, plans to open 230 hotels in suburban and urban cities nationwide by 2002. The all new-construction hotel chain so far has 30 hotel deals signed in primary and secondary cities, such as Boston, Detroit and Houston. The first hotel will open in November.
Bass began surveying extended stay guests of its future competitors in 1996, while company officials considered purchasing one of two already existing extended stay brands, Sierra and Summerfield Suites. In the fall of 1997, the company intensified its research of extended stay traveler preferences in major U.S. and European cities. During one of the research projects, competitors' guests were taken to model suites in Staybridge's Atlanta office to help design the new product.
The rooms will have moveable furniture so travelers can manipulate their environment. Guests also will be allowed to check in or out using a freestanding kiosk, named Bridgette. Bridgette will speak a minimum of three languages depending on location, such as English, French and Spanish. Similar to Homestead, Staybridge will offer an onsite exercise room and 24-hour business center.
The properties' target segment will depend on its location, allowing the properties to fluctuate between the upscale to midpriced markets, said Bill Linehan, Staybridge Suites' brand director.