Market Mulls Buying Extended Stay In Blocks

<B> Market Mulls Buying Extended Stay In Blocks</B>

By Maria P. Vallejo

If availability is king in the hospitality industry this year, then blocked rooms in extended stay properties may be the way to usurp the power.

Even while the industry projects declines in occupancy rates, there has not yet been enough movement to counteract the lack of availability in urban markets that is currently plaguing travel buyers. Instead, travel managers are beginning to consider buying extended stay rooms in blocks, which simultaneously will guarantee room availability and reduce hotel spend, insiders said.

The advance purchase of hotel rooms is a concept already in use by several hotel companies in Europe, though still practiced in clandestine deals in the United States. American Express signed an agreement with Thistle Hotels in England, for example, to work out something of a block room deal (<I>BTN,</I> April 9), though their partnership does not require Amex to pay in advance for the rooms it is holding.

This still unconventional form of hotel purchase is expected to become more prominent in the extended stay market during the next few years, analysts and consultants agreed.

Unlike mainstream hotels that charge the same rate regardless of length of stay, extended stay hotels are built on the concept of lower rates for longer stays, and often reduce their rates even further the longer a guest stays at the property.

The extended stay market is divided into three sections, with the economy segment costing less than $40 a day, the midscale segment costing between $40 and $70 a day, and the upscale segment costing more than $70 a day. Even at an upscale extended stay facility, travel buyers can spend as little as $500 a week--a significant savings when compared with this year's industry average daily room rate of $112.96, according to PKF Consulting's State of the Industry Report, which was issued in September.