Marriott's The Heavyweight In Both Ext. Stay Divisions

<B>Marriott's The Heavyweight In Both Ext. Stay Divisions</B>

By Bruce Serlen

For the second year in a row, the results of the extended stay segment of the Top U.S. Hotel Chain Survey were broken out in two parts: upscale and midprice. This reflected the very strong growth that the extended stay segment has continued to experience in the past few years, both in the number of brands in the category and in the number of new units the largest brands are constructing.

The one multi-brand hotel company that has made a science of brand differentiation, Marriott International, operates the top-ranked extended stay brands at both the midprice and upscale price points. Marriott's two brands--the upscale Residence Inn by Marriott and its more moderately priced TownePlace Suites by Marriott--both placed first in their respective categories in the 2001 survey. Runner-up among the upscale competitors was Homewood Suites by Hilton, while the number-two choice of respondents in the midprice arena was Homestead Village.

In the upscale category, Residence Inn placed first in four of the nine criteria to which buyers were asked to respond, including: ease of arranging individual travel, the properties' physical appearance and the quality of both their business centers and business amenities. Homewood Suites, meanwhile, received top scores on three other criteria, including the overall price-value relationship, helpful and courteous staff, and quality and variety of its in-room amenities.

TownePlace Suites finished first in two criteria in the midprice competition: physical appearance and in-room amenities. Homestead Village, on the other hand, won first-place honors on four fronts: timely commission payments, helpful and courteous staff and quality of its business centers and business amenities.

As senior vice president for extended stay lodging at Marriott, Tim Sheldon has a good handle on the business strategy at Residence Inn and TownePlace Suites, since he's responsible for both brands. "At Residence Inn, we're continuing to drive the core elements that have always distinguished the brand," he said. "This means a good size room that includes a great workspace and a full kitchen. We've got a full pipeline to fuel future growth with 40 to 50 new properties scheduled to open each year for the next few years. Thirty-six opened in 2000, bringing the portfolio to 350."

While the Residence Inn portfolio remained mostly suburban, there has been some limited urban development. "We've opened in the Cambridge section of Boston, Washington, D.C., and Seattle, for example. And we've even opened in conversions of historic buildings in downtown New Orleans and Hartford, Conn.," Sheldon said.

A newer brand than Residence Inn, TownePlace Suites during 2000 opened its 75th property and is expected to hit the 100-property milestone by year-end. "Given it's at a different price point, we're bringing TownePlace Suites into markets where there's already an established Residence Inn, and they're doing very well," Marriott's Sheldon said. "If the market for extended stay lodging is deep enough, there's no reason they both can't develop a client base."

As TownePlace Suites builds its own identity, the intention is to make the hotels increasingly residential in feel. "Our core business traveler is either on long-term assignment for weeks or months or is in the process of being relocated, which also can take many weeks," Sheldon said. "Either way, we're looking to make the experience of staying at one of our properties as close to residential as we can."

With this objective in mind, Sheldon said the brand had new laboratory rooms under development for introduction in the third quarter of this year. "We're hardly abandoning the old strategy. Rather, we're enhancing it, looking especially at issues around entertainment and technology in the room."

At Residence Inn, meanwhile, physical changes in the basic prototype revolve around the signature gatehouse. "This self-contained public space includes exercise and laundry rooms in addition to the lobby and breakfast areas," Sheldon said. "The changes are intended to improve the space's functionality even further by creating more pockets within the zone for such things as Internet hook-ups. Our intention is to help business travelers become even more productive while they're away from their office."

Like TownePlace Suites, Homewood Suites by Hilton expects to hit the 100-property milestone in 2001 and, like Residence Inn, is beginning to move selectively into urban locations, while retaining its mostly suburban identity.

"We're looking to have 150 hotels open in three years, a goal we believe is aggressive, but realistic," said Jim Holthauser, senior vice president of Homewood. "While approximately 20 percent of the new development will be in downtown locations, the high barriers to entry that exist in these locations make additional projects difficult."

As with any basically suburban prototype, transporting it to an urban setting means higher rates. "Travelers' expectations are bound to be higher in these situations, so the rates required to deliver a product that meets these expectations will inevitably be higher," Holthauser said. "The hotels that are developed, in fact, tend to be closer to a full-service experience," continued Homewood's Holthauser.

Holthauser said an advantage for Homewood Suites was the addition of the sub-brand "by Hilton" to its name a year ago. It's a practice Marriott has followed for a number of years. "It may be hard to quantify the benefit," he said, "but our anecdotal evidence suggests that the Hilton association is doing a lot to build confidence and trust in the brand. Previously, people often thought we were independently owned."

In 2000, Homestead Village completed the introduction of a new suite product in addition to its standard studio suite configuration. "Although our studio suite remains our most popular room type, guest feedback indicated that having a two-room suite option would be desirable," said James Potts, president and COO. Given that extended stay travelers stay a relatively long time, having the second room often can be an advantage. In addition to a full kitchen, Homewood Suites' two-room suite configuration features a second full bathroom, two telephones with dataports and a second television. "The living area also comes with a queen-size sleeper sofa," Pott said. The extra space would appeal to corporate travelers being relocated, whose families already have joined them.