Paired Full Service/Extended Stay Development Expands

A Homewood Suites by Hilton, an extended stay hotel, and an Embassy Suites Hotel, a Hilton full-service brand, last month opened on adjacent sites in Dulles, Va., while in February construction began on an extended stay TownePlace Suites by Marriott side-by-side with a Courtyard, a midprice Marriott brand, in Thousand Oaks, Calif. The new projects are the latest examples of a small but growing trend of pairing extended stay hotels—which have specific target audiences and pricing models—in a single development with more traditional transient business properties, whether full service or midprice, that have the same ownership and are part of the same multi-brand hotel company.

The strategy makes increasing sense for the hoteliers since they're able to target business travelers on two different types of business trips. At the same time, hotel owners are able to take advantage of operational efficiencies.

Corporate travel buyers have the opportunity to benefit as well. They are able to direct travelers to the type of hotel best suited to their needs and then generate cost savings on the extended stay bookings, given the attractive extended stay pricing model.

On peak nights, meanwhile, when the transient hotel sells out, travel buyers can use the extended stay property as back-up. These transient bookings, however, generally are at a higher rate per night than extended stay bookings.

"Homewood Suites and Embassy Suites each offer distinct accommodations," according to David Pollin, president of the Buccini/Pollin Group, which owns and manages the two hotels in the Dulles, Va., project.

"By offering these options side by side, we're able to cast a wider net into the market and appeal to multiple customer segments," Pollin said.

Extended stay hotels are designed specifically with the needs of the extended stay traveler in mind, according to Homewood senior vice president of brand management Jim Holthouser. "Suites come with full-equipped kitchens and sleeping and living areas that are spacious enough for work, study, entertaining or relaxing," Holthouser said.

In another project that opened last fall, Hilton paired a new Homewood Suites with the existing full-service Hilton Philadelphia City Avenue, outside of Philadelphia. A passageway physically connects the two. Likewise, a Homewood is under construction in Iselin, N.J., adjacent to an existing full-service Hilton.

The California Marriott project, by comparison, pairs Marriott's midprice extended stay brand, TownePlace Suites, with a midprice brand, Courtyard.

"A number of the upgrades for business travelers that we've made at Courtyard are in place at TownePlace as well," according to Marriott senior vice president for extended stay lodging Laura Bates.

"High on the list is high-speed Internet access, which business travelers tell us has become indispensable for them," Bates said. "This is especially true for extended stay travelers, who can be with us for weeks or even months. The room becomes their surrogate office."

However, a strong residential feel still distinguishes TownePlace Suites and its upscale extended stay sister brand, Residence Inn, from such midprice transient products as Courtyard.

"The difference goes beyond layout and design of the room," according to Marriott's Bates. Rather, it extends to the feel of the common areas and to staff training. "Staffing levels actually are lower at extended stay hotels than at other types of lodging, which affects pricing, but the staff is trained to interact with guests more often and more directly.

"Since extended stay bookings can last so much longer than transient bookings, there's a much greater sense of community that develops between guests and staff," according to Bates.

At Marriott, a precursor to the current wave of hotel pairings was the 2003 conversions of the historic Humble Oil Building in Houston into a Residence Inn, a Courtyard and luxury apartments. Each component of the project has its own entrance.

In 2004, Tharaldson Enterprises opened a complex consisting of an extended stay hotel and three midprice transient hotels adjacent to one another on a site off the Las Vegas Strip.

What made the Las Vegas project unique was that owner/manager Tharaldson included brands from two different hotel companies: Residence Inn, Courtyard and Fairfield Inn from Marriott and Holiday Inn Express from InterContinental Hotels Group.

"By putting two or more brands on the same exit on a key highway, we don't compete against ourselves as much as we end up pretty much owning that entire exit," according to Tharaldson Enterprises regional vice president Dean Manternach. "Cross-selling between the hotels becomes a natural. Whichever brand corporate travelers choose, based on the nature of the particular business trip, the booking still ends up with us."

Combined, the four hotels have 580 rooms, which would be a fair size for a single, full-service hotel. "That way, however, we only could offer travelers one type of accommodation," according to Manternach. "This way, we multiply their options."

Operationally, paired hotels can save money for their owners in a number of ways. Pollin cited three: shared laundry, maintenance and housekeeping. A fourth is security. At the Homewood and Hilton outside Philadelphia, one director of sales and marketing sells both properties.

Such synergies may have certain limits, however. Since acquiring extended stay Candlewood Suites in late 2003, InterContinental Hotels Group has approved several projects that pair Candlewood with a Holiday Inn Express. None have opened yet. Candlewood brand vice president Gina LaBarre anticipates potential cost savings from maintenance and security, but draws the line at shared management personnel.

"At that level, an extended stay brand such as Candlewood is best served when there's a focus on that brand and that brand alone," LaBarre said. "Extended stay business is a specialized niche, so you have to go out and really know what you're looking for."