Top U.S. Hotel Chain Survey: Homewood, TownePlace, ESH Top Extended Stay Tiers

Extended stay brand hoteliers shifted their focus by introducing downtown properties and implementing service upgrades in an effort to capitalize on the ever-changing needs of the business traveler, as evidenced in research for Business Travel News' annual U.S. Hotel Chain Survey.

Homewood Suites by Hilton continued its reign at the head of the upper upscale extended stay category, but shared the distinction with last year's third-place finisher and Hyatt's newly acquired brand, Summerfield Suites, which leapfrogged runners-up Residence Inn by Marriott and InterContinental Hotels' Staybridge Suites. Hawthorn Suites, in which Hyatt owns a majority stake, rounded out the group.

The race for the top spot in the upscale extended stay category mimicked last year, as TownePlace Suites by Marriott outpaced IHG's Candlewood Suites, albeit by a closer margin.

The midprice extended stay division was a win-win for Extended Stay Hotels, as its offerings finished one and two. Homestead Suites took the top prize, with Extended Stay America following up. The Blackstone Group bought the brands, previously separately owned, in 2004 and consolidated them under the Extended Stay Hotels umbrella.

Extended stay companies are seeking to develop more properties to keep up with burgeoning demand. Primarily for the traveler staying more than five nights, only 5 percent to 6 percent of U.S. hotel rooms are categorized as extended stay. Sean Hennessey, CEO of Lodging Investment Advisors, highlighted the extended stay tier as an upstart in the hotel industry that will continue to gain prominence. "Analysts continually indicate that the amount of demand that will continue to grow at extended stay will make it one of the darlings of the industry and supply will continue to grow, but occupancies will remain strong and the high value relationship will continue to make it an attractive option," he said.

What was once a product that serviced suburban areas almost exclusively now is entering downtown destinations. "Extended stay is moving into some of the urban locales—the Residence Inn in Manhattan that opened in late fall 2005 is an example," said John Fox, senior vice president of PKF Consulting. Homewood, too, offers a flexible prototype that can by implemented into urban areas. Developers also are building Homewood Suites adjacent to such other Hilton offerings as Hilton Garden Inn and Embassy Suites to derive efficiencies. Gary DeLapp, president and CEO of Extended Stay Hotels, noted that this progression to urban builds is indicative of the changing needs of the business traveler, adding that ESH just opened an Extended Stay Deluxe in downtown Ottawa.

Both Homewood and Summerfield are rolling out new bed models. Homewood will integrate its Serta Sweet Dreams bedding package in 50 percent of its rooms in 2006 and Summerfield will introduce the Hyatt Grand Bed as one of its new signature items.

Extended stay brands increasingly are making services like in-room high-speed Internet complimentary, a service that is indispensable to business travelers. Both Homewood and Summerfield give their customers Internet free of charge. "Adding technology upgrades has been very important, particularly high-speed Internet access," said Jim Abrahamson, Hyatt's senior vice president of acquisitions and development.

Extended Stay Hotels in the midprice category is ramping up efforts to introduce wireless Web capability in all its hotels. "Our big initiative that speaks to the corporate business travelers is the implementation of Wi-Fi at all our hotels last year," ESH's DeLapp said. ESH has most recently made a foray into the upscale extended stay category with its Extended Stay Deluxe brand offering. The brand's 63 properties provide more guest amenities and bigger suites and are conversions of ESH's Studio Plus brand. DeLapp said that 100 more properties will be converted within the next 18 months.

Global Hyatt Corp. acquired Summerfield Suites' 21 hotels on Jan. 5 as part of the vertical integration of its portfolio and soon after announced it would rebrand it as Hyatt Summerfield Suites. Hyatt's move is part of an aggressive buying pattern that started in 2005 with its acquisition of AmeriSuites from the Blackstone Group, which will be rebranded as Hyatt Place Hotels in 2006.

Buyers using upper upscale extended stay chains ranked Summerfield as the leader in eight of the 12 categories, while Homewood carried only two but was competitive throughout. Summerfield excelled in its ability to arrange individual and group travel, its corporate rate program and its commission payment system, for which it received a perfect score. "The hotels are very dedicated and committed to the travel agent and consortia community, just like Hyatt, so this is a good match for our acquisition," said Abrahamson. "Hyatt will continue to be dedicated to this high performance level." TownePlace was tops in categories including the the physical appearance of hotels and its commission payment system, while Candlewood bested TownePlace in categories including its ability to arrange individual travel.

"We build the experience around being able to provide local knowledge," said Laura Bates, senior vice president of extended stay brand management for TownePlace Suites. "Travelers want to get to know the area. They often have new-found time and want to know where the best pizza joint is or cheapest gas station."

For the extended stay category as a whole, "the increases in demand are at a rate faster than the increases in supply," said Fox. "We'll probably hit equilibrium within a year or two, because there is a lot on the drawing board. There are cycles and we happen to be riding a period that is close to the crest. It will come down in the near term, but is by no means near a trough."