All Suite Hospitality Gains Momentum During Downturn

When the new 455-suite Embassy Suites Hotel Downtown Lakefront officially opened last month in Chicago, it was the culmination of four years of planning and construction. Lodging industry occupancy rates and room revenues were robust in 1997 and all suite properties' value proposition had strong appeal: a traditional two-room suite or large one-room studio suite for either the same cost or a slight premium to the cost of a regular hotel room.

By contrast, U.S. occupancy rates and room revenues today are in a tailspin, not only in Chicago, but in New York, Los Angeles and other key gateway cities, a reflection of the severe cuts many corporate travel budgets have undergone. But operators of all suite brands argued that this category's value proposition rings even truer in the present environment, whether the brand is positioned in the upscale, full-service sector, such as Embassy Suites—which is part of Hilton Hotels Corp.—or in the midprice category, such as Marriott International's SpringHill Suites.

Likewise, they argued it is true for all suite properties that are part of chains not known for an all suite product, such as Sheraton, which is part of Starwood Hotels & Resorts Worldwide, and manages the Sheraton Suites Lincoln Harbor Hotel in Weehawken, N.J. Even in the deluxe category, properties that are known for their high-end suites, such as the Waldorf Towers, a Conrad Hotel, convey the perception of extra value for the dollar.

"All-suite brands have continued to deliver on that promise we made to business travelers about extraordinary value for the dollars they pay," Mark Snyder, senior vice president of brand management for Embassy Suites, told Business Travel News at the opening of the Chicago property.

"That brand promise is even more the case now that the economy is suffering. While there may be some trading down of price points as a result of the economy, we're finding that business travelers who are used to the service and experience of an upscale hotel are less likely to be able to function productively without it," he said.

To further reinforce his point, Snyder put himself in the shoes of one of today's overextended, harried road warriors. "Times are rough enough today," he said. "Travel managers don't need travelers coming back from a trip, saying, 'You know, I work six days a week for the company, I'm away from my family, I'm on planes at midnight and, on top of that, now I have to stay at a hotel that doesn't really help me meet my productivity goals while I'm on the road.' "

The Chicago property is the second largest in the Embassy Suites system, the 463-suite New York property, which opened in Battery Park City last year, is the largest. "Chicago is a market where we felt we were under-represented," Snyder said. "We knew that was so from the amount of business we were turning away from our existing property here, the Embassy Suites State Street."

The new property clearly is positioned as a business hotel, attracting families on weekends. "Initially, Embassy Suites was identified with family leisure travel," said David Greydanus, senior vice president for Embassy Suites operations. "But with the downtown locations in New York and now Chicago, the focus is clearly business."

Downtown sites in other gateway cities are under consideration, but these locations tend to have high barriers to entry, so development can be a prolonged process, as it was in Chicago. The only project that formally has been announced, therefore, is Washington, D.C.

"These urban prototypes tend to be roughly twice the size of a typical suburban or office park Embassy Suites, which continue to be developed," Snyder said. In total, the brand, which was launched in 1983, now has more than 160 properties in operation.

At the midprice tier, the value proposition behind Marriott's SpringHill Suites was meant to appeal to the budget-conscious business traveler from the beginning. "When we introduced the brand in late 1998, we were conscious of the very specific need it was intended to fill in the marketplace," said Craig Lambert, senior vice president of select service lodging at Marriott. "We felt there was an unmet lodging need there we could fill."

More than 60 properties have been built in the three years since the brand was launched. Unlike downtown Embassy Suites, the prototype in this case is suburban, secondary or tertiary destinations. Expansion plans are aggressive. In August alone, three SpringHill Suites opened—in Hawthorne, Calif., Plymouth Meeting, Pa., and West Mifflin, Pa.—ranging in size from 94 to 201 suites. A fourth property, with 119 suites, opened in Eden Prairie, Minn., in September.

Given the importance business travelers place on convenient access to transportation, three of the four new SpringHill Suites properties are close to local airports, though none actually is on the airport grounds. Closest is the West Mifflin property, which is one mile from the county airport and also is convenient to downtown Pittsburgh.

Embassy Suites has built a lot of its brand positioning on its two-room suite configuration. Snyder said the separate bedroom and parlor make the two-room configuration even more of a value proposition today. "You can work in the living room area and get away from that when you go into the bedroom area," Snyder said. "Even for stays of a night or two, it becomes very nice to have that extra space."

SpringHill Suites' studio-style suites are up to 25 percent larger than traditional hotel rooms and feature separate areas for sleeping, working/eating and relaxing. "Business travelers tell us they find the suites very spacious," Lambert said. "What's more, the feedback we get is that the space is very well laid out, that it allows guests to comfortably do everything they need to do in the room, including work."

David Berghorn, director of sales at the Sheraton Suites at Lincoln Harbor, said that in response to the economy, business travelers increasingly are using the separate living room space in his property's 347 suites for business appointments. "They'll even use the space for a small client or sales meeting, which saves the expense of having to book a separate meeting room," he said. "Just this morning, a guest asked about using the parlor room for recruiting interviews. Simply close the bedroom door and there's no sense the suite also is being used to house someone."

Extra chairs can be brought in to the suite, as well as basic audiovisual equipment. "Because the parlor comes with a small kitchen, including a wet bar, microwave and refrigerator, we often provide coffee service or a working lunch, which also tends to be a cost-saver," Berghorn said. "The economy is affecting everybody, forcing people to be more resourceful."



waldorf separates suites by class

In its long history—it opened in 1931—the Waldorf Towers, where every U.S. president since Herbert Hoover has stayed, hardly has been associated with frugality. But even at the deluxe level, the hotel offers added value for the price to senior-level business travelers.

The hotel, which in June was named the first Conrad Hotel in North America, has three distinct classes of suites, each of which has at least two separate rooms. "At the premier level, the Empire Suites, space can run from 2,500 square feet to 4,000 square feet," said Eric Long, general manager of the Waldorf-Astoria, which includes the Waldorf Tower. "What we try to do is offer the maximum in flexibility, so some of the larger suites include up to five bedrooms." They are appropriate for teams of executives, for example, that are part of a high-level management meeting or even a confidential mergers and acquisitions negotiation. Like Embassy Suites, Conrad is part of Hilton Hotels Corp.

Long stressed the suites' one-of-a-kind quality. "They're in keeping with the original design and philosophy of the building, which was to be strictly residential in feel," he said. In fact, many of the suites were occupied as apartments earlier in the building's history.

Because of this residential quality, travelers booking suites tend to stay longer than travelers booking regular guest rooms. "Length of stay is significantly higher, though not quite what the industry would consider extended stay," Long said.

When it comes to pricing, Long acknowledged that the value proposition at his property was a lot different than at a SpringHill Suites, Sheraton Suites or even an Embassy Suites. "Today, there's a greater sensitivity on price regarding everything," he said. "But for the traveler seeking luxury accommodations, we're still considered a good value. In fact, we're perceived as 'well worth the money,' when you factor in the quality of the rooms and the service orientation."

For Embassy Suites, Sheraton Suites and SpringHill Suites, part of the brand promise is a complimentary breakfast and, in the case of Embassy Suites, a manager's reception every evening, also complimentary.

"We're expecting up to 85 percent of our guests to have breakfast each day," said Steve Jung, general manager of the new Embassy Suites in Chicago. At Embassy Suites, the brand standard is a full, cooked-to-order breakfast.

Complimentary breakfast is a cost-benefit in itself, but it's also a convenience. "Because travelers help themselves, they don't have to waste time ordering and then waiting to be served," Berghorn said. "For business travelers eager to get to their first appointments, this can be a big advantage."

In line with this, SpringHill Suites offers travelers what it terms a "Grab and Go" express food service, for which it charges, in addition to the complimentary breakfast buffet. "Given how hectic a traveler's day can be, the express items have proven popular because they give people the chance to eat on the run," Marriott's Lambert said.

Embassy Suites' evening manager's reception doesn't typically get the same high turnout as the full breakfast, but still is popular. "People's business appointments may have run late or they're just tired and want to go up to their suites to rest before heading to dinner," Jung said.

But from a cost-saving point of view, travelers understand it is still part of the overall value proposition. "If it's the last business appointment of the day, for example, a guest is welcome to bring a colleague back to the hotel and have drinks at the manager's reception," Snyder said. "It's a nice way to end the work day and—not to be overlooked—can end up saving the guest a $25 bar tab."