Extended-stay properties continue to be in high demand across Canada, with New Hampshire-based Lodging Econometrics reporting the segment saw a 25-per-cent increase in projects in 2018. Typically offering larger rooms, kitchen facilities and other home-like amenities beyond those offered at a traditional short-stay hotel, properties in this segment are able to attract a diverse demographic thanks to their ability to cater to varied needs. Also economical for hoteliers to manage, extended-stay properties are proving to be a win-win accommodation investment for guests and operators alike.
Rick Colling, global head of Homewood Suites by Hilton, says kitchens are the selling point for many guests who choose extended-stay properties. Leisure travellers, particularly families, welcome the opportunity to curb their spending by cooking some meals in-room. “The value-added amenities of our extended-stay offerings have been major drivers in the brands’ rising popularity among leisure travellers,” says Colling. “With more properties located in urban cores and near popular tourist attractions, travellers are also taking advantage of the inherent savings of being centrally located.” Colling says guests appreciate that they can easily leverage the money saved on dining out and transportation to budget for additional experiences in the destination.
Hilton currently has two extended-stay brands in Canada: Homewood Suites by Hilton and Home2 Suites. Homewood offers an upscale experience, with suites featuring full kitchens, free daily hot breakfast and free grocery-shopping service; while the newer Home2 Suites brand caters to more value-conscious travellers.
“Extended stay has typically been a product tailored for, and used by, business travellers in suburban markets, but this is no longer solely the case,” says Colling. “With the rise of travellers mixing business with pleasure, as well as the growth of extended-stay hotels in non-traditional markets, we’re seeing more leisure travellers embrace this option.”
Adrian Kurre, global head of Home2 Suites by Hilton, describes Home2 as one of the fastest-growing brands in Hilton’s portfolio. “Canada has proven to offer the brand a wealth of growth opportunities,” says Kurre.
Marriott is seeing similar success with its extended-stay portfolio, says Don Cleary, president of Marriott Hotels of Canada. He reports they’re among the company’s most profitable brands. “Longer-stay brands are designed for guests who are travelling for five nights or longer, however, one of the reasons they’re so successful is they have broad appeal,” he explains. “While [these properties are] designed for longer stays, shorter-stay and leisure guests love the extra space and strong value proposition of free Wi-Fi and free breakfast. This broad appeal drives average occupancy that is five-to 10-points above industry average.”
Good value-for-money makes extended-stay hotels a hit with guests in many different markets, and, as Cleary notes, this segment is equally popular with owners and operators, too. “Residence Inn has consistently had the highest owner satisfaction of all Marriott International brands,” he says. “This is because it provides the highest profit margins and among the highest guest satisfaction.”
Sandeep Gupta, vice-president of Sunray Group, which operates TownePlace Suites by Marriott Windsor and Extended Stay St. John’s, also cites the wide-ranging appeal of extended-stay properties as one of the driving forces behind their popularity with operators and guests. “As an operator, I have the advantage of being able to market the property not only to the extended-stay market but also the regular market,” says Gupta. “We have guests who stay for a week, two weeks or longer and then we have those who stay for a day or two to three days, as they prefer a place that has a kitchen.”
The appeal to different customer bases is one reason behind this segment’s success, but Tony Cohen, EVP and partner at Toronto-based Crescent Hotels & Resorts, says ease of operation is also a factor. “From a cost perspective, extended-stay properties are easier to run,” says Cohen. “With lower turnover, there is less-frequent servicing of rooms, lower check-in/check-out volume, et cetera, which means these properties have lower day-to-day costs such as staffing, laundry and replacement of supplies.”
While Cohen agrees the segment’s wide-ranging draw is one of the reasons it’s so profitable, he says the varied clientele it attracts also presents a challenge. “The fact that extended-stay properties appeal to many customer types is a double-edged sword,” says Cohen. “It’s great to have a large customer base, but the drawback is that our sales process is different for each of these customer groups, which requires more resources.”
Despite the challenge of marketing to a broad range of potential customers, growth in the extended-stay segment is showing no signs of slowing. Lodging Econometrics reports a total of seven extended-stay hotels opened in Canada in 2018 — including Staybridge Suites Niagara-on-the-Lake, Ont.; Homewood Suites by Hilton Ottawa Airport; Home2 Suites by Hilton Dorval, Que; and Staybridge Suites Saskatoon — as well as 45 properties currently in the pipeline in Canada — 16 of which are already under construction. Notable new projects in the works include the Residence Inn Toronto Mississauga, Best Western Residency Calgary and Hyatt House Winnipeg Southwest.
According to Bruce Ford, SVP of Lodging Econometrics, the extended-stay model is also becoming increasingly popular for dual-branded properties. “You can share staff; you can share resources,” says Ford. InterContinental Hotel Group’s dual-branded Holiday Inn Express and Staybridge Suite property, which opened in Niagara-on-the-Lake, Ont. in April 2018, is one such example. “The difference between operating a full-service hotel and limited-service hotel is really about staffing,” says Ford. “[A dual-branded property] is a more efficient operation for hoteliers.”
With all signs pointing towards growth in the extended- stay market, what’s next for this quickly expanding segment? “Given this strong performance record, it stands to reason that established and new competitors will be pushing to claim a larger share of this market,” says Kurre. “Operators already in the space, or planning to enter it, should do so with an innovative brand that understands how to differentiate itself.”
Improving the ambiance of shared spaces is a key aspect of Hilton’s “Take-Flight” initiative — a program launched in 2014 to upgrade the brand’s existing properties. “Staying ahead in the extended-stay market goes beyond focusing on new development,” says Colling. “It also means implementing smart renovation strategies that allow our legacy properties to reflect the needs and desires of today’s traveller.”
Marriott is also turning its attention to the common areas of its extended-stay properties and focusing on creating a more social ambiance for guests. In 2015, the brand’s Residence Inn introduced RI Mix, a program of evening socials that encourage guests to mingle over food and drink. Cleary says Marriott’s Element by Westin hotels also have programming geared toward activating shared spaces such as lobbies. He adds these programs typically take place in the evening, when most guests are returning to the hotel after a day of work or touring and looking to interact.“[Extended-stay properties] are in demand from a consumer and owner point of view,” says Cleary. “The extended-stay business model is compelling.”
Written by Jessica Huras
