“A home away from home” — a familiar saying to us all, but what does it really mean? For the guest at an extended-stay hotel, it means enjoying the comforts of home with the benefit of a hotel’s professionalism. Guests can enjoy the use of a kitchen or kitchenette, access to technology/Wi-Fi as she or he would at work, as well as access to amenities — all while staying close to clients in the suburbs for business and/or tourist sites for families.
Research published by the Chicago-based CCIM Institute notes the number of services hotels in this segment offer depends on what the guest is willing to pay. Traditional offerings, such as meeting rooms, swimming pools and complimentary continental breakfasts, are typically included, as well as those geared for extended-stay guests.
Carrie Russell, senior managing partner at HVS, defines an extended-stay property as “all-suite with kitchen facilities [that] cater to guests that stay five [or more] nights.” She notes that the services offered usually include “a complimentary breakfast, evening reception (mainly weekdays), fitness facilities, often an outdoor space for barbecue and socializing, a pool and a sports court or some type of leisure amenity.”
Not too big, nor too small — Russell observes, “A typical [extended-stay] room varies from 350 to 400 sq. ft. They are successful in both urban and suburban markets.”
Johnathan Korol, president of SilverBirch Hotels & Resorts, agrees, commenting that this hotel type “has a history in suburban areas close to demand generation [such as] office parks and hospitals.” He adds that dual-branding makes sense for brands in this segment. With an “out parcel it makes sense to have an extended-stay hotel versus an urban location.”
Russell notes that extended-stay brands are popular inclusions in dual-branded properties because they “serve a different market segment and provide suites, so it differs from a typical focused- or limited-service hotel and can be quite complementary.”
CURB APPEAL
What types of guests do these hotels attract? Corporate guests like the services and convenience offered. “Often downtown-core locations have a number of professionals [who] work on projects for an extended period of time or relocate from other areas. These hotels are perfectly suited to their needs as a long-term guest.” Generally, Russell notes, “Guests like these hotels because they cater to their specific needs, i.e., providing a kitchen, closet and work space that makes it feel like home when they are away for multiple nights or weeks.”
The CCIM Institute article notes that extended-stay hotels appeal to business people seeking a homey atmosphere, workers relocating or on long-term projects and people who are in a state of flux regarding their homes or personal relationships.
The ability to “put down roots and feel like they are in an apartment [has] value for guests and the hotelier,” Korol agrees, adding, “Millennials are experience driven [and want] a ‘home base’ for their stay.” He also points out that, from a brand standpoint, there is a strong loyalty base and, in many respects, extended-stay offers “better value than some full-service hotels.”
What the extended-stay segment offers — in contrast to Airbnb or apartment buildings offering temporary rentals — is a “consistent standard of service,” Korol notes. “At an Airbnb [you are just] handed a key and told where to go.”
“Airbnb is often not the most desirable option for corporate travellers, who want the convenience and security of a hotel, along with frequent-guest rewards points,” adds Russell. She also points out that “extended-stay hotels do try and make the experience of staying there as much like home as possible and the design of the buildings and service tries to reflect that — more so than a typical hotel.”
“As hoteliers, we’re consistently adapting and listening,” Korol notes. The segment is evolving because hoteliers keep informed about what guests want. As an example, he points to hotels that have begun piloting programs with grocery stores to provide grocery delivery for guests. “Its popularity is in its infancy [but there is] more runway in Canada,” he says.
With so many ‘beds’ available how does the consumer know which one to choose? Marketing is key, especially within this segment. “With the number of hotel brands that currently exist in all segments, consumers have a hard time understanding the differences between each one, so this isn’t specific to the extended-stay segment,” notes Russell. “What is unique about the segment is that it requires a very hands-on marketing strategy in the local community, which allows the sales team to explain the unique attributes of these type of properties and is likely why the segment tends to be very high performing.”
The segment appeals to operators because “it’s an efficient/profitable model,” Russell explains. Labour costs are reduced due to, “the long-term nature of the guests, the check-in/check-out service is reduced, which also results in cost savings. They typically perform at penetration rates well beyond their fair share and the operating margins are strong given the nature of the staffing model.”
Korol also notes that both operators and developers appreciate “the lower operating costs and greater profit margins, as well as the ability to control costs like housekeeping, which is weekly not daily. There are no variable costs, which goes directly to the bottom line.”
The CCIM Institute article confirms these sentiments, indicating that the amount of labour needed is lower because housekeeping is light during the week, checkouts happen less often and, as guests stay longer, there are fewer weekend checkouts. Thus, rates do not have to be lowered to attract guests on weekends.
Developers, Russell remarks, “are often trying to find a new niche to gain a competitive advantage when going into a new market and this market is still relatively underserved in Canada and provides that potential advantage.”
The future looks bright for extended-stay in Canada. “The Canadian market has actually been slower to target this segment than the U.S., which has a significantly larger number of extended-stay brands and hotels and has been active in the segment since the first Residence Inn was built in 1975,” says Russell. In Canada, she adds, “There are currently 40 hotels in the development pipeline.”
“We, as a company, are very bullish on extended-stay hotels,” Korol states, pointing to the 390-suite Residence Inn by Marriott Calgary Downtown and SilverBirch Conference Centre under construction in Calgary’s Beltline district, which is set to open in 2019. “The extended-stay [hotels] perform really well and are a good fit
for Canadians.”
Written by J Lynn Fraser
