STR Article - Extended-Stay Hotels... This hybrid group keep growing and growing
Note: In the October 1997 issue of LODGING, we noted that the "All-Suite" facility offers guests separate living and/or working space in addition to sleeping accommodations and other amenities. The "Extended-Stay" hotels are a sub-set of the Limited-Service, All-Suite segment. Extended-Stay hotels generally contain full kitchens and are designed to accommodate guests staying more than six nights.
As we indicated in the last article, the Extended-Stay hotel concept is really a "hybrid" product which combines elements of both hotel and apartment operations. In fact, the Extended-Stay brand that has pioneered this segment, Residence Inn, was originally conceived by an apartment developer, JackDeBoer, who is now developing the Candlewood brand. Other "all-suite" hotels also have their genesis is in the apartment business.
Even though a "hybrid", for some reason the Extended-Stay concept has been adopted by the hotel industry rather than the apartment industry. Interestingly, to the hotel industry Extended-Stay represents a long-term guest and to the apartment industry a short-term guest. While this article specifically addresses the hotel industryís view of Extended-Stay, it should be remembered that many apartment complexes are also in the extended-stay business. In fact, apartments are often overlooked or, at best underestimated, in terms of measuring the available supply of Extended-Stay accommodations. Major players in the apartment/corporate housing business include Accommodations America, CRS Corporate Housing, California Suites, ExecuStay, Oakwood and Preferred Living. Potential competition from these companies and several regional providers should be understood when evaluating the overall supply and demand relationships for Extended-Stay accommodations.
The term Extended-Stay is not one of our primary Chain Scale designations, but of the more than 35 thousand hotels with 20 or more rooms listed in STRís U.S. Lodging Census database at November 30,1998, 1,143 of those are included in groups of what we will call Upper and Lower Tier Extended-Stay hotels. That was slightly over 3 percent of total U.S. hotels. The current inventory and the major "players" with at least a few months of operating history are listed in Table 1. (Note: these are the same groupings of Extended-Stay brands that are periodically reported on by Bear Stearns & Co., Inc. in their equity research publications.) Since we last reported on the status of this group as at July 31,1997, the number of properties has increased by 85 percent and the number of rooms by 84 percent.
We analyzed the Historical TREND reports of the aggregate data provided by most of the companies listed in Table 1 (we receive information covering 89 percent of the Extended- Stay rooms). We estimated the performance of Extended-Stay hotels for 1998 and 1999 based on the trends from 1991 through November 30, 1998. The accompanying tables and charts portray the results of our analysis.
By Chuck Ross, Vice President, Smith Travel Research