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typically weathers storms better than other types of hotels.
Still, it’ s choppy, dynamic times, an economy where consumer confidence ebbs and flows on a monthly basis. Boring times they are not, but tedium is actually something many hoteliers in the space are after.“ Boring times are not bad times,” said Vinay Patel, president and CEO of Fairbrook Hotels, which currently has four extendedstay hotels in its portfolio.“ Make money and move on.”
Mark Carrier, president of B. F. Saul Company Hospitality Group, which owns and operates hotels across chain scales, doesn’ t shy away from fluctuations in the greater economy, calling rollicking times“ kind of fun,” though admitting that there is market pressure, especially on the expense side, where necessities, such as property insurance, are up, against a backdrop of higher interest rates.
Carrier said that for owners and operators to achieve pricing power, an occupancy rate of 65 % is optimal. Extended-stay hotels reached an occupancy rate above 70 % in Q4 2024 versus 60 % for traditional hotels.“ We don’ t create the demand, we reflect it,” Carrier said. His overall development ethos rests on the idea of understanding why someone would need to stay in a particular market and then select a business model for it.“ Extended stay is flexible,” he said.“ When we look to build, we look at extended-stay models first.”
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Owners and operators discussed the current state of extended-stay development. From left: Vinay Patel, president & CEO of Fairbrook Hotels; Emily Feeney, senior director of capital markets at Noble Investment Group; Mark Carrier, president of B. F. Saul Company Hospitality.
MORE TO COME New extended-stay supply is increasing with the addition of new products. According to The Highland Group, new extendedstay rooms in the market have increased by 115,000 since 2019 and Skinner said that demand is growing more slowly than new supply. Deal volume, according to Emily Feeney, senior director of capital markets at Noble Investment Group, is also a laggard.“ We are busy in acquisition and new construction,” she said, but“ dispositions are frustrating.” She said there remains a wide bid / ask spread, which has caused the stagnation in transaction activity. The goal of Noble, Feeney said, is to have 100 extended-stay hotels in its portfolio, calling it a target of CEO Mit Shah.
New development also has its perils, observed Patel.“ The challenge is the risk that it will take two to three years before making any money,” he said, though he added that extended stay is less risky. Then there are the other variables, such as permitting, entitlements and budgets, which can affect the timing of openings.
Extended-stay hotels are typically easier to develop than other asset types with a streamlined operating model that typically is less labor intensive and absent costs like
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food and beverage. Noble’ s Feeney said that while it can be difficult to convert a traditional hotel to extended stay, due to things like plumbing and electrical, the company isn’ t afraid of ground-up development with a specific land piece in mind.“ To reduce risk, we look for a piece of land that fits a mold: a two-acre site that is zoned and entitled,” she said.
BRAND IMPRINT Developers build hotels. Operators run them. It’ s up to the brands to make sure they are a market success through their networks, loyalty programs and other services and systems. Lodging companies, and their attendant brands, are laser focused on growth— what the segment refers to as net unit growth, or the ability to generate rooms in development and openings. As extendedstay hotels remain and become more popular with the traveling public, lodging companies have set out to satiate it. It compelled
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companies like Marriott, Hilton and Hyatt, all three that for years eschewed lower chain scales, to create brands in those segments, some of which are specific to extended stay. They join others who have been mainstays in economy and midscale, such as Choice Hotels and Wyndham Hotels.
One thing is certain, as explained by Talene Staab, brand leader of Home2 Suites by Hilton, all extended stay is not created equal.“ You can’ t lump it all together,” she said. Hilton launched midscale extended-stay brand LivSmart Studios in 2023 and recently opened its first property in Tullahoma, Tenn., with another to come later this year in Kokomo, Ind. LivSmart complements Hilton’ s other legacy extended-stay brands, Homewood Suites and Home2 Suites, which operate in the upscale and upper-midscale chains, respectively. Since extended-stay is unique, Staab warned that you must operate them differently than transient
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