Brands and owners discussed trends in franchise development. From left: Damon Healey, founder, Eternal Companies; Chet Patel, SVP, Baywood Hotels; Steven Anderson, sr. director, extended-stay development, Concord Hospitality; Miraj Patel, past chair, AAHOA; Talene Staab, brand leader, Home2 Suites by Hilton; Matt McElhare, VP and extended-stay segment lead, Choice Hotels; Ron Stewart, SVP of lodging development for midscale brands North America for Marriott International. |
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hotels.“ People get excited by extended-stay performance, but if you start pricing them with transient ADR, then GOP erodes,” she said. At the same time, she challenged the notion that people who stay at extended-stay hotels are different customers than those who stay at other types of hotels.“ It’ s about reason for stay,” she said,“ different stay occasions,” adding that Hampton Hotels, one of Hilton’ s legacy, bestperforming brands, acts as a funnel to Home2.
Choice Hotels International has long been a player in extended stay, with brands including WoodSpring, Everhome Suites, Mainstay Suites and Suburban Studios. Though new competition in the space is inevitable, Matt McElhare, VP and extendedstay segment lead for Choice Hotels, calls more brands“ a new phase,” where driving franchisee value has never been clearer.“ They look to harness the power of large brand organizations, [ leveraging ] their marketing and loyalty strategies
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and global sales. It’ s about driving length of stay,” he said.
McElhare said that Denverbased Highside Companies recently signed a $ 500-million lending facility with Apollo to develop Everhome Suites across the country in partnership with Choice.
LOS, or length of stay, is a major factor in extendedstay success, accounting for typically higher occupancy rates than other asset types. While transient hotels usually have a stay length of two to three nights, extended-stay hotels can generate stays of a week or more, or even months. This is compounded with the shortage of multifamily housing currently in the U. S., voiced by Chet Patel, SVP of Baywood Hotels, which owns and operates hotels. It’ s also an impetus for more extended-stay stock being built or converted to.“ The lack of apartments fuels development from a brand side, and all at once,” he said, though adding that financing and development costs have slowed it down some.
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Length of stay has always been a driver for Marriott, whose success with brands like Residence Inn and TownePlace Suites has made it a force in extended stay. Like Hilton, it recently created a midscale extended-stay brand in StudioRes, which opened its first property in June, in Fort Myers, Fla., and in partnership with Concord Hospitality and Whitman Peterson.
At the time of the opening, Mark Laport, president and CEO of Concord, said that part of the reason they got interested in the lower-end extended-stay segment was because it was already gaining institutional interest.“ That was very important to me,” he said. Historically, the lower segments of extended stay were mom-and-pop kind of assets, where cap rates, for example, were higher on exit. They were not the strongest type of investment. But when real estate titans like Brookfield began to embrace the concept, it changed the game. In 2018, Brookfield acquired
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110 WoodSpring properties from investment firm Lindsay Goldberg for around $ 750 million. Four years later, it sold the portfolio to Blackstone and Starwood Capital for more than $ 1 billion.
Ron Stewart, SVP of lodging development for midscale brands North America for Marriott International, said that when developers propose a site for extended-stay development,“ we put our lens on it and see what fits,” considering variables like potential occupancy and LOS. Marriott uses companies like Buxton, which provides location and marketing intelligence so companies can decide what types of real estate may succeed. He’ s bullish on the extendedstay asset class:“ It drives success and better margins,” he said, alluding to its streamlined and limited operational model.
To make lower-end extended-stay models even more compelling to potential franchisees, companies like Marriott have turned to bundled fee packages that include things like the franchise fee, systems fee and loyalty fee.“ The costs have to be midscalefriendly,” he said.
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66 hotelsmag. com Sept / Oct 2025 |