Extended stay lodging is getting bigger, cooler, more diverse – and even jumping into the sharing economy. With ever-increasing demand, there has been a proliferation of possibilities for accommodations that have a few things in common: they are designed for longer stays; they have more space than the average hotel room; and they have kitchens.
There are also wide disparities – with stays at most American-style extended stay hotels in the three- to five-night range, and for those needing more, serviced apartments/corporate housing stays average three months or more.
But like the perennial confusion about how to define a boutique hotel, the definition of extended stay has become more nuanced as concepts overlap one another. Many travelers seem to want apartments with hotel services, and many hotels are offering rooms that are more like apartments. And recently we have even seen the emergence of yet another hybrid, the boutique extended stay.
On top of that, there are terms used internationally – like serviced apartments or aparthotel – that are less commonplace in the US. And finally, the impact of sharing concepts like Airbnb are being felt in the extended stay space. Major serviced apartment operators like BridgeSteet Global Hospitality are making their inventory available on Airbnb. And Hyatt has bought a piece of OneFineStay, an upscale sharing product.
All this activity is attributable to the success of the segment. According to the most recent report from The Highland Group, which closely follows the extended stay industry, “Overall, average extended stay hotel occupancy is at a record high; strong increases in average rate is driving some of the largest gains in revenue per available room seen in a decade.”
Because it’s doing well, everybody has jumped into extended stay which has added options for travelers – but also added confusion. One reason for the confusion is that extended stay, which started as suburban housing for corporate travelers doing training or project work, has now emerged as an all-purpose solution.
“Travelers want to stay for all types of trips – short term, family, leisure,” says Bill Duncan, who was recently named to head up Hilton’s all-suite brands (Embassy Suites by Hilton, Homewood Suites by Hilton and Home2Suites by Hilton). “We have huge pipelines for Homewood Suites and Homewood2 Suites because customers want them for every kind of trip.”
In fact, significant efforts are being made to define the various forms of extended stay. Loren Nalewanski, vice president of TownePlace Suites by Marriott, says that lodging companies from around the world have signed a charter that begins to sort out all the various products in hopes of educating travelers and making it easier for them to know exactly what they are getting – and which specific product might be best for a specific trip.
Meanwhile, insiders work with their own definitions. Mark Skinner, a partner at The Highland Group consultants, defines extended stay simply as: “full kitchen, ability to make reservations, and no requirement for a lease.”
Another useful definition is based on the length of stay. “Corporate housing is defined as a stay of 30 nights, usually for business reasons,” says Katiria Astorga, assistant general manager at New York’s Sutton Court Hotel Residences, which fashions itself an ‘extended stay boutique hotel’ in Midtown Manhattan. “An extended stay or all-suite hotel may offer a large apartment style room that can be booked for a night or two. Serviced apartments are the same as corporate housing to me except this term is more internationally used.”
As for those international variations, Duncan says, “It’s very different outside of the US. So as we launched Homewood Suites internationally we were flexible in how we describe ourselves. We will even use the word aparthotel in Europe or the Middle East. That’s with a wink and nod until we move further along the educational process.”
Jo Layton, managing director-commercial sales for London-based The Apartment Service, explains, “The extended stay product in whatever form shares one major common factor – the ability to ‘self-cater’ within the apartment. Whether this is a meal as simple as ‘beans on toast for one’ or a luxury experience of preparing a five-course gourmet dinner for a party of four is determined by the style of product,” she explains.
“Understanding if your apartment in an aparthotel provides a ‘kitchenette’ or ‘full kitchen’ is vital, if you want to ensure that you can cater for the latter,” says Layton. “The interesting and surprising fact is that some three-star studios within the corporate housing banner can have more enhanced kitchens and are more conducive to providing a substantial catering option than their five-star counterparts.”
Extended Stay Evolves
Extended stay is moving along a parallel path with its traditional hotel counterparts on several fronts. “Twenty years ago, the idea was that guests just wanted to be left alone in their rooms,” notes Nalewanski. “Fast forward and now we all want to be together. As a result at TownePlace Suites we have larger lobbies and more communal space. It’s been a tradeoff with smaller, more efficient rooms,” he adds.
“Travelers want it all,” says Duncan, “more space in the room as well as public spaces and you have to make sure you are delivering all of that. Ultimately we have a lot of humanity under our roof on any given night and they all want something different. Also, one day the same guest might want to spend quietly in their rooms and the next in the lobby with a lot of activity and noise.”
Extended stay is also getting ‘cooler.’ Notes Skinner of The Highland Group, “The products are becoming ever more residential following the same sorts of trends as hotels with more natural light, lighter colors, sleek lines, shower-only units and so forth. At the upper end you will see expanded lobbies and sometimes even meeting space and a bar.”
Extended stay is moving decidedly upscale at brands like AKA, according to senior vice president MJ Paschall. “We cater to global citizens, the new Ultra High Net Worth nomads, who are looking for a ‘no strings attached’ lifestyle.” And Craig Partin, chief sales officer for Furnished Quarters adds, “Extended stay has been seen as simple accommodations for a low price but there is a transition to a desire for Class A properties.”
Also, with all the competition, brands are aiming to distinguish themselves with signature products. For instance, in 2013 Hyatt House launched a Very Important Resident (VIR) program which provides guests staying 30 or more nights with a personalized stay experience that includes a Grub Stub, which may be redeemed for a $10 food and beverage credit from the bar or market; and a Scrub Stub, which can be redeemed for one washer and dryer cycle.
“According to the PwC Millennials at Work – Reshaping the Workforce report, 71 percent of Millennials expect to do an overseas assignment during their career,” says T.J. Spencer, vice president-sales for Oakwood Corporate Housing. “Younger travelers, in particular, want to define their own stay experience and embrace the space and freedom that comes with having a whole apartment in which to live. Corporate/serviced apartments also help them maintain their sense of work/life balance and the sense of community.”
Traditional extended stay products do seem to fit right in with current lodging trends. For instance, a kitchen allows for healthier eating on the road. “The ability to cook in-room,” says Thomas J. Bardenett, COO for Extended Stay America, “ranked second as the most important amenity for increased productivity by business travelers in a recent poll.”
And now we see the arrival of the boutique extended stay hotel. Occupying two floors in the mixed-use Packard Building in downtown Philadelphia, the Roost Apartment Hotel has 27 furnished apartments with loftlike floor plans. Antique Turkmen carpets partly cover wood floors. Some kitchens feature island work counters with zinc surfaces. Each apartment has unique art on the walls, and plants on the counters.
The Sharing Factor
Even as extended stay concepts evolve, the rise of the sharing economy looms on the horizon. The BridgeStreet/Airbnb deal, which placed BridgeStreet corporate housing accommodations on Airbnb For Business, was a reflection of both the growing demand for extended stay and the explosive growth of sharing accommodations.
However, extended stay competitors are clearly wary of Airbnb and hope to keep it within a fairly limited niche. “Airbnb is competition for us but we believe the lack of consistency for that product makes it difficult for corporate travel programs to use it,” Partin says. Astorga echoes that point of view: “The pool house that Aunt Molly put on Airbnb may not have reliable WiFi or is located in the wrong neighborhood. Corporate travel managers don’t want to put the safety or convenience of their travelers at risk.“
In Europe, Layton notes, “Airbnb could potentially provide additional supply in markets where there is a limited natural corporate housing or serviced apartments supply. I would stress, however, that if this route is adopted, the required supply checks (local regulations, etc.) are completed for these product in same manner as would be the case for normal supply chain models.”
As for Airbnb itself, it takes this market seriously. According to a spokesperson, “Airbnb is a great option. On our Airbnb for Business platform we see stays as long as several months.”
Some believe that while sharing might not yet be having a big impact, there are things to learn from it. Steven Dominguez, vice president of global brands for Hyatt House, says, “What we are seeing today is that short-term online rentals are not having a material impact because they tend to serve a different customer who is more leisure focused and not derived from corporate demand. More broadly, the success of the sharing economy reflects a change in the way travelers interact with the world. We think there is a lot to learn, so we are leaning into that change – rather than away from it.”
Technology: A Natural Fit
Extended stay guests have always had to maintain contact with their hosts because of needs that differ from traditional hotel guests – groceries, local information, and the like. And technology has now made that easier.
For example RentalsCombined.net is developing an app that will serve as “a concierge in your pocket,” Nicholas says, with mapping, information on local tours and attractions, restaurant reservations and so forth. “Unlike a hotel,” he adds, “there is often no one to ask in a private apartment, so having this in your phone is helpful.”
Still, Nalewenski points out, “One of the keys to extended stay has been personal relationships between staff and guest. We get to know you and your favorite things to put in the fridge and even about your pet. We can do the tech part, but our guests prefer direct contact because we have a relationship with them.”
By Harvey Chipkin