Bigger, broader and easier to book, longer term lodging is making waves with business travelers
By Harvey Chipkin
Awareness, accessibility and adaptability are changing the landscape for the extended stay lodging market. Comparing all kinds of longer term lodging is easier than ever, booking in real time is getting more efficient for products like corporate housing, and all kinds of extended stay accommodations worldwide are transforming to keep up with changing travel patterns, and demographics.
For extended stay and other long-term counterparts, the big advantage has always been that most travelers like having more space as well as a kitchen at the same price as a hotel room. Through shared economy options like Airbnb, millions of travelers have been exposed to the idea of staying in an apartment while on the road. Now some providers of longer-term accommodations are even seeing shared economy sites as a lower cost option to online travel agencies.
These are heady times indeed for the extended stay segment. According to hospitality consultants The Highland Group, “Remarkably at this stage in the cycle and with more than 450,000 extended-stay rooms now open, demand growth in 2017 was one of the highest we have ever reported. Beginning mid-2016 the accelerating increase in demand kept occupancy at or near record levels and by mid-2017 reversed the trend of decelerating gains in average daily rate. The result was a 6.8 percent increase in ADR in the last quarter of 2017.”
A few other statistics for extended stay: Room night demand up 8.4 percent over last year; rooms under construction at a record high, up 23 percent YOY; room revenue up $1.4 billion in 2017; and occupancy above 75 percent.
Those numbers are reflected in the success of top brands. Example: Adrian Kurre, global head of Homewood Suites (upscale) and Home2 Suites (midscale) by Hilton notes that those two brands, combined with Embassy Suites by Hilton (upper-upscale) will soon reach a total of 1,000 locations globally.
As awareness of all extended stay products grows, the muddle between extended stay, serviced apartments and corporate housing is becoming less important. Jon Wohlfert, co-CEO of Reside, which owns Aboda and other lodging companies, describes them as “different product types in the same marketplace,” depending on what a building is zoned for. “I feel we’re all in the same family. The same customer may choose extended stay or a serviced apartment depending on their needs during a specific trip.”
For the travel manager, the growth offers broader choice: classic, “American-style” extended stay as provided by mega-brands like IHG, Hilton and Marriott; serviced apartments now easier to find and book through options like the BridgeStreet and MyKey platforms; or sites like Urbandoor serving as “agnostic” sources of housing.
“In a world where the fastest growing segment of our workforce is more likely to travel than buy a home, and who value experience over possessions, corporations need to incorporate simple-to-use, technology solutions into their corporate travel programs,” says Gordon Doell, CEO of the Obasa Group, a Canada-based provider of serviced apartments.
Shared Exposure Now that almost everybody has heard of Airbnb, the option of staying in an apartment has become part of everyday life. All the disruption “is creating awareness in our space,” according to Wohlfert, adding that for many long-term lodging providers, Airbnb is – like the OTAs – another way to market their properties.
Furnished Quarters also works with shared economy sites to augment locations with fewer vacancies, turning those platforms into “just another channel,” says Robin Spindel, vice president-marketing for Furnished Quarters. “The shared economy has affected us by giving people more exposure and understanding of the desire, especially by seasoned travelers, to want to be in a larger space and prepare their own meals,” Spindel explains.
“People with inventory have power,” Wohlfert explains, noting that Reside is strongly interested in acquisitions of other corporate housing companies to build that inventory. He says Reside has buildings it owns, then augments that space with leased apartments.
And extended stay properties are moving into some of the same locations as shared economy options. What was once a suburban product, Kurre says, is expanding quickly to urban “surban” and coastal markets. Homewood Suites and Home2 Suites now have more than 30 hotels in urban locations with more coming soon in Austin, Chicago and Nashville.
Similarly, Diane Mayer, vice president and global brand manager for Residence Inn by Marriott, TownePlace Suites by Marriott, Marriott Executive Apartments and Protea Hotels by Marriott, says those brands are responding to the demand by opening more properties in city-center, urban locations.
At Airbnb itself, Jenny Bulgrin, market manager, corporate mobility, says, “We know when people take extended work trips they want to stay in neighborhoods rather than in hotels/tourist districts. We're seeing a trend where relocating employees stay in an Airbnb before moving into their permanent home.”
Real-time Bookings Get Realer Extended stay horizons are also broadening thanks to new tools that allow travel managers to book corporate housing and serviced apartments in real time. Less than three years after its founding, serviced apartment platform Urbandoor offers book-now inventory in over 120 markets, with instant pricing and availability. CEO Erik Eccles says his goal was “to put a level of confidence on top of a fragmented industry.” However, it is still necessary to put in a request for some rooms. And that may be the case for the foreseeable future because of how the corporate housing marketplace works.
One trend lodging providers of all stripes are dealing with: Travelers want to control their own lodging choices and booking. Like traditional hotels, Eccles says the majority of apartment stays are moving toward the individual booking versus an agent and “we are working hard to help TMCs, corporations and relocation firms offer this experience.”
Urbandoor is far from alone in seeking to facilitate corporate housing bookings. Platforms like MyKey enable managers to compare hotel, extended stay and furnished accommodations in a single site. MyKey founder Doell says this capability allows “both full service evaluation from the travel managers and self-service options for organizations that want the associate/business traveler making their own selections.”
Meanwhile BridgeStreet is transitioning from being a provider of serviced apartments to becoming a platform for booking them. Individual companies are moving in the same direction. Oakwood Worldwide’s new website will feature real-time pricing and inventory, with all inventory available for online booking. The move is part of a “digital transformation” for the venerable company that also features the consolidation of three websites into one simplified portal, streamlining the business process while allowing users to directly access inventory in real-time.
Furnished Quarters plans to launch its real-time booking capacity this summer that aims to be “a user-friendly, mobile-friendly website,” according to Craig Partin, chief sales officer
The key for managers, Doell says, is to find the combination of housing solutions that fits their corporate travel program and travelers’ needs. The platforms that survive “will have simple technology, inventory from a range of secure sources, and safety at the forefront of their service,” Doell contends.
“There will continue to be consolidation and innovation in the B2B and B2C marketplace,” says Tom Buoy, executive vice president-revenue for Extended Stay America. He says the channels or providers that prosper “will be the ones that provide a frictionless experience end-to-end for suppliers, bookers and guests.”
Lobbying To Be More Like Hotels Anyone who hasn’t walked into a hotel in the last 20 years would be stunned by what they see – large communal spaces, guests and visitors having informal meetings, drinks and coffee being served. While extended stay properties have the advantage of the larger rooms with kitchens, they’ve had to respond to these trends.
“Especially with younger travelers,” says Spindel, “there is a desire for shared spaces. That could be a bar, restaurant or expanded fitness center. As we shift inventory to newer buildings there will be more public spaces – even amenities like basketball courts – making these places you never have to leave.”
At the same time hotels are evolving quickly to meet the competition. According to Kurre, an Embassy Suites Atrium Refresh design initiative reimagines the brand’s traditional open-air atrium as “intimate” social lobbies. Similarly, Homewood Suites launched Take Flight to refresh older generation hotels by creating more spaces that encourage interaction.
Even lower-cost extended stay brands are catering to the trends. A new prototype from Extended Stay America has a lobby concept with an open, inviting social space for guests and speedier free WiFi.
The so-called ‘experiential’ revolution has transformed the hotel industry, turning the room into a base for guests to explore their neighborhood. Now extended stay and even corporate housing segments are being swept up in the tide. Residence Inn by Marriott has introduced Residence Inn Mix, which gives guests the opportunity to experience aspects of the local area or, perhaps, stay and socialize and network without leaving the hotel. The program, offered three nights a week, features beer and wine tastings and other events.
And at Airbnb, says Bulgrin, Airbnb Experiences are excursions or other activities designed and led by local hosts.
With more business travelers adjusting their schedules for a ‘bleisure’ experience, Doell says MyKey is working to highlight accommodations that combine business and pleasure, offering guests professionally managed, vacation-friendly accommodations to help them transition from their work week to free time.
Ryan Rivett, CEO of My Place, a relatively new but rapidly growing lower-cost brand, says, “Our response to the trending demand for experiential stays is expressed in the savings. We encourage our guests to ‘Do More,’ and it simply means ‘You’re here to do things, here’s everything you need at a price you’ll be happy with.’”
Urbandoor is working with providers to offer a 24/7 virtual concierge to connect guests directly with the local experience. Eccles says the company is also providing real estate developers with design input to help their buildings attract corporate guests with the amenities they want.
In fact, Urbandoor’s executive in charge of hospitality came from Starwood’s luxury brands. As Eccles puts it, “the design bar is getting raised a lot. An incredible apartment stay experience for guests is where everything is thought of in advance and you don’t need anything more.”
And, as extended stay properties and corporate housing providers pick up on hotel trends, the largest hotel company is looking in the reverse direction. Marriott International is testing home rentals in London through its Tribute Portfolio brand, working with London-based property management company Hostmaker to enable a dedicated Tribute Portfolio Homes booking website.
Marriott promises that each of its more than 200 home-rental properties will feature key amenities, including a full kitchen, high-speed WiFi, in-unit laundry, 24-hour check-in and 24/7 support.
Going Global The need for global access to housing is only continuing to grow. Furnished Quarters recently opened an office in London, partly to service people who are coming to the US and partly for customers heading to Europe. “The idea is if you’re a global company you need somebody available at all times,” Spindel explains.
The international landscape is growing quickly. “It doesn’t operate like the US, so it’s important a travel manager’s partner understands and offers the right solutions,” Eccles says. For example, overseas vertical operators have dedicated inventory in serviced apartments versus the traditional US approach where operators take individual temporary leases in large apartment complexes.
Brands are going all out to adapt their products to international markets. Homewood Suites opened its first hotel featuring a Latin American prototype in Silao, Mexico. The differences are in design, use of space (smaller but still with separate rooms), as well as a full-service bar and lounge space offering lunch and dinner menus. The company is also expanding in Asia and the Middle East.
The Corporate Contribution Many extended stay changes, not surprisingly, are in response to what operators hear from corporate travel managers, mobility managers and human resources executives. Spindel says that among other exciting developments for travel managers are custom websites or traveler sites that can become a centralized point of booking and information for corporate clients. There, they can see policies, service requests and communicate with teams in one place.
Approximately 45 percent of Extended Stay America’s revenues come from business travel, says Buoy, which includes managed travel programs that represent approximately 15 percent of that total. Over the coming year or so, “we’d like to see that grow significantly,” he says. “It’s getting the door opened for the managed travel program and then working with the travel manager to figure out how to get our hotels to be the preferred properties of travelers.”
At Airbnb, says Bulgrin, “The way we look at it, we want to work with travel managers and employees to help them achieve what they’re looking for in each specific stay.”
And Rivett’s advice for managers is, “No matter where the search begins, look for flexibility.” The My Place national sales team is constantly setting up long-term national accounts with needs-based terms across multiple locations. Online RFP forms for corporate and group bookings have also grown significantly, he says, “indicating the amount of demand for flexible, needs-based agreements.”
Kirk Hart, vice president of brand operations, Hawthorn Suites by Wyndham, says that the classic pricing standard has been the longer the stay, the lower the rate, but adds that the number of tiers, the discount between tiers and the length of each tier is seeing more flexibility now as hotel owners try to maximize revenue.
The future looks extremely bright for every manner of extended stay, whether it is classic brands targeting transients, serviced apartments adapting to new demographics or travel managers full taking advantage of all their options. Eccles says that there is a need to move away from the idea of “hotel alternative” to one of “defining the vertical as ‘flexible apartment living.’”