2023 BTN Hotel Survey
IHG Captures Top Spot for Extended Stay Accommodations
IHG’s classic brands Candlewood Suites and Staybridge Suites comprise the bulk of its extended-stay portfolio. The company added the Atwell Suites concept in 2019 and it’s beginning to add options in key cities. Hilton and Marriott took second and third place, respectively, in BTN's 2023 Hotel Survey results for extended stay.
Corporate travel buyers anecdotally have told BTN that their business travelers are taking longer but fewer trips as business travel continues to change patterns going into 2024. Much of that travel is still absorbed by traditional hotels according to Mark Skinner, partner at the Highland Group, a research firm that tracks hotel performance including the extended stay segment. That means there’s room to grow—in terms of awareness around extended stay in the corporate travel sector and in product availability in the hotel industry—and plenty of big hoteliers are jumping on that extended stay property development train. More on that later.
In the meantime, corporate clients who already have extended stay brands in their hotel programs have rated IHG’s extended stay brands and the sales teams that deliver those partnerships as the best among the competitors already in the market. Hilton’s extended stay offerings Homewood Suites and Home2Suites captured second place. Marriott’s extended stay portfolio Residence Inn, Townplace Suites, Element by Westin and Marriott Executive Apartments reeled in third.
As IHG did in the traditional hotels category, where it captured fourth place, the hotel group and sales team showed its best performance in having a partnership approach to corporate business and in delivering quality data and reporting. It squarely beat out the competition in these two criteria for extended stay, scoring a 5.12 and 4.9 respectively. It also bested all others in “traveler safety and security” as well as “sales empowerment and responsiveness.”
IHG global sales SVP Mark Sergot said that the company works closely with corporate clients in the extended stay space “to understand their needs and negotiate rates that work for both parties. We also align sales, account teams, and revenue managers to ensure we are providing the best possible service.”
Sergot said the extended stay option had “grown in popularity” among corporate clients and the company sees more corporates understanding the opportunity and adding the option to their programs.
In particular, he said, “with the rise of remote work, employees are choosing to work from different locations for longer periods of time, making extended stay hotels more attractive.”
He also cited infrastructure and project teams as avid users of extended stay properties and also included healthcare workers who are doing more traveling to areas of need as well as travelers participating in training and development programs.
Like all hoteliers, he said, “We also see trends in blended stay, where guests arrive for business but then stay longer for personal travel.”
IHG is investing in its existing extended stay portfolio with an ongoing design refresh called Beacon 4.0 for Candlewood and Next Generation 7.0 for Staybridge. About a third of the portfolio will have redesigned exteriors, public spaces and guest rooms by the end of 2023. The brands continue to attract hotel developers as well. There are 371 existing Candlewood Suites with a pipeline for 138 more. Staybridge Suites has 319 open properties and a pipeline of 162. Atwell Suites, its newest extended stay brand has opened in Denver and Miami (pictured), with 35 more properties in the pipeline, one of which is scheduled to open an Austin airport location this fall.
“When underwriting terms start loosening again—which they ultimately will—you’ll likely see faster supply growth for extended stay hotels than the overall hotel market.”
– Highland Group's Mark Skinner
Competition Heats Up
IHG’s performance in the extended stay market has growing competition as the hotel investment community has locked into the opportunities this segment represents. Many current investments like Hilton’s Project H3 and Marriott’s Studio Res are still in the concept stages or have rolled out one or two properties. Hyatt Studios will be another contender in a new generation of extended stay options… when any of these come online in earnest.
That eventuality depends on funding and interest rates, which Skinner said have not been favorable to developers for traditional or extended stay properties. However, he said, “when underwriting terms start loosening again—which they ultimately will—you’ll likely see faster supply growth for extended stay hotels than the overall hotel market.”
The hotel investment community has been attracted by the resilience the sector showed during the pandemic and by the wider profit margins that extended stay properties enjoy. “The operating model is more efficient. Returns are higher,” said Skinner. “So you're going to attract hotel developers looking for higher returns. You'll also attract those looking to diversify their portfolio.”
Hotel companies, for sure, are keying into that. Hilton, Hyatt and Marriott are all realizing the portfolio opportunity they can achieve by floating down into market segments they have not yet explored.
“[Hyatt Studios] is the first brand that sits in the upper midscale. Everything else sits above that,” said Hyatt VP global sales Gus Vonderheide. “So we will finally dip our toes into an area that we really have left untapped.” Hyatt’s current extended stay brand is Hyatt House with approximately 120 locations. Hyatt Studios currently has two locations opening in Alabama and California in 2024 but is planned to open “hundreds” over the next three years, according to Vonderheide.
Hilton and Marriott both will go deeper into the affordable midscale. Hilton announced Project H3 in June, positioned to serve “workforce travelers,” according to the company’s website. Marriott announced its Studio Res product just weeks later, which global sales SVP Tammy Routh is excited to realize within the Marriott brand portfolio “because we didn’t really have anything to serve that segment of the market.”
IHG’s Atwell Studios is slightly bucking that trend, remaining in an upper midscale sweetspot but targeting trendy neighborhoods like Brickell in Miami and up-and-coming business markets like Austin, Charlotte and Denver. Choice Hotels will be another hotel company to watch in terms of extended stay, expanding its Woodspring Suites locations and debuting Everhome Suites last November in a play for the suburban market.
Asked who he thought would be better positioned to capture share with corporate clients, Skinner left it up to the market to decide. “It’s not like these are new entrants,” he said. “These are all highly experience extended stay brand operators.”
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