Extended Stay America occupies a unique niche in the US hospitality market, with 629 properties located across 44 states and three more in Canada. Although Extended Stay might be considered a hotel, the locations’ fully equipped kitchens and other amenities prompt guests to settle in and treat their rooms like a second home or apartment.
With nightly rates similar to those of midtier hotel chains, Extended Stay stands alone with a brand-value proposition purposely designed for guests looking to stay three weeks or longer. Unsurprisingly, that’s what most of them end up doing. Michael Fruin, senior vice president of real estate and development, isn’t content with that, however. He is handling two simultaneous chainwide upgrades to improve the guest experience and enhance brand value.
Fruin joined Extended Stay in March 2015, after spending more than 23 years with Marriott, and immediately embarked on a project to design the product of the future for the brand.
“We hired brand experts in this space that I had worked with successfully in the past and did a deep dive on our existing and aspirational customer base,” he says of the update. “We took a good, hard look at the competitive landscape to determine where we should position our future brand, being mindful to incorporate hallmark items in the current portfolio through the next round of renovations.”
In other words, Extended Stay was already in the throes of a major renovation project that began in 2011. Fruin says the 500th unit was completed in May 2016 and, as of press time, the entire portfolio was scheduled to be done by April 2017.
“This was a somewhat of a catch-up phase,” he says. “We’re just level-setting the portfolio across all 629 hotels to help us deliver a better, more consistent stay. Going forward, we will be much more strategic about our renovation spend—perhaps expanding the scope and quality of materials in markets that will generate a timely ROI.”
That’s where the company’s new prototype comes in.
“We don’t want to create a second brand, but rather we want to attract weekly business where we can command a higher rate and leverage our efficient business model,” he says. “There’s a lot of room between us and some of the other purpose-built, extended-stay competition that, incidentally, is not nearly as targeted toward long-term customers as we are.”
In 2016, the average daily rate for Extended Stay properties was shy of $70. The new prototype can and will bump that number above $80, but thanks to customer research, Fruin says it will still deliver a better value than many of the company’s competitors.
For instance, Fruin and his team learned that storage presented issues for guests.
“People were not maximizing the use of kitchen cabinetry,” he says. “For one thing, they didn’t always know if those spaces behind closed doors were clean. Two, they were afraid they may leave something behind. It wasn’t convenient for them to get in and out of cabinets either, so they would leave things on the countertop instead and not have anywhere else to put them.”
The new prototype kitchens feature open shelves instead of cabinets above the sink. The effect is a more open and brighter space. Guests can also see everything at a glance—not to mention create an unintentional design element. The open shelves give the the feel of a New York City loft apartment.
“We’re also looking at incorporating storage underneath the bed, which has historically been dead space,” Fruin says. “Just having more shelving and hooks around the room for day-to-day use is another big thing. Additionally, guests will enjoy the convenience of a shelf at the entrance with a charging station so they can leave their phones, keys, and other items there when they come into the room.”
Fruin says the layout of a room can affect guest perception. For example, in the research, guests said that if they could see their bed or closet from the kitchen or living room area, they felt as if they were living in a bedroom or dorm. As a result, the new “King,” “King Sofa,” and “Double Queen” concepts feature reoriented beds, sleeping alcoves that have multiple LCD TVs, and more efficient dining, living, and sleeping spaces.
“Just creating that little bit of separation has gotten us amazing feedback,” Fruin says. “Each room feels like a real apartment now.”
There’s also a new common-space design, which Fruin says he’s particularly excited about, as Extended Stay has never offered such a design in its properties before.
“In all my years in the hotel industry, I learned it was difficult to drive incremental rates without creating space in the product for guests to get out of the room and feel a sense of community,” he says.
An activity as mundane as laundry—which anyone staying three weeks at a time likely will do—is now an opportunity to socialize. Fruin says consultants researched laundromats that combine laundry, food, beverage, and other activities to develop a communal design that allows guests to meet and interact around the lobby and fitness area.
“We have to keep reminding ourselves we’re not just a hotel, but that we’re also like an apartment building,” Fruin says. “We’re straddling those two environments, and our customer is very different from a regular hotel customer. For our guests, having a fully equipped kitchen and onsite laundry makes away-from-home extended living as close to home as possible.”
The strategy appears to be working. Since hosting an “Investor Day” in New York City in June 2016 during which some of the new concepts were unveiled, the reaction to Extended Stay’s new prototype has been strong from both domestic and foreign investors.
“We’ve spoken with a number of partners, and are working to get all the paperwork in place so we can move forward with it,” Fruin says. “I’ve personally talked to a number of partners I’ve dealt with in the past, and they’re very interested in our model. A lot of them are experienced in the extended-stay arena and know the efficiencies of our model.”
Fruin says the first prototype could be in the ground by the end of 2017, and activity should ramp up quickly thereafter—perhaps at a rate of 30–50 hotels per year. Of course, before he knows it, Fruin likely will have to get started on plans for more updates. He knows better than anyone that the wants and needs of the extended-stay traveler are always changing.
