Due to its impressive performance during the pandemic, the extended-stay segment has become a darling of hotel investors. Extended Stay America (ESA) capitalized on this opportunity by launching two new brands—Extended Stay America Premier Suites and Extended Stay America Select Suites. It also rebranded its flagship brand to Extended Stay America Suites.
“One of the things that we’ve just come to grips with is that there are customers with extended-stay needs across the whole spectrum of rate and preferences,” said Kelly Poling, EVP/chief commercial officer, ESA, “So, in order to maintain our position as the leaders in extended-stay, we want to make sure that we cover all of these various price points and brand tiers, but stay solely focused on the extended-stay guest.
The company rebranded its core hotels to Extended Stay America Suites in February 2021. “We wanted to better communicate our product offering—a hotel with a kitchen that feels more like a home than a hotel—to guests,” said Poling.
At the same time, the company launched Extended Stay America Premier Suites, a higher-end brand that will feature more amenities than its predecessor, such as “signature bedding, a free healthy breakfast bar, more storage space and things that are more important to a higher-rated extended-stay guest,” she noted.
Mark Williams, managing director, franchise development, said the Premier Suites brand sparked interest from potential franchisees from the get-go.
“We started off with 13 hotels, and we also renovated and rebranded another 15 existing Extended Stay America Suites to meet the needs of the markets they were in,” he said. “That caught the attention of our franchisees or prospective franchisees like nobody’s business. They wanted to be in that top tier.”
He added that the company currently has 66 executed deals for Premier Suites, including nine under construction, and “we anticipate several being open by the end of 2023, which includes two openings this March.”
Among the deals already in place includes a development agreement for 15 Premier Suites hotels throughout the Western U.S. with Concord Hospitality and Whitman Peterson.
“They’ve got a very fine timeline to find locations, which they will run through my team, myself and then our executive team before signing off,” said Williams. “They’ve got a plan to open properties in Denver, Phoenix, Salt Lake City and Las Vegas. Prior to the signing, we worked with them over a period of time to help identify locations because we’ve got franchisees and company stores in each of these markets. So, we have outlined, ‘Here’s where we need to go and why you need to go there,’ and we feel it’s a great opportunity for us to get some larger numbers in some high barrier-to-entry markets without using our own balance sheet.”
The latest brand, which joined the ESA family last September, is Extended Stay America Select Suites. It is geared toward price-conscious guests and longer stays, and offers basic services and amenities with the same apartment-like room design as the flagship brand.
The new brand launched with more than 100 hotels which were formerly WoodSpring Suites properties acquired by ESA owners The Blackstone Group and Starwood Capital Group early last year.
“Being able to launch the Select Suites brands with approximately 100 hotels from the [start]is a truly unique differentiator in the industry because usually when the hotel companies launch a brand, they’re selling a dream, a vision and a pipeline,” said Poling. “We launched a brand at 100-plus hotels, so we’re immediately at scale, which I think is a significant differentiator for Select Suites.”
Williams noted that Select Suites is generating a lot of interest. “We’re hearing from multi-unit developers, experienced extended-stay franchisees and capital partners wanting to efficiently get into the segment,” he said. “They are interested in Select Suites because of its cost to construct or convert; its sustainability-efficient labor model; and its positioning to attract longer-term stays.”
Another group interested in Select Suites are franchisees that have started construction on a Premier Suites property and have a number of assets in their portfolio.
“They like extended-stay, and they want to participate in both segments,” said Williams. “They’re looking at markets where a Premier Suites won’t satisfy the need. So, they’re coming to us saying, ‘Can we build [a Select Suites], or could we do a conversion?’ and the answer is ‘yes.’ We just need to evaluate what the market looks like.”
While ESA historically has put properties in major markets—”because that’s where the investors wanted to go,” noted Williams—the company has an opportunity to go into secondary and tertiary markets with the new brands.
“We don’t need to have 124-125 keys,” he said. “We can put smaller properties in tertiary markets that are justified. So, we now have three brands that we could easily do that with. You can’t do it with Premier in every one of these markets, but you can do it with Extended Stay America Suites and Select Suites. So, we have a lot of opportunity and a lot of white space.”
Poling added, “Between the projects that are already being constructed, under contract or soon to be under contract, we’re on pace to basically double our franchise operation by 2024.”
