HB ON THE SCENE: ESA eyes future with new-build

GIBSONTON, FL—For the first time in more than 12 years, Extended Stay America (ESA) opened a new-build property, with a new design, here.

The company-owned, four-story Extended Stay America Gibsonton will serve as a new prototype for potential franchisees as part of the company’s franchise development program, which it created in 2017 to attract its first third-party owners.

Jim Alderman, chief development officer, ESA, said that the company’s design team, led by Paul Fraser, VP, construction and design, started with the brand’s essence.

“Together, we took an old design and went back to the roots of ESA,” said Alderman. “Paul used a lot of what he had learned from owning 20,000-some-odd rooms: the wear and tear that happens in a room, the pattern of guest usage, even the pattern of traffic in how a room gets cleaned. All of that was taken into consideration in coming up with a prototype that is just exactly the size it needs to be.”

The new prototype has a number of changes from the previous design, but at the core, both meet guests’ needs.

“If you take a look at the old ESA and the new ESA, functionally, they serve the same purpose—full-size refrigerator, kitchen, microwave, stove, bed, a place for storage,” he said, adding that there have also been purposeful changes: storage space under the beds instead of a fabric dust ruffle that holds cooking odors; a state-of-the-art fresh air push system and a stale air pull system; and an air conditioner that knows if the room is occupied or not, and that can be controlled with a phone. “With 124 rooms, the GM can say ‘I don’t think it needs to be 63 in there because there is no one in the room,’” he said.

Many of the new additions and changes to the prototype came from the lessons learned in renovating many other ESA properties. “We did a $1-billion renovation,” said Fraser. “It took us about seven years to complete all of the hotels. We are starting with a clean slate. It is not often that you get an absolutely clean whiteboard to come in and start from scratch with all those lessons learned. We are living this, breathing this, just like [franchisees]will be if they choose to build an ESA.”

The new prototype had to meet guests’ needs, while also make sense economically for owners. “When we first did it, our prototype was great, but we realized that it was $139,000 a key,” said Alderman. “No one is going to go for ESA at $139,000 a key. We removed an enormous amount of the cost. All-in on this property, including land and everything, is about $100,000 a key, but construction is about $61,000, including building and site development, depending on the size of the lot.”

He continued, “It is an economy of operation based on economy of service and economy of design. Everything is pointed toward creating as much of a profit in the business model for a franchisee to execute. To me, it is a perfect place for people to start their career in ownership because it is not a very difficult model to pick up.”

One word of caution, he said, is to stay true to the extended-stay ethos. “You do have to pay attention to it—other extended-stay brands might go a little away from the typical path that they should follow; you are trying to seek an extended-stay guest,” he said. “You want to sell this room once for 30 days, not 30 times for one day.”

The company is going to continue updating the prototype. “We are always evaluating and adjusting the prototype to make it better, and we are going to continue to learn along the way,” Fraser said. “I think franchisees should have confidence that our development and franchise departments are going to work with them to find solutions that work, and we are going to provide answers when they have questions or problems because we are building it.”

The new hotel and prototype are part of a number of recent changes for the company, with Bruce Haase named president/CEO in November. “The board was exploring some strategic options for the company and what to potentially do with it,” said Alderman. “They decided that Bruce Haase, who was on our board at the time, would be a terrific leader to take us forward given his background as a hotelier in the extended-stay business specifically; he also has the background of building an organization that was franchised before and had owned and operated its own properties.”

The move to more franchisees is going to take some time but, he said, “We certainly have to give them every bit of care that we give all of our own properties and, in some cases, it is going to take even more because we know this so well that we know it by rote.”

Randy Fox, EVP, property operations, who joined the company at the same time as Haase, sees the extended-stay category as a great draw for franchisees. “It is easy to sell,” he said. “You quote the profit margins to them and you get their attention right away. Then when you get into the detail and you explain the way the model works and that the length of stay is longer, then they get it. Some nightly hotels try to execute it in their box, but they don’t have room for the kitchen. They can’t do what we’ve done over here with square footage or utilities.”

While it was 12 years between the opening of the last new-build and this one, the plans are to grow at a rapid pace. “We are going to open one a month between now and the end of the year,” he said. “Roughly 12 this year, maybe another four in the first quarter of next year. That is a big focus; we have to ramp these up and make it a success. The first franchised property will open in March or April.” HB

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