While extended stay guests have long been part of the hotel industry, the purpose-built segment has exploded in North America and particularly in the US within the last ten years. This has been a hotel developer's nirvana. Who wouldn't have been attracted to the segment?

Depending on whose figures you rely on, extended stay guests make up about six to ten percent of the overall traveling public and a greater percentage of the industry's sold room nights. Yet even today, extended stay rooms make up about less than ten percent of the North American total hotel room count. Even though this segment of the industry has experienced great growth by the adding of new brands and creating new price/quality tiers it still can not be ignored. Higher occupancies than any industry segment; and the highest profit margins in the industry are likely factors for this continuing trend.

Jack DeBoer is generally credited with creating the extended stay concept in the 1970s with the Residence Inn brand (sold several times over and now part of Marriott International). He has since created several other successful extended stay brands and is now on his fourth. Residence Inn by Marriott is now the largest extended stay brand boasting over 350 properties.

Several factors are important to the extended stay lodging product. Suites should include cooking facilities at least a microwave oven and two-burner stovetop and outfitted with related kitchen service ware (pots, pans glasses, dishes, etc.). Restaurants are out and hospitality centers for guests to enjoy complimentary breakfasts and evening social hours along with the social interaction highly prized by extended stay guests. Meeting rooms are out and exercise facilities, business centers and new office spaces for a beefed-up sales team are in. Unique direct selling methods are employed to reach extended stay guests and their decision-makers. Visit the author on-line at www.shgonline.com

Staffing models and operational procedures from the front of the house to the heart of the house are changed to meet the needs of long-term guests. Media advertising is stopped. Staff is energized for the new high levels of guest contact. Bus tours, conference and group business is put on the back burner to focus on guests staying at least five nights.

The lure of higher occupancies and better bottom lines brought about by these extended stay guests has created a rush by some transient, full-service and select-service hotel owners and operators to get on the extended stay bandwagon. However, these hotels, adding a small refrigerator here and a 30-night rate there are not usually fully prepared to meet the needs of the segment's guests and may not ultimately create satisfied customers. A complete commitment to the philosophical, physical plant and long-term guest focus is necessary for success. Success can be achieved through a dedicated purpose-built product or by converting a facility designed for long-term living, such as apartments and condominiums, into extended stay hotels. Hotel operators that jump into the fray without the know-how or physical plant to support them will find themselves up against several problems.

Owners' and operators' knowledge of the extended stay segment is crucial to their success. Unlike transient hotels, extended stay operations cannot count on their brand's reservation system to produce high volume of room nights or the brand's identity to pull guests off the street. Good market conditions will not put extended stay guests in the beds. Even though extended stay hotels can look, and in many ways feel, like any other hotel, the operational differences behind the scenes are vast. The most difficult philosophical change involves letting go of the bird-in-the-hand theory that is the basis of most hotels' yield management principles. This advance booking mentality is not conducive to the long-term guests' booking and travel patterns. Not only must operators abandon previous ideas about yield management, they must embrace and enact the upside down yield management principles that often make an extended stay hotel successful, including holding a certain number of rooms from sale until all possible extended stay guests are booked, and only then releasing any remaining inventory to non-extended stay guests.

In addition, managing an extended stay hotel's inventory restrictions and sell-through availability is vital to remove the usual market conditions of the daily occupancy peeks and valleys that could hinder an extended stay hotel's success. Complete knowledge of the extended stay guest's travel patterns is necessary to make these critical and profit impacting decisions.

The most important area of expertise is perhaps the most central to the success of extended stay hotels. It is the very unglamorous, specialized and tedious selling process practiced to attract guests and the decision-makers. No national trade shows to attend; no glamorous FAM trips; and very few three-hour lunches with reservation makers attempting to curry the favor of their phone calls.

It is also important for an operator to understand which operational procedures must change to better accommodate the extended stay guest. Operators who are not prepared to dedicate their facilities to the segment may find themselves dealing with unhappy guests and lost revenue. Purpose-built facilities are designed around guests' needs for separate and divided spaces in which to be productive, sleep and relax. The guests require a high degree of contact with all the hotel associates. They require contact with both hourly and managerial associates at early breakfasts and late social hours each day. The hotel's service levels have to be geared toward the guest's need for home-like services. Room attendants must treat the space as someone's home and act as the guest's personal housekeeper. That attendant must take on added responsibilities like folding clothes neatly and putting them away. Extended stay guests also require that the physical property be maintained at a very high level. Long-term guests spot guest room flaws easily. The small tear in the wall vinyl in room 302 eats away at the guests' quality perception each and every day of their 30 night stay. A lack of an operator's complete attention to these and other such details will create dissatisfied guests.

The extended stay segment is not one that a hotel owner and/or operator can be in part-time without heading toward lost revenue. A dedication to the principles of extended stay yield management is needed so property managers can maintain the industry occupancy premiums that make this segment so successful. Long-term guests expect facilities designed to provide the living spaces of home at rates lower than corporate hotels in exchange for their long-term reservations. They do not use hotel profit centers such as lounges, restaurants, pay-per-view movies and banquet facilities like a typical transient or other type of lodging business. The unique direct selling methods needed for the extended stay segment are costly on a per-booked-room basis and the selling process requires constant management guidance for what is a very long sales cycle. A single extended stay booking can take months to develop from initial research to an in-house guest.

The lodging industry has experienced some very positive economic times and no segment has seen more attention and growth than the extended stay market. It provides great rewards to owners and operators such as higher than market occupancies and the highest profit margins of any industry segment. But do not forget, these hotels are distinctively different both physically and operationally from hotels in other industry segments. Extended stay hotels are sales and product driven operations that rely less on market conditions, location and brand identity and more on knowledge and experience within this specialized sector.