Choice plans 30 extended stay inns to “fill the gap”

At the MainStay Suites Sherwood Park groundbreaking, from left to right: Dan Couture – RVP, Franchise Development (North America), Choice Hotels Intl., Scott Richer – Director, Franchise Development (Canada), Choice Hotels Intl., Hon. Tim Uppal – Member of Parliament, Edmonton - Sherwood Park, Barry Remai – Vice President, Remai Group, Cathy Oleson – Mayor, Strathcona County, Jim Hunker – Manager, Development, Remai Group, and Chris Kornmayer – Senior Director, Marketing, Choice Hotels Intl.

SILVER SPRINGS, MD—The Canadian market is underserved in the extended stay area, particularly in the upper-mid- and economy-market sectors in secondary and tertiary markets.  “There’s a hole in the market,” says Scott Richer director, extended stay development, (Canada)  for Choice Hotels International.

Choice Hotels International plans to plug that hole, by building 30 of its MainStay Suites and Suburban Extended Stay hotels across Canada over the next three years.

That plan is now well underway, with the ground breaking ceremony last month for the first MainStay Suites in Sherwood Park, Alberta.  

MainStay Suites hotels are “well-appointed mid-market extended stay hotels first launched in 1996,” says Chris Kornmayer, senior director, strategy and marketing (upscale and extended stay brands) for   Choice hotels International. Every room comes with a kitchen equipped with sink, microwave, cooktop, dishwasher, refrigerator, coffee-maker, utensils, dishes, and cooking utensils.

“They’re for people on the road awhile, who want all the comforts of home.”

In the U.S. the hotels compete with brands like Candlewood Suites and TownPlace suites. There is only one Candlewood Suites in Montreal, and Marriott announced a push to bring more TownPlace Suites to Canadian secondary markets.

“There is a large opportunity in Canada,” says Richer. Canada is under-served with extended stay hotels. While more than eight per cent of the market in the U.S. is extended stay, these hotels make up less than one per cent of Canadian stock. And almost all Canadian extended stay hotels are upper-scale brands such as Homewood Suites, Residence Inns, Homewood Suites and Staybridge Suites, says Richer,

“There’s a large opportunity for mid-market and economy brands,” he adds. Upscale brands can’t compete economically in secondary and tertiary markets such as Sherwood Park, AB, Thompson, MB or Saguenay, QC.  Choice is an active player in these markets in the transient area.

“We saw a huge supply hole particularly in Canada. There couldn’t have been two brands more ideally suited than MainStay Suites and Suburban Extended Stay.  We started developing [the brands in Canada] in 2006. No one else can offer developers the one-two punch of mid-scale and economy brands that are well appointed and cost effectively designed to meet operator needs, with a massive global reservation system,” he says.

Sixteen Canadian franchises have already been executed, with another eight in the application stage. Sherwood Park is now open, and Choice plans to have three other hotels in Manitoba and Ontario breaking ground between now and spring 2010. Choice forecasts 15 more in the next three years, likely split 50/50 between MainStay Suites and Suburban Extended Stay.

Dan Couture, Choice’s regional vice-president extended stay development for North America, adds that by having two extended stay brands, Choice can go into any market and let the brand be chosen by the demand generator. “If you have one brand, you could be putting a square peg into a round hole.”

Couture, who used to be VP development for Choice Canada, adds that Choice Hotels International is responsible for developing three brands in Canada: MainStay Suites, Suburban Extended Stay, and Cambria Suites, Choice’s luxury lifestyle offering in the mid-upscale category.

Choice Hotels Canada is a master franchisee of Choice Hotels International, owned by CHI and another partner. They handle the remaining seven Choice brands — Comfort, Comfort Suites, Sleep Inns, EconoLodge, Rodeway Inn, Clarion and Quality. There is another affiliated Choice brand called Ascend, comprised of boutique, historic hotels with unique character. There is currently just once Ascend in Canada, in Halifax.

Lean and mean design

Recently MainStay Suites’ designers took a fresh look at the brand, redesigning it with a contemporary, residential look. There’s a MainStay Market by the front desk which stocks snacks, sundries, soft drinks, energy drinks, waters, and fruits depending on the regional demand. The hotels also offer a grab-and-go continental breakfast.

“Three years ago we built a prototype which stripped out anything that was not revenue producing,” says Couture.

The result is a lean and mean hotel. The cost per key is quite often less than transient brands such as Holiday Inn Express, Hampton Inn and Comfort Inn and Suites.  Ninely per cent of the space is revenue generating compared to 70 to 75 per cent of transient brands.

Developers have an “Aha!” moment when they hear this, Couture adds. “They assumed it would cost more to build a MainStay Suites because of the extras — the rooms are bigger and they have a full kitchen.  

“They’re amazed, and they ask, ‘how did you do that?’”

MainStay Suites don’t have large, expensive two-storey lobbies.  “Think of how may guestrooms you are losing on the second floor,” says Couture.  “The lobby is not small, but it’s not a large, expansive space. We have an efficient back-of-the-house. The laundry is located behind the front desk. We’ve thought about the location of the elevators and the corridors in the building.”

“It’s called value engineering,” Richer says, adding that MainStay Suites is still No. 1 in terms of occupancy performance among Choice Hotels International’s 10 hotel brands.

Indeed, the Choice business model is geared at maximizing extended stay business, which has proven to be the most profitable lodging business available. It’s geared to maximize “ESOCC”, the acronym for Extended Stay Occupancy, which is the percentage of overall business where guests stay five or more nights.

“The longer somebody stays, the more efficient the business model,” says Richer.  “There’s no room cleaning, we’re not checking them in or out every day.” The business model marries the hotel business model with that of apartments.

While Choice doesn’t give a range of room rates, they say “typically the ADR is in the upper and mid-market price point relative to the market.”

Suburban Extended Stay is Choice Hotels International’s economy extended stay brand. To date, about half of the extended stay hotels planned for Canada fit this model.