There’s probably no better indication of the hotel industry’s (and country’s) healthy obsession with cost control than Residence Inn’s approach to its latest generation of property upgrades. The 622-unit chain, the long-time leader in the upscale extended-stay segment, recently introduced a new cutting-edge suite renovation package that brand executives say costs about $15,000 per key, which is “not a penny” more than the price of the brand’s previous upgrade package.

The new look, which includes a number of features that meet evolving guest expectations in an extended-stay product, will be phased in as properties come due for their standard renovations at six-year intervals. Residence Inn officials say abut 300 properties, or nearly half the system, will get the new look in the next five years. The brand is also revamping its new-construction prototype, but chose to focus on the renovation package first since it will have a bigger and quicker impact on consumer perceptions of the brand.

The brand surveyed its key stakeholders—owners, operators and guests—to drive the scope and particulars of the renovation. The results are elements geared to the brand’s core customers and accomplished in a cost-effective way.

“Our owners were adamant the new package had to be cost neutral relative to the existing renovation scheme,” said Katie Tyson, former vice president of the Residence Inn brand, in introducing the concept at a recent general managers’ conference. Tyson has since left Marriott, and the company has not yet named a replacement. “While we added some features to the room, we were able to keep costs down by delaying some other CapEx requirements. For example, for the most part, vinyl in the bathrooms has held up so we’ve delayed the requirement to change it.”

Listening to the Guest
The new scheme includes some big-picture items, as well as a few subtle touches aimed at the guest experience. One key finding from the research, said Tyson, is that space is the number-one consideration for the typical extended stay guest.

“We also found work is a crucial part of their stay,” she said. “A typical guest is in the room 12 hours a day, and awake for five of those hours. The bulk of their time is spent in either the work or living area so that helped us drive our priorities.”

One significant research-driven change is placement of the desk in the suite. Currently, the desk is near the entrance to the guestroom. In the new scheme, a large (nearly seven-foot long) newly designed desk is now positioned in front of the window to connect guests with the outdoors as much as possible. It also features a task bar with four outlets spaced far apart to accommodate today’s bulky charging units. Guests can use a storage unit at the end of the desk to store work materials or other personal items.

“We wondered at first whether such a large desk was necessary,” says Deborah Huguely, a Marriott vice president of product development, architecture and construction for the company’s select-serve brands. “But we found guests like to spread out their work and often have several devices with them (printers, laptops, etc.), so the larger space is needed and appreciated.”

One new item unique to the Residence design is what Tyson called “shed the day,” a console at the entrance of the suite with a tray guests can use to unload their keys, cellphones and other items. Changes in the bathroom include a new backlit mirror, shelving to store toiletries and a new shower curtain with opaque top to allow more light into the shower compartment.

The design, which Huguely likens to the chic but timeless feel of Pottery Barn, also reflects a change in guest attitudes toward the design of guest units. “Years ago, guests told us we needed to be consistent from hotel to hotel because they wanted to trust us,” said Tyson. “Now they’ve said we trust you but we need some variety. Having one hotel look just like the next doesn’t contribute to my enjoyment.”

To make that happen, the new design package gives owners a wide range of design options in artwork, carpet, wall colors and draperies. This mix-and-match, Garanimals-like approach yields more than 40 possible design iterations. Huguely says research shows guests are typically in one of two modes when they’re in their rooms: “a ramp-up mode where they’re getting ready for the day ahead and a wind-down mode where they’re decompressing. This reminded us of sunrise and sunset, so the colors in the unit reflect those times of day.”

The kitchen is accented with a hot blue color, whereas the living room is a neutral color, the work area has powerful wood tones, and the bedroom has a calming look. Another revelation from research: guests don’t use the lounge chair in the living area so instead the new package features a sectional sofa bed.

The Process
Development of the new renovation package was a two-year-plus process that involved several Marriott departments along with the brand’s owners association. The association, and in particular its design and construction committee, worked closely with brand management to develop the concept and then perform the tough task of making it cost neutral.

“Every franchisee in the hotel industry has felt amenity creep in the last 10 to 15 years, so our mantra with this project was it had to be zero sum,” says Mark Stebbins, chairman of the association and co-chairman of the design and construction committee. His firm, Schleicher & Stebbins Hotels, owns 21 hotels, including seven Residence Inns, one of which will undergo the new renovation this fall. The committee had multiple brainstorming sessions with Residence Inn management to develop the new scheme based on the research findings.

“After all that work, we developed a concept we all liked, and then we considered the costs,” he says. “The key was deciding on priorities and what things could be eliminated. I’m not sure this outcome would have been possible three or four years ago.”

The brand has been updating its product in other areas. A 2008 initiative looked at the lobby, a space that formerly was only used during breakfast hours. The new design uses sliding doors to hide the buffet after breakfast. Newly renovated lobbies have soft seating and study pods guests can use for work or small meetings. Outdoors, a formerly bland patio now has a living room atmosphere with either a fire pit or water feature.

Last year, Residence Inn upgraded its breakfast program, again at no additional operating cost. Tyson says the new program features fewer but higher quality items and more rotational items. Popular breakfast restaurants like Panera were the inspiration for the program.

Growth Plans
The brand showed a significant rebound in performance in 2010. Occupancy was up nearly 5%, although rates were about flat. The chain showed a clear uptick in one of its key metrics, the percentage of occupancy that is extended stay (ESOCC), or five nights or more. That figure climbed nearly five points to 43.7%, and a few properties in the system posted ESOCC levels above 70% last year.

The chain continues to grow, adding 15 properties last year, bringing the brand roster to more than 620 hotels. The first international Residence Inn opened in 2009 in San Jose, Costa Rica. A second, overseas property opens this year in Munich, Germany and later in Edinburgh, Scotland; Bahrain; Ecuador; Panama; and Saudi Arabia.

“Just as we do in the U.S., we’re looking at markets where there is pent-up, extended-stay demand,” Tyson said of the brand’s international growth plans. “In Germany, for example, there are a lot of extended-stay travelers who now are staying in transient hotels.”

The product is slightly different country by country based on culture, space availability, usage patterns, etc. In Europe, where space is premium, guest units are smaller; in the Middle East the rooms and properties tend to be larger.

“And in the Middle East, the male business traveler doesn’t want to see the kitchen because they don’t cook,” says Tyson. “In Latin America, travelers tend to bring their facilities and do a lot of cooking so there we spec higher-quality kitchen equipment.

“In every market we plan to enter, we do quantitative and qualitative research before we design the product for that country. The last thing we want to do is slap a North American solution on an international product. The execution needs to be locally relevant. A good example is the Munich property, which will have a bar.”