Back to School
I hadn't felt as overmatched since art class in third grade when I was the only one using safety scissors. My first assignment at InterContinental Hotels Group' Extended-Stay Owner Certification class in June was to create an origami crane. Without instructions.
Judging by the looks of the 36 Candlewood Suites and Staybridge Suites owners, I wasn't alone. We were in Atlanta at IHG's Americas headquarters to learn how to run an extended-stay hotel, so why was the first lesson folding paper?
“It proved a point,” says David Wespiser, a managing member of Hotel Development Services and a longtime developer of Staybridge Suites. “You just can't say, ‘Hey, I'm going to do an extended-stay hotel, you have to learn and know the basics of the model and the formula.”
Mike Wohl, a veteran of the extended-stay segment since his start with Residence Inn in 1986, was chosen to lead IHG's schooling. Wohl, a full-time consultant, had the same role from 1997-99 when Staybridge debuted. The task was easier when he could work one-on-one with new franchisees. As the two brands have exploded — Staybridge has 132 properties and another 180 in the pipeline and Candlewood has 181 properties with 230 more coming — that's not quite as easy today.
“We need to ensure the long-term health of these brands,” says Robert Radomski, IHG's vice president, brand management, extended-stay brands. “The next 400 hotels need to perform at or above existing hotels. We needed to do something different, something more than the typical three-hour brand training we had.”
Wohl lectured to an attentive and interactive group. His first creed: “Any transient hotel ideas you have going in, forget them. Forget everything you've learned.”
“This is much more of a local market sales effort to identify and find the right customers than a national reservations sales effort,” he says. It would be easy to fill rooms with transient business using the reservation system, he added, but what do you do when a local business needs a block of rooms for several months and you're sold out one of those nights with transient business?
Wohl stressed the importance of hiring a general manager or director of sales (ideally both) four to six months ahead of opening to find a base of local customers.
Mock resumes and interview questions were included in workbooks so owners could understand how to identify the right people. The pricing model was next as Wohl recommended looking at an extended-stay hotel as three separate smaller hotels: a 100-room property could be divided into 50 studios, 25 one-bedroom suites and 25 two-bedroom suites. Rates should vary by room type and length of stay. Suites should be reserved for extended-stay guests (stays of five nights or more).
“You have to have the fortitude to say we're going to fill these on a weekly and monthly basis and not with transient business,” says student Anand Bhakta, who's on the verge of breaking ground on his first Staybridge Suites, in San Antonio. “You've got to say half your hotel is like an apartment complex.”
Wohl demonstrated the math behind the model with detailed spreadsheets. “You may have 12 different prices in play,” he says. “There's a learning curve. Let the mistake in the first year be low rates and higher extended stays. You can always reverse that; not the other way around.”
If owners start early and understand the local sales effort and pricing model, operating an extended-stay hotel can be much easier because most guests aren't expecting hands-on service. “It's a much different operating model if you do it correctly,” Wohl says. If not, and the bulk of occupancy is transient business, the limited staff — which keeps operating costs down and profits up — will likely fail to keep up with daily expectations of guests.
The schooling ended for me, but owners have the option of continuing with advanced programs. Once owners take the initial class and reach certain performance standards — in RevPAR, quality and extended-stay business — they're certified and can graduate to master's and PhD classes that culminate with a higher set of standards for certification.
Obviously the biggest reward, Radomski says, is these advanced owners will “achieve top-line revenue.” Other small perks are being considered, possibly development incentives, since IHG would love the best owners adding to their portfolios.
I left Atlanta with a much better understanding of extended-stay hotels and a crane that looked more like a paper airplane after a crash landing. My classmates, though, left looking ready to take flight in their new endeavors.
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