As hoteliers globally increasingly focus on leaner operations as a way to combat increasing operational costs and guest preferences continue to evolve in relation to increased blending of business and leisure travel, the extended stay segment has emerged as a standout. And the segment is set to continue to benefit as industry leaders seek to take advantage of this growing lucrative market.
Increasing interest
Philip Lassman, vice president – head of development Northern Europe at Accor highlights the burgeoning potential of the extended stay market. “In the last few years, we’ve noticed that extended stay has huge potential and it’s something that we’re focusing on quite a lot. The extended stay market has exploded since Covid and we’ve jumped on that bandwagon.” he says.
Anna Corkill, Hyatt's regional vice president of development for the UK & Ireland echoes this sentiment, pointing out the market’s diversity: “There are different sorts of people looking at extended stay – from business travellers to students – so there’s a huge market to capture.”
Accor’s approach includes creating sub-brands which expand the extended stay offering across its portfolio.
“Rather than just focusing on Adagio as our extended stay brand, we’ve done extended stay options for all of our other brands as well; we have offshoots of Swissotel, Movenpick, Pullman, Novotel Living, Mercure Living etc. We want to increase the extended stay offering for our partners. We’re attracting huge pools of interested parties and people are very keen to jump on and invest in extended stay.”
And Wyndham is also working on growing its presence in the extended stay market, building on its brand portfolio which includes ECHO Suites and Hawthorne, and following its entry into the upscale extended stay market in early 2024 through a brand partnership with WaterWalk. Late last year, the hotel company entered into a ten-year development relationship with residential hospitality management company Reside to expand its upscale extended stay offering in the US, introducing five residence-style hotels to the Wyndham brand and marking the debut of Wyndham Residence in the US.
Reside co-founder Lee Curtis says the focus with the platform is that Wyndham and Reside continue to grow into every major metropolitan area in the United States.
“I’m already getting calls for other parts of the world but our initial focus is in the US where there is tremendous opportunity. In 2025, I feel very confident we’ll have at least 20-plus properties and we’re excited for the growth potential. We have about 70 different projects that we’re looking at in different parts of the country including New Orleans, Tampa, San Diego, Chicago and New York.”
Hybrid models
But while the extended stay segment offers significant growth potential, it comes with its own set of challenges. However, experts say that while there’s a perception of extended stay being more expensive due needing more space than a normal hotel room, this doesn’t have to be an issue.
“From a build point of view and from a cost and efficiency point of view, combining extended stay offerings with traditional hotels really does work. What we’ve found is in some hotels is that we could put some extended stay suites in/some larger rooms with kitchenettes,” says Corkill.
She explains further. “For extended stay, it’s just about finding the right value engineering. Five years ago, everyone thought they had to have a 31 sqm room for extended stay but now we’ve realised that you can actually fit facilities like a kitchenette into 24 to 26 sqm.”
She adds that dual-purpose properties reduce costs by sharing amenities like entrances and reception areas.
Lassman agrees, noting that while extended stay is great from an efficiency and staffing perspective, it’s important to keep an eye on maintaining said efficiency.
“The whole point of having an extended stay hotel is that it’s supposed to be more efficient as an operation for the owner but if guests are then staying for one night, then it defeats that purpose. The solution is to tailor the product by having a mixture of extended stay rooms and regular rooms – so when guests are staying just one night, you just put them in a regular room.”
He adds: “The guest is happy because the brand promise is still being fulfilled, and the owner has the flexibility to put guests in the relevant accommodation and still maintain efficiency.”
“Having the ability to have different room types to cater for different types of guests is very attractive,” adds Matt Walton, head of development UK & Ireland at IHG.
Market-specific adaptation
Separately, Lassman stresses the importance of adapting extended stay products to the relevant market, noting that the extended stay market varies significantly across regions and therefore requires tailored approaches.
“In the US, people stay much longer but Europe is getting smaller in a sense due to improved connectivity. So extended stay products need to be more relevant for the new dynamics.”
Walton reinforces the importance of local dynamics: “When looking at how extended stay offerings should be adapted, it comes down to the fundamental dynamics of what that micro location is, what the guest type is, and the demand,” he says.
Of the new Reside residence-style hotels, Curtis says: “Every single one of our products will look different, feel different and will have a different footprint and will take on the characteristics of the area it’s in. It’s not a one-size-fits-all, standardised product. And that’s a key element to creating an experience versus just a place to stay and lay your head.”
To ensure success, Walton advises further, emphasizing the importance of transparency and clear communication around offerings to ensure guest satisfaction while achieving operational efficiency.
“It’s just being very clear about what the offering is and having a consistent approach with that as well as with the quality of stay and service,” he says.
Looking to the future, Lassman predicts significant evolution in the extended stay market, driven by technology and ESG considerations.
“I think there’s going to be a lot more evolution in the extended stay market over the next five years than in the last 20 or 30 years. It’s about artificial intelligence, booking channels and how you service the guests and interact with them. There’s going to be a big demand for, and focus on how the hotel of the future works alongside all the technology that’s coming and all the ESG and sustainability considerations.”
Curtis notes that while the extended stay market is getting more crowded downstream, there’s opportunity in the upper upscale market.
“In upper upscale, there isn’t a lot out there that’s scaled. There will also be some interesting decisions to be made on the older extended stay products that are out there. So going up and looking down are the two places we’re going to see more extended stay growth.”