EXTENDED STAY OPPORTUNITIES Leading the Market
EXTENDED STAY MARKET The extended stay segment is a great opportunity for you and your portfolio. This fastgrowing lodging segment is outperforming the hotel industry as a whole, and is less complex and more cost-efficient to operate than traditional hotels due to lower staffing requirements,* The extended stay segment has consistently reported an increase in demand year-over-year for the past eight years.*
Strong Demand Guests require extended stay lodging based upon everyday changes in their lives. Extended stay brands are increasingly more popular for a variety of reasons including: • Employees engaged in temporary consulting jobs and longer term assignments. • Relocation due to change of employment. • Job training that requires being away from home for longer periods of time. • Life changes that may affect living accommodations.
Higher Occupancy Over the past 8 years, extended stay hotels have enjoyed signifcantly higher occupancy percentage points ranging from 9.8 to 14.9 percentage points above the overall U.S. hotel industry.*
Lower Operating Costs Strong performance numbers can be attributed to higher occupancy, longer stays and substantially lower payroll/operating costs compared to traditional transient hotels.* (For example, you can staff a 100 room extended stay hotel with only 10 to 14 employees.)
*Source: Extended Stay statistics provided by The Highland Group – 2012 U.S. Extended Stay Lodging Market Report. The Highland Group is a global business consulting firm. Unless otherwise noted, all figures and statistics in this document are from internal data of Choice Hotels International, Inc. This advertising is not an offering. For New York: This advertisement is not an offering. An offering can only be made by a prospectus filed first with the Department of Law of the State of New York. Such filing does not constitute approval by the Department of Law : For Minnesota: MainStay Suites #F-3269, Suburban Extended Stay Hotel #F-5274. Choice Hotels International, Inc., 1 Choice Hotels Circle, Rockville, MD 20850, franchise_sales@choicehotels.com
STRENGTH OF THE EXTENDED STAY SEGMENT
Occupancy Premiums+ Average 2012
Average Daily Rate Growth* Percentage Increase (2011-2012)
80
Choice Hotels® is focused on best 6
60
Increase %
Occupancy %
8
74.8%
70
61.4%
50
4
40
6.9%
0
Extended Stay Segment
practices in the extended stay segment, with concentrated efforts
8
in boosting guest satisfaction,
4.2% 2
US Hotel Industry
EXTENDED STAY COMMITMENT
6
80 increasing brand awareness
and delivering strong brand
4
US Hotel 2 Industry
Extended Stay Segment
70 performance. 80
At Choice Hotels, we have two 60 popular extended stay brands – 70
0
MainStay Suites®, a growing 50
8.0
7.5 8.0
6.5
7.5
6.0
7.0
5.5
6.5
RevPAR %
7.0
5.0
midscale brand, and 60
Revenue Per Available Room Growth* (2011-2012 increase)
Suburban Extended Stay Hotel®, one 40 of the top economy extended stay 50 franchises in the U.S. We have value-engineered our prototypes 40 7.1%
to deliver efficient designs and low operating costs. As one of the world’s leading
6.0
4.5
5.5
4.0
5.0
6.0%
franchisors with over 70 years
6.1%
experience and over 6,700
5.6%
properties open or under development worldwide, Choice Hotels has the expertise,
4.5
4.0
the advertising and sales support, US Industry Economy Segment
Economy Extended Stay Segment
U.S. Industry Midscale Segment
Midscale Extended Stay Segment
the reservations and the systems in place to lead the extended stay segment.
*Source: U.S. Hotel Industry performance data provided by Smith Travel Hotel in Review, year-end 2012. Smith Travel Research (STR) is leader in hotel benchmarking and tracks supply and demand data for the hotel industry. Extended stay segment performance data provided by The Highland Group - 2012 U.S. Extended Stay Lodging Market Report. The Highland Group is a global business consulting firm.
EXTENDED STAY BRANDS — SPECIALIZED TALENT, DEDICATED SUPPORT.
Choice Hotels has made a strong commitment to the extended stay market. We’ve purposely looked at the way an extended stay hotel’s business model operates and developed a support team unique to each area of the business. From franchise development to design and construction, brand performance to marketing and reservations, each hotel will have a dedicated support person whose sole responsibility is to consult and service each area of an extended stay franchise. In addition to the customized extended stay divisional support, we also offer extensive corporate benefits for all of our properties. We work together with your business in mind.
Franchise Development Our development team works for you, connecting you with our network of professionals from financial planning and feasibility consultants to general contractors and other qualified vendors you will need along the way. Most of all, they will work with you to help identify a target guest market while concentrating on local extended stay demand generators.
Design & Construction As you plan, design, build and furnish your hotel, you will be supported by a team to help you through the process. Each franchisee will receive design manuals, prototype architectural drawings and a selection of interior design packages, along with added support through site visits during construction. Our Procurement Services team assists franchisees by providing purchasing services that enhance brand consistency and help hotel owners navigate the complex purchasing process.
Brand Performance Operations Your hotel will be assigned a Brand Performance Consultant (BPC) who will become an invaluable resource for your hotel as you open and operate. Strategies designed to enhance your hotel’s potential for a return on investment and optimize performance are only part of the expertise and guidance you will receive. Your BPC will help you understand your local market, guide you toward developing extended stay business, provide advice to help you develop revenue and occupancy strategies that best suit your hotel. Prior to opening, you will be asked to complete a Local Market Assessment (LMA) as well as a Hotel Opening Guide (HOG), both of which are critical milestones to assist in ramping up your hotel before and after opening. In addition to your BPC, the Brand Performance Operations team provides support through Project Managers who will assist your hotel in learning how to use our property management software choiceADVANTAGE®, help you to understand Brand Standards, provide solicitations support and advises your hotel with Quality Assurance (QA) concerns. Project Managers also conduct Virtual Visits ensuring your hotel has all of the essential components to perform well.
Training In February 2012, Choice Hotels earned Training Magazine’s Top 125 Best Practice Award for its sales training program, which goes beyond recording guest orders to understanding and responding to their needs. We offer exceptional training options at our corporate training facility as well as training at your hotel. These focused programs include: •
Total Lodging by Choice (TLC) – Gives hotel owners and General Managers the fundamental knowledge, skills, and resources that are needed for them to operate their hotels.
•
Hospitality Operations Success Training (HOST)–a five-day certification program centered on how to efficiently manage a Choice brand property. HOST is designed for employees who are responsible for the daily operation and management of a property, including General Managers, Assistant General Managers, Front Desk Managers or other employees who may be moving to or training for management positions within the hotel.
•
Owner’s Orientation – Provides a franchisee with a bird’s eye view of Choice Hotels Extended Stay Resources.
•
Choice Training Days – A regional program where our professionals assist franchisees in key areas such as guest satisfaction, housekeeping, maintenance and monitoring quality assurance.
MARKETING Robust sales and marketing activities are key ingredients in the performance of extended stay hotels. The extended stay team develops and executes targeted marketing initiatives geared exclusively to extended stay hotel guests.
Extended Stay Field Marketing Field Marketing works closely with the owner, your hotel’s BPC, GM and sales team to build strong local marketing strategies to target your local demand generators. “Backyard” tactical marketing is vital to the performance of all extended stay hotels. With the support of field marketing, your hotel will have the ability to opt into pay-for-play marketing services that each hotel can customize to maximize local marketing impact.
National Advertising Industry-leading multi-brand marketing campaigns work to tackle changing consumer buying patterns and deliver incremental business. Over $208 million was spent system-wide on programs and promotions in 2012 designed to increase brand awareness and drive hotel reservations.* There were 12 billion impressions delivered through advertising to ChoiceHotels.com in 2012.
Global Sales Global Sales provides a bold and coordinated effort that includes aggressive business to business programs, and strategic account management all designed to drive customer relationships with increased exposure and delivered results to your hotel. Our Global Account Directors (GADs) concentrate their efforts on the top high volume corporate accounts, tour operators, travel agents, meeting planners and negotiate with consortia and mega-travel agencies to include Choice Hotels worldwide locations in the consortia’s private hotel programs.
Extended Stay Global Account Directors Our commitment to cultivating 5+ nights of extended stay business is channeled through our dedicated team of extended stay focused Global Account Directors. Their focus includes: •
Mining backyard accounts for 5+ nights of business to foster new relationships.
•
An Extended Stay Hotel Referral Program.
•
Extended Stay Group Sales Desk – Identified corporate accounts can contact our group desk to book 5+ rooms for 5+ nights.
Choice Privileges® Rewards Programs Our guest loyalty program is designed to generate repeat business. It is one of the most competitive growing loyalty programs in the industry, with more than 17 million members that drive reservations to your hotels.
*Source: Figure is based on accounting records of the System Fee in 2012 and has been compiled in a manner consistent with generally acceptable accounting principles. See applicable Franchise Disclosure Document dated April 1, 2013.
Reservations The Choice Hotels central reservation system (CRS) delivers strong reservations. In 2012, we booked more than $2.8 billion in system-wide gross room reservations for our family of brands.* •
choicehotels.com – Our recently redesigned comprehensive, multilingual website. The new site makes it easier to find and book the right hotel for our guests. Some of the enhanced features of the site include: simple, powerful search options and easily sorted results; rate comparison and packages according to needs and interests; and saved favorites for faster future booking.
•
800.4CHOICE - We have proprietary call centers located around the world, staffed with trained sales agents who deliver high conversion rates, and are commission free.
•
Internet Distributors - Choice Hotels has negotiated agreements with leading third-party Internet travel websites.
•
Global Distribution Systems (GDS) - Our vast GDS relationships and technology enable us to optimize delivery, minimize complexity and reduce costs.
* Soure: Figure reflects revenues delivered through the Choice Hotels Central Reservation System (CRS) as well as non-CRS marketing channerls. See applicable Franchise Disclosure Document dated April 1st, 2013.
FEATURES: •
Studio and one-bedroom suites
•
Fully-equipped kitchen in every room: Refrigerator-freezer Microwave 2-burner cooktop Sink with disposal Dishwasher Coffee maker Cookware and utensils •
Free high-speed Internet access
•
Free cable TV, including premium movie channels
•
Weekly housekeeping service
•
Guest laundry facility
•
Iron and ironing board
•
Sleeper sofa
•
Community room
•
Exercise facility
•
Free weekday continental breakfast
A STRONG BRAND FOR THE GROWING EXTENDED STAY MIDSCALE SEGMENT
MainStay Suites offers guests a relaxing and spacious environment with a residential feel and valueadded amenities for the special needs of long term stays at a reasonable cost. MainStay Suites enjoys higher occupancy rates and greater operational efficiency than traditional brands due to the extended stay business model.
Hotel Design The hotel exterior has been refined to present a classic residential appearance. The efficient and compact building footprint creates shorter public corridors and many desirable corner rooms with two windows to provide cross ventilation and more natural light. The warm and inviting interior design focuses on guest comfort and convenience and includes a comfortable community room with big screen television and Internet nook, complimentary continental breakfast bar, fitness center, guest laundry facilities and the MainStay Market, offering food and sundries for sale.
Guestrooms Every suite provides guests with the luxuries of home including a sleeper sofa, work/dining table, 32� flat panel television with premium cable service, walk-in dressing area and closet, pillow-top mattresses and free high-speed Internet access. The fully-equipped kitchens contain full-size refrigerator/freezers, ceramic glass cooktops, built-in microwaves, coffeemakers, dishes and cookware. Several attractive interior decor scheme packages are available at no charge to the franchisee.
ENTRY COSTS AND ONGOING FEES INITIAL FEE:
$300 per suite, minimum $30,000
ROYALTY FEE:
5% of Gross Room Revenues (GRR)
SYSTEM FEE:
2.5% of GRR
TERM:
The standard term of the agreement is 10 years
FEATURES: •
Studios with one or two beds
• Well-equipped kitchen in every room: Refrigerator-freezer Microwave 2-burner cooktop Sink Coffee maker Cookware and utensils •
Free high-speed Internet access
•
Free cable TV, including premium movie channels
•
Weekly housekeeping service
•
Guest laundry facility
ONE OF THE TOP FRANCHISED, ECONOMY EXTENDED STAY BRANDS IN THE U.S.
The Suburban Extended Stay Hotel brand is one of the top brands in the economy segment, by providing the essentials of home at attractive long-term rates. Suburban Extended Stay Hotel offers developers low investment requirements, higher occupancies and low operating costs than other hotel segments. Suburban速 is well positioned to participate in the expansion now underway in the extended stay hotel market. Our portfolio of properties combine the promising concept of extended stay hotels with the best of limited service.
Hotel Design Utilizing a welcoming residential/apartment style of architecture, the hotels feature single suites, queen suites and double-double suites, convenient on-site guest laundry and a large vending area. The flexible floorplan concept allows for easy local market driven design modifications such as revised guestroom mix, or the addition of a fitness center, meeting space or swimming pool.
Guestroom Features All guestrooms feature well-equipped kitchens, complete with full-size refrigerator/freezer, twoburner cooktop, microwave oven, coffee maker, dishes, cookware and utensils. The built-in table/ desk provides both work space and a comfortable dining area. An upholstered leisure chair is provided for guest relaxation.
ENTRY COSTS AND ONGOING FEES INITIAL FEE:
$225 per suite, minimum $30,000
ROYALTY FEE:
5% of Gross Room Revenues (GRR)
SYSTEM FEE:
2.5% of GRR
TERM:
The standard term of the agreement is 10 years
CHOICE HOTELS EXTENDED STAY BENEFITS: • Strong Demand • High Occupancy • Low Operating Costs • Powerful Advertising, Sales and Operational Support
Contact us today: franchise_sales@choicehotels.com or visit ChoiceHotelsFranchise.com.
© 2013 Choice Hotels International, Inc. All rights reserved. 13-320/08/13
CH-ESBRO