This year, Extended Stay America celebrates its 30th anniversary.
For decades, the hotel company has offered affordable long-term stay accommodations to a range of guests with its signature brand, known today as Extended Stay America Suites.
But in recent years, the company expanded its offerings with two new brands: Extended Stay America Premier Suites at the upper end of midscale, and Extended Stay America Select Suites at the economy level.
The new brands, coupled with strong continued demand in the sector, pose a growth opportunity for Extended Stay America. As the company looks ahead to the next 30 years, CEO Greg Juceam sat down with Hotel Dive to share how the extended stay segment will evolve in the short term and where his company is looking to fill white space.
This interview has been edited for clarity and brevity.
HOTEL DIVE: How will extended stay demand shift in 2025, and, in turn, impact Extended Stay America’s growth strategy?
GREG JUCEAM: When we look at our guest mix, there are three main buckets that we analyze, and each of them has a little bit of a different outlook for the year ahead.
Our largest bucket comprises guests who are in some type of housing transition. Either they are waiting to move into an apartment, waiting for a home to be constructed or repaired or, for whatever reason, they're just not ready at the moment to commit to longer-term housing options.
When interest rates are high, apartment rates also tend to be high, and consumers get concerned about making these long-term housing commitments, which is sort of the environment that we’re in today. People typically choose to maintain optionality. Often that means checking into an extended stay hotel for an indefinite period of time until the dust settles.
“There continues to be demand bifurcation in the hotel industry, not just for extended stay hotels but overall, based on a consumer’s individual economic means.”
Greg Juceam
Extended Stay America CEO
Additionally, Extended Stay America and other extended stay providers play an important role when communities are impacted by storms, fires and other weather events, and we've seen that more recently. So, demand for transitional housing remains really high for 2025.
The second bucket is the business travel bucket, from which we house people who are staying for weeks or months at a time. It could be a corporate entity, a government entity or even a nonprofit.
The demand is steady overall. We’ve seen demand increasing for infrastructure projects and construction, especially as the interest rates began to recede. The temporary workforce such as traveling nurses isn't as strong as it was during COVID-19 but still remains a good source of demand. And then small businesses, which will benefit more over time with lower interest rates as they materialize, also remain steady.
The last piece is the most challenging piece in today's environment, and it's our smallest bucket making up less than 20% of our business at Extended Stay America: leisure travel.
There continues to be demand bifurcation in the hotel industry, not just for extended stay hotels but overall, based on a consumer’s individual economic means. Those with strong personal balance sheets are still traveling, and paying big rates for luxury hotels. But at the lower end, those with less disposable income are holding back on nonessential expenses, which can include vacation travel. So, for 2025, our expectation is that the leisure economy segment traveler will be less robust than it was in recent years past.
There’s been a recent push in the upscale extended stay space by several hotel players. Is this an area that Extended Stay America is exploring?
We are not currently working on anything that would push us into any segment above where we are today, with one brand in the economy segment and two brands in midscale.
I haven't seen an upscale or, particularly, luxury extended stay company that's been able to see truly long average length of stay at a higher price point. It'll be interesting to see how some of these upscale and luxury extended stay hotel brands do.
The multifamily component is interesting. That's one of the neat things about the extended stay industry is it's a cousin to multifamily, and so it creates a little bit more optionality on the real estate side and perhaps on the operating side.
But, the key to Extended Stay America has always been its long average length of stay, and our view is that comes from affordability. That's where the masses are.
What does Extended Stay America’s growth trajectory look like, and are there specific markets the company is targeting?
Because we are mainly an affordable extended stay brand, we don't currently have a big urban supply. We tend to operate and see the demand come more from secondary and tertiary markets.
We’re targeting all of the U.S. We're in 46 states today, and we're entertaining, specifically from our franchise division, opportunities for people to build and convert hotels [all over].
There's been an influx of interest in the “smile states” — everything from Arizona to Texas to the Carolinas and Florida. That continues to be where the highest demand comes from developers. But I'm also seeing demand in the mountain states, some of which is coming amid needs for more workforce housing. A ski resort could potentially need a place to house workers because they can't afford to live in the town where the resort may be, but some of the mountain demand is just pure population growth shifts.
What is Extended Stay America’s white space?
For the first 25 years of our company, we were just one brand — what we refer to as Extended Stay America Suites today. But over the last four years, we've developed two new brands: Extended Stay America Premier Suites, at the upper end of midscale; and Extended Stay America Select Suites, which is a pure economy brand. So, we have the opportunity now to fill in white space, not just with our long-standing core brand, but at a higher price point and a lower price point.
For Premier Suites, which was born in 2021, we built the first 15 properties with our own capital. We then converted and renovated 15 more properties and up-tiered them into the brand. We just celebrated its 50th hotel opening in just four years, and we have another 50 new-build Premieres under contract to open in the next two and a half years or so. Our pure economy brand Extended Stay America Select Suites, born in 2022, has more than 220 hotels, and it's just newly available for franchising. We're gaining a great deal of interest for conversion properties into that brand because of its simple operating model.
Both of them are growing very quickly. But I think the key point is that unlike some public companies, where net unit growth is their primary goal, our primary goal at Extended Stay America is performance. We believe that proliferation follows performance, so we will aim to grow, and I believe we will, but not at any cost. We want to make sure that all the hotels that are in the system are good representatives of our brand.
