In this article, you will get all information regarding Choice Targets Corp. Travel, Delves Further into Extended Stay – United States KNews.MEDIA
Choice Hotels’ Anna Scozzafava discusses:
- Post-pandemic extended-stay demand contours
- Trends and challenges in the extended-stay market
- Solving persistent staffing shortages
Choice Hotels International in 2022 opened its newest extended-stay brand, Everhome Suites, its fourth in the sector. Extended-stay brands proved sturdy during the pandemic due to a base of essential workers, but Choice now looks to broaden the brands’ corporate appeal in an uncertain economic environment. Choice Hotels VP and general manager of extended stay brands Anna Scozzafava talked with BTN’s Angelique Platas about the hotel company’s strategy. Edited excerpts follow.
BTN: Are you seeing an uptick in corporate travel within the extended-stay market? What is your strategy for business travel?
Anna Scozzafava: We are actually seeing that tick up. We never lost a lot of our guests through the pandemic … given that there were more essential workers—traveling nurses working for corporate hospitals, trades and salespeople—all of those types of folks that have always been on the road. But we are seeing some more of those macro trends starting to pick up. If you think about the restoring of American manufacturing, this trend started back in like 2017 when we started seeing more skilled trades going remote on job sites for weeks or months at a time, which has really set up our portfolio and the extended-stay segment in general to capture that demand. We expect that to continue now, particularly business travel as you start to think about the supply chain moving domestically, nationwide investment again from the infrastructure bill, the CHIPS [and Science] Act, etc., so really seeing more of those longer-stay guests.
Some other things starting to pick up more recently that we’re watching right now are high-level consulting relocation training and retail openings. All of those corporate business sectors are really starting to come to a head … across the back half of 2022 and into 2023. We are starting to see a pickup across a variety of segments in corporate business travel. So our strategy is obviously to go after them is as hard as we can. We have a national sales team who is dedicated to extended-stay exclusively.
BTN: Is the extended-stay sales team integrated into the overall Choice Hotels sales team?
Scozzafava: They do sit within the broader national sales organization, but they have a dedicated leader and a dedicated team that only focuses on that vertical—each one of those team members have different verticals they’re focused on. They do obviously cross-collaborate on accounts that way, but coming into the Choice national sales team, the leads get passed appropriately.
BTN: We just saw a report from The Highland Group that indicated U.S. extended-stay occupancy in 2022 was down due to rising rates. Have you seen that?
Scozzafava: In our WoodSpring Suites brand, no. We’re actually still outperforming the economy extended-stay segment according to The Highland Group data. That brand in particular has been just an outstanding performer and really resilient across the pandemic to now. Choice in general I think [has] really rebounded. We saw some softness in some markets, but we’re pretty aggressive about maintaining the right rate and revenue management strategy across tiers. I think for extended stay … we’ve been really great about figuring out how many weekly stays we have versus monthly stays and making sure that we’re kind of maximizing rates that fit that need so that we’re not losing out on occupancy.
We opened our first Everhome Suites in September 2022 in Corona, Calif. We have our next one opening right outside of Atlanta later this year, and we have over 50 of them in the pipeline. Interest is really high. That property is running really high occupancy.
BTN: What is your team investing in and focusing on for 2023 and beyond?
Scozzafava: We have a lot that we’re doing. Over the past five years for extended stay in particular, we’ve built out an infrastructure of nearly 60 associates that are dedicated to nothing but extended stay. We have development, real-estate teams, lending support, performance support, marketing, and global sales strategy. We’re looking to continue to invest in the right people and technology and tools and other kind of support resources for the segment.
From a technology standpoint, we continue to build extended-stay capabilities into our proprietary system that helps with some of the rate management and revenue management that we talked about. Looking at different things like, how do we maximize profitability for our owners? … And making sure that they can maintain the operating profits that they’re used to in extended stay, which are typically higher than you would find in a transient hotel. WoodSpring Suites in 2022, I believe, had at 59.7 percent [gross operating profit]. So they’re really high operating margins.
Obviously, wages have gone up a little bit to help attract and retain, but the other beautiful thing about extended stay is the labor model is lean on purpose. You’re not cleaning rooms every day. The turnover is so much less.”
BTN: We’ve been hearing about hotel staffing shortages for a while now. Can you tell me about that within Choice’s extended-stay properties?
Scozzafava: We definitely struggled with that early on, as [was] common across the industry, but we have a lean operating model. In the economy extended-stay space, you might only have five to seven full-time employees. So we’ve been able to get back there for a while. Folks were using some contract labor, but we’re not seeing that so much anymore. They’re able to staff up. Obviously, wages have gone up a little bit to help attract and retain, but the other beautiful thing about extended stay is the labor model is lean on purpose. You’re not cleaning rooms every day. The turnover is so much less. If you’re a guest staying for many weeks, we may come into your room once a week and clean your room, or ever-other week, depending on preference and location. That helps alleviate a lot of stress on that labor model in particular and on the actual associates working on property. It’s just not as strenuous as some other segments in the hotel industry.
BTN: What are some of the challenges you’re seeing in the extended-stay market in general or regarding the corporate travel sector?
Scozzafava: If you think about interest rates and just the costs overall, I do think there could be a slight headwind around some corporate travel as we move forward. [It’s about] really making sure that we’re pricing our product and our stays correctly to continue to capture that business. We’re still seeing a lot of conference business, and that doesn’t seem to necessarily be slowing down tremendously. Given the types of travelers we have that are essential in terms of traveling nurses, construction, those types of things, we tend to be a little more insulated. But we’re mindful and watchful as we head into the future, given the economic environment overall.
BTN: Regarding conference travel: Is it small and simple meetings or larger conferences?
Scozzafava: We’re seeing all of it. We have some of our midscale products next to corporate offices, and they’re using our smaller training rooms, and they’re bringing people in for those types of meetings that may not be located in the headquarters. And if you attended any of the travel industry conferences, you’ll know they’re very well attended. Everything … from sales meetings [and] training meetings, those types of things, it does not appear that any of that business is disappearing at this point.
Choice Targets Corp. Travel, Delves Further into Extended Stay – United States KNews.MEDIA
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