Who are the players converting older properties into extended-stay hotels?
“I have an opportunity to buy a hotel property that has closed due to competition in the area. This is a former Quality Inn/Best Western property and has a large 11-acre campus (pool, restaurant, valet areas, etc.), and was built in 1984. I would like to know the players in the hospitality industry that are converting these older properties into extended-stay motel properties. Who can I contact who can help me open this now-closed property utilizing the extended-stay model?”
If you are knowledgeable on the market and understand the demand sources for extended-stay, then you are the best person for this conversion. Every market across the United States has a few regional operators that understand this business. These extended-stay owners operate from three to 10 projects and are not the typical hotel owner. Most are always hunting to expand their portfolio as the cash flow provided by these projects is excellent and the owner can benefit from expanded scale. You need local market knowledge to know if the conversion will be successful and the intensive nature of this business eliminates most national developers.
You need local market knowledge to know if the conversion will be successful and the intensive nature of this business eliminates most national developers.
A local architect, one who understands the municipality’s codes and is skilled in land planning, would be your best source of guidance on converting an existing hotel to an extended-stay model. Experience with the local municipality is absolutely paramount as many cities and counties are not welcoming to non-purpose-built extended-stay hotels. Also, some developers have engaged local multi-family operators and consultants that know specific markets for their expertise.
As your conversion appears to be in a prime location with extra acreage, some alternative uses could be possible. Developing a restaurant or a national chain drug store that could be leased can complement your business. Eliminating rooms, if removing some of the existing building is possible, may enable you to monetize the sale of a larger parcel for other uses that may also benefit your extended-stay guest.
At the end of the day, you are not running a hotel nor an apartment complex, but a hybrid. Similarities do exist with developing a hotel, but apartment codes and feasibility do require you to look at much more and engage counsel outside of our hotel community.
Answered by Burton Brooks, principal at Mumford Company
In the Know With LODGING is an advice column for hoteliers, managers, and team members at all levels of hospitality. Experts will answer questions on everything from operations and F&B to finance and marketing. Have a question? Submit it here.