Hospitality companies have come up against major hurdles in the wake of the COVID-19 pandemic. Some brands, though, have been better positioned to weather the storm than others. Extended Stay America (ESA) is one such brand. Every ESA hotel in the U.S. has remained open throughout the pandemic. And, according to Judi Bikulege, ESA’s chief investment officer, the brand is already seeing the effects of a rebound. LODGING touched base with Bikulege, as well as Mark Williams, managing director, franchise development, to talk about how the company is managing through the COVID crisis.
How are things at ESA right now?
Judi Bikulege (JB): First, I just want to say that we feel so blessed that of all of the hotels in our system—which is about 634 right now—have not had to close due to COVID. We’re really happy about that, and we’re already seeing the beginnings of a rebound. We have more hotels with 90 percent occupancy than we do hotels with an occupancy under 50 percent. It’s an interesting and exciting time for us. And, of course, I was really excited to welcome a true franchise veteran to the team in Mark. He’s going to be a great asset to the company and to our franchise organization.
That’s not to say that ESA needs to be introduced to the market, but we need to be able to articulate what a strong asset proposition we are to the industry. We also need to ensure that the franchise community recognizes that we are very unique in our offerings. We’re the only brand out there that does nothing but extended stay. It’s our bread and butter and we live and breathe it. It’s not just a subset of what we are, it is who we are. And, I think that we want to take this opportunity to ensure that that’s really driven home and communicated to the entire franchise community out there.
Mark, what are some of your top priorities as someone new to the team?
Mark Williams (MW):
Well, first, it’s getting to know everyone! I’ve spent a lot of time talking to people since coming on board. Beyond that, as Judi said, we are entirely focused on the extended-stay market, which gives us a lot of clarity in our mission and influences all that we’ve been working on, like our new hotel prototype.
Having such a clear focus works. I had a conversation this morning with one of the gentlemen involved in new construction, and these projects are coming in on time and on budget, which is rare in the hotel industry.
As we saw in the worst time in the hotel business, now, the extended-stay segment is performing extremely well—better than other segments. And ESA with our systems is out performing the segment. We look forward to continuing to share our story with the franchise community. ESA is the right choice, the right brand, and the right model to ensure franchisees meet their numbers regardless of the economic conditions.
I know ESA has been working on a lot of conversions lately. Can you talk about that a bit?
JB: When ESA first started franchising hotels in 2017, we were mostly focused on creating a new-build prototype that would meet the needs of extended-stay developers. We acquired 17 sites to build—from the ground up—the new prototype that we were going to present to the franchising community. Since the fourth quarter of last year, we’ve opened four new-construction properties and we have nine more in various stages of construction. We’ve also opened a few assets in the midst of this pandemic, and they’re doing well, all things considered.
But in addition to the new builds, we’ve also had seven conversions from different hotel brands, four of which were done by franchisees. We wanted to do some conversions so that we could really establish a proof of concept and put our money where our mouth is. We also wanted the developer community to know that it’s something that can be done. Our basic model is very simple—every room has to have a kitchen, the property has to have a guest laundry facility, it has to have a lobby or a public space that is large enough to provide for grab-and-go breakfast. And now we have Mark, and he and his team will gladly assist any franchisees who want to look at potential conversion to see if a change would work for both of us. We have no problem with that.
MW: I just want to add that with any brand, it makes sense that many will have a preference for new construction because it’s new. However, everything Extended Stay America has done since its inception has been going outside the box a little bit, and doing conversions falls into that category. We just want to be sure that the franchise community knows what we’re doing and knows that we’ve tested our concepts and have put our money where our mouth is. We have a portfolio of owned hotels, so we’re going through this process along with them.
JB: And I want to reiterate that we are 100 percent dedicated to extended-stay. All of our sales and marketing efforts go toward drawing that extended-stay guest. And all of our best practices, our labor models, our operation models, they’re all dedicated to extended-stay guests and that market. Our product is designed and all of our offering reflect the needs of the long-term guest. When we were working on the prototype, we talked to the extended-stay community. We asked them what they wanted. We asked them what was important to them, and then we developed our new building around their needs and what was important to them. So, its unique in the fact that even our reservation and our call centers, they’re not selling to a transient community. They’re not selling to group business or large corporate functions. Everything is catered to that 30-plus-night stay.