Starting up and growing a new hotel brand means a lot of legwork, and that's exactly what James F. Anhut is doing. As senior vice president and brand maanger of Staybridge Suites, Atlanta-based Holiday Hospitality's entrance into the extended-stay market, Anhut responds to Hotel Strategies' questions whle awaiting a flight to Athens, Greece, from JFK Ariport.
In late March, Staybridge Suites broke ground on its first hotel, which is located in Alpharetta, Ga., a northern suburb of Atlanta. Anhut explains the significance of this location and what he has planned for the brand's future.
Q: The first Staybridge is going to be in Alpharetta. Why this area? Anhut: We are targeting high-visibility locations near high-tech enterprises, regional medical centers, military installations and high-growth residential developments. Alpharetta is indicactive of such a location, and it has the added benefit of being just up the street from our corporate offices. It will be a showplace.
Q: Will Staybridge focus more on the suburban markets or CBDs and why? Anhut: Staybridge Suites will be developed worldwide in suburban markets primarily. This is not to say we will not target CBDs, since many urban markets (especially internationally) generate a significant amount of extended-stay demand. We have a midrise prototype that can be constructed on less than 1.25 acres, and we are willing to consider creative adaptations of buildings in urban locations as long as core elements of the brand concept (e.g. suite configurations) are preserved.
We will also target leisure destination markets worldwide such as Orlando. Our research indicates there is a tremendous opportunity for us to offer a consistent "condo-style" hotel product in leisure locations.
Q: At what other markets are you currently looking? Anhut: Our parent company development team and our franchise community are actively seeking sites in over 100 markets worldwide at this time. We expect construction to commence in over 20 of those markets before the end of the year. We should have between 30 and 40 open hotels by the end of calendar year 1999.
Q: Some Holiday Inn brands try to distinguish themselves from Holiday Inns. Does Staybridge Suites plan to capitalize on the Holiday Inn reputation or distinguish itself from it? Anhut: We have enthusiastically adopted the "by Holiday Inn" tag line as a means of distinguishing our brand from the myriad of would-be extended-stay competitors which have been introduced in the last 24 months. Staybridge Suites by Holiday Inn is from a brand family that the consumer knows and trusts.
Q: How does Staybridge intend to differentiate its hotels from other extended-stays? Anhut: Our biggest differentiator is our affiliation with Holiday Hospitality. No other competitor can replicate this tie. Holiday Hospitality brings a worldclass reservation system, global distribution, worldwide notoriety and Priority Club (frequency program). These features make it easier for guests to stay with us, and they keep our guests coming back.
>From a physical perspective, we will offer all the features and amenities of the upscale competitors, but at a better price. Better value will be delivered because we have designed a more efficient building than the upscale competitors, but we have not compromised on design or amenities.
Q: What will you offer customers of the extended-stay market that others do not? Anhut: Service and amenities will be comparable with the upmarket competitors, including 24-hour front desk, evening hospitality hour, two-line speaker phones with voice mail in all suites, free complimentary breakfast, convenience store and flexible suite floorplans.
Q: What is your strategy for growing the brand? Anhut: We will own hotels for our own account, and we will franchise locations. I suspect we will control 25% to 35% of the system for the forseeable future through direct ownership and management agreements.
Q: I understand that your franchise community and consumer base helped design certain aspects of the hotels. Could you explain how? Anhut: The franchise community had a significant influence on the economic equation vis a vis return on invested capital. They did not design the building, however. The consumers designed the building through a series of focus groups and surveys which were conducted worldwide over the last year. Specifically, the technology and flexible suite plans are a direct result of consumer input.
Q: Will Staybridge grow more through new development or reflagging? Anhut: We will not reflag properties. We do not have any invisible hand nudging us along and forcing growth for growth's sake. We are building a brand, and it is important to adhere to the brand standards. Converting apartment buildings and older generation extended-stay hotels would compromise the integrity of the brand.
Q: Who are your main competitors? Anhut: Domestically, Residence Inn, but only from a distribution perspective. We believe we have a better product. Internationally, we do not have a competitor and, in this regard, we will be very aggressive in our rollout of properties in the international arena. We have approved our first project in Europe already - Brussels, Belgium.
Q: Will all Staybridge Suites adhere to a prototype or change depending on the market? Anhut: Our buildings will take on the local flavor architecturally, but will always incorporate the core brand elements such as residential elevations, inviting great room, 24-hour convenience store, leading edge in-room technology and our signature flexible suite plans, which allow our guests to customize their furniture lay out. Our guests will be able to make it their place!
Q: What segment of the extended-stay market are you targeting? Anhut: We have been careful not to compartmentalize our product by labeling it with a rate position. We are an extended-stay hotel designed to accommodate the needs of extended-stay guests across a fairly broad rate spectrum. Our average rates across the country will likely be between $70 and $80.
Q: Where will Staybridge Suites be by the year 2000? Anhut: This is a new-build brand so realistic projections are in order. We cannot snap our fingers and convert a bunch of hotels overnight. With that in mind we should have 75 hotels open or under construction by the end of 2000. We should have 150 to 200 open by 2002.
Q: How will the rise in virtual employees affect the extended-stay market? Anhut: These guys are our bread and butter. The growth of this market segment is the reason why this product category has proliferated over the last five years.
Q: What do you see happening in the extended-stay market in the next five years and how will this affect your brand? Anhut: Consolidation at the lower end. Slow down of the growth of proprietary brands as their capital runs out and the market waits to see how the brands have been accepted. Probably one more brand at the upper end.
Q: Are there any concerns of overbuilding in the industry and/or segment? Anhut: Not worried about overbuilding since our perspective is global. Most of the inventory added in the last two years has been absorbed at better than fair share penetration. The consumers love this product.
Q: Does Staybridge plan to mostly own or franchise the hotels? If you franchise, will you provide financial services for developing more Staybridge Suites? Anhut: No financial programs yet. We are studying a few. So far the franchise response has been fantastic, not too many people asking for assistance. Our franchise community believes in our ability to bring this brand to market successfully.
Staybridge Suites by Holiday Inn is a stand-alone brand within the Holiday Hospitality portfolio of brands. The hotel has been designed to accommodate the specific needs of extended-stay travelers and will command this unique position within our family of brands. It is a complement to our other brands, which primarily accommodate the needs of short-term guests at varying price points and required amenity levels.