Extended Stay America has signed a development agreement with Concord Hospitality and Whitman Peterson to develop 15 new Extended Stay America Premier Suites hotels in major Western U.S. markets including Denver, Phoenix, Las Vegas and Salt Lake City. The properties will be owned by Whitman Peterson and Concord and managed by Concord.
“The amount of interest in the ESA Premier Suites brand from developers and extended-stay investors has far exceeded our expectations,” said Greg Juceam, president and CEO of Extended Stay America, noting the “relative success” of the segment during the pandemic. “Now that we've made this opportunity available to the franchise community, preferably through new-build but also through conversions of higher-quality assets, the pipeline is gaining traction.”
Brand Appeal
ESA launched the Premier Suites brand in 2021 after building or renovating 25 properties that the company owns and manages. “Most brands today are not owner/managers,” Juceam said, “so when people saw that we were willing to put our own balance sheet on the line to build and grow the Premier Suites brand, people sat up and noticed.” The first new-build franchised properties opened earlier this year in Colonial Heights, Va.; Ukiah, Calif.; and August, Ga., and the company also recently opened two conversion properties with an existing franchise partner.
To develop the new hotels, ESA contacted Westlake Village, Calif.-based Whitman Peterson—a private real estate equity company that makes and manages real estate investments on behalf of institutional investors. The company will provide equity, identify markets and assist with development of the project. “We recognize that ESA is one of the leaders in the economy extended-stay segment and Premier was an attractive extension for the brand,” said Paul Novak, executive director of lodging at Whitman Peterson.
“The economy extended-stay sector continues to be one of the healthiest in the hospitality industry,” said Mark Laport, president and CEO of Raleigh, N.C.-based Concord Hospitality, which will be handling the development, branding and operations of the properties. The brand’s “upgraded” design elements and amenities appeal to a larger segment of blue-collar and white-collar extended-stay travelers, he added. “This will allow Premier Suites to target a stronger average daily rate.”
The Whitman Peterson team has been working “very closely” with Concord to determine where to develop new hotels in key markets, sharing insights on the sites under consideration and on the underwriting as well as monitoring the construction.
Gaining Ground
The brand will target markets that have sufficient demand for midscale extended-stay demand that are not currently being served by existing ESA Premier Suites properties, Juceam said. “With extended-stay hotel supply currently only representing 10 percent of the U.S. hotel room supply, there are many markets that remain open for Premier Suites development.”
The new hotels, he added, will be in “strong demand, high barrier-to-entry markets that can support more midscale extended stay hotel supply and where ESA may be currently underrepresented.” Laport, meanwhile, said that adding the portfolio to its development pipeline has “opened the opportunity” for the company to expand its reach into new markets. “We are confident the strong demand trends for … economy extended-stay hotel product will continue. “
While each of the new properties developed through this agreement will be ground-up construction, Juceam said the ESA team expects to upbrand six more owned and managed properties in the year ahead.
Juceam said the endorsement of Laport, Novak and their teams in the extended-stay segment—and in ESA Premier Suites “as an emerging brand with a bright future”—is validating to the company. Extended Stay America currently has 28 Extended Stay America Premier Suites open and operating throughout the United States and 55 more hotels in the contracted pipeline, including this venture with Whitman Peterson and Concord. “We anticipate tripling in size in the not-too-distant future,” Juceam said.