ESH Hospitality to expand North America extended stay footprint

George Sell George Sell Uploaded 28 March 2017

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US: ESH Hospitality, which owns more than 620 hotels in North America, has revealed details of its “ESA 2.0” growth plan.

ESH is the REIT subsidiary of Extended Stay America (ESA), Inc. ESH and ESA shares trade as a single unit. The company's brand, Extended Stay America, serves the mid-priced, extended-stay hotel segment, and has an average customer length of stay of 26 days.

ESH president and CEO Gerry Lopez said the company expects to expand its market share by focusing on individual assets and markets, rather than acting on a portfolio-wide basis. Its five-year plan, called ESA 2.0, involves selling, building and franchising of assets. In contrast, ESA 1.0, which ran from 2011 to 2016, involved renovating the entire portfolio, installing a revenue management system and organising a sales force to target the extended-stay market.

During the last 14 months, ESH has sold or placed under contract 57 hotels, a process which will gain momentum. It will look to develop new hotels in markets where it already has a presence and anticipates continued growth. These include areas in the south-east that have benefitted from a surge in auto manufacturing and related business travel.

The company expects to build 70 to 80 new hotels by 2021, with an even split between owned and franchised assets. "Our unsolicited franchise inquiries, driven by our brand equity, signal a pent-up demand for this brand. However we want to initially concentrate on owners who will commit to multiple locations," said Lopez.

Business travellers account for about 60 per cent of ESH's revenues, said Lopez, who emphasised the company's use of OTAs: "Even after paying the OTA commission, the rate we get is higher than our average daily rate. It allows us to control demand at each hotel much more effectively than we otherwise could."

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