"Home2 Suites will offer developers an opportunity to enter the segment with a comfortable, yet stylish product at a low cost per key," said Phil Cordell, global head of focused service brands.
The budget extended-stay niche (although I doubt Home2 would call itself that) is growing and among the winners in the niche is Value Place, based in Wichita. The company recently opened its sixth extended-stay hotel in Indiana and has 137 in the rest of the country. Costs per week range from $189 to $239.
Jack DeBoer, the company's founder and chairman, is well-known in the extended-stay industry. He started (and later sold) Candlewood Suites, Residence Inn and Summerfield Suites to the InterContinental Hotels Group, Marriott and Hyatt.
The no-frills Midwestern company was founded in 2003 and plans 50 new hotels in 2009. Their business model is streamlined -- franchisees finance hotels and each property has about four employees. Any frill -- including coffeemakers, housekeeping once a week, or dishes -- costs extra. The formula seems to be working because the company hosts about 12,000 guests a night.
Value Place usually serves customers paying their own way, families traveling, construction crews or visitors, so it doesn't rely on business travelers. A good thing when many businesses are cutting back on travel. However, budget extended-stay hotels could benefit from those companies pressuring workers to find cheaper lodging.
Value Place's future appears rosier than many other extended-stay brands, including financially-troubled Extended Stay America, and since its prime attraction is price -- its continued success could hinge on that alone.
Is Home2 Suites' $100 a night attractive enough to lure hardworking families moving across country? A quick look at Hilton's Homewood Suites properties in the San Francisco Bay area range from $85 to $139 a night -- not much different from the average $100 a night for Home2. Either way, $500 to $700 a week is still pretty high for most families . . . and maybe even for the newly cash-strapped business traveler.