Marriott launches its 32nd — and most affordable — brand
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And then there were 32 … brands at the world's largest hotel company, that is.
Marriott officially launched what it anticipates will be its most budget-friendly extended stay brand earlier this summer. The new brand (which had a working title of Project MidX Studios) got its official name this week: StudioRes.
Marriott CEO Anthony Capuano first hinted on a company earnings call earlier this year that a new brand was on the cusp of being announced. StudioRes was first announced mere weeks after the company brought in its 31st brand with the official acquisition of Mexico-based City Express, an affordable mid-tier chain.
StudioRes is the biggest throttle forward to date among the major hotel conglomerates battling it out for budget-minded travelers. Hilton recently launched an extended-stay brand under the working title Project H3. Hyatt launched its Hyatt Studios brand earlier this year and was the only major extended-stay brand to launch with an official name set in stone.
Hilton also launched at the beginning of the year a so-called "premium economy" brand called Spark, but it is not an extended-stay offering.
Marriott's StudioRes concept already has several hundred potential development opportunities in the works compared to the similar extended-stay brand launches by Hyatt and Hilton — both of which touted more than 100 development talks apiece at launch for their respective projects. The official website for StudioRes notes there are 1,800 target markets identified for the new brand.
"Our deep experience and leading position in extended-stay lodging, coupled with the recent trends toward increased work flexibility and longer stay travel, make us very optimistic about our growth potential," Capuano said on a company earnings call earlier this month. "While it is still early days, initial interest from the development community has been extraordinary. We are working on several hundred deals and hope to have our first deal signed by the end of this year."
The details on StudioRes
Marriott leaders promoted affordability both for the people staying at a future StudioRes property as well as the developers fronting the bill to build each hotel.
The brand aims to appeal to guests staying 20 nights or longer at a hotel who want to pay around $80 per night. Guest suites will feature single or double queen-size beds as well as kitchens and an abundance of storage areas. Common areas will include guest laundry facilities, a gym, pay-and-go retail spaces and pet-friendly spaces.
Marriott also estimates the new label will be the most affordable cost-per-room option in the company's overall brand portfolio. The extended-stay sector has been a highly lucrative one for Marriott in the past. Residence Inn is widely seen throughout the hotel industry as a cash cow for owners of each of these properties due to the popularity of the brand.
Even in economic downturns, extended-stay hotels generally perform well due to their customer base of essential workers and people needing temporary housing. Marriott has tapped into that revenue with a reliable stream of licensing fees compared to other companies that rely more on leisure or business travel demand that ebbs and flows.
"With trends toward longer-stay travel and increased work flexibility, Marriott is utilizing its experience in extended stay to deliver a fresh solution to meet the needs of a growing customer base, backed by Marriott's powerful demand engines and revenue systems," Noah Silverman, Marriott's global development officer for the U.S. and Canada, said in a statement. "With our plans for [StudioRes], we will have an extended-stay product in every lodging tier — from affordable midscale to upper-upscale and luxury — for our customers and our owners and franchisees."
Marriott's swelling extended-stay brand count
While StudioRes brings Marriott's overall hotel brand count to 32, it also beefs up the company's extended-stay lodging bracket to six brands. The company already has Residence Inn, Element, TownePlace Suites, Marriott Executive Apartments and the recently announced Apartments by Marriott Bonvoy.
Why another brand? StudioRes taps into a more budget-conscious market segment, both for customers and hotel owners. Each of StudioRes' siblings operates at a higher price point.
Residence Inn is a traditional hotel brand operating in the upscale segment alongside competitors like Hyatt Place and Hilton Garden Inn. On the other hand, the new Apartments by Marriott Bonvoy is in the premium and luxury stratum and is more of a serviced apartment-style option rather than a typical hotel stay (think: weekly housekeeping and up to three-bedroom offerings in a high-end residential building).
But StudioRes brings something new — and more affordable — to the table for Marriott customers.
Major hotel companies like Marriott, Hyatt and Hilton often touted their concentration on higher-end segments of the hospitality food chain while leaving more budget-friendly options to players like Wyndham and Choice Hotels. However, that mindset is rapidly changing. Hotel chains are embracing the idea that it's better to have an offering at all price points rather than focusing just on higher-spending, higher-yielding markets.
Attract travelers when they primarily book more affordable hotels, and you'll keep them in the loyalty ecosystem for a lifetime (and ideally when they can pony up for more expensive offerings like a St. Regis or Edition), the thinking goes.
"With [StudioRes], we are focused on enhancing the breadth of our portfolio through the creation of a product specially designed for the affordable midscale extended stay tier — from the physical product to the operating model," Leeny Oberg, Marriott's chief financial officer and executive vice president of development, said in a statement. "The team created [StudioRes] to reach both new customers and new markets."
Marriott was already at work on beefing up its affordable accommodation lineup with the recent acquisition of City Express. While the hotel world waits to see if City Express expands globally like Marriott's other mid-market brand, AC (which was once a brand focused on Spain), travelers in the U.S. and Canada will be the first to experience StudioRes.
As for the first outposts? Hotel development company Concord Hospitality, which is based in Raleigh, North Carolina, expects to break ground on three StudioRes hotels later this year and open the first as early as sometime next year.
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