I am interested in collecting any forecasts for the number of extended
stay lodging rooms being added in the US in the first quarter, second,
third and or fourth quarter of 2004 and /or for all of 2004 and/or any
forecasts beyond that.
I am on a short leash, time-wise, and need your best efforts within 24
hours.  I am interested in economy, midprice and/or upscale segments,
if it is broken down that way.  Anything about conversions to extended
stay from traditional would be helpful. The terms "suite" and "weekly"
seem to be used a lot also.

Infopros --

There's lots of information about extended stay hotel companies: the
problem was more one of sifting wheat from the chaff.  I'll start with
the more valuable resources, should you choose to pursue the task
further:

SMITH TRAVEL RESEARCH
-----------------------

As you may be aware, the leading research site for the hotel &
hospitality industry is Smith Travel Research, which tracks detailed
industry data like occupancy rates -- as well as being a news source. 
They have an excellent search facility on their web pages.  For
example, a search for "extended stay" turns up 271 stories.

For example, they have the Aug. 22, 2002 news release from Homestead
Suites Hotels, of Atlanta, announcing an "an active search for
individual hotels or hotel portfolios from interested independent
owners."  Homestead had acquired Dallas North Hawthorn Suites
that week and announced a conversion program.

Smith Travel has classifications for extended stay hotels: high-end
(above $500 per week) and lower-tier.  Unlike other hotel
classifications, there's no middle tier:
Smith Travel Research
"Glossary"
http://www.smithtravelresearch.com/SmithTravelResearch/misc/GlossaryAds.aspx#e

Smith Travel's 2000 numbers for this category had these numbers of
rooms in the U.S., according to an analysts' report:
High-end (> $500/week): 73,000
Lower-tier (< $500/week): 118,000

TOTAL = 191,000 rooms 

Smith Travel's reports are expensive but you can find a number of
references to them with a Google search using:
"Smith Travel" + "extended stay"

Here, for example is an analysis that says the U.S. market capacity is
300,000 rooms:
Hotel-online.com
" US Demand for Extended Stay Properties at Approximately 300,000
Rooms - Current Supply is Less than 100,000" (Sept. 11, 1998)
http://www.hotel-online.com/News/PressReleases1998_3rd/Sept98_ExStayStudy.html



ANALYSTS REPORTS
----------------

Analysts' reports are available on the major public chains via
Investext, a proprietary data base available at no charge at many
major public libraries.

Analysts find the extended stay hotels to be attractive because they
cut hotel overhead by making cleaning weekly (instead of daily); by
reducing front desk hours; by dropping restaurants -- all of which
lowers the capital and operating costs.  Thus, margins until 2001
(particularly for Extended StayAmerica) were running twice those of a
full-service hotel and 50% higher than limited-service models like
Hampton Inns.

Because of this -- and the PriceWaterhouse Coopers report cited above
on potential for the market -- growth has been explosive.  Sept. 11,
2001 and the subsequent recession really stopped expansion but it is
starting again, albeit tentatively.

The cost of developing a property is $5.8 million per hotel, according
to Thomas Weisel Partners in a December, 2001 report.  At maturity,
they generate about $1.5 million per year in revenues, with a gross
margin of about 59% at Extended StayAmerica.  The same report gave
Extended StayAmerica 36% of the 118,000-room "lower tier" market.

Morgan Stanley's Oct. 31, 2003 report predicts that Extended
StayAmerica, which currently has about 475 hotels, will add none in
the first half of 2004.  During Q3, they expect 4 to be added -- and 8
more in Q4 2004, bringing the total to 503.  Additions estimated for
coming years, according to Morgan Stanley are:
2005: 16
2006: 10
2007: 10
2008: 10
2009:  8
2010:  8

Note that the Morgan Stanley report anticipates a slipping in room
operating margin by about 500 basis points (5%) from the high levels
of 2001.
Lehman Brothers, reporting on the Q3, 2003 earnings report from
Extended StayAmerica, noted that "Despite uncertainty around the
short- and mid-term condition of the industry, ESA reaffirmed its
intent to begin refilling its pipeline with new construction projects,
starting 9-10 new hotels in 4Q03 and another 20-25 in 2004." Thus, no
NEW openings during the first half of 2004.
The company had halted ALL new projects in November, 2002.  And it
said during the Q3, 2003 earnings call that if economic conditions
worsened, it would halt projects.

Marriott Corporation's intent with respect to extended-stay isn't
clear.  However, the company said in its Q3, 2003 earnings conference
calls that it plans room conversions of about 60,000 - 90,000 next
year.  The units receiving most of the conversions: the Rennaissance
(full-service hotel) and timeshare units.  So it doesn't appear that
either of the extended-stay units will see substantial growth.

Winston Hotels, which is an NYSE-traded company, has recently raised
both equity and partner funding to expand its hotel chain. Much of its
activity is in the acquisition and conversion market:
Winston Hotels
"Winston Hotels Announces Plan to Expand the Scope of Financing
Programs; Company Updates Outlook for Three Growth Strategies" (Oct.
15, 2003)
http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=WXH&script=410&layout=-6&item_id=458937

(Freeman Billings Ramsey seems to be the only analyst tracking Winston.)

Candlewood is a public company, with stock traded OTC, but too small
for analyst tracking.  According to its Sept. 30, 2002 10-Q, it is
planning to sell remaining hotels to Hospitality Trust Properties and
dissolve:
Candlewood Hotels
Form 10-Q (Sept. 30, 2003)
http://www.sec.gov/Archives/edgar/data/1022820/000089256903002614/a94616e10vq.htm



GOOGLE
------------

One of the fastest ways to find competitors in the business is to use
Google to find a known player, like Extended StayAmerica, then click
on "similar pages."  Again, a wealth of resources, with 26 hotels
chains listed.  However, it allows us to find key extended stay
participants.

Leading players:

Extended Stay America (472 hotels total), Spartanburg, SC
StudioPlus Deluxe Studios: 95
Extended StayAmerica: 338
Crossland Economy Studios: 39
http://www.extstay.com/


Marriott Residence Inn (400+)
Marriott Towneplace Suites (104+)
http://www.marriott.com/residenceinn/
http://www.marriott.com/towneplace/default.asp?WT_Ref=MI_ts_homlnk

Hilton Homewood Suites (125 hotels)
http://www.homewood-suites.com/en/hw/index.jhtml
Website for Homewood Suites notes that 7 more are being added in 2003;
8 more before summer 2004.

Homestead Studio Suites, Atlanta, GA (132 hotels, 32 states)
http://www.homesteadhotels.com/

Winston Hotels, Raleigh, NC 
(54 hotels with 7,399 rooms in 16 states, which includes: 47
wholly-owned properties with 6,456 rooms; a 49 percent ownership
interest in three joint venture hotels with 453 rooms; a 50 percent
ownership interest in two joint venture hotels with 215 rooms; and, a
mezzanine financing interest in two hotels with 275 rooms)
http://www.winstonhotels.com

AmeriSuites
http://www.primehospitality.com/default2.htm

Candlewood Suites, Wichita, KS (72 hotels)
http://www.candlewoodsuites.com/main/index.cfm

Homegate Studios (5 in Texas)
http://www.homegatestudios.com/

Hearthside (9 hotels)
http://www.hearthside.com/


OTHER RESOURCES
-----------------

There's a newsletter tracking the extended-stay hotels and they note
that even apartment providers like Oakwood, Accommodations America,
Castleton are interested in the market:
Clayton-Fillmore
"The Extended Stay Lodging Quarterly"
http://www.clayfil.com/l2p4.htm

I've always found quarterly earnings calls for public companies to be
tremendously valuable in providing information on what's happening in
the next 12 months.  The short time-frame here prevents investigating
them all.  Usually they're linked on Investor Relations pages (like
this one for Extended StayAmerica):
Investor Relations
http://www.extendedstay.com/investor.html

Sometimes you'll even find transcripts on the IR sites with management
comments, particularly about growth metrics and expectations.

Using the Wall Street firms which track Extended StayAmerica, Marriott
and the other public hotel companies can be a great way to structure a
Google search as well.  Here's a concise list of which analysts track
Marriott.  The same firms (and analysts) track Extended StayAmerica as
well:
Marriott
"Security Analysts"
http://ir.shareholder.com/mar/security.cfm



Google search strategy:
"Smith Travel" + "extended stay"
"Extended Stay America"
"extended stay" + expansion
"Extended Stay" + "Morgan Stanley"

Best regards,

Omnivorous-GA

---

Clarification of Answer by omnivorous-ga on 22 Dec 2003 12:41 PST

Infopros --

Thanks so much for the extra sum.

I'd hoped that the answer showed a couple of things regarding future
construction or conversion:
1.  despite the PriceWaterhouse Coopers report suggesting capacity of
300,000 rooms in the U.S. market, Sept. 11, 2001 seems to have been a
turning point at which the industry realized that it was no longer in
a growth mode, but in a mature phase
2.  Extended Stay America has such a large position that its growth
figures probably represent 40-50% of the expansion.
3.  A possible wild card is Winston Hotels, which is aiming to expand
via conversion.

Happy holidays,

Omnivorous-GA

---

Request for Answer Clarification by infopros-ga on 22 Dec 2003 14:08 PST

Those sure do seem to be valid insights.  Thanks.

---

Clarification of Answer by omnivorous-ga on 22 Dec 2003 16:26 PST

Thanks Infopros!

Lots of interesting information but I was unable to find any forecasts
for the number of extended stay rooms being added in the future.
Appreciate the effort, nonetheless.