‘Extending’ Its Portfolio

Increasing its domestic room count by more than 35 percent, Choice Hotels International recently demonstrated its commitment to growing MainStay Suites with the conversion of 15 properties bringing the midscale extended-stay brand close to the century milestone.

The 15 hotels—which were previously Hawthorn Suites properties—were awarded to Gulf Coast Hotel Management, Inc. in what represents the largest portfolio deal to date for MainStay Suites.

Ron Burgett, SVP, franchise development, extended stay, Choice Hotels, talked about the company’s recent emphasis on the brand following the acquisition of its sister brand WoodSpring Suites.

“Over the last three years we have really taken a second look at MainStay and we really reimaged the brand. In 2019, we put a new logo out, but we also looked at all of our operations and our technology. When this opportunity came up we said ‘why don’t we look at Choice’s MainStay brand for this portfolio?’” he said.

Burgett, meanwhile, explained why Gulf Coast Management—which is the second largest WoodSpring Suites franchisee with some 22 properties owned, and specifically CEO Ian McClure—was afforded the opportunity.

“He’s very familiar with how we operate at Choice with our extended-stay segment. He knows the WoodSpring brand inside and out,” he said, adding McClure is also a member of Choice’s franchise owners council.

McClure explained the deal from his perspective.

“Choice made a commitment several years ago with the acquisition of WoodSpring. Gulf Coast and myself really got involved with the senior management at Choice and their commitment to making sure that extended-stay [segment] really begins to grow. It was a really an easy decision for us [based on] past relationships, their commitment and really where these markets are located,” he said.

Choice described the hotels as being in major markets across the U.S. with some of the notable cities including Salt Lake City, UT; Charlotte, NC; Louisville, KY; Omaha, NE; as well as three in the Chicago area in Schaumburg, Wheeling and Hoffman Estates, IL.

“We were looking at top 50 MSA’s across the country and this kind of satisfied that in one fell swoop,” said Burgett, who added that while the properties have already officially switched over to MainStay they would undergo significant enhancements over the next 12-18 months.

According to the company, these new MainStay Suites hotels were purposefully designed for long staying guests with spacious, apartment style suites featuring fully equipped kitchens and hotel amenities such as fitness rooms, on-site marketplaces, and guest laundry facilities.

McClure pointed out the company is actually expecting to finish the renovations within 2021 and is starting the first redo in the next few weeks. He noted some of the changes would include replacing the case goods, flooring, wall coverings as well as exterior enhancements and generally just “bringing them up to 2021.”

While McClure also touted the locations he noted the deal was about more than that.

“What really attracted us to the portfolio was the quality of the assets, not just the real estate. They’re all great locations, but the actual quality of the physical property. We believe this is the right year to do it [renovations] and really take advantage of the increased demand as the traveling public begins to start happening in the next several months,” he said.

Burgett acknowledged that that conversions represent the best opportunity to grow the brand, which now has close to 100 hotels open and operating and a pipeline of roughly 130 properties. While this is particularly true in the wake of the pandemic where new builds are tougher to execute, Burgett noted it was the company’s strategy all along.

“With Mainstay even pre-pandemic we had already focused on this being our conversion opportunity in midscale to grow. You’re looking at a segment here which has a lot of growth,” he said.

In addition to WoodSpring Suites, the company’s extended stay family of brands also includes Suburban Extended Stay and the newly created Everhome Suites.

McClure acknowledged that the extended-stay segment in general has gotten “a gold star of the hospitality world” for its performance since the outbreak of the pandemic in March, but he emphasized the company’s interest in the segment preceded that as he extolled some of the benefits of the business model.

“When run properly it produces a tremendous of amount of net income for the owner and the operator. So this was not an asset class that we all of a sudden because of the pandemic decided to get into. But it was one when the pandemic happened, we saw this portfolio and we saw the opportunity to expand with MainStay and Choice so it was a very easy decision on our part based upon our previous experience already in extended-stay,” he said.