• Extended stay reaches beyond America

The first extended stay property under Starwood's Element brand opened its doors this week. It follows last month's opening of InterContinental's first Staybridge Suites outside of the Americas.

The segment has grown rapidly in the US and is forecast to demonstrate a similar trajectory overseas, according to the brand owners and their advisers.

Smith Travel Research data shows that extended stay now accounts for more than 5% of the total bed stock in the US, having grown at more than five times the pace of the hotel bedrooms in the US as a whole.

The US-based PKF Consulting, which is partnered with Colliers Macaulay Nicholls and part of Colliers International Property Consultants, reckons that the attraction of extended stay is the historic occupancy premiums and high profit margins.

As supply in the US has increased, the occupancy premiums have declined and so has profit growth. But even so, profit margins in the US averaged 47.7% in 2006, according to PKF against a hotel industry wide average of 28.0%.

The market in Europe remains far less penetrated than the US and so, theoretically, should offer developers the chance to access the same enhanced occupancy and profits enjoyed in the early years of the US roll out.

According to a PricewaterhouseCoopers study last year, the biggest operator in the UK is Bridgestreet with just 1,000 serviced units, followed by Ascott with 848, Frasers with 365 and PREM with 318.

IHG is also eyeing emerging economies for its extended stay roll-out. A few days after the opening last month in Liverpool it opened a unit in Cairo. It has also signed two Staybridge Suites contracts in Russia, one in St Petersburg with Moskovskaya Vorota, and one in Nizhny Novgorod with Clover Group.

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