NEW YORK— It’s been a particularly “hot” winter for Marriott International as franchise activity continues to heat up around its corporate housing arm, Marriott ExecuStay.
Earlier this month, a single deal doubled franchised markets for ExecuStay, the result of adding 11 markets via a franchise agreement with Wichita, KS-based Suite Options Inc., the largest such contract for the division since it began franchising in July 2002.
Later the same day, the franchise count jumped to 24 with the inking of a deal with CSM Lodging and The Bernstein Companies, both established Marriott hotel franchisees.
In December, the brand had inked two other franchise contracts, again in one case with existing Marriott franchisees who put together Elements, LLC to do the deal, the other with Potomac Hospitality Services, a real estate development management group.
The quartet of deals also bookended the Jan. 22 opening of The Aurora, 32-story luxury building on the East Side of Manhattan that encompasses 126 luxury studio and one-bedroom ExecuStay units, which Marriott manages for co-developers Pine Equity NY Inc. and Townhouse Management Co.
Overall, the brand is in 37 major metro areas nationwide.
Joe Lavin, executive vp/managing director for the division, said the Suite Options deal with corporate housing veteran Bill Jackson would bring seven new territories to the ExecuStay fold. Suite Options will operate in Dallas, Houston, Austin and San Antonio, TX; Kansas City, MO; Little Rock, AR; Jacksonville, FL; Des Moines, IA; Wichita and the state of Kansas; Tulsa and the state of Oklahoma; and Nebraska.
“One of the things that’s great about this deal is not only does it double our size on the franchise side of the business, it’s with a great company. Suite Options is a big player, well known. Their owner, Bill Jackson, is one of the most respected operators in the industry,” said Lavin.
Minneapolis, MN-based CSM Lodging will operate ExecuStay’s corporate housing business in St. Paul-Minneapolis. CSM Lodging is a division of CSM Corp., a developer of real estate assets in the hospitality industrial, multi-family residential and retail sectors, and has in its portfolio 26 Marriott lodging products under the Courtyard, Residence Inn, SpringHill Suites and TownePlace Suites brands.
In addition, Washington, D.C.-based The Bernstein Companies, which franchises Courtyard and Fairfield Inn brands, will operate ExecuStay in Baltimore and Annapolis, MD, via its new corporate housing partnership named TempRentals/Bernstein.
In both cases, the new franchisees will supplement their owned inventory with ExecuStay’s existing third-party leases, according to the brand.
J.J. Doran, director of sales for Marriott ExecuStay, said occupancy for The Aurora was 85%. A second Marriott-managed ExecuStay in Manhattan is The Chelsea, which features 204 studios, one- and two-bedroom units.
Full Pipeline
Lavin indicated the Marriott ExecuStay pipeline was “very strong” and expected to have more than 30 major franchise markets by year’s end. Canada is also on ExecuStay’s radar. “We’re also starting to put a strategy together on how we can bring Europe, Australia and Asia into the fold. We definitely feel we have a formula that can be exported,” he said.
Greg Miller, whose company PM Hospitality Strategies owns and operates Elements LLC, which began franchising ExecuStay in December, said the group would operate corporate housing programs in Wilmington, DE, via two downtown luxury apartments, and the Philadelphia suburbs of Chadds Ford and Kennett Square. PMHS, founded by Miller, Rob Buccini and Dave Pollen (of its sister company, The Buccini/Pollen Group Inc.) has 10 hotels, including two Marriotts: a Fairfield Inn and SpringHill Suites.
“We know that product is not it alone; we’re in the service industry [via hotels]. So the extent of our reach through Marriott ExecuStay is what is attractive for me,” said Miller.
Having the Marriott Reward as part of the structure, he said, also allows him to connect to the small user. “It’s almost like we’re Hotels.com, because we’re going out there and finding people that own [Class A apartmenst,] and saying: ‘Give us some of your inventory and in exchange we’ll do some preferred things for you.’”
In the other December deal, Washington, D.C.-based Potomac Hospitality Services now operates the program in Center City, PA, including 90 corporate apartments at The Windsor. Hotelier Don Minkler, who spent eight years as director of marketing at Marriott, serves as president. Before franchising, he and Potomac principal and developer Conrad Cafritz had been involved with ExecuStay for four years at The Windsor and in Chicago.
The franchise fee structure has royalty at 5.5%; system service fee of 2% includes myriad smaller activities, such as marketing and reservations fees; and an incremental charge for some of the Marriott Rewards costs.
“This is a cottage industry. It is fragmented, there are low barriers to entry, it lacks sophistication. In many ways it’s like the hotel industry in 1963; it’s way behind in many ways,” said Lavin.
However, he believes “it can leap forward fairly quickly with the right kind of strategies and applications, through branding and networking. We can leap ahead and get into the mainstream of overall lodging fairly quickly.”