Over the past two years, the hotel industry has been hit during the recession as business travel declined significantly and budget conscious customers seeking lower hotel prices. There is one exception that is stabilizing the industry: extended stay hotels. In 2009, even though industry demand fell 6%, the demand for extended-stay hotel rooms rose 2.6%(according to STR). In July, 2010, demand rose 14.1% and the occupancy rate increased 8.9%. Extended stay hotels are defined as hotels that offer lower prices if the guest stays for a longer period of time (they must stay for at least four consecutive nights). Many of the travelers may stay for as long as weeks if not months. This cannot only attract budget conscious business travelers but also the leisure customer who might be moving to an area for an extended period. Some of these extended stay hotel chains are offering free Internet access and free personal laundry. In this part of the business occupancy rose 8.9% in July from a year earlier and demand was up 14.1%. Extended- stay is defined as at least four consecutive nights at one property.
The success of the Extended-Stay concept suggests that leisure travelers want cheap room rates and are willing to stay for a longer period of time. As also demonstrated by the growth of the no-frills hotel market in New York City, customers increasingly want low room rates and are willing to seek out the best deals. Traditional hotels have been losing more customers due to their expensive room rates. Extended-stay hotels though are able to attract business customers who are looking for a quality hotel that values customer satisfaction. They can give incentives by offering a long-term, lower rate to a guest. The combination of the growth in the no-frills and extended stay markets will likely put more pressure on hotel prices and force the traditional hotel companies to offer more value to their customer. This could mean lower rates, more free services, or possibly more flexible pricing policies that are similar to the extended stay concept.
Jesse, insightful post. Definitely consider saving the sources you used in writing this post for use during the actually term paper. Be careful when you talk about "leisure guests moving to a new area." Leisure guests seem to be more vacationers than someone traveling with a purpose, such as moving to a new area. Good job. Make sure to provide some type of source links in the future!
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