Candlewood Suites
Gina LaBarre
Vice President, Candlewood Suites Brand
Extended Stay Segment Overview
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3 Tiers of Extended Stay hotels
¾ Upper
¾ Mid-priced
¾ Economy
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IHG covers 2 of the 3 tiers with Staybridge and Candlewood
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When moving from Upper down to the Economy tier, the following occurs:
¾
¾
¾
¾
¾
¾
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Longer lengths of stay
ADR decreases
Less staff (more streamlined operating model)
Lower operating costs
Potential for higher GOP margins
Lower development costs per room
Extended Stay “Suites” vs. Traditional hotel “Suites”
¾ Traditional hotels: Larger and more well appointed rooms, higher ADR
¾ Extended Stay hotels: Standard offering built around more
living space and fully equipped kitchens throughout
Segment positioning
Staybridge Suites
Candlewood Suites
Price tier
Upscale extended stay
Midscale extended stay
Customer
demographic
Male 25-54 years old
Male 25-54 years old
HHI $86,000
HHI $75,000
Experience
LOS: 5+ nights
Community
LOS: 14+ night stays
Independence
Amenities
Breakfast buffet
Paid, available in cupboard
Daily housekeeping (upon
request)
Weekly housekeeping
Swimming pool
Free laundry
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Segment positioning
Staybridge Suites
Candlewood Suites
ADR
$87.00
$58.00
Room types
Studio
Studio
1 bedroom
1 bedroom
2 bedroom
Studio: 50%
Studio: 85%
1 bedroom: 40%
1 bedroom: 15%
2 bedroom: 10%
Studio: 350 sq ft
Studio: 350 sq ft
1 bedroom: 481 sq ft
1 bedroom: 525 sq ft
Room mix
Room sizes
2 bedroom: 745 sq ft
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Brand History
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In 1975 Jack DeBoer, an apartment developer, realizing the
need for short-term apartment leases, founded Residence Inn,
the first Extended Stay hotel chain
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Jack built or franchised 103 hotels before selling The
Residence Inn Company to Marriott in 1987
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1988, Jack co-founded Summerfield Hotel Corporation, an
upscale all-suite hotel chain, before leaving to found
Candlewood in 1995
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From 1995 – 2003, Candlewood Hotel Company franchised and
managed 108 hotels throughout the US
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January 1, 2004 – Candlewood Suites was acquired by
InterContinental Hotels Group
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Since the acquisition, IHG has opened 5 additional hotels
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Extended stay segment comprises 7% of upscale
and midscale combined market
Extended stay segment size, rooms available (m)
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Extended stay
segment contains over
37 million rooms
available
Majority of these are in
the upscale segment
40
35
30
25
20
15
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Extended stay
segment has grown
60% over the last five
years, and is one of
the highest growth
segments
10
5
0
1999
2000
2001
2002
2003
2004
Midscale extended stay
Upscale extended stay
Source: STR; Highland Group
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We compete in the mid-tier segment of extended
stay
US
Industry
Mid Tier
Extended Stay
Segment
5 yr trend
Growth vs. Prior Year
+ 25 %
HOMESTEAD VILLAGE
CANDLEWOOD SUITES
TOWNEPLACE SUITES
STUDIO PLUS
SIERRA SUITES
MAINSTAY SUITES
BRADFORD
- 25 %
Supply
Demand
Revenues
Source: STR
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Our key competitors
Rooms 2004
Pipeline
RevPAR 2003
16,841
0
$36.07
Candlewood Suites
12,915
1,237
$41.25
TownePlace by Marriott
11,555
642
$47.46
Studio Plus
7,670
0
$32.47
Sierra Suites
2,342
278
n/a
Mainstay Suites (Choice)
2,150
0
$37.14
Homestead Studio Suites
Mid-scale extended stay segment is
not dominated by any one brand
Source: STR
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Profile of a typical Candlewood Suites
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Rooms:
100 - 150
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ADR:
$58
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Occupancy:
71%
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RevPAR:
$41
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Rooms Revenue:
$1.9-2.0m
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Non Rooms Revenue %:
2-4%
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Total Revenue:
$1.9-2.1m
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Build cost/key:
$46-50k
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Location type:
Secondary/tertiary
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% Franchised
¾ on hotels:
33%
¾ on room:
29%
Source: STR
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Our target customer’s stay occasions include...
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Self-sufficient traveler
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Occupation drives the need for 7+ night stays
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Occupations include
¾ Government / military employees
¾ Trainers / training attendees
¾ Consultants
¾ Insurance Adjusters
¾ Relocating employees
¾ Temporary medical staffing
¾ Corporate
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What our brand is about…
Candlewood is the informal and relaxed hotel
choice, that enables our guests to live
independently and take care of their personal
needs according to their own schedule
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The most important ways we make that real are…
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Large, spacious, all suite rooms
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Fully equipped kitchens with dishwasher & refrigerator/
freezers
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Oversized desks, executive chairs, free HSIA
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Over-stuffed recliners, TV(s) and DVD or VCR players
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Friendly, service oriented, yet inconspicuous staff
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Guests may shop on the honor system in the Candlewood
Cupboard or use our free laundry facility 24/7
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Leisure oriented amenities, including Gazebo Grill,
Fitness Facility, and the free CD/Video Lending Library
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Our revenue growth strategy
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Continue to drive increased contribution
from IHG Enterprise Values
¾ Priority Club (awareness)
¾ eCommerce
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Targeted direct sales efforts
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Product enhancements that drive guest
satisfaction and higher rates
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What guests think about us
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J.D. Power & Associates award
¾
¾
¾
¾
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Jan – June 2004
Extended Stay Segment
Hotel Services
Costs/Fees
High loyalty
¾ Booked because of rate / returned
because of value
¾ Staff
¾ Cleanliness
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The typical hotel owner is / has…
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Existing limited service hotel operators
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Extensive experience in non-extended stay hotels
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Strongly focused on return on investment
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Propensity for Candlewood and IHG brand
expansion
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Why an owner invests in Candlewood
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Offers developer strong growth potential and high immediate ROI
¾ Strong brand in young segment
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Affiliation with IHG and its enterprise values makes it a more
attractive brand
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Performs well in secondary & tertiary markets
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Low cost per key to build
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High GOP margins
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Streamlined operating model
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Occupancy rates that out-pace industry
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Growing contribution from Priority Club and IHG channels
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Growth strategy for Candlewood
Growth
Driver
Units
RevPAR
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Focus
√
√
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Significant opportunity for growth in secondary and
tertiary markets where there is currently a limited
supply of extended stay product
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Franchise sales focus on current Candlewood and
IHG franchisees
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Low cost to build, low overhead, and high GOP
margins make Candlewood an attractive brand for
developers
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Occupancy strong – pushing rate increases
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Candlewood has significant growth prospects
% of tracts in which brand is present, Candlewood vs segment
alternatives
52%
16%
16%
14%
16%
4%
Candlewood
Residence
Inn
Homestead
Mainstay
Studio Plus TownePlace
Source: STR
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Conclusion
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Candlewood was a value enhancing acquisition
for IHG
¾ Large management fee
¾ Franchising rights
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Integration process has gone well
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IHG enterprise values enhance our competitive
advantage
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Focus on both RevPAR growth and unit growth
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