By Jeff Higley H&MM Managing Editor

Norcross, Ga - June 1998 - .-Southeastern Hospitality Holdings, seeking to cash in on the extended-stay frenzy in the lodging industry, is launching a new brand called SuiteOne.

The first SuiteOne extended-stay property is under construction in Gwinnett County, Ga.

"We've spent two years studying extended-stay," said Matt Cooper, chief financial officer of Southeastern Hospitality, which was founded in October. "The financial returns are so good and the occupancies are so high that it's hard to believe there's overbuilding in extended-stay. With extended-stay, you can get 75 percent occupancy in a bad location, so we think the opportunity to succeed is definitely there."

Relying on a new-build and conversion mix, the company hopes to have up to six properties open this year and 30 to 40 hotels open within five years, according to Cooper. Cooper said the company will concentrate on the Southeast, but also is looking at some Midwest locations. The next two sites in planning are in Mobile, Ala.,
and New Orleans. The company also is considering sites in North Carolina, South Carolina and Ohio.

"We have six acquisitions right now that are in the talking stage," he said. SuiteOne properties will range in size from 85 units to 125 units, according to Cooper. The chain will fit the lower-tier extended-stay product range, with
weekly rates between $189 and $209.

According to Bear, Stearns & Co.'s 1998 U.S. Lodging Almanac, there were 848 extended-stay properties open with nearly 97,000 rooms at the end of January. The firm projects the extended-stay room inventory to reach 297,000 by the end of 2000.
 
 

Mark Skinner, principal with Atlanta-based consulting firm The Highland Group, said there is enough room for SuiteOne in the crowded extended-stay field. There are at least 25 other extended-stay brands. "An additional brand will not necessarily tip the supply-and-demand balance," Skinner said. "Currently, there are about 50,000 economy extended-stay rooms out there, and I don't see a brand with the growth aspirations of SuiteOne having
that much of an impact."

Skinner said the availability of financing could affect the segment. "It is not easy to find financing for extended-stay hotels," he said. Cooper agreed. "Any new company or new brand in any business will find lenders wary because of a lack of a track record," he said. "Even in the best of times, a start-up will be a little shut out."

Cooper said Southeastern Hospitality has been successful by focusing on smaller banks in the areas in which it hopes to build hotels. "The money center banks, forget it," he said. "I don't think they even lend to
hospitality any more.

"With the size of our deals, it makes sense to go to the local banks," he added. "We've talked to a lot of banks, and have received a lot of free advice, but it's been tough. You have to dig in tough. At this level, it's definitely a
lender's market."

SuiteOne units will be at least 278 square feet, according to Cooper. Development costs for the three-story prototype building will range from $30,000 to $35,000 per unit, depending on the cost of land, he said. SuiteOne buildings will have enclosed stairwells. Other features of the brand will include full-size refrigerators in each room, adjoining doors for select rooms and 24-hour on-site management. Properties will be located near interstates or other major highways.
 

The company currently has no franchising plans, but is leaving the door open. "We don't see the benefits of franchising right now," Cooper said. "That may change in the future, though." Cooper said SuiteOne will target typical extended-stay clientele, including business travelers, technical employees and construction workers. It will get 10 percent to 15 percent of its occupancy from leisure travelers, he said.