Magnuson sees promise in extended-stay

Magnuson

Magnuson Hotels has launched a new extended-stay brand, with locations in Canton, Ohio and Irving, Texas.

The company’s CEO, Tom Magnuson, told us that he saw extended stay as “a very promising segment of growth for the company”.

Magnuson said that the move came after “listening to owners”. He said: “There’s really been a shift. Before Covid-19 there had been a big shift of owners in economy and midscale converting some space to extended stay, because it offered a more predictable cashflow to nightly stays.

“There have been two movements; the extended stay rooms have been populated by long-term leisure, construction and corporate workers assigned for a period of weeks or months, now it has widened to essential service workers. There has also been a movement in America where the credit crunch has meant that the cost of a permanent house has risen and so some people see extended stay as pay-as-you-go housing.

“Judging by our pipeline and the level of interest, this appears to be a very promising segment of growth for the company.”

Magnuson said that the segment was “performing strongly” in the currently impacted US hotel sector, with a focus on serving non-leisure business segments of essential services workers. US economy extended stay hotels held a nearly 72% occupancy rate compared to the 42% hotel industry average, according to STR data sampling the first 28 days of March.

Formerly affiliated with Red Lion Hotels Corporation, the Magnuson Hotel Extended Stay Canton Ohio was located near Akron/Canton Airport. Previously independent, the Magnuson Extended Stay and Suites Airport Hotel Irving TX was near DFW airport.  

Both launch properties have been newly renovated to Magnuson Hotels Extended Stay brand standards and featured kitchenette suites, free parking, with special rates for corporate, government, construction, medical, educational and trucker customers.

In its recent Q1 performance report, Magnuson reported a portfolio-wide occupancy reduction of only 0.4%, against an industry-wide fall of 15% across the US; a factor of almost 30 to 1.  Magnuson saw a $1.00 loss in ADR (average daily room rate) compared to USA average of -$5.14.

The company said that, that because its portfolio was widely dispersed across secondary, tertiary, rural and highway markets, many areas had been less impacted than primary markets dependent upon leisure, corporate and international.

The group said that its midscale business segment moved to a 100% focus on serving essential services workers across secondary tertiary, rural and highways markets of the US.  Customer groups staying in Magnuson Hotels included blue collar, construction, transportation, truckers, medical, government and student housing.

Exterior corridor properties were performing strongly as guests could drive up to their rooms, eliminating interaction with other guests, using elevators or passing through lobbies.