Hotels hope extended stays extend revenue

STERLING, Va. -- A 350-square-foot hotel room with a full kitchen has been his home here for more than two months. "This is real comfortable for me," says the engineering student, who's in town for a three-month job for the U.S. Postal Service. "I like to cook and eat healthy. My dishes are washed when I come home at night. I've been kind of spoiled here."

In the refurbished lobby, workstations with flat-screen monitors provide Internet access. Free coffee flows throughout the day. An 8-foot-tall town map points out nearby stores. Within a half mile, several other midscale hotels — including Holiday Inn and Hampton Inn — compete for the travelers who come and go from Dulles.

They cater to business consultants and workers, flight attendants and vacationers toting their kids.

Extended-stay hotels like these have been popular among hotel companies in recent years because they're cheaper and easier to build. With blocks of guests staying weeks at a time, they also have fewer check-ins to process and report consistently higher occupancy rates than other hotels do. The three- to four-story wood-frame buildings are located mostly in suburbs, near airports and business parks. Rooms are equipped with a separate living area, full kitchen and laundry facilities.

However, expansionist days for one of the hotel industry's most reliably profitable segments may be coming to an end. "It's been the fastest-growing segment in revenue since 1995," says Mark Skinner of The Highland Group, a hotel research firm in Atlanta. "Demand for extended stay has never gone down. But based on industry demand so far, that'd be difficult this year."