Hotels for Executives Offer the Suite Life : Apartment-Style Is Hot Industry Trend

Barry Lastra packed his bags early last month, left the Nob Hill hotel that long had been his home-away-from-home while on working trips here, and moved a few blocks away to the TLC Suites.

Nothing had changed at his old haunt--one of San Francisco’s best small hotels--but “it still was very much a hotel,” he said. “And I was very tired of being in a hotel. . . . I needed a place that would feel more like home.”

The TLC is an old 48-room apartment-hotel, just up the cable car line from Union Square, that’s being renovated into an all-suites lodging. Its one-bedroom and studio apartments have a cozy feel about them. “People like us because it’s not like a hotel,” said TLC manager Jennifer Gallear, nearly echoing Lastra’s sentiments. “It’s homey. That’s the biggest thing we offer, is homeyness.”

Because he has been transferred to Chevron’s headquarters here from Atlanta and is looking for a permanent place to live, Lastra might be calling the TLC Suites home for yet another month or two--which suits him just fine.

Indeed, if TLC Suites had searched for a month to find its prototype guest, it couldn’t have picked better than Lastra--who said he just “stumbled” onto the new hotel while he was walking around San Francisco.

All-suites hotels are becoming the hottest segment in the lodging industry, as major players try to attract the lucrative business represented by the 33 million business travelers each year. As competition for the business traveler’s dollar heats up, the chains are finding they have to offer more than free shoe shines or corporate discounts. And they have to find a way to bring the business traveler back a second and third time.

“Everybody has gotten into the act . . . (all-suites) are the No. 1 growth factor in the business today,” said Joseph Kordsmeier, a hotel industry consultant and analyst.

So far, only about 2.5% of all hotels in the country are all-suites properties. But the growth rate is accelerating as other chains join the competition now dominated by Holiday Inns and Quality Inns.

Although many hotels offer some suites or even floors of suites, all-suites hotels offer, as the term implies, only suites. Suites usually consist of a bedroom, bathroom and sitting room, and sometimes they include kitchen facilities. Suites geared to the business traveler often provide a desk in a working or meeting area that is distinct from the sleeping area.

Most all-suites hotels don’t have restaurants, bars, or banquet and meeting rooms. The money and space that might have gone for such common facilities is used instead for the more spacious accommodations.

Getting return customers is no small feat, said Melinda Bush of the Hotel & Travel Index. In a survey of business and frequent travelers (those who take 10 or more trips a year), nearly 40% said they switched hotels upon returning to the same location.

“People are more willing to try different products. They are willing to break tradition,” said Bush.

A Southern Californian, Robert Wooley, is credited with opening the first all-suites chain, called the Grenada Royale Hometels, beginning in 1969. After a decade of lethargic growth, with a few others springing up here and there, the all-suites segment began picking up at the beginning of the 1980s.

“It really took off in 1981-1982,” said Mark V. Lomanno of the Philadelphia office of Laventhal & Horwath, an accounting firm that also does consulting in the hotel industry. “By 1990,” said Lomanno, “there will be double the number of suites and it will be an important segment, but it will never be like (as much as) 20% of the industry.”

So far, the segment leader is Holiday Inns, which took over the Grenada Royale chain and developed its own Embassy Suites properties. As of May, there were about 15,000 rooms in the 63-hotel Embassy Suites chain, accounting for 23% of the total. Holiday Inns has another 22 hotels under construction that it expects will add another 5,700 suites.

Additionally, Holiday Inns is half owner of the Residence Inns chain, the runner-up in the all-suites sweepstakes, with 11% of the rooms in the all-suites category. Residence Inns are two-story townhouse developments geared to the business traveler on an extended stay. There are 71 Residence Inns in operation, with another 18 under construction that will bring the Residence Inns room total to about 9,800.

More Firms Join Market

Quality Inns is making a major effort in the all-suites segment with its Comfort Suites and Quality Suites properties. Marriott is building its first all-suites hotel near Atlanta and hopes to have 40 of them completed by the early 1990s. Hilton is developing its own all-suites plan and one Hilton franchisee operates an all-suites property on the East Coast.

So far, Hyatt has decided not to build separate all-suites hotels, deciding that its guests want the “glitz” of the Hyatt name and common areas. But the success of Embassy Suites has forced Hyatt into rethinking its strategy. “It sure gave us a kick,” said Hyatt Executive Vice President Laurence Geller. He said that now, in some suburban markets with a large commercial base, Hyatt is building “bigger bedrooms than we’ve ever built” that have enough space for a sitting or working area.

Even so, someone at Hyatt sees merit in the all-suites concept. The Pritzker family, which controls Hyatt Corp., has majority interest in a separate venture that purchased the Hawthorne Suites, a four-hotel chain in Texas, and has plans to expand it into a national franchise network of more than 120 all-suites hotels within five years. Another competitor for Embassy Suites is Washington-based Guest Quarters, which has all-suites properties on the East Coast.

Part of the trick of pleasing a business traveler and getting return business is in providing a place to conduct business, whether it be holding meetings or getting some paper work done. Business travelers are growing weary of meeting in coffee shops and hotel lobbies, said Kordsmeier. He added that the suites are especially popular with women who, even more than men, may feel uncomfortable conducting business meetings in hotel rooms that are little more than bedrooms.

One common peeve among business travelers is having the phone on the bed stand and not on the desk--if there is a desk at all. Said Bush: “The biggest complaint (of business travelers) is not having the appropriate facilities from which they can do business.”

Popular Amenities

Part of Embassy Suites’ success, analysts said, has come from providing buffet breakfasts and complimentary happy hours for its guests--amenities that have caught on at other chains as well.

Daniel T. Reiner, chief executive of Optical Devices, a small company based in Camarillo, Calif., is a frequent traveler who prefers Embassy Suites or other all-suites hotels over single-room hotels. He said he likes having the separate room for business meetings, especially when others from the company are on the same trip and need a gathering spot before starting the day’s business.

He especially likes the courtesy breakfast. “I’m not interested,” he said, “in spending an hour and a half taking breakfast on my way to my first meeting in the morning. (At Embassy Suites) I can be eating breakfast within two minutes of getting out of the elevator . . . and often I leave with the Styrofoam cup of coffee in my hand to finish on the way.”

But Embassy Suites does not have a lock on the all-suites market. Most are single, non-chain properties, according to Kordsmeier. The independent hotelier has been able to take advantage of existing sites in prime downtown locations, while the chains often must go to the outskirts of town looking for available land on which to build new properties.

The lack of prime sites puts the chains in a double-bind. For while out-of-the-way, even funky locations may be the attraction of bed-and-breakfast inns, it’s just the opposite for the all-suites hotels.

A convenient location is the most important factor in a business traveler’s decision about where to stay, according to the Hotel & Travel Index’s survey. And even though business travelers say they like the idea of an all-suites hotel, most still opt for regular rooms closer to town.

Bush said that of those responding to the survey, only 2% said they had stayed in all-suites hotels in the past 12 months, whereas 27% of them had stayed in large luxury hotels. “There’s just not enough of them,” Bush said of the all-suites properties.

In some cities, the move to convert rent-controlled apartment buildings on lucrative downtown sites into all-suites hotels has stirred controversy. Some cities, including San Francisco, have amended local ordinances to prevent wide-scale conversions that might dilute or subvert rent-control statutes. TLC Suites occupies a building that had long been an apartment-hotel, and some permanent residents remain at monthly rents far below what the weekly rates are for TLC’s transient guests.

Rates for rooms at all-suites hotels average $80 a night--higher than average room rates, but comparable to rates at hotels in major cities, and considerably lower than luxury hotel rates. However, as the field of all-suites hotels expands to include budget and luxury sites, so is the range of prices widening.

Bush said that cost is the business traveler’s third-most-important consideration. It is slightly more important to the long-term guest, and in that regard, most all-suites hotels have the advantage. Many give discounts to long-term guests; normal rates are reduced for stays of seven days and longer, and again for stays lasting 30 days or more.

At TLC Suites, which bills itself as the cream of the crop of the independent all-suites hotels, rates are comparable to luxury hotels in San Francisco.

A one-bedroom runs about $180 a night. And although TLC does not provide the lavish services and facilities of its Nob Hill neighbors, it does stock the room with a dazzling array of equipment and work supplies.

TLC partners Walter Lawrence and Tony Mead bought the old apartment hotel at the corner of Powell and Pine in January and began remodeling and upgrading rooms. Lawrence is a former advertising man who spent many years on the road, being bored in hotel rooms and disconsolately compiling complaints against them.

His “pet hates,” as he calls the list, include lights that were either off or on but nothing in between, lamps and other fixtures bolted in place, hook-less clothes hangers that could be hung only on clasps affixed to the clothes rod, and having nothing to read or do--except watch television--once he got to his room.

Hoteliers, he said, “kept telling me that people never stay in their rooms and I would say, ‘I ask you, idiot, why should they?’ ”

He decided back then, he said, that if he ever got the chance, he would open a hotel that was suited to working travelers. The TLC, with a list of equipment that fills four single-spaced pages, is his answer.

Most of the rooms at TLC are one-bedroom apartments, with kitchens and separate desk areas. All lights are on dimmer switches and there are real hangers, in three varieties. The kitchen is equipped with high-quality cookware, plus a mixer, a toaster oven, food processor, coffee maker and grinder (gourmet beans supplied). Not only are there books to read (and we’re not talking trashy paperbacks here), but guide books, cook books and half a dozen reference books.

For entertainment, there are games and a gaming table, stereo television, an AM-FM tuner, cassette deck, videocassette recorder and a compact disc player. TLC has a lending library of audio and video tapes and compact discs, in case the guest wishes to exchange the ones left in the room.

The desk area mutes almost all gripes any business traveler has ever had about trying to work in a hotel room.

In addition to supplies like staplers, cellophane tape, scissors, paper clips and drafting tools, each room has a two-line phone, state-of-the-art phone system and its own answering machine.

“If there’s any question about whether someone would want it, we put it in,” said Walter Lawrence. “We call it overkill.”