We enter this year with some room. Well, 745 rooms to be exact! We have several hotel projects under construction ranging from the early stages in the design-build process to preparing for the furniture, fixtures, and equipment. And there are more coming! We have been building hotels through many cycles in our forty-two years of construction. We usually see a burst of new construction and then an inevitable drop off—note the emphasis on usually. This time seems to be different.
After a prolonged growth cycle like we have been enjoying, we naturally look at our pipeline to gauge feasibility, recession risks, and long-term prospects. However, there seems to be continued growth in all the industries we serve—restaurants keep expanding, medical offices are growing, senior living is breaking ground on new facilities, and of course, hotels continue to rise. In preparing for a recession, we often see declines in project volume across industries except, oddly enough, in extended-stay hotels.
A presentation we attend ed at a conference and reiterated in a recent article in Hotel News Now, indicates that the extended-stay hotel segment outperformed other hotel classes during the past two recessions. “More than 500,000 hotel rooms have been added since the last recession, increasing supply by more than 10% nationally, and much more than that in a handful of top markets. Moreover, the vast majority of these new rooms have come in two segments: select service and extended-stay,” according to Joseph Rael with STR.com writing for Hotel News Now. Extended stay is growing at four times the overall room supply.
This map indicates the extended-stay hotels Fortney & Weygandt are currently constructing.
Despite the recessionary fears we hear murmured, our bid board remains full and diverse. With this encouraging news from various hotel experts, we believe (and our bid-board supports) that extended stay continues to be in high demand. The demographics extended-stay hotels target also seem to support the other industries we serve. Restaurants continue to boom in available tenant space or in new retail centers. Extended-stay brands target growing office centers and medical campuses—segments where we get more and more requests to build.
There is no crystal ball to accurately predict the future. However, by studying the trends and diversifying our approach, we remain confident in our ability to continue to thrive. If you look at the industry segments we serve, they are all providing a service that people want and need. Paint color trends will change, food flavors will evolve, and medical needs change depending upon the phase of life you are in. The successful ones continue to hear what the customers are saying and adapt to meet those needs which is the true staying power.