By Bill Duncan for Hotel-Online
An increasing number of people are choosing to reside and travel to destinations just outside the city limits. These areas are dubbed ‘surban’ – a pairing of urban amenities and suburban price points – and present opportunities for those hotel owners who are willing to get creative, adapt their properties and remain flexible in expanding their business models.
According to a new Urban Land Institute report, the majority of the households formed by younger adults through 2025 will gravitate to surban areas. In addition, the growth of urban populations is another driving force to surban areas. In fact, all but one of the United States’ 20 largest cities grew in population last year, according to May 2016 U.S. Census Bureau data.
Sweet Spot for All Suites
Multifamily developers have responded to this trend with an increasing number of highly amenitized luxury rental offerings adjacent to suburban retail and business hubs. Likewise, homebuilders have followed suit, adapting the single-family home into a more urban context to take part in this burgeoning market.
From a hotelier’s perspective, All Suites properties are perfectly poised to be at the forefront of the surban trend. Travelers are increasingly looking for space, value-added amenities and convenience at a cost-efficient price point. Recent guest surveys conducted by Hilton’s All Suites brands (Embassy Suites by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton) point to an increased desire for accommodations located in walkable, vibrant communities with shopping and dining, as well as easy access to public transportation.
Finding the Right Partner
Hotel developers seeking greater share of the lucrative surban market should look for a partner with experience in suburban communities, a flexibility to quickly adapt to tighter spaces and an expertise in finding prime locations. Hilton’s All Suites brands all have proven track records in suburban markets nationwide and have recently made significant inroads into major metropolitan areas like New York, Chicago, Denver, Dallas, Atlanta and Washington, D.C.
The Hilton All Suites brands will continue focusing on high-barrier-to-entry markets and offering a strong value proposition for travelers. Complimentary breakfast, Wi-Fi, and other signature amenities give guests who wish to stay in urban or surban locations more bang for their buck, and new streamlined development models provide owners with hotels that are easier to build than ever before.
Finding the Right Fit
Urban and surban locations require innovative building designs and revamped development prototypes to accommodate tighter spaces. Embassy Suites’ Design Option III takes a scalable “kit of parts” approach that adapts well to a wide range of urban/downtown, suburban, mixed-use and conversion builds. The efficient side-by-side suite design allows for more natural light throughout the property, including the atrium. Other key benefits include more one-bedroom suites and less land required for development.
Another design innovation, Homewood Suites’ Generation 9.2 prototype, provides a scalable cost-saving building model that vastly increases the number of potential sites for a Homewood Suites extended stay hotel. This prototype also features a “bend and flex” approach to extended stay properties, allowing up to 85 percent studios compared to the previous 60 percent maximum, in markets where it makes sense for business and customer loyalty.
Home2 Suites, the youngest of the All Suites brands, has been catering to guests from all over the world for about six years – the same period travelers’ preference towards urban markets began picking up steam. From the onset, Home2 Suites was designed to be built on less land than its fellow All Suites brands, with streamlined construction that often allows owners to go from groundbreaking to opening in under a year. This is a competitive edge that has become increasingly valuable in today’s fast-moving urban and surban markets.
Other Strategies: Go Historic, Combine Brands
In addition to the flexible and evolving prototypes, All Suites brands embrace adaptive reuse and dual-branded models in markets where real estate is at a premium. Conversion of the 1917 Walton Office Building to the Home2 Suites by Hilton Atlanta Downtown is a prime example of adaptive reuse that benefits both the brand and the community.
Dual builds are another effective strategy that appeal to both owners and travelers. The Homewood Suites by Hilton Cincinnati-Downtown, for example, is a dual-branded 249 room Homewood Suites and Hampton property. Sharing front- and back-of-house facilities saves each brand construction costs, zoning approvals and ongoing operational expenses.
Landing the Right Location
Location, opportunity and demand will ultimately determine the success of downtown and surban developments. Drawing from the combined experience and best practices of our All Suites brands, we help owners identify current and future growth around convention centers, sports stadiums, cultural attractions and other demand generators. Moreover, because of the depth of the All Suites footprint in urban and prime suburban locations, we can more easily forecast market patterns, including important distinctions between leisure and business traveler activity.
Our experience proves All Suites hotels work well in revitalized areas around a city. The Embassy Suites by Hilton The Woodlands at Hughes Landing just outside of Houston and the Homewood Suites by Hilton Jacksonville-South/St. Johns Center have both been in high demand since opening.
We are also helping developers successfully target suburban areas perfectly situated to transform into surban centers, offering a mix of residential and commercial real estate with walkable city centers. The pending Embassy Suites by Hilton at Brooks City Base situated near San Antonio’s Missions National Historic Park is part of a new emerging surban neighborhood on the city’s south side. Similarly, the community surrounding the Home2 Suites by Hilton Stafford/Quantico property slated to open in 2017 is in the midst of a major redevelopment, which will include several new retail, recreational and business centers.
With the cost of living in our nation’s urban centers rapidly on the rise, surban markets will continue to emerge to accommodate residents and travelers alike. Likewise, savvy hotel executives should not only monitor, but move quickly to tap into these lucrative markets nationwide.
