Updated 10:58 a.m. Eastern Standard Time, 7 January 2016
REPORT FROM THE U.S.—In 1975, Jack DeBoer found himself in a pickle when he realized the apartment world wasn’t doing well.
“Interest rates went through the roof and apartment buildings were vacant around the country,” DeBoer told Hotel News Now during a phone interview. He said he thought to himself, “Gee, if we could have apartment costs and hotel revenue that would be OK.”
That thought prompted DeBoer to launch The Residence in Wichita, Kansas, and subsequently created the extended-stay concept that is today known as the Residence Inn brand.
Marriott International would go on to acquire the brand 12 years later in 1987. And not much has changed with the brand since Marriott first acquired it. That’s by design.
With the brand having just celebrated its 40th anniversary and 700th hotel opening—The Residence Inn Chicago Downtown/Loop—which is also the largest hotel in the extended-stay chain’s portfolio, the brand’s leaders have plans to hit the urban and international markets hard in the coming years, Diane Mayer, VP and global brand manager, told HNN during a recent press event.
But that road to the brand entering global markets is scattered with a nearly 40-year history that has seen it develop into what it has become known for today.
DeBoer’s ‘The Residence’
In 1981, DeBoer formed a joint venture with Brock Hotel Corporation, and under Brock Suite Hotels (the name of the joint venture) DeBoer and Robert Brock worked to develop the infrastructure of the Residence Inn system.
When DeBoer first launched the brand, guests were only able to stay at The Residence on a monthly basis. Then DeBoer realized that some people wanted to stay for two weeks, one week and even one day.
“I didn’t know anything about the hotel business, but I did understand extended stay,” he said. “We did invent that word just trying to figure out who the hell we were.”
The extended-stay customer typically stayed for more than five nights and would not require daily maid service, cutting down on housekeeping costs. These guests are typically traveling for work assignments, medical reasons or have suddenly became homeless because of natural disasters.
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| An early advertisement for the Residence Inn Hotel brand. (Photo provided by Eric Jensen) |
DeBoer still owns that first Residence Inn property, which has since converted to his new brand WaterWalk, a hybrid extended-stay hotel/apartment product.
In January 1985, the Residence Inn system was sold to Holiday Corporation. Twelve days before agreeing to sell the Residence Inn brand to Marriott in April 1987, DeBoer purchased the outstanding shares of the brand from Holiday Corporation, which also owned the Holiday Inn brand. When DeBoer sold Residence Inn to Marriott, the brand had 103 hotels in its portfolio, DeBoer said.
DeBoer said he’s happy with how things are going in Marriott’s care.
“They’ve done really well with the brand,” DeBoer said. “The brand is probably the best brand out there. They make more money than any other franchises.”
The Marriott handoff
Since the deal to acquire Residence Inn closed in 1987, Marriott has done little to change its foundation aside from adding the “by Marriott” tag.
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Much like other hotel brands, there have been several prototype refreshes and other physical changes to the properties, but the core has remained the same, Mayer said.
The first couple of years after acquiring Residence Inn, Marriott left it alone. Many in the industry joked and called the brand “Resistance Inn,” Mayer said.
“(Residence Inn) had its own way of doing things,” she said. “Over the years, I respect that Marriott has let it do its own thing.”
DeBoer said Marriott not only changed the physical but was able to build in upscale markets and push rates, making it one of the more attractive brands to franchise in the early ‘90s.
Lew Wiens was one of the early franchisors who also got his start in the apartment industry. Wiens was the incoming president of the franchise advisory council for Residence Inn in 1987 when Marriott closed the deal with DeBoer.
At the time, Marriott wasn’t “heavy” into the franchising game, Wiens said, which caused for a lot of headbutting. Marriott continued to build its own Residence Inn hotels after purchasing the brand, but after a brush with bankruptcy when developing the Courtyard by Marriott brand, the company’s attitude toward franchising changed.
“The cradle of their franchise business started with Residence Inn,” said Wiens, now chairman and CEO of True North Hotel Group, a hotel development and management company that owns and operates several Residence Inn hotels. In its portfolio, the company has 10 Residence Inn hotels with one under construction.
When Wiens and his business partner launched True North in 1998, he had only owned and operated Residence Inn hotels.
“Residence Inn is our DNA all the way back to the beginning,” Wiens said. “To us, it’s the best business model that was available.”
Wiens listed three reasons why the brand has remained relevant to his company and other franchisors over the years:
- the business model (the occupancies work better);
- lower operating costs; and
- high profit margins.
The future of Residence Inn
Choosing Chicago as the market to house the largest Residence Inn hotel in the world was a calculated decision, said Marriott President and CEO Arne Sorenson during a sit-down meeting with HNN at the 700th grand opening event for The Residence Inn Chicago Downtown/Loop.
“This brand makes sense in a lot of markets around the world, but Chicago is especially unique in that it welcomes a mix of business and leisure travelers,” Sorenson said.
“This property is representative of a new growth trajectory for the brand,” Mayer said, adding that the focus in the coming years will be urban and international markets.
Executives see strong growth prospects in the Middle East and Africa regions where extended-stay options are limited.
However, in the Middle East, developers don’t quite get the model and consumers don’t understand the value proposition, Mayer said. For that reason, Marriott has created a separate prototype for the region with bigger rooms, more food and beverage and high-end finishes to the guestrooms.
There are three Residence Inn hotels open in the Middle East and seven more in the pipeline, mostly in Saudi Arabia, Mayer added.
The brand will open its first hotel in Africa in 2017 with four more coming down the pike in Algeria and Nigeria. But what’s the one thing holding up development in the region?
“Sourcing materials are tough,” Mayer said.
Residence Inn also is increasing expansion in Latin American markets. The brand first expanded outside North America in 2009 with the opening of the Residence Inn in Escazú, Costa Rica.
South America’s first Residence Inn—The Residence Inn Barra da Tijuca— will open in June in Rio de Janeiro, Brazil.
Aside from expansion efforts, the brand is piloting a new breakfast menu that is set to debut in April or May of this year, Mayer said.
“It’s been six years since a refresh,” she said, adding that the current breakfast has a lot of variety but is the same every day.
The brand is working on a “Made for You” entrée that will rotate every day and a “customization station” that will allow guests to make their own breakfast, Mayer said.
Editor's note: Marriott International paid for travel expenses, hotel accommodations, food and entertainment for two nights. Complete editorial control was at the discretion of the Hotel News Now editorial team; Marriott International had no influence on the coverage provided.