In every industry, trends develop in society, the issue for each company is to decide if it is a fad that will peak or will it be on going. For an individual you can do something or not, but for a company, a rational business case must be made to investment millions of dollars to ensure the investment repays millions of dollars. If the company is wrong, then millions of dollars of investments must be written off and careers change.

In an article by Martha C White of the New York Times News Service, the issue during the COVID is work from home. If you can work from home, then potentially you can work from any city or place. It is possible to work and enjoy the community you are visiting for longer period of time and if you are staying for longer periods of time, you will want a setup you have at home.

In the lodging industry, extended stay hotels are popular. Visitors tend to stay longer and need less housekeeping, extended hotels are less expensive to build and operate than their full service hotels. If they are less expensive, it tends to mean the margins are higher and higher margins mean hotel operators are adding new brands to their portfolios.

Hilton Worldwide, Hyatt Hotels and Marriott International have all introduced extended stay brands. Last year, Best Western International, Wyndham Hotels and Resorts as well as Choice Hotels introduced an extended stay chain.

Jan Freitag, national director of hospitality market analytics firms CoStar, said the action is hot as it can get.

Issac Lake, a brand manager at Project H3 by Hilton, noted economical construction is a top priority for hotel operators and the design is superefficient the way the design is built. For example, H3 rooms are designed so the bathrooms require only one fire sprinkler, light fixtures can be plugged in behind the bed to minimize the number of electrical lines and a single type of vinyl floor tile is used rather than multiple flooring surfaces. (next time you are in a hotel room really look at how the room is put togther behind the walls).

The extended stay rooms are a little larger, but there are no palatial lobbies, full service restaurants. Weekly rather than daily housekeeping is the normal, fewer daily check ins and outs reduces the number of front desk employees needed.

According to a study by Actabl, a maker of hotel management software, labor costs at full service hotels rose 24% in 2022, while costs rose 12% at extended stay hotels.

The kitchen in the extended stay hotels, means there can be cost savings on restaurant meals because people can make their own meals rather than eating out.

Extended hotels also cater to construction workers working on the infrastructure which is being built out.

Linking to dividend paying stocks, all companies look at trends and have to make a decision to add the trend to their products and services. If the trend becomes the normal, then there will be more additions as time goes on. However the key is always trends change, it is harder to change once the infrastructure has been built to service the trend. For your investments, how does your company capitalize on trends? which trend lost money? what did the company do?

There are more questions than answers, till the next time – to raising questions.