Manor Care to expand into extended-stay hotels Company to open 10 MainStay Suites

Lodging

January 26, 1996|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

TC

Manor Care Inc. will open 10 extended-stay hotels by next year, pushing the Silver Spring company into a segment of the lodging market that has been expanding even faster than traditional hotels as the whole industry recovers briskly from a deep early-1990s downturn.

Manor Care told an investor conference in California that it will spend $100 million on the expansion, and will name the new hotels MainStay Suites.

Like Marriott International Inc.'s Residence Inn chain, the hotels will be aimed at business travelers who plan to stay five nights or longer, and MainStay will be run by an executive who worked for Residence Inn before Marriott bought that chain in 1987.

"The reason we are going into this is that MainStay is designed to fill the gap between traditional upscale and basic extended stay products," Manor Care spokeswoman Wendy Grant said. She said the company broke ground this week on a hotel outside Dallas, and is seeking sites in Denver, Miami, Kansas City and suburban Washington.

The new chain will seek a niche as a less expensive alternative to Residence Inn, Ms. Grant said. MainStay rates will run between $55 and $65 a night.

Studio and one-bedroom suites will come with kitchens, work spaces, two-line phones and with data ports for laptop computers. Plans also call for central business centers at each hotel to offer faxing, photocopying and other services.

"Manor Care is obviously looking to fill in some holes where demand is," NatWest Securities Corp. analyst Marie Conway said. "I think this will be another home run for them. Companies are more cost conscious and may not want to pay for the Beverly Hilton for five days."

By some measures, the extended-stay market has been Marriott's strongest brand in recent years, Marriott spokesman Terry Souers said. Residence Inn had the highest occupancy of any Marriott hotel chain in 1994, and continued that streak during the first three quarters of 1995, posting occupancy in the 85 to 90 percent range.

Nationwide hotel occupancy, according to recent reports, is running about 66 percent.

Manor Care plans to have 170 MainStay Suites by 2000, with 25 company-owned hotels and the rest franchised. Manor Care's Choice Hotels International unit already owns 65 hotels and franchises 3,600 hotels in 40 nations. It controls the Quality, Comfort, Clarion, Sleep, Econo-Lodge and Rodeway chains.

Manor Care's hotel business generated about $303 million in sales during the fiscal year that ended last May, according to company reports. Its network of rehabilitation facilities and nursing homes generated most of the rest of its $1.3 billion in revenues.

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