Dive Brief:

• Atlanta-based Noble Investment Group acquired a 10-property extended stay portfolio spanning Florida, Georgia, South Carolina, Tennessee and Kentucky, the company announced Tuesday. All hotels in the portfolio are WoodSpring Suites properties, a Choice Hotels International brand. 
• With the acquisition, Noble continues its investment strategy of adding “substantial scale to [its] extended-stay travel and hospitality platform,” Ben Brunt, the company’s managing principal and chief investment officer, said in the announcement. The company has acquired 48 hotels in the select-service and extended stay spaces over the last two years. 
• The acquisition comes as investors and developers increasingly eye extended stay opportunities, particularly in the Southeastern region, and brands in the category expand nationwide.

Dive Insight:

Noble said the Southeastern states it’s chosen to expand in are “characterized by positive net migration, job growth and wage growth.” The firm will continue actively investing in extended stay hotels across the Southeast, which Brunt calls the firm’s “backyard.” 

Noble is also in the process of launching a ground-up construction extended stay “platform,” according to Brunt.  

“We are working with all of our brand relationships around a variety of strategies to help them develop and build their [extended stay] product to scale,” Brunt said. He told Hotel Dive the firm has “deep relationships” with Marriott, Hilton, Hyatt and IHG but did not specify which brand it’s working with for the launch. 

Noble is one of several investment companies that has been drawn to the extended stay product type for its lower costs to build and operate. Following the pandemic, extended stay hotels have become a more desirable option for longer-term guests who are working remotely or looking for in-room accommodations like kitchen space.

“It became clear, as we moved through the pandemic, that the [extended stay] segment of the hospitality business, specifically the economy and midscale segments, were the most resilient from an occupancy standpoint, and it has the potential, if properly run, to be the most profitable segment relative to gross operating profit margins,” Brunt told Hotel Dive. 

“[Extended stay properties] have labor-light operating models, with longer length of stays,” he added. “This longer-term extended stay [product] that is at the nexus of hospitality and residential has become interesting given its performance metrics.” 

Hotel chains like Choice are expanding their extended stay pipelines. The hotel company’s WoodSpring Suites brand broke a record in May, opening six hotels in one month with another 100 hotels in the pipeline. 

Some of those will be developed by Rimrock Companies, an investment and development firm that was similarly drawn to the Southeast, previously telling Hotel Dive the region boasts strong population and job growth fundamentals. 

Earlier this year, Marriott entered the U.S. midscale segment with a new extended stay brand dubbed Project MidX, and Hilton launched its Project H3 extended stay brand.