Gary DeLapp is a pioneer in the extended-stay sector. Now he’s building a new brand.
Not every road-warrior corporate exec or gig worker facing a short-term, remote assignment in a distant city wants to snag an Airbnb. That’s an underlying reason that veteran lodging-industry executive Gary DeLapp sees big potential for his Matthews-based startup, stayAPT Suites.
With backing from New York private-equity group Lindsay Goldberg, stayAPT is targeting 100 corporate-owned and250 franchisee-owned properties within five years. Thirteen hotels were open as of October, including properties in Raleigh and Goldsboro, where the first stayAPT opened in October 2020. A few dozen more units are in the permitting and construction stages, mostly in the Southeast and Texas.
DeLapp says stayAPT is aiming at the higher end of the extended-stay market with a room design that sets the brand apart from entrenched rivals including SpringHill Suites, Homewood Suites and Extended Stay America, one of his former employers. StayAPT’s units average about 500 square feet and include three distinct areas: a kitchen, a living room with a 55-inch television, and a bedroom connected to a full bathroom. It doesn’t plan to convert existing hotels into the new brand.
“Our product is unique and a market disruptor with a distinct residential feel,” he says. The units also open to a garden-style courtyard that is “a critical piece for us to generate the residential feel found in upscale apartment living.”
Lindsay Goldberg tapped DeLapp to launch stayAPT in early 2019, before the COVID-19 pandemic shook up the hospitality landscape. At the same time, the investment group also acquired an existing extended-stay business, Myrtle Beach, South Carolina-based Affordable Suites, which now has 20 units and is operated separately from the newer concept.
The pandemic slowed stayAPT and other building projects, to be sure. In mid-2021, DeLapp told the Hotel Management industry publication it would have 25 hotels open by early 2023.
Still, an increase in the gig economy, flexible work space and greater mobility of the workforce prompts industry followers to forecast spiking demand for extended-stay lodging. Annual revenue in the overall extended-stay sector is expected to increase about 170% over the next decade to $132 billion, according to a report in Travel Daily News, a trade publication.
DeLapp is a graduate of Florida State University with lots of industry experience. After working for a Houston-based hotel company, he joined the Homestead Village brand in 1996, when extended-stay hotels started popping up everywhere. He was named CEO five years later when the Blackstone private-equity group bought the business. He also became the top executive at Extended Stay America, which Blackstone acquired in 2004 and developed into an industry leader with more than 650 hotels.
Charlotte-based Extended Stay, which was a public company between 2013 and 2021, is now owned by a partnership of Blackstone and Starwood Capital Group.
“By the time I left [in 2011], I’d gone through four different ownership changes, and it was time to take on a new challenge,” DeLapp says.
He later moved to Invitation Homes, a home-leasing business with 60,000 rentals, where he was president between 2013 and 2015. A seat on the board of directors at WoodSpring Hotels led to the top job there from 2016-18, during which the business expanded from 179 to more than 250 locations.
Lindsay Goldberg, which owned WoodSpring from 2012 to 2017, sold it to Choice Hotels for $231 million in 2018. The private-equity firm is also a lead investor in Mount Airy-based Pike Corp., an energy industry contractor that is one of North Carolina’s largest private companies.
Now DeLapp is focused on building the brand and selling the vision to franchisees, who will pay the operator a royalty of 5% of gross revenue and 2% for marketing expenses. StayAPT offers hotels in four formats, ranging from 59 to 103 rooms. They indicate the average stay across their network is about 18 nights.
According to a spokesperson, the hotels require an investment of $9 million to $15 million depending on their size.
Target customers tend to be employees on long-term assignments, consultants, military personnel, traveling nurses and university workers, says Jennifer Kearney, the chief marketing officer. Having a national footprint will help make the company more attractive to organizations with multiple locations, she adds.
Room rates average about $90 a night with price breaks for longer rentals. Occupancy rates have been about 86% in recent months, Kearney says. That is the high end of what DeLapp calls the industry’s “midscale category.”
StayAPT employs 30 people at its suburban Charlotte office where real estate, franchise development, sales, finance, and administrative staff comprise most of the team. A separate manage-ment company employs hotel operations, maintenance, security, and housekeeping staff to support the individual properties.
“It’s a business with tremendous potential,” says DeLapp, noting as a startup there are ample new markets for the brand with no worry of existing overlap. “I feel so strongly about our future, I personally have invested in the business. I believe in it that much.” ■