The Extended-Stay Turnaround: Strategy, Grit and Returns
Inside the 3-Year Turnaround of a Forgotten Hotel
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Key Concepts:
#HospitalityTurnaround | #RealEstateRepositioning | #OperationalStrategy
#RevenueOptimization | #ExtendedStayStrategy | #AssetReinvention
In 2015, we acquired a 112-key extended-stay hotel with immense potential—but also immense challenges. Occupancy rates were low, the property was dated, it was poorly managed, and the surrounding area wasn’t welcoming. While many might have dismissed it as a liability, for distressed real estate investors, it represented a promising opportunity—one yet to be confirmed.
The hotel was originally built in 1986 as a Marriott Residence Inn and enjoyed two decades of success. However, over time, the owner either couldn't—or chose not to—comply with updated franchise requirements. As a result, the property began operating independently under a private label since 2009.
Assessing the Opportunity
Financial Assessment and Investment Thesis
We set a goal of achieving a 20% IRR (Internal Rate of Return) over a 5-year period, which required careful planning and smart execution. The main focus was on increasing revenue by tapping into strong market demand, improving operations to reduce costs, and ensuring the property’s value would grow significantly by the time of sale. Every decision was guided by detailed financial models and stress tests to balance potential risks and rewards.
Understanding Product-Market Fit
Extended-stay hotels thrive by catering to guests in transitional phases of their lives—those who need a place to stay weekly or monthly. Traditional hotels often fall short because their rooms lack kitchens and the space required for longer-term stays, while furnished apartments typically require commitments of six months or more.
This leaves extended-stay hotels in a sweet spot, especially compared to alternatives like Airbnb. While Airbnb can offer a mix of options, the experience is often inconsistent. Many guests ultimately prefer the reliability, convenience, and amenities of an extended-stay hotel.
Scarcity in the Market
At the time of purchase, this hotel was the only extended-stay option in New Haven, a city where the economy is heavily driven by education and healthcare. This unique positioning meant that, despite its challenges, the property had untapped potential.
Who are these Guests?
To understand the opportunity, we needed to clearly identify our target audience. Here’s what we found:
Academics and Professionals Professors, researchers, and physicians regularly come to New Haven for short-term assignments. Whether they’re collaborating on a project at Yale University or completing a rotation at one of the city’s hospitals, they need comfortable, practical accommodations.
Families in Transition Families visiting for medical treatments, relocations, or extended visits with loved ones in the area often require a home-like experience for several weeks or months.
Corporate Travelers Companies frequently send employees to New Haven for temporary assignments, whether for consulting, training, or project management. These professionals appreciate the blend of hotel services and apartment-like functionality that extended-stay hotels provide.
What We Learned
Extended-stay hotels fill a critical niche in the hospitality market. By understanding the needs of these key groups, we began to craft a turnaround strategy that didn’t just renovate the property but also repositioned it to meet the unique demands of our market.
The journey wasn’t just about fixing a building—it was about creating a product that served its guests and filled a gap in the local economy.
Strategies for the Turnaround
After identifying the product-market fit and understanding our target audience, it was time to craft and execute a strategy to turn the potential of this extended-stay hotel into reality. Here are the key elements that drove our success:
Repositioning the Property
We knew that to attract our target audience, the property needed a fresh identity and an inviting environment:
Rebranding for a Residential Feel: We changed the name from Premiere Hotel to Village Suites, evoking a sense of home and community. This subtle but impactful shift helped position the property as a welcoming, long-term accommodation option rather than a transient hotel.
Creating a Serene Environment: To transform the industrial/commercial surroundings, we planted abundant pine trees and installed a 6-foot picket fence around the property, added a BBQ area, a bocce court and created a few gathering nooks closer to units/rooms. This not only enhanced privacy but also created a tranquil, residential atmosphere that appealed to our guests.
Modernizing the Rooms and Amenities: Kitchens were updated, furniture was replaced with contemporary designs, and spaces were optimized for comfort and functionality, aligning with the needs of extended-stay guests.
Building Operational Excellence
Transforming the hotel required addressing inefficiencies and elevating the operational framework to industry standards:
Partnering with Experts: We brought in a Marriott-certified hotel management company, which provided:
Streamlined processes and standard operating procedures (SOPs) to ensure consistency in operations, service delivery and guest experience. This helped us reduce costs and improve efficiency.
Revenue Optimization: Leveraging the management company’s tools and expertise, we implemented dynamic pricing strategies and enhanced booking systems, ensuring the property maximized occupancy and profitability across various market conditions.
Staff Training and Development: The partnership also provided comprehensive training programs for staff, empowering them with the skills needed to deliver exceptional service and maintain guest satisfaction.
Securing Strategic Partnerships
A major breakthrough came when we secured long-term contracts with corporate clients and institutional partners. These agreements provided consistent occupancy and reliable revenue, forming a solid foundation for the hotel’s financial stability.
Overcoming Challenges
No turnaround comes without its hurdles. One significant challenge arose sixteen months into our ownership when we received a notice requiring the property to achieve full compliance with ADA regulations within six months. We had initially assumed the property was grandfathered under existing rules. To comply, we reconfigured nine units, including installing an accessibility elevator for a second-floor unit—an unexpected expense of approximately $120,000. And like this, there were many other challenges along the way.
Challenges like these exemplified the complexities of this project. From navigating regulatory requirements to managing unforeseen renovation setbacks, each obstacle tested our resolve but also provided invaluable lessons in resilience, adaptability, and problem-solving.
The Results
Within 3-year occupancy rates climbed from 53% to 64%
Average daily rates grew by 26%
GOP from 38% to 53%
36% IRR upon sale
This project wasn’t just about turning a profit; it was about realizing potential, creating value, and delivering a product that truly served its community.
Lessons Learned
Reflecting on this experience, here are three fundamental lessons that shaped the success of this project:
Know Your Market, Know Your Product Success starts with understanding both the needs of your target audience and how your product fits into the market. Aligning your offering to address those needs is the foundation of any successful turnaround.
From Vision to Action The best strategies mean little without execution. Clear priorities, disciplined follow-through, and adaptability in the face of challenges are what truly drive results.
The Power of Collaboration Surround yourself with partners who bring expertise, share your vision, and have the capacity to navigate complex situations. Empower them, foster trust, and let their strengths elevate the collective effort.
Until the next edition.
Build smart. Build with purpose. Build to Thrive.
Juan M Salas-Romer
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About the Author
Juan Salas-Romer is the Editor of Build to Thrive and the President & CEO of NHR Group, a real estate investment and development firm focused on transformative real estate and business turnaround projects. An award-winning investor and business development leader, Juan brings over 20 years of experience driving companies from inception to 7-figure revenues across the finance, real estate, hospitality, and education sectors. His work sits at the intersection of economic growth, innovation, and community impact. Linkedin bio: Juan Salas-RomerHow to Transform Blighted Properties Into High-Value Assets
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