Aug. 20--At a time when most chief executives are cutting back, David Vickers talks almost exclusively about growth. 

Vickers, 44, is the founder and chief executive of InTown Suites, an Atlanta-based extended-stay hotel firm. InTown this year doubled its size by acquiring competitor Suburban Lodges of America. 

The combined chain includes 118 properties and targets the low end of the market. 

Vickers plans to build new hotels while simultaneously searching for the next acquisition. 

"It is very, very difficult in today's marketplace to find a real estate deal that makes sense," he said. "As long as our model continues to work, it pays us to keep going." 

Other extended-stay firms are also growing -- including midtier players like Homestead Studio Suites and upscale chains such as Staybridge Suites. Both Homestead and Staybridge are based in Atlanta. 

The extended-stay segment is outperforming the overall hospitality industry, and experts say demand continues to grow. Compared to the general hotel market, extended-stay seems nearly immune to the economic downturn. 

The firms do face challenges -- from expensive capital to a falloff in business after Sept.11 to the perception that extended-stay hotels attract crime. 

Still, on an average night in the first quarter, extended-stay properties were 70 percent full, compared with 55 percent for all hotels, according to The Highland Group, a hospitality consulting firm. 

Demand for extended-stay hotels increased 4 percent in 2001, while demand in the overall hotel industry fell by the same amount. 

At an InTown Suites on the industrial stretch of Northside Drive, a sign recently advertised a $175 per week rate. Each small room features a sink, stove, microwave and mini-refrigerator tucked in beside the bathroom. 

Mike Author, who works at Brinks, moved in about two months ago after a relationship breakup. He is saving money to get an apartment, he said. In the meantime, he said, he likes the quiet hotel. "The best part is I've got my own place," he said. 

Extended-stay has held up relatively well in the recession because it caters to people working temporary jobs and looking for work, local executives say. It also appeals to budget-conscious business travelers. 

People are unsure about their employment situations because of the economy, said Kevin Lewis, chief executive of Atlanta-based Suburban Franchise Systems. 

"People who once would have jumped into a year-long apartment lease now are saying, `Let's wait and see,"' he said. 

Gary DeLapp, chief executive at Homestead, said he started seeing an increase in vacation business in fall 2001. The price is often cheaper than at a regular hotel, plus you get a kitchen, which appeals to families. 

Vickers said InTown Suites, particularly in Florida, is increasingly attracting tourists. 

InTown operates above 90 percent occupancy if you don't include the newly acquired Suburban properties, Vickers said. 

The key, according to Vickers, is to keep it simple and the prices low. He only employs six people per property. A guest asking for fresh towels at the front desk will be directed to the nearest laundromat. 

"We don't do all things, but the things we do, we do right," Vickers said. 

Vickers started InTown Suites in 1988, by turning old buildings into extended-stay properties. After a while, his in-house construction team started building properties across the country. Meanwhile, in the mid to late 1990s, many extended-stay players were entering the market, and existing companies were expanding. 

Vickers sped up growth in 1997, when New York investment banking firm Lazard invested $150 million. In May of this year, InTown acquired Suburban, also based in Atlanta. InTown sold off the franchise business and the GuestHouse International division. Vickers then laid off 400 workers and set about converting the company-owned properties to InTown Suites. 

The company is experiencing growing pains, Vickers acknowledged. 

The Suburban properties are operating at a much-lower occupancy than the InTown properties, he said. Many Suburban employees were upset about the acquisition, and in some markets, Suburbans operate across the street from InTowns. 

Plus, Vickers said many Suburban properties were in bad condition, including one he visited that reeked of smoke. 

"I thought it would be easier," Vickers said. "I thought we'd make a couple of changes and the ship would turn. It didn't quite happen like that." 

In addition to the difficulties of digesting an acquisition, InTown faces the same challenges as the rest of the industry. The biggest is image. 

In metro Atlanta, municipalities like Marietta and Gwinnett County have fought to stop extended-stay hotels. Some community leaders say the lower-price hotels attract drug dealers and other undesirable residents. 

The local market may be particularly tough in terms of backlash, but Mark Skinner, a partner at The Highland Group, said the image problems are nationwide. 

As for future growth, capital is expensive. Andrew Pace, president of a seven-property chain in Atlanta called SuiteOne, said he hopes to add three properties next year. His properties are operating at 84 percent occupancy, down only 2 percentage points since Sept.11. However, "because of the recession, it is hard to get capital," he said. 

Vickers acknowledges expensive capital may slow him down but he hopes to announce another acquisition in early 2003. 

He said he may take InTown public eventually or sell it to a REIT. In the meantime, the business is generating cash for him and his investors, he said. Vickers owns about 30 percent of the company. 

Vickers is on the road most weeks, visiting Suburbans. After years of staying at high-end hotels, he started staying at his own properties again after the acquisition. 

While he no longer gets room service or mints on his pillows, he gets an up-close look at the business. 

These days, he mostly likes what he sees. 

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(c) 2002, The Atlanta Journal-Constitution. Distributed by Knight Ridder/Tribune Business News.