David Beatty, president of Guest Quarters, opened a slick, blue folder in front of him and up popped a miniature cardboard replica of a typical suite of rooms, complete with prints on the walls, house plants and a kitchen sink. Next to the three-dimensional picture was this explanation: "It's a difficult concept for many people to grasp, which is why we have reproduced this model of a typical Guest Quarters one-bedroom suite."

Beatty was displaying one of the latest marketing devices that Guest Quarters is using to convince companies to put their executives up in their residential hotels.

Guest Quarters is one of a new breed of smaller, luxury hotels catering chiefly to businessmen and seasoned travelers.

What sets the company apart from others is its novel approach to the concept of lodging.

Instead of the standard bedroom and bath arrangement, all of the hotel chain's 1,225 rooms are actually suites with a small kitchen, living room and a separate bedroom or bedrooms. Whereas room space in most hotels occupies 50 percent of the available space, Guest Quarters devotes 75 percent of its buildings to rooms, Beatty said.

The idea was to create a comfortable, home-like environment that would allow guests to conduct business meetings, bring their families or entertain right in their rooms.

"We took the apartment and added hotel services," Beatty said, who moved his company's headquarters from Norfolk to Washington last spring.

You won't find opulent lobbies or ballrooms at a Guest Quarters. The energy and money is put into the rooms and room service.

Beatty is quick to point out the Guest Quarters is in the hotel business, not the food services business. Upon request, the hotel staff will stock a guest's refrigerator with food or will prepare a meal and serve it in the suite. But most of the hotels do not have a restaurant, although all are equipped with kitchen and a food service staff.

"We think that the critical thing is to make people comfortable," Beatty said. "We're not an entertainment service." Since the hotels are relatively small (the largest one has 243 rooms), the staff can better serve the individual needs of the guests, Beatty said.

The company employs 650 people, 23 in its M Street headquarters. It is a privately held firm started in Norfolk in 1972 by developer George Kauffman, currently chairman, and lawyer Shepard McKenney. Guest Quarters Development Inc., the site acquisition firm of the company, still is based in Norfolk. The operations, marketing, accounging and central reservations functions of the firm are all handled here.

Guest Quarters is currently in the midst of an expansion into its two key markets, the West and the Sun Belt. The company operates seven hotels in Washington, Atlanta, Houston and Greensboro, N.C., and broke ground this summer for a 349-unit, 35 million hotel in Houston, that city's second. A 210-room facility opened in Atlanta last month.

There are three Guest Quarters in this area, one in Alexandria and two in the District. Some of the early hotels, such as the one in Alexandria, were conversions of existing apartment buildings. The emphasis is now on new construction.

"We consider D.C. a growth market," Beatty said. "We need to be in Washington."

The room rates, which start at $88 a night for a one-bedroom suite in the down-town hotels, are in keeping with the luxury image of the hotel and are on par with hotels such as the Four Seasons. The rates vary with location and occupancy.

Beatty refers to the hotel as "a luxurious value." For what you would pay for a standard one-bedroom, at Guest Quarters you get a lot more -- more room and more service -- he said.

A typical Guest Quarters suite is 650 square feet with a small but functional kitchen, a combination living/dining room area, bedroom and bath. The kitchen has a full-sized refrigerator, dishwasher, toaster and is stocked with an array of pots, pans, plates, glasses and silverware. There are two sofas, a chrome-and-glass coffee table and dining table. The rooms are appointed with brightly colored and contemporary furniture and furnishings.

Guests Quarters has its share of families, but most of its business comes from corporates ranks. Beatty said he has witnessed an increase in the number of business women who are traveling and staying at his hotels.

The average stay at Guest Quarters is longer than the industry average, and its not unusual for some to stay three or four months at a time. The federal government and the World Bank are among some of the institutions that house visitors at Guest Quarters for extended stays.

Beatty knows he has a good thing and that others will be chasing after some of his business.

"There is a lot of competition. But it has been on the lower end of the market," he said. "No one has built a $40 million hotel. We've left a lot of the lower end of the market. We don't want to cheapen our suites. We want to continually set the standard for the industry."