Report: Extended-Stay Occupancy Rises

ATLANTA—The Highland Group has released its “2018 U.S. Extended-Stay Lodging: Mid-Year Report.” According to the findings, extended-stay hotels continue to absorb record levels of new rooms while maintaining occupancy above their long-term average.

“Continuing a four-quarter trend of demand growing faster than supply, extended-stay hotel occupancy reached one of its highest second quarter levels in 17 years,” said Mark Skinner, partner at The Highland Group. “More than 30,000 new extended-stay rooms opened over the past year, but demand growth was strong enough to lift average occupancy and continue ADR growth. Extended-stay hotel RevPAR increased 4.4% in the second quarter of 2018 compared to the same period in 2017.”

The two-year trend of accelerating supply growth and declining occupancy reversed in 2017, and demand has grown faster than supply for the last four consecutive quarters. After picking up in the second half of 2017, ADR growth moderated over the last six months but is well ahead of inflation, according to the report.

The strong extended-stay hotel performance in 2018 is welcome as rooms under construction climb above 50,000. The supply growth rate is accelerating but only incrementally and is short of the most recent peak levels that occurred throughout most of 2009. Recent trends in rising demand and high occupancy indicate extended-stay RevPAR growth should continue to exceed general inflation over the next year.

“Extended-stay hotel occupancy above its long-term average and the strongest demand growth trend since the post-recession recovery provide a solid foundation to absorb the record number of new rooms under construction,” said Skinner.