Extended Stay Hotels Continue To See Strong Rate Gains
Increases follow five months of decelerating hikes >>
by: Harvey Chipkin
Following five consecutive months (March through July) of decelerating gains in average daily rate (ADR) in the extended stay hotel segment, there was a 12.2% gain in October — the third consecutive month of increase after the 12% gain in September and the 10.9% rise in August, according to The Highland Group, a consultancy.
Mark Skinner, partner, said, “Three consecutive months of double-digit gains in extended-stay hotel ADR coupled with growth in demand is very encouraging at this point in the hotel business cycle.”
According to The Highland Group‘s monthly report, extended stay hotels continue to perform very well, with monthly demand growth exceeding the change in supply, resulting in a slight uptick in occupancy.
Following all three extended stay segments (economy, mid-price, upscale) reporting a monthly decline in demand in July compared with the previous year, mid-price and upscale extended stay hotel demand gained for the third successive month in October and overall extended stay hotel demand increased more rapidly than the change in supply.
Upscale was the only extended stay segment reporting an occupancy increase in October. However, at 94.9%, its occupancy index is still below the corresponding month in 2019. Only in April 2022 did the upscale extended stay segment’s occupancy index exceed 100% this year. (Occupancy can exceed 100% when a room is sold twice within the same period.)
Mid-price and upscale extended stay hotels continue to lead ADR growth, with October reporting the 12th consecutive month that overall extended stay ADR in those two categories was higher than its nominal value in 2019.