Extended-Stay Hotels Enjoy Record Demand in Second Quarter
Report from Highland Group shows strongest performance in lower-priced segments >>
by: Harvey Chipkin
All three extended-stay hotel segments reported their highest-ever room night demand in the second quarter of 2021, according to a report from the Highland Group, a consultancy. Additionally, economy and mid-price segments reported their highest room revenues to date, and upscale extended-stay hotels have regained more than 90% of revenues achieved in the second quarter of 2019. At the end of the second quarter of this year, overall extended-stay hotel revenues were very close to their level two years ago. The combination of new and reopening of temporarily closed hotels resulted in the strongest supply growth in more than 20 years in the quarter. However, very strong demand raised extended-stay hotel occupancy to its highest level in seven quarters. With the rate of supply increase forecast to decline in the second half of 2021 and beyond, extended-stay hotel occupancy should continue to rise during the foreseeable future. Monthly revenue per available room (RevPAR) for economy extended-stay hotels has already exceeded its 2019 value, and the segment is set to achieve the same for the calendar year 2021. The mid-price segment is likely to follow next year, but not until 2023 is the upscale extended-stay hotel annual RevPAR expected to be back to its nominal 2019 level. That segment’s relatively high concentration of rooms in urban gateway markets is hindering its recovery pace compared with lower price segments.
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