The 6.2% increase in demand for extended stay hotels in July was the largest monthly gain since February 2022, according to a report from The Highland Group, a consultancy. The FIFA World Cup boosted extended stay average daily rate (ADR), revenue per available room (RevPAR) and room revenue growth to their second highest monthly gains in more than three years in July, and the underlying fundamentals also showed strength, with demand outpacing supply for six straight months.
Comparatively, according to the research, STR/CoStar reported aggregate comparable-class hotel demand increased 3.1% in July. When the additional day for Leap Year is considered for February 2024, monthly extended-stay hotel demand has recorded a positive change in 43 of the last 44 months.
“With six consecutive months of demand growth exceeding the increase in supply, the outlook for more extended stay hotel RevPAR gains is very promising,” said Mark Skinner, partner at The Highland Group.
The summer travel season usually benefits the overall hotel industry more than extended stay hotels, and the World Cup boosted both, according to the report, mainly during the first half of July. The event lifted ADR predominantly, and extended stay hotels reported the second largest monthly increase in ADR, RevPAR and room revenues in more than three years.
The World Cup aside, extended stay fundamentals were strong again in July. Supply growth has been below its long-term average all year, whereas demand has been higher than its long-term trend every month since February. The outlook for further gains in extended stay RevPAR is very promising, according to the report.
The 1.5% increase in extended stay hotel occupancy in July was the sixth successive positive monthly change and the largest gain in three months. Extended stay hotel occupancy in July was 10.2 percentage points higher than the average for comparable class hotels, which is typical for a summer month.
Extended stay hotels’ 3.9% ADR gain in July was the sixth consecutive monthly increase and the second largest since May 2023. Economy and mid-priced extended stay hotels posted higher growth in ADR than STR/CoStar reported for corresponding classes of hotels.
