Research from The Highland Group shows falloff in Q2

In the first half of 2025, extended stay hotels incurred lower revenue per available room (RevPAR) declines than corresponding classes of all hotels, especially at the economy level, according to a new report from The Highland Group, a consultancy.

The performance of extended stay hotels in the first half of 2025 is largely “a tale of two quarters,” according to the report. Extended stay occupancy contracted every month this year, but RevPAR increased each month in the first quarter before declining for three consecutive months in the second quarter.

Total extended stay hotel RevPAR is down 1.1% year to date in 2025, but this is largely due to a shift in extended stay room supply favoring lower-priced rooms. Economy and mid-price extended stay hotel RevPAR is up 0.3% and 0.6% respectively through June 2025. STR/CoStar, the industry data provider, reports that all economy class hotel RevPAR declined 1.2% in the first half of 2025 compared with the same period in 2024. All midprice-class hotel RevPAR contracted 0.9% year to date, demonstrating that economy and midprice extended stay hotels are weathering the decline better than corresponding classes of all hotels.

Upscale extended stay hotels also fared slightly better than all upscale-class hotels based on the decline in RevPAR year to date.

Extended stay hotel demand, which has never declined annually except in 2020, continues to grow, but well below its long-term average increase. Without an uptick in demand, the near-term outlook is a further decline in extended stay occupancy and, if so, average daily rate is likely to follow.

Highlights from the report include:

• Room revenues were up 1.6% year to date and 0.7% in the second quarter;
• RevPAR declined 1.1% year to date and 2.7% in the second quarter;
• Occupancy fell to a five-year low in the second quarter, but with a 10-percentage-point occupancy premium compared with all hotels.