Research from The Highland Group and Kalibri Labs indicates potential for more development >>
Extended stay room revenues in traditional hotels are 21% higher than in extended stay hotels, indicating considerable potential for additional extended stay hotel development, according to a new report from The Highland Group and Kalibri Labs, both hospitality consultancies.
For the 12-month period ending June 2023, guest-paid room revenue from customers staying seven consecutive nights or longer was $8.97 billion at traditional hotels compared with $7.39 billion at extended stay hotels. Corresponding room nights accommodated were 74.3 million and 72.2 million. Nationally, the share of extended stay demand in extended stay hotels is 53%. In traditional hotels, extended stay demand is 13%, but there are 10 times as many rooms compared with extended stay hotels.
Mark Skinner, partner at the Highland Group, said traditional hotels are still accommodating more extended stay demand than extended stay hotels, despite the latter’s substantial gains in market share over the last 25 years.
Mark Kren, director of real estate and investment reporting at Kalibri Labs, said that despite the growth in extended stay during the pandemic, “in the current lodging environment we expect continued expansion of this segment for the foreseeable future.”
Extended stay hotels in Washington DC reported the highest guest-paid room revenues from guests staying 7-29 nights in the 12-month period ending June 2023. During the same period, the highest guest- paid room revenues from stays of the same duration in non-extended-stay hotels was in the New York market, which has relatively few extended stay hotels for the size of the overall hotel market.
Atlanta reported the largest room night demand from guests staying 30 nights or longer in traditional hotels. The largest corresponding demand in extended stay hotels was in Dallas, which has among the largest supply of extended stay rooms of any market in the country.