US: The latest extended-stay report from The Highland Group reveals that the economy sector has witnessed a 13 per cent increase in supply in November 2023 compared to last year.
November 2023 marked 26 consecutive months of four per cent or less supply growth, which remains below the long-term average. The 13 per cent increase in economy extended-stay supply and decline in mid-price segment rooms is mainly due to conversions, as new construction in the economy segment is estimated at about three per cent of rooms open compared to one year ago.
As a result of the gain in supply from conversions, the economy segment saw a 10.5 per cent growth in demand in November – the highest in three months, and the third consecutive month the segment reported a greater than nine per cent increase in demand.
November also marked the third consecutive month economy extended-stay hotels have reported greater than 10 per cent gain in room revenue. However, the total revenue growth for the sector was lower than September and October, and slightly behind the 3.3 per cent gain STR/CoStar reported for the hotel sector during the same period.
Following a general increase in RevPar growth over the previous three months, the one per cent gain in RevPar in November was the smallest increase since July. Relatively small increases in ADR across all three extended-stay hotel segments was the main reason for this, as November’s occupancy contraction was lower than the overall hotel industry.
“November’s 1.4 per cent increase in extended-stay hotel demand was consistent with the general acceleration in extended-stay hotel demand increases following slower growth during the spring and summer of 2023,” said Mark Skinner, partner at The Highland Group.
Economy brands which contribute to the report include Affordable Suites of America, Extended Stay America Select Suites, HomeTowne Studios by Red Roof, SureStay Studio by Best Western, WoodSpring Suites Extended Stay by Choice Hotels and more.
