US: The extended stay hotel sector has reported a bigger growth in occupancy than the hotel sector as a whole, with economy extended stay occupancy for Q3 2020 down just 0.8 per cent compared to the same period in 2019.
According to the latest report from The Highland Group, over the last 20 years extended stay hotel average occupancy has ranged from 10 to 15 points above the overall hotel industry. In the third quarter of 2020 the premium reached 17.8 points. Occupancy was 65.8 per cent compared to the 48 per cent average STR reported for the overall hotel industry.
In Q3 2020 extended stay hotels reported lower RevPar losses compared to all hotels in the same price categories, indicating broad recovery of the extended-stay hotel sector.
“Across all metrics extended stay hotels continue to perform better than the overall hotel industry six months following the start of the pandemic,” said Mark Skinner, partner at The Highland Group.
“Occupancy is now higher than during the low points in 2009 and is rapidly approaching parity with quarterly occupancy during the last recession,” according to the report.
Extended-stay room supply grew 6.7 per cent year-on-year during Q3 to 490,820, as new hotels opened and existing hotels reopened. The year-to-date supply growth was six per cent to 1,413,170 room nights available.
Q3 RevPar declined 35 percent year-on-year, compared with a 55.6 per cent drop the previous quarter. The year-to-date RevPAR decline was nearly even with that of the third quarter, at 36.4 percent.
ADR fell 21.5 per cent year-on-year for the quarter to $83.77
The Highland Group numbers were backed up by a Q3 earning statement from Extended Stay America which recorded occupancy of 79.8 per cent and a 14.7 per cent year-on-year drop in RevPar to $46.75.
“We are pleased with another strong quarter easily outperforming every industry benchmark and improving our RevPAR index by more than 30 per cent against our closest competition,” said Bruce Haase, ESA’s president and CEO. “Our performance illustrates the strength of our unique operating model, our singular focus on the extended-stay segment and the successful implementation of a wide variety of operational, marketing and distribution channel initiatives.”
“We generated strong free cash flow and fully repaid our REIT’s outstanding revolver during the quarter. While others in the industry are forced to make difficult short-term decisions, we continue to invest in our properties, our people and our longer-term strategies, which will enable further long-term success as the lodging markets recover,” he added.
