US: Extended-stay occupancy rose to 79.9 per cent in Q@ 2019, the highest level ever reported in that quarter, according to The Highland Group.
Its 2019 Mid-Year US Extended-Stay Lodging Market Report attributed the increase to a deceleration in supply growth and a rise in demand.
For the first half of 2019 overall, though, occupancy slipped 0.1 per cent from the same period in 2018 to 76.5 per cent. The report said this came as a consequence of economy and upscale demand growth lagging changes in supply. This number still stands more than 10 percentage points higher than the 65.9 per cent occupancy STR reported for the overall hotel industry.
Supply grew 5.6 per cent year-over-year to 485,608 rooms, according to report. The 25,731-net change in new rooms stands in contrast to the more than 29,000-room increases recorded in both the preceding 12-month periods. By segment, the report found mid-price hotels experienced the fastest supply growth, economy hotels reported their largest annual supply increase in three years and the upscale segment experienced its smallest quarterly supply increase in five years.
The Highland Group highlighted rising construction costs and lengthening development timelines as two factors slowing supply growth. According to the report, the number of rooms under construction decreased at mid-year 2019, falling faster than at year-end 2018.
The group reported extended-stay hotels saw the strongest quarterly demand growth in a year. The 5.8 per cent increase in demand through mid-year fell “only a tiny fraction short” of the rise in supply, according to the report.
The Highland Group reported that extended-stay average daily rate growth in Q2, at 1.3 per cent, outpaced Q1, but stayed below two per cent for the third consecutive quarter, “generally in line with the overall hotel industry.” Revenue per available room growth also stayed below two per cent.
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