US: The 2024 First Quarter US Extended-Stay Hotels Report, published by The Highland Group, reveals a decline in RevPAR for the first time in three years.
The 1.6 per cent decline in extended-stay hotel RevPar in Q1 2024 (compared to the same period in 2023) was the first contraction since RevPar started rising in April 2021.
Lower priced extended-stay hotels led the decline but economy and mid-price segments made gains relative to corresponding classes of all hotels.
Overall demand for extended-stay hotels increased 1.7 per cent over the last 12 months, and the average occupancy of extended-stay hotels are 13 points higher (71.5 per cent) than all hotels.
There were 585,403 extended-stay hotel rooms open at the end of the Q1 2024. Excluding 2020, the 11,583 net gain in rooms open over the last year was the second lowest annual increase since 2013 and less than 40 per cent of the annual average gain from 2016 through 2019.
With interest rates expected to stay high during the near term and construction costs rising, extended-stay supply growth should be relatively low nationally for the foreseeable future.
“If most forecasts for overall hotel industry performance are realised, extended-stay hotels are likely to reverse the trend of declining occupancy in the near future because demand has increased for 13 consecutive quarters and supply growth is very low,” said Mark Skinner, partner at The Highland Group.
The full report can be purchased here.
