The Highland Group’s recovery continues, supply growth stalls

Revenue per available room for every segment of the U.S. extended-stay hotel sector in the second quarter recovered to 2019 levels for the first time since the onset of the Covid-19 pandemic, according to a new report from The Highland Group. Meanwhile, the rate of extended-stay supply growth has dwindled and the number of rooms under construction has dropped sharply.

Second-quarter U.S. extended-stay RevPAR increased 24.3 percent year over year to $91.12, compared with $83.32 in 2019. Upscale extended-stay RevPAR for the first time since the pandemic reached 2019 levels, at $117.99 from $117.25 three years ago.

Extended-stay occupancy hasn’t quite recovered to 2019 levels. In the second quarter, it was 78.3 percent—up 1.1 percent year over year—versus 78.5 percent in 2019. Average daily rates, however are higher, at $116.35 compared with $106.12 in 2019.

While extended-stay properties during the pandemic reported stronger comparative occupancy and revenue levels than did hotels, “the overall hotel industry recovery caught up with extended-stay hotels in Q2 after lagging for 18 months,” according to Highland.

Available extended-stay room nights in the second quarter increased 2.4 percent year over year to about 101.8 million, and supply in each segment—economy, midprice and upscale—increased by similar percentages. Rooms under construction, however, declined 34.3 percent year over year, with the upscale tier most affected. Highland noted that “supply growth forecasts through 2025 are the lowest for several years.”

“The foreseeable outlook for extended-stay hotels is very good, because the last time extended-stay hotel supply growth declined below 3 percent it stayed there for four years and RevPAR grew 47 percent over the same period,” The Highland Group partner Mark Skinner said in a statement.

Chris Davis  www.businesstravelnews.com