Reversing trends from the first quarter, occupancy, average daily rate and revenue per available room in the second quarter at U.S. extended-stay hotels all increased, according to a new report by The Highland Group.
Second-quarter ADR for the segment increased 0.9 percent year over year to $123.76, according to Highland, bouncing back from a first quarter which showed the first such decline since before the pandemic. Though second-quarter ADR at economy-tier properties dipped 0.1 percent year over year, Highland noted June ADR for the segment increased, the first such monthly increase of the year.
Q2 rates at midprice and upscale properties increased 3.1 percent and 1.4 percent year over year, respectively. Highland noted that “extended-stay hotel ADR is increasing more slowly than the overall hotel industry,” but said overall gains are being driven by luxury and upper-upscale rate growth, tiers with little extended-stay presence. When those tiers are removed from consideration, according to Highland, rate growth among extended-stay and other properties has been similar.
STR Substantially Softens 2024 U.S. Hotel Forecast
Second-quarter U.S. extended-stay occupancy increased 1 percent year over year to 78.1 percent, with the midprice and upscale tiers each increasing by 1.4 percent. Still, occupancy remained below the Q2 2022 level of 78.3 percent. Second-quarter RevPAR increased 1.9 percent year over year to $96.61.
Nearly 49,000 U.S. extended-stay rooms were listed as under construction at the end of the second quarter, a 62 percent increase year over year and the highest such level since 2020.
Still, Highland noted that “not all the rooms will have actually started construction, and recent trends indicate that about 60 percent of these rooms can expect to open over the next 12 months. If so, the absolute increase in extended-stay room supply will be less than 5 percent over the next year and the growth in annualized room nights available will be lower than that.”
Added Highland Group partner Mark Skinner in a statement, “Despite headline grabbing large increases in extended-stay rooms under construction, the annualized increase in room nights available over the next year should be well below the long-term average and the near-term risk of over supply nationally is very low.”
