Highland Group: Extended-stay market up but decelerating

The 122-3oom WoodSpring Suites Reno Sparks was built for extended-stay travelers, and is located near the Reno-Tahoe International Airport.
Extended-stay hotels, such as the WoodSpring Suites Reno Sparks, reported higher revenue per available room in 2019 than in 2018. Photo credit: Choice Hotels International

Extended-stay hotels in nearly two-thirds of the United States’ largest metropolitan statistical areas reported higher revenue per available room in 2019 than in 2018, according to a report from The Highland Group and STR. Gains, however, were generally smaller than the previous year.

The number of MSAs reporting declines in RevPAR grew to one-third compared to one-quarter in 2018, according to the report. Most RevPAR decreases were less than 3 percent and only six MSAs reported falls of 5 percent of more.

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The 29,820 extended-stay rooms under construction in the 100 largest markets marked a small decline compared to a year ago. While more than one-third of MSAs expected at least 10 percent supply growth in 2020, 30 had no rooms under construction.

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“Supply growth and the effect from the coronavirus will have the largest impacts on extended-stay hotel RevPAR in 2020,” Mark Skinner, partner at The Highland Group, said in a statement. “The list of MSAs with lower extended-stay hotel RevPAR in 2020 compared to 2019 is expected to be longer than those reporting it last year.”

Extended-stay occupancy reached a 19-year high in 2019 amidst the largest gain in rooms in 20 years. Despite 32,000 new rooms, extended-stay occupancy stayed above 76 percent for the fifth time in the last six years. Extended-stay rooms under construction totaled 47,000.

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