Highland Group: Extended-stay market up but decelerating

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.

“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.