According to a new report from the Highland Group, extended-stay hotel monthly revenue per available room declined for the first time since February 2021. Midscale and upscale segment RevPAR increases in December were too small to offset the economy segment’s decline and monthly total extended-stay hotel RevPAR fell 0.8 percent compared to one year ago.
“Aside of the monthly decline in total extended-stay hotel RevPAR, December 2023 concluded nine consecutive quarters of extended-stay hotel supply growth well below its long-term average and we expect no change in that during the near term,” Mark Skinner, partner at the Highland Group, said in a statement.
Compared to the overall hotel industry—and similar to November—extended-stay hotel performance in December was mixed. Supply, demand and room revenues posted relative gains and occupancy declined less than the total hotel industry. However, relatively low growth in average daily rate and a higher than expected fall in economy extended-stay RevPAR resulted in total extended-stay hotel RevPAR declining compared to a small RevPAR increase for the overall hotel industry.
Midscale extended-stay hotels posted their first monthly decline in revenues in almost three years but economy and upscale segment gains lifted total extended-stay revenue 1.6 percent above its December 2022 level. Comparatively, STR/CoStar reported revenue for all hotels increased 1.5 percent over the same period.
All three extended-stay segments reported lower occupancy compared to December 2022 but the decline was slightly less than the overall hotel industry. December was the ninth successive monthly fall in total extended-stay occupancy. However, extended-stay hotel occupancy in December was 13.8 percentage points higher than the total hotel industry, which is within the historical long-term average occupancy premium. All three extended-stay segments posted gains in ADR in December. However, the increase in total extended-stay ADR was about one third of the 2.2 percent growth STR/CoStar reported for the overall hotel industry.
