October was a good month for the extended-stay segment, according to a new report from The Highland Group. Supply, demand, average rate, revenues and revenue per available room for the segment all exceeded those of the overall hotel industry.
Occupancy in extended-stay hotels declined 1 percent compared to October 2022, but analysts at the company noted that this was smaller than the 1.6 percent contraction STR/CoStar reported for the total hotel industry. The report also noted that supply in the segment outpaced demand, which likely affected the occupancy rate. Extended-stay hotel occupancy was still 10.9 percentage points above the overall hotel industry for the month, which is within the historical long-term average.
“The long-term correlation coefficient between the annual change in RevPAR for extended-stay hotels and the overall hotel industry is very high and we expect that to continue during the near term,” Mark Skinner, partner at The Highland Group, said in a statement.
Revenue and RevPAR
Total extended-stay hotel revenue growth in October was the second highest monthly increase in five months and ahead of the 2 percent gain STR/CoStar reported for all hotels over the same period. Led by the midscale and upscale segments, extended-stay RevPAR was ahead of the overall hotel industry for the month. The report noted that RevPAR in the economy segment has fallen over the last seven months. However, October’s decline was lower than the year- to-date trend and markedly less than the 4.9 percent contraction STR/CoStar reported for all economy segment hotels.