Extended Stay Segment Continues Strong Run

Nothing seems to slow down performance of the extended stay segment of the hotel industry. In the first quarter, the sector again outpaced the overall hotel industry in most performance measures, despite the fact that extended stay supply grew more than 11 times as fast as the overall hotel industry. The Highland Group reported these results in its most recent quarterly study of the business.

Overall RevPAR for the segment grew by 10.3 percent to $53.71, eclipsing the previous peak posted in 2001. RevPAR levels for the mid-price and upscale segments were slightly lower than their 2001 highs. Other highlights of the study:

  • Demand for extended stay rooms increased by six percent compared to the first quarter of 2005. Overall hotel demand rose just 3.5 percent during the same period. All extended stay segments posted healthy gains, with the upscale sector leading the way with a 9.8-percent increase.

  • Segment occupancy topped 73 percent, up one point from the previous year and well ahead of the overall industry mark of 60.1 percent for the quarter.

  • Rates rose 8.7 percent, with the economy sector posting the biggest increase (10.9 percent). Average rates in all extended stay price categories reached their highest first-quarter levels ever.

  • Supply of extended stay units grew by 4.5 percent in the quarter. Supply growth was particularly robust in the upscale category, which posted an 8.9-percent rise in the number of units.

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