Extended Stay Stays HOT

Despite the crummy state of the economy and an uptick in supply in the segment, extended stay continues to outperform the rest of the hotel industry, at least in the first quarter of the year.

According to The Highland Group, demand for the product grew by 2.0 percent in the first quarter over the same period in 2007. In addition, average rate rose by 5.9 percent and room revenues were up by 8.1 percent, despite supply growth of 5.5 percent, which was the fastest first-quarter growth in six years.

Other results in the first quarter for the segment:

  • At 68 percent, occupancy was 10 points higher than the overall industry but down from 71.1 percent in the first quarter of 2007.

  • Demand for upscale extended-stay properties rose by 7.5 percent in the quarter; rates were up by 4.0 percent and revenues shot up by 11.8 percent.

  • Economy and mid-priced extended-stay demand dropped by 2.0 and 1.3 percent respectively. It was the second consecutive quarter that demand fell for these sub-segments. Properties in these categories depend on the now-ailing construction industry for much of their demand.

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