Report: Extended-stay hotels set for faster growth
The sector’s supply growth is set to accelerate over the next three years
U.S. extended-stay hotels finished 2024 strong after a slow start, with supply, demand and room revenue growth outpacing the industry, while ADR and RevPAR remained positive but gained momentum later in the year, according to The Highland Group.
Vishnu Rageev R is a journalist with more than 15 years of experience in business journalism. Before joining Asian Media Group in 2022, he worked with BW Businessworld, IMAGES Group, exchange4media Group, DC Books, and Dhanam Publications in India. His coverage includes industry analysis, market trends and corporate developments, focusing on retail, real estate and hospitality. As a senior journalist with Asian Hospitality, he covers the U.S. hospitality industry. He is from Kerala, a state in South India.
Extended-Stay Hotels Set for Rapid Growth: Key Industry Insights
"U.S. EXTENDED-STAY HOTELS ended 2024 strong after a slow start, with supply, demand and room revenue growth outpacing the overall industry, according to The Highland Group. However, ADR and RevPAR growth lagged yet stayed positive, with stronger gains in the latter half.
The Highland Group’s report on the U.S. Extended-Stay Hotel Market 2025 found that although below the long-term average, extended-stay supply growth in 2024 was the highest since 2021 and is set to accelerate over the next one to three years.
“Fundamental differences, such as far higher interest rates and real construction costs, exist between the current and most recent extended-stay hotel growth cycles, but a substantial increase in room revenues remains likely over the next one to three years,” said Mark Skinner, The Highland Group’s partner.
Extended stay supply and demand growth accelerated in 2024, with rooms under construction rising 8 percent to over 48,000, the report said. The 2025 growth cycle mirrors 2015-2019, when 100,000 rooms were absorbed, and room revenue grew by $4.5 billion. However, higher interest rates and construction costs set this period apart. While extended-stay performance remains closely tied to the broader hotel industry, strong demand signals a positive growth outlook.
Supply & distribution
Extended-stay supply grew 3.1 percent in 2024, the highest in three years but still below the long-term average for the third consecutive year, The Highland Group said. Economy segment supply rose 13.2 percent, driven by conversions, while mid-price and upscale saw smaller gains. New economy construction accounted for about 3 percent of rooms opened year over year.
Supply changes have been influenced by rebranding, de-flagging, and hotel sales to apartment firms and municipalities. These factors should decline in 2025, while new construction accelerates, though growth will likely remain below the long-term average.
Rooms under construction rose 8 percent year over year, reaching levels similar to 2017-2019. Economy and upscale segments saw the largest gains, while mid-price remained stable, the report said. Reporting inconsistencies mean some listed projects may not materialize, but the pipeline is set to expand, driving supply growth over the next one to three years.
Meanwhile, extended-stay companies project a 4.2 percent annual room growth through 2029, driven partly by new economy and mid-price brands. This aligns with 2011 to 2017 growth following the 2010 to 2011 construction trough. Extended-stay rooms made up 9.3 percent of total room nights in 2019, rising to 10.3 percent by 2024.
Demand & occupancy
Extended-stay demand hit a record high in 2024, rising 3.3 percent year over year—one of the decade’s smallest gains but ahead of the overall industry's 0.8 percent growth, the report found. Demand grew every month except January, with the strongest increases in the second half. Occupancy also rose each month after the first quarter.
Economy extended-stay occupancy saw positive growth only in the last two months of 2024 and ended the year down one point from 2023. Total extended-stay occupancy remained 11.8 points above the overall industry, consistent with its long-term premium.
Revenue, ADR & RevPAR
Extended-stay room revenues hit record highs in 2024. The 4.2 percent annual increase, though the smallest since 2003, excluding 2002, 2009, and 2020 declines, outpaced the overall industry's 2.4 percent growth, The Highland Group said. Revenue gains were significantly stronger in the second half of the year.
Extended-stay ADR rose every month after the first quarter, with growth accelerating throughout 2024. While segment trends mirrored the broader industry, total extended-stay ADR increased just 0.8 percent, trailing the overall industry's 1.7 percent gain. This was partly due to the economy segment expanding its share of extended-stay supply, while its share of total hotel supply declined.
Extended-stay RevPAR trends in 2024 followed occupancy and ADR, with positive gains every month after the first quarter except September, the report said. The fourth quarter saw the highest quarterly growth at 3 percent. Economy extended-stay RevPAR lagged, with strong fourth-quarter gains failing to offset a slight annual decline. Excluding 2020, the 1 percent annual increase was the smallest since 2019 and below the overall industry's 1.9 percent growth.
The Highland Group recently reported that U.S. extended-stay hotels saw strong fourth-quarter 2024 results, with six-quarter highs in RevPAR and room revenue as supply grew over 3 percent and demand rose 4.6 percent."
IHCL said reports of Taj exiting The Pierre Hotel are incorrect and misleading.
Media reported the Central Park hotel could sell for around $2 billion.
The company holds leasehold rights and continues to operate the New York hotel.
INDIAN HOTELS CO. Ltd. said media reports on Taj exiting its stake in The Pierre Hotel in New York are incorrect, misleading and speculative. In an exchange filing, IHCL stated it does not own The Pierre, but holds leasehold rights and continues to operate the hotel.
NYT reported that the board, advised by Newmark on the Pierre’s revamp, is in final talks to sell the hotel. It said that the Khashoggis, a prominent Saudi family, may provide some financing, while Dorchester, another luxury hotel chain, could manage the renovation. Dorchester is owned by the Sultanate of Brunei.
NYT said Taj defended its management of the building and proposed upgrades that would not require residents to move out.
However, IHCL called the media report speculative.
“IHCL follows the highest standards of governance and disclosure and any material information requiring it to make disclosures under the applicable regulatory requirements will be promptly disseminated by the company to the stock exchanges,” the company said.
In May, Business Line reported that IHCL’s U.S. business has recovered, with The Pierre and Campton Place in San Francisco seeing steady demand. Together, the two hotels have about 300 rooms and contribute around 10 percent of IHCL’s consolidated revenue.
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Noble broke ground on StudioRes Mobile Alabama at McGowin Park.
The 10th StudioRes expands Noble’s long-term accommodations platform.
Noble recently acquired 16 WoodSpring Suites properties through two portfolio transactions.
NOBLE INVESTMENT GROUP broke ground on StudioRes Mobile Alabama at McGowin Park, a retail center in Mobile, Alabama. It is Noble’s 10th property under Marriott International’s extended stay StudioRes brand.
“Noble is institutionalizing one of the most resilient and undersupplied segments at the intersection of hospitality, mobility and how people stay,” said Shah. “We are scaling a branded platform to capture secular demand that creates stable cash flow and long-term value.”
In May, Noble acquired 16 WoodSpring Suites properties through two portfolio transactions, expanding its platform in branded long-term accommodations.
Noah Silverman, Marriott International’s global development officer, U.S. & Canada, said breaking ground on the 10th StudioRes with Noble reflects the brand’s growth and the companies’ three-decade partnership.
“With both companies’ expertise in long-term accommodations, Marriott’s distribution channels, and the power of our nearly 248 million Marriott Bonvoy members, we are confident StudioRes is uniquely positioned to generate customer demand at scale, drive performance and sustain long-term growth,” he said.
Meanwhile, Marriott has more than 50 signed StudioRes projects, about half under construction, the statement said. The first StudioRes opened in Fort Myers, Florida.
Hersha Hotels & Resorts sold The Boxer Boston to Eurostars Hotels.
The company acquired the property in 2012 for $12.6 million.
The property now sold for $23.6 million.
HERSHA HOTELS & RESORTS sold The Boxer Boston, an 80-room hotel in Boston’s West End, to Eurostars Hotels, part of Spain’s Grupo Hotusa. The company, which reportedly acquired the property in 2012 for $12.6 million, received $23.6 million for it.
The seven-story hotel, built in 1904, is near TD Garden, the Charles River Esplanade, One Congress, North Station and Massachusetts General Hospital, said JLL Hotels & Hospitality, which brokered the sale. It also has a fitness center.
Hersha Hotels & Resorts is part of the Hersha Group, founded in 1984 by Hasu Shah. Jay Shah serves as senior advisor and his brother Neil Shah is president and CEO.
JLL Managing Director Alan Suzuki, Senior Director Matthew Enright and Associate Emily Zhang represented the seller.
"The Boxer’s prime location at the crossroads of Boston's West End, North End and Downtown districts, combined with its strong cash flow and its unencumbered status regarding brand and management, made this an exceptionally attractive investment," said Suzuki. "Boston continues to demonstrate resilient lodging fundamentals driven by its diverse demand generators, including world-class educational institutions, medical facilities, corporate presence and convention and leisure attractions."
The property will become the Spanish hotel chain Eurostars’ fifth U.S. hotel, supporting the group’s North American expansion, the statement said.
Amancio López Seijas, president of Grupo Hotusa and Eurostars Hotels Co., said the addition of Eurostars’ The Boxer strengthens the company’s presence in key locations and promotes urban tourism.
Peachtree recognized by Inc. and the Atlanta Business Chronicle.
Named to the 2025 Inc. 5000 list for the third year.
Chronicle’s Pacesetter Awards recognize metro Atlanta’s fastest-growing companies.
PEACHTREE GROUP ENTERED the 2025 Inc. 5000 list for the third consecutive year. The company also won the Atlanta Business Chronicle Pacesetter Awards as one of the city’s fastest-growing private companies.
The Inc. 5000 list provides a data-driven look at independent businesses with sustained success nationwide, while the Business Chronicle’s Pacesetter Awards recognize metro Atlanta’s fastest-growing privately held companies, Peachtree said in a statement.
“We are in the business of identifying and capitalizing on mispriced risk, and in today’s environment of disruption and dislocation, that has created strong tailwinds for our growth,” said Greg Friedman, managing principal and CEO. “These recognitions validate our ability to execute in complex markets, and we see significant opportunity ahead as we continue to scale our platform.”
The Atlanta-based investment firm, led by Friedman; Jatin Desai, managing principal and CFO and Mitul Patel, principal, oversees a diversified portfolio of more than $8 billion.
A PETITION FOR a referendum on Los Angeles’s proposed “Olympic Wage” ordinance, requiring a $30 minimum wage for hospitality workers by the 2028 Olympic Games, lacked sufficient signatures, according to the Los Angeles County Registrar. The ordinance will take effect, raising hotel worker wages from the current $22.50 to $25 next year, $27.50 in 2027 and $30 in 2028.
Mandatory health care benefits payments will also begin in 2026.
The L.A. Alliance for Tourism, Jobs and Progress sought a referendum to repeal the ordinance, approved by the city council four months ago. The petition needed about 93,000 signatures but fell short by about 9,000, according to Interim City Clerk Petty Santos.
The council approved the minimum wage increase for tourism workers in May 2023, despite opposition from business leaders citing a decline in international travel. The ordinance requires hotels with more than 60 rooms and businesses at Los Angeles International Airport to pay workers $30 an hour by 2028. It passed on a 12 to 3 vote, with Councilmembers John Lee, Traci Park and Monica Rodriguez opposed.
The L.A. Alliance submitted more than 140,000 signatures in June opposing the tourism wage ordinance, triggering a June 2026 repeal vote supported by airlines, hotels and concession businesses.
AAHOA called the ruling a setback for Los Angeles hotel owners, who will bear the costs of the mandate.
"This ruling is a major setback for Los Angeles' small business hotel owners, who will shoulder the burden of this mandate," said Kamalesh “KP” Patel, AAHOA chairman. "Instead of working with industry leaders, the city moved forward with a policy that ignores economic realities and jeopardizes the jobs and businesses that keep this city's hospitality sector operating and supporting economic growth. Family-owned hotels now face choices—cutting staff, halting hiring, or raising rates—just as Los Angeles prepares to host millions of visitors for the World Cup and 2028 Olympics. You can't build a city by breaking the backs of the small businesses that make it run."
Laura Lee Blake, AAHOA president and CEO, said members are proud to create jobs in their communities, but the ordinance imposes costs that will affect the entire city.
“Even with a delayed rollout, the mandate represents a 70 percent wage increase above California's 2025 minimum wage,” she said. “This approach could remove more than $114 million each year from hotels, funds that could instead be invested in keeping workers employed and ensuring Los Angeles remains a competitive destination. The mandate increases the risk of closures, layoffs and a weaker Los Angeles."
A recent report from the American Hotel & Lodging Association found Los Angeles is still dealing with the effects of the pandemic and recent wildfires. International visitation remains below 2019 levels, more than in any other major U.S. city.