Summary:
- Extended-stay occupancy fell 2 percent in June, the sixth straight monthly drop.
- ADR declined for the third consecutive month.
- RevPAR down 2 percent in June, third monthly decline since Sept. 2024.
U.S. EXTENDED-STAY HOTEL occupancy declined 2 percent in June, the sixth consecutive monthly decrease, according to The Highland Group. However, extended-stay occupancy remained 9.6 percentage points higher than the overall hotel industry, consistent with long-term summer patterns.
The drop was greater than the 1.7 percent decline STR/CoStar reported for all hotels, the report said.
“Early indications are that extended-stay hotels should weather an industry downturn better than corresponding classes of all hotels, especially at lower price points,” said Mark Skinner, partner at The Highland Group.
Extended-stay hotel ADR declined for the third consecutive month in June. The decrease was due to a higher share of economy segment room supply compared to June 2024. Each extended-stay segment reported ADR gains, while STR/CoStar reported ADR declines for the corresponding classes of all hotels.
The long-term correlation between RevPAR changes for extended-stay hotels and all hotels in the same class continued in June, with all segments reporting declines. However, extended-stay hotels outperformed same-class hotels on most performance metrics, including RevPAR.
Extended-stay RevPAR declined 2 percent in June, the third consecutive monthly decrease since September 2024. The total decline was larger than the individual segment decreases due to a higher share of economy segment room supply. STR/CoStar reported June RevPAR declines of 5 percent for economy, 2.7 percent for mid-price, and 1.4 percent for upscale segment hotels.
This performance is unusual for a summer month, the report said, as seasonal leisure travel typically benefits the overall hotel industry more than extended-stay hotels, especially at lower price points. This year, STR/CoStar reported June demand declines of 3.3 percent and 0.3 percent for all economy and mid-price class hotels, respectively. In contrast, extended-stay hotels in the same segments saw demand growth of 8 percent and 1.1 percent compared to June 2024.
Room supply up
Extended-stay room nights available rose 3.7 percent in June 2025 compared to June 2024, partly due to the addition of Executive Residency by Best Western to the database in January 2025.
June marked 45 consecutive months of extended-stay supply growth at 4 percent or less. Annual growth has ranged from 1.8 percent to 3.1 percent over the past three years, below the long-term average of 4.9 percent. The 11 percent increase in economy extended-stay supply and smaller changes in mid-price and upscale segments are mainly due to conversions, with new construction in the economy segment estimated at 3 to 4 percent of rooms opened compared to one year ago.
Supply comparisons have been affected by rebranding, de-flagging, and sales of hotels to multifamily apartment companies and municipalities. Conversion activity is expected to decline in the near term, and the total supply increase for calendar year 2025 will remain below the long-term average.
Revenue increase
Extended-stay hotel room revenues rose 1.5 percent in June compared to one year ago. STR/CoStar reported a 0.4 percent decline in overall hotel room revenues over the same period. Excluding the luxury and upper upscale segments, which include minimal extended-stay supply, total hotel room revenues fell 1.6 percent.
According to STR/CoStar, June room revenues declined 5.8 percent for all economy class hotels and 1.4 percent for midscale hotels. Upscale hotel revenues were unchanged.
Extended-stay hotel demand rose 1.6 percent in June, the largest monthly increase since March but still below the past year’s trend. In comparison, STR/CoStar reported a 0.8 percent decline in overall hotel demand. Adjusting for the extra day in February 2024, extended-stay demand has increased in 30 of the past 31 months.
Extended-stay occupancy fell 2.2 percent in May, the fifth straight monthly decline, outpacing the 0.7 percent drop for all hotels, The Highland Group reported. At 10.5 points above the overall hotel industry, the occupancy premium was at the low end of its long-term average.
