LOWER-TIER EXTENDED-STAY hotels in the U.S. were the least impacted by the COVID-19 crisis, according to a special report by Kalibri Labs. In March, the largest-producing rate categories of these hotels, which encompassed almost 60 percent of their actualized room nights in 2019, experienced the least reduction in demand.
According to the report, “In a COVID-19 World: Extended Stay Hotels Have the Advantage,” in 2019 lower tier extended-stay hotels captured 22.4 percent more of their business through Rack/BAR and 3.1 percent more from corporate in 2019 than non-extended stay hotels. In March 2020, business stays of one to six nights were impacted the most in both extended-stay categories, but the lower tier extended-stay hotels proved more resilient across all length of stay tiers.
The special report evaluated the U.S. hotel performance using length of stay and rate category metrics for March 2020, the first month of the COVID-19 pandemic, with comparisons to 2019.
“Extended-stay hotel’s RevPAR performed 14.4 percent better than non-extended stay hotels in the U.S. during the first full month of COVID-19’s impact,” the report said. “Lower tier extended stay hotels specifically drove the extended-stay hotels resiliency at negative 30 percent March year-over-year guest paid revenue compared to negative 48 percent for upper tier extended-stay hotels, and negative 54 percent for all non-extended stay hotels.”
In 2019, 40 percent of the extended-stay hotel revenue was driven by demand staying seven nights or more as compared to nine percent for non-extended stay hotels. In March , longer length of stay hotel demand was not as severely impacted as the shorter length of stay hotel demand.
In March, extended-stay hotels’ largest contributing rate categories, Rack/BAR and Corporate, declined significantly less than non-extended stay hotels, the report reveals.
Around five percent of extended stay rooms have temporarily closed as a result of the COVID-19 pandemic, a lower rate than the overall industry total, according to Highland Group’s 2020 first quarter US extended-stay Lodging Market Report. There were 487,615 extended-stay hotel rooms open at the end of first quarter, according to the report, and room nights available increased 3.5 percent over last year.
A previous study from hotel investment advisors The Highland Group found also found that lower-tier extended-stay hotels were performing better during the downturn.