ECONOMY EXTENDED-STAY hotels continued to show resilience during the first full month of the COVID-19 pandemic, according to the latest report from hotel investment advisors The Highland Group. Extended-stay brands, from economy to upscale, had the highest RevPAR during the month, or the lowest declines, compared to other chainscale segments.
RevPAR declined 18 percent to $29.78 for economy extended-stay hotels during the month, while mid-price saw 55.8 percent declines and upscale dropped 76.3 percent, according to the group’s “U.S. Extended-Stay Lodging Bulletin: April 2020.” Similar declines were seen in The Highland Group’s March report.
“Extended-stay hotels, especially the economy segment, should continue to demonstrate RevPar loss resilience during the foreseeable future,” said Mark Skinner, partner at The Highland Group.
The closing of some extended-stay hotels kept the number of rooms available about the same as last year despite new rooms opening, according to the report. The economy segment reported higher room nights available than the same time last year.
“Relatively few of these hotels have closed as they are incurring markedly lower revenue loss than either mid-price or upscale extended-stay hotels,” the report said.
Their high share of longer-term, essentially residential and construction related business provides a cushion for economy extended-stay hotels against declines in transient and group travel, according to the report
“All extended-stay hotel segments reported higher occupancy than the US hotel average in April 2020,” the report said. “The closing of some mid-price and upscale extended-stay hotels distorted the distribution of rooms open compared to one year ago. The change in distribution coupled with large losses of higher rated guests caused overall extended-stay ADR to fall 34.7 percent in April 2020 compared to one year ago. ADR losses were lower than the 44.4 percent decline STR reported for the overall hotel industry.”