Report: Extended-stay hotels’ Q1 RevPAR down 1.6 percent, revenue up 1.5 percent
Historical declines were noted in occupancy, ADR, and supply growth in first quarter
By Vishnu Rageev RMay 08, 2024
U.S. EXTENDED-STAY hotels experienced their first quarterly decline in RevPAR since the first quarter of 2021, according to The Highland Group. In the first quarter, the segment saw a 1.6 percent drop in RevPAR, despite a 1.5 percent increase in revenues. Demand increased by 1.7 percent, contrasting with a 2.8 percent fall in total hotel demand when excluding upper upscale and luxury segments.
STR/CoStar estimated that overall hotel RevPAR, excluding upper upscale and luxury segments, which have minimal extended-stay room supply, increased by 1.3 percent in the first quarter of 2024 compared to the same period in 2023.
The Highland Group’s 2024 First Quarter U.S. Extended-Stay Hotels report indicated that overall hotel RevPAR and room revenues declined by 1.1 percent and 0.9 percent year-to-date, respectively, excluding upper upscale and luxury segments.
The report said that extended-stay supply growth is expected to remain relatively low nationally in the foreseeable future, as interest rates are anticipated to stay high in the near term and construction costs continue to rise.
“If most forecasts for overall hotel industry performance are realized, extended-stay hotels are likely to reverse the trend of declining occupancy in the near future because demand has increased for 13 consecutive quarters and supply growth is very low,” said Mark Skinner, The Highland Group’s partner.
First quarter highlights:
ADR declines for the first time in three years
Lowest occupancy for 11 years
Second lowest supply growth in a decade
Demand gains 1.7 percent
Room revenues up 1.5 percent over last year
Average occupancy 13 points higher than all hotels
Hotel pipeline and supply dynamics
According to the report, approximately 585,403 extended-stay hotel rooms were operational at the end of the first quarter. Over the past year, excluding the pandemic-affected year of 2020, there was a net increase of 11,583 rooms, marking the second-lowest growth since 2013. This increase represents less than 40 percent of the average annual gain observed from 2016 to 2019.
The Highland Group said room nights available increased by 3.2 percent over the last year. However, when adjusting for the leap year in 2024, the increase was approximately 2 percent. Notably, there was a 15 percent surge in economy extended-stay supply, contrasting with a relatively modest gain in the mid-price segment, primarily due to conversions. New construction in the economy segment is estimated to be around 3 percent of rooms open compared to a year ago.
The report highlighted that supply change comparisons have been influenced by various factors, including rebranding, room reallocations across segments, de-flagging of hotels failing to meet brand standards, and sales to multi-family apartment companies and municipalities. This trend is expected to persist, especially through the first half of 2024, as several older extended-stay hotels remain on the market.
Furthermore, the report predicts that the full-year increase in total extended-stay supply compared to 2023 will remain well below the long-term average.
Peak demand
The first quarter witnessed peak demand in the economy and upscale extended-stay hotel segments, the report said. Total extended-stay demand increased by 1.7 percent over the past 12 months, inclusive of the leap year in 2024. This stands in stark contrast to STR/CoStar's reported 0.4 percent decline in demand for the overall hotel industry during the same period.
STR/CoStar estimated a 2.8 percent decline in total hotel demand, excluding luxury and upper upscale segments, in the first quarter compared to the same quarter in 2023.
Minimal revenue increase
The report highlighted that the 1.5 percent increase in extended-stay room revenues in the first quarter marked the lowest quarterly gain since the upward trend began in mid-2022. Meanwhile, STR/CoStar noted a 1.9 percent increase in total hotel industry room revenues for the same period. However, this figure dropped to a 0.9 percent decline when excluding upper upscale and luxury segments.
According to the report, total extended-stay hotel occupancy in the first quarter stood at 71.5 percent, a level not seen since 2013. Average occupancy was one half to two and a half points lower compared to first quarters from 2016 through 2019, with extended-stay hotels reporting lower occupancy in six of the last seven quarters.
The Highland Group also said that the economy extended-stay segment was the only segment to see a decrease in ADR in the first quarter. Coupled with the segment’s supply growth affected by conversions, this decline led to a drop in total extended-stay hotel ADR in the first quarter, marking the first contraction in quarterly ADR in three years. In contrast, STR/CoStar reported a 2.3 percent increase in total hotel industry ADR for the same period.
Furthermore, the quarterly RevPAR change mirrored the ADR pattern, with the economy segment spearheading the decline and influencing the overall change in total extended-stay RevPAR from the first quarter of 2023 to first quarter of 2024.
Trends in performance metrics
The report said that extended-stay hotels maintained an average occupancy premium over the overall hotel industry, averaging 11.7 percentage points from 2017 to 2019, a trend consistent over the last 25 years. This premium typically widens during economic downturns, notably peaking at 20 percent in the first quarter of 2021. By the first quarter of 2024, the extended-stay hotel's occupancy premium stood at 12.5 percentage points.
During the period from 2017 to 2019, extended-stay hotels experienced a slightly faster rise in ADR compared to the overall hotel industry. The relative growth spiked to 83 percent in 2021 before receding to 77 percent in the first quarter of 2022. After a minor increase last year, the ADR ratio fell to 75 percent in the first quarter of 2024.
The upper upscale and luxury segments have contributed somewhat to the overall hotel ADR growth. The relative RevPAR mirrored the ADR trends, accelerating gains from 2017 to 2019 and reaching a peak ratio of 119 percent in the first quarter of 2021. However, as the broader hotel industry rebounded in RevPAR more swiftly, the extended-stay hotel's RevPAR ratio dipped to 91 percent in the first quarter of 2024, slightly below its level compared to 2017.
Excluding the upper upscale and luxury segments from the estimate, the RevPAR ratio has shown a relatively modest decline over the past two years, with a slightly higher first-quarter ratio in 2024 compared to the same period in 2017. Although economy extended-stay hotel RevPAR declined in the first quarter of 2024 compared to the same period in 2023, the contraction was less severe than observed across all economy class hotels, maintaining an upward trend relative to all economy hotels.
Mid-price extended-stay hotels have made notable advancements compared to all mid-price hotels. In the first quarter of 2019, the ratio of mid-price extended-stay hotel RevPAR to all mid-price hotel RevPAR stood at 102 percent. Five years later, it rose to 111 percent, despite considerably higher supply growth over the period.
However, upscale extended-stay hotels, largely due to a high concentration of rooms in urban sub-markets, have lagged behind the overall extended-stay recovery since 2019. These hotels have also experienced a decline in RevPAR relative to all upscale hotels, although the gap has narrowed over the past year.
In April, The Highland Group reported a 0.2 percent decrease in total revenues from extended-stay hotel rooms for March, marking the first monthly decline in over three years. Despite facing challenges since the beginning of 2024, the segment experienced declines in most metrics compared to March 2023 but generally outperformed other hotel classes.
The Trump administration says it is reviewing more than 55 million visa holders.
Reviews cover a wide range of visas for law enforcement and overstay violations.
The administration also suspended worker visas for foreign commercial truck drivers.
THE TRUMP ADMINISTRATION is reviewing more than 55 million people who hold valid U.S. visas for potential violations. It is expanding a policy of “continuous vetting” that could result in revocation and deportation.
The State Department confirmed all visa holders are subject to ongoing review, which includes checking for overstays, criminal activity, threats to public safety or ties to terrorism. Should violations be found, visas may be revoked, and holders in the U.S. could face deportation, according to the Associated Press.
Officials said the reviews will include monitoring of visa holders’ social media accounts, law enforcement records and immigration files. New rules also require applicants to disable privacy settings on phones and apps during interviews. The department noted visa revocations since President Trump’s return to office have more than doubled compared to the previous year, including nearly four times as many student visas.
The administration also announced an immediate halt on issuing worker visas for foreign commercial truck drivers, with Secretary of State Marco Rubio citing road safety and competition concerns for U.S. truckers.
“The increasing number of foreign drivers operating large tractor-trailer trucks on U.S. roads is endangering American lives and undercutting the livelihoods of American truckers,” Rubio posted on X.
The Transportation Department linked the move to recent enforcement of English-language proficiency requirements for truckers, aimed at improving safety. The State Department later said it was pausing visa processing while it reviewed screening protocols.
Critics, including Edward Alden of the Council on Foreign Relations, warned the actions could have significant economic consequences.
“The goal here is not to target specific classes of workers, but to send the message to American employers that they are at risk if they are employing foreign workers,” Alden wrote, according to AP.
Data from the Department of Homeland Security shows there are 12.8 million green card holders and 3.6 million temporary visa holders in the United States. The 55 million figure under review includes many outside the U.S. with valid multiple-entry tourist visas.
Earlier this week, the State Department reported revoking more than 6,000 student visas for violations since Trump returned to office, including around 200 to 300 for terrorism-related issues.
The vast majority of foreign visitors require visas to enter the U.S., with exceptions granted to citizens of 40 countries under the Visa Waiver Program, primarily in Europe and Asia. Citizens of China, India, Russia and most of Africa remain subject to visa requirements.
A $250 Visa Integrity Fee in President Donald Trump’s Big Beautiful Bill drew criticism from groups that rely on seasonal workers from Latin America and Asia on J-1 and other visas.
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Peachtree Group originated a $176.5 million retroactive CPACE loan for a Las Vegas property.
The deal closed in under 60 days and ranks among the largest CPACE financings in the U.S.
The company promotes retroactive CPACE funding for commercial real estate development.
PEACHTREE GROUP ORIGINATED a $176.5 million retroactive Commercial Property Assessed Clean Energy loan for Dreamscape Cos.’s Rio Hotel & Casino in Las Vegas. The deal, completed in under 60 days, is its largest credit transaction and one of the largest CPACE financings in the U.S.
The 2,520-room Rio, now under the Destinations by Hyatt brand, was renovated in 2024 and comprises two hotel towers connected by a casino, restaurants and retail, Peachtree said in a statement.
“This transaction is a milestone for Peachtree Group and a testament to the ecosystem we have built over the past 18 years,” said Greg Friedman, Peachtree's managing principal and CEO. “Through our vertically integrated platform, deep expertise and disciplined approach, we have developed the infrastructure to be a leader in private credit. Our ability to deliver speed, creativity and certainty of execution positions us to provide capital solutions that create value for our investors and partners across market cycles.”
Atlanta-based Peachtree is led by Friedman; Jatin Desai as managing principal and CFO and Mitul Patel as principal.
The CPACE loan retroactively funded the renovations, allowing the owners to pay down their senior loan, the statement said. The property improvement plan included exterior work, upgrades to the central heating and cooling plant, electrical infrastructure improvements and convention center renovations.
Jared Schlosser, Peachtree’s head of originations and CPACE, said the deal marks an inflection point, with major financial institutions consenting to its use for the benefit of the capital stack.
“By closing quickly on a marquee hospitality asset, we were able to strengthen the position of both the owner and its lenders,” he said.
The CPACE market has surpassed $10 billion in U.S. originations in just over a decade, according to the C-PACE Alliance, with growth expected as more institutional owners and lenders adopt it.
“We see significant opportunity for retroactive CPACE and its use in funding new commercial real estate development,” Schlosser said. “It is an alternative to more expensive forms of capital.”
In June, Peachtree named Schlosser head of originations for all real estate and hotel lending and leader of its CPACE program. Peachtree recently launched a $250 million fund to invest in hotel and commercial real estate assets mispriced by capital market illiquidity.
Spark acquired the 120-key Home2 Suites by Hilton Wayne in Wayne, New Jersey.
Hunter Hotel Advisors facilitated the transaction with DC Hospitality Group affiliates.
The 2020-built hotel is near William Paterson University and less than 20 miles from Manhattan.
SPARK GHC RECENTLY acquired the 120-key Home2 Suites by Hilton Wayne in Wayne, New Jersey, from affiliates of DC Hospitality Group. Hunter Hotel Advisors facilitated the deal for an undisclosed amount.
The 2020-built hotel is less than 20 miles from Manhattan in a commercial corridor with major employers including Driscoll Foods, FedEx Group, Advanced Biotech, St. Joseph’s Wayne Hospital, and the Passaic County Administration, Hunter said in a statement. William Paterson University, Willowbrook Mall, and MetLife Stadium are also nearby.
It features an on-site fitness center, business center and indoor pool.
“The Home2 Suites by Hilton Wayne represents the type of asset we target,” said Patel. “Its proximity to major corporate demand generators, higher education institutions, and retail and entertainment venues supports strong performance.”
Hunter’s senior vice presidents, David Perrin and Spencer Davidson, brokered the transaction.
Patel said this is their second transaction with Hunter and praised the process and partnership.
“We look forward to building on the hotel’s recent performance and continuing to deliver guest experiences in the Greater New York City community,” he said.
Northstar Hotels Management recently acquired a 78-key Residence Inn and an 81-key Courtyard near the Jacksonville, Florida, airport.
Global pipeline hit a record 15,871 projects with 2.4 million rooms in Q2.
The U.S. leads with 6,280 projects; Dallas tops cities with 199.
Nearly 2,900 hotels are expected to open worldwide by the end of 2025.
THE GLOBAL HOTEL pipeline reached 15,871 projects, up 3 percent year-over-year, and 2,436,225 rooms, up 2 percent, according to Lodging Econometrics. Most were upper midscale and upscale, LE reported.
The U.S. leads with 6,280 projects and 737,036 rooms, 40 percent of the global total. Dallas leads cities with 199 projects and 24,497 rooms, the highest on record.
LE’s Q2 2025 Hotel Construction Pipeline Trend Report showed 6,257 projects with 1,086,245 rooms under construction worldwide, unchanged in project count and down 3 percent in rooms from last year. Projects scheduled to start in the next 12 months totaled 3,870 with 551,188 rooms, down 3 percent in projects but up 1 percent in rooms. Early planning reached 5,744 projects and 798,792 rooms, up 10 percent in projects and 9 percent in rooms year-over-year.
Upper midscale and upscale hotels accounted for 52 percent of the global pipeline, LE said. Upper midscale stood at 4,463 projects and 567,396 rooms, while upscale reached 3,852 projects and 655,674 rooms. Upper upscale totaled 1,807 projects and 385,396 rooms, and luxury totaled 1,267 projects and 245,665 rooms, up 11 percent year-over-year.
In the first half of 2025, 970 hotels with 138,168 rooms opened worldwide. Another 1,884 hotels with 280,079 rooms are scheduled to open before year-end, for a 2025 total of 2,854 hotels and 418,247 rooms. LE projects 2,531 hotels with 382,942 rooms to open in 2026 and 2,554 hotels with 382,282 rooms to open globally in 2027, the first time a forecast has been issued for that year.
HAMA is accepting submissions for its 20th annual student case competition.
The cases reflect a scenario HAMA members faced as owner representatives.
Teams must submit a financial analysis, solution and executive summary.
THE HOSPITALITY ASSET Managers Association is accepting submissions for the 20th Annual HAMA Student Case Competition, in which more than 60 students analyze a management company change scenario and provide recommendations. HAMA, HotStats and Lodging Analytics Research & Consulting are providing the case, based on a scenario HAMA members faced as owner representatives.
Student teams must prepare a financial analysis, a recommended solution and an executive summary for board review, HAMA said in a statement.
“Each year, the education committee looks forward to the solutions that the next generation of hotel asset managers bring, applying their own experiences to issues in ways that reveal new directions,” said Adam Tegge, HAMA Education Committee chair. “This competition demonstrates that the future of hotel asset management is in good hands.”
The two winning teams will each receive a $5,000 prize and an invitation to the spring 2026 HAMA conference in Washington, D.C. HAMA will cover travel and lodging.
Twenty industry executives on the HAMA education committee will evaluate submissions based on presentation quality, the statement said. HAMA mentors volunteer from September through November to assist teams seeking feedback and additional information. Schools will select finalists by Jan. 15, with graduate and undergraduate teams reviewed separately.
The competition has addressed topics in operating and owning hospitality assets and HAMA consulted university professors to update the format for situations students may encounter after graduation, the statement said.
This year’s participants include University of Denver, University of Texas Rio Grande Valley, Boston University, Florida International University, Michigan State University, Columbia University, Morgan State University, Howard University, New York University and Penn State University.