Skip to content

Search

Latest Stories

Report: Extended-stay hotels set for faster growth

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.​

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.

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.

More for you

Olympic Wage ordinance 2028
Photo credit: Unite Here Local 11

Petition fails to stop L.A. hotels wage increase

Summary:

  • Failed petition clears way for Los Angeles “Olympic Wage” to reach $30 by 2028.
  • L.A. Alliance referendum fell 9,000 signatures short.
  • AAHOA calls ruling a setback for hotel owners.

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.

Keep ReadingShow less
AHLA Foundation expands hospitality education

AHLA Foundation expands hospitality education

Summary:

  • AHLA Foundation is partnering with ICHRIE and ACPHA to support hospitality education.
  • The collaborations align academic programs with industry workforce needs.
  • It will provide data, faculty development, and student engagement opportunities.

THE AHLA FOUNDATION, International Council on Hotel, Restaurant and Institutional Education and the Accreditation Commission for Programs in Hospitality Administration work to expand education opportunities for students pursuing hospitality careers. The alliances aim to provide data, faculty development and student engagement opportunities.

Keep ReadingShow less
U.S. holiday travel 2025 trends

Report: U.S. consumers’ holiday travel intent dips

Summary:

  • U.S. holiday travel is down to 44 percent, led by Millennials and Gen Z.
  • Younger consumers are cost-conscious while older generations show steadier travel intent.
  • 76 percent of Millennials are likely to use AI for travel recommendations.

NEARLY 44 PERCENT of U.S. consumers plan to travel during the 2025 holiday season, down from 46 percent last year, according to PwC. Millennials and Gen Z lead travel intent at 55 percent each, while Gen X sits at 39 percent and Baby Boomers at 26 percent.

Keep ReadingShow less
Report: Global RevPAR to rise 3–5 percent in 2025

Report: Global RevPAR to rise 3–5 percent in 2025

Summary:

  • Global hotel RevPAR is projected to grow 3 to 5 percent in 2025, JLL reports.
  • Hotel RevPAR rose 4 percent in 2024, with demand at 4.8 billion room nights.
  • London, New York and Tokyo are expected to lead investor interest in 2025.

GLOBAL HOTEL REVPAR is projected to grow 3 to 5 percent in 2025, with investment volume up 15 to 25 percent, driven by loan maturities, deferred capital spending and private equity fund expirations, according to JLL. Leisure travel is expected to decline as consumer savings tighten, while group, corporate and international travel increase, supporting RevPAR growth.

Keep ReadingShow less
Hotel data challenges report highlighting AI and automation opportunities in hospitality

Survey: Data gaps hinder hotel growth

Summary:

  • Fragmented systems, poor integration limit hotels’ data access, according to a survey.
  • Most hotel professionals use data daily but struggle to access it for revenue and operations.
  • AI and automation could provide dynamic pricing, personalization and efficiency.

FRAGMENTED SYSTEMS, INACCURATE information and limited integration remain barriers to hotels seeking better data access to improve guest experiences and revenue, according to a newly released survey. Although most hotel professionals use data daily, the survey found 49 percent struggle to access what they need for revenue and operational decisions.

Keep ReadingShow less