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Report: Extended-stay segment’s strong performance continued in Q3

The Highland Group said extended-stay’s occupancy premium over average rose to highest point in past 20 years

THE THIRD QUARTER presented no exception to the rule that U.S. extended-stay hotels, especially economy extended-stay, have been outperforming other categories of hotels during the COVID-19 pandemic, according to hotel investment advisors The Highland Group’s latest report. That premium in occupancy levels above other hotels rose t 17.8 points in the third quarter after averaging between 10 to 15 point for the past 20 years.

Occupancy for extended-stay over the quarter was 65.8 percent compared to 48 percent STR reported for the overall hotel industry, according to the report.


“Rooms open increased more than 33,000 over the last year and room nights available gained 6 percent year-to-date compared to the 4 percent contraction STR reported for the overall hotel industry,” the report said. “While extended-stay hotel demand is down 17 percent so far this year, the decline is less than half that of all hotels. Despite stronger supply growth in higher priced extended-stay hotels, which the pandemic has impacted harder, extended-stay ADR losses are still less than all hotels.”

Occupancy losses for extended-stay hotels were less than the national average, but quarterly room revenue losses are four to five times greater than during the 2009 recession. In The Highland Group’s mid-year report, extended-stay hotels saw the steepest declines ever in occupancy and other performance metrics since the COVID-19 pandemic shut down the nation’s travel industry in March.

Still, during the third quarter the segment continued recovering faster than others, especially on the economy level.

“The economy segment posted three consecutive monthly increases in demand in the third quarter and the segment’s room revenue was higher in September 2020 compared to one year ago,” the report said. “Occupancy in the third quarter rebounded strongly from an all-time low in the second quarter. Occupancy is now higher than during the low points in 2009 and is rapidly approaching parity with quarterly occupancy during the last recession.”

Other third quarter highlights in the report include:

  • Room supply up 6.7 percent over 2019
  • Room demand down 12.5 percent over 2019
  • Occupancy 18 points higher than all hotels
  • Room revenue down 30.7 percent compared to 2019
  • Room revenue lowest since 2014

“The supply growth rate is climbing back to pre-pandemic levels as new hotels open and existing hotels re-open,” the report said. “Mid-price extended-stay hotels have accounted for more than half of the sector’s rooms under construction for the last three years. It is expected to continue to report the fastest growth in supply.”

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