Vishnu Rageev R is a journalist with more than 15 years of experience in business journalism. Before joining Asian Media Group in 2022, he worked with BW Businessworld, IMAGES Group, exchange4media Group, DC Books, and Dhanam Publications in India. His coverage includes industry analysis, market trends and corporate developments, focusing on retail, real estate and hospitality. As a senior journalist with Asian Hospitality, he covers the U.S. hospitality industry. He is from Kerala, a state in South India.
EXTENDED-STAY ROOM SUPPLY increased by 1.8 percent in February due to it being a leap year, consistent with the average monthly increase observed over the last two years, according to The Highland Group. February marked 29 consecutive months of 4 percent or less supply growth. Additionally, the change in supply has remained below 2 percent for more than two years, with both metrics significantly falling below the long-term average.
The 18.8 percent surge in economy extended-stay supply, along with a modest increase in mid-price segment rooms, is largely attributed to conversions, The Highland Group said. Meanwhile, new construction in the economy segment is estimated at around 3 percent of open rooms compared to a year ago.
2024 first half supply trends
Supply change comparisons have been affected by rebranding, segment realignment in The Highland Group’s database, and the de-flagging of hotels failing to meet brand standards, along with sales to multi-family apartment companies and municipalities, the report said. This trend is expected to persist into the first half of 2024, particularly with older extended-stay hotels still available on the market.
However, the year-over-year increase in total extended-stay supply compared to 2023 is expected to remain significantly below the long-term average.
Decline in mid-price segment revenues
Adjusted for the leap year, mid-price extended-stay hotels recorded their third consecutive monthly revenue decline in three years, while the economy segment continued to show double-digit gains, The Highland Group said.
The mid-price segment experienced a contraction in supply due to rebranding, which notably affected segment demand, the report added. Adjusted for the leap year, the segment saw a decline of about 2 percent in demand. Even adjusted for the additional day in 2024, February’s extended-stay demand increase was the highest monthly gain over the last year.
Occupancy grows, ADR and RevPAR decrease
February saw the extended-stay hotel occupancy grow slightly, marking the first monthly increase in 11 months, the report further said. Extended-stay hotel occupancy in February was 12.2 percentage points higher than the total hotel industry, aligning with the historical long-term average occupancy premium.
In February, total extended-stay hotel ADR experienced a monthly decline for the first time since March 2021, The Highland Group said. While economy extended-stay was the only segment reporting a decrease in ADR, both mid-price and upscale segments saw the smallest monthly increases since rates began rising in April 2021, which was insufficient to elevate the total extended-stay ADR.
Extended-stay hotel RevPAR mirrored the ADR trend, the report said. While the economy segment experienced a decline, the increases in mid-price and upscale segments were insufficient to boost the total extended-stay hotel RevPAR, resulting in a third consecutive month of decline.
In January, extended-stay hotels experienced lower performance compared to the overall industry, attributed to weather factors, according to The Highland Group. Room supply, revenues, ADR, and RevPAR across segments were impacted.
Sonesta launched Americas Best Value Studios, an extended-stay version of ABVI.
The model targets owners seeking limited front desk and housekeeping.
The brand meets demand for longer-term, value-focused stays.
SONESTA INTERNATIONAL HOTELS Corp. launched Americas Best Value Studios by Sonesta, an extended-stay version of its franchised brand, Americas Best Value Inn. The model targets owners seeking limited front desk and housekeeping, optional fitness center and lobby market along with standard brand requirements.
The brand aims to address the growing demand for longer-term, value-driven accommodations, Sonesta said in a statement.
"Americas Best Value Studios by Sonesta represents a strategic evolution of our trusted Americas Best Value Inn brand," Keith Pierce, Sonesta’s executive vice president and president of franchise development, said. "We are expanding our offerings to directly address the increasing demand within the extended-stay segment, providing a practical solution for travelers seeking longer-term lodging at value. This new brand type allows our local franchised owner-operators to tap into a growing market while maintaining the community-focused experience that Americas Best Value Inn is known for."
ABVI has a majority presence in secondary and tertiary markets, the statement said.
The extended-stay brand’s operational model features a front desk, bi-weekly housekeeping, on-site laundry and pet-friendly accommodations, Sonesta said. Guests can also earn or redeem points through the Sonesta Travel Pass loyalty program.
In August, Sonesta named Stayntouch its preferred property management system after a two-year review of its ability to support the company’s franchise model. The company operates more than 1,100 properties with more than 100,000 rooms across 13 brands on three continents.
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