Report: Total extended-stay hotels achieved fourth quarter milestones in 2023
The quarter also saw the lowest occupancy in 10 years
By Vishnu Rageev RFeb 09, 2024
TOTAL EXTENDED-STAY HOTELS achieved new fourth-quarter milestones in 2023, setting records in supply, demand, ADR, RevPAR, and room revenues, according to The Highland Group. Despite this, occupancy declined alongside the broader hotel industry trend, with slower growth in ADR and RevPAR throughout the year. Consequently, extended-stay hotel RevPAR experienced its smallest fourth quarter increase since 2019, excluding contractionary periods.
Extended-stay hotel supply growth increased marginally in 2023 but remained very low, the report said. The last time supply growth consistently hovered around its current level was from the fourth quarter of 2010 through the third quarter of 2014. Throughout this period, supply increases stayed below their long-term historical average for 20 consecutive quarters, while the federal funds rate was about 10 times higher than its current level.
With interest rates and construction costs expected to stay relatively high, the risk of extended stay hotel oversupply nationally is low in the near term, despite the launch of several new brands, The Highland Group said.
Fourth quarter highlights for extended-stay hotels include:
Lowest occupancy in a decade
Second lowest net gain in new rooms in ten years
Record-high revenues across all segments
Room revenues up 3.3 percent compared to the previous year
RevPAR increased by 1 percent compared to fourth quarter of 2022
Average occupancy 12 points higher than all hotels
Supply dynamics in Q4
At the close of the fourth quarter of 2023, there were 580,562 extended-stay hotel rooms in operation, The Highland Group said. Excluding the pandemic-disrupted year of 2020, the net gain of 12,792 rooms over the past year doubled compared to the previous year but still represented the smallest annual increase since 2013.
The 13 percent rise in economy extended-stay supply, coupled with a decrease in mid-price segment rooms, is primarily attributed to conversions, the report added. New construction in the economy segment is estimated to account for approximately 3 percent of open rooms compared to the previous year.
Supply change comparisons have been influenced by re-branding, which entails moving rooms between segments in The Highland Group’s database, as well as the de-flagging of hotels that no longer meet brand standards. Moreover, some hotels have been sold to multi-family apartment companies and municipalities, further impacting the comparison, the report added.
This pattern is likely to continue into the first half of 2024 as several older extended-stay hotels remain on the market. However, the total year-over-year increase in extended-stay supply compared to 2022 is expected to remain well below the long-term average.
Demand up in economy, upscale segments
The economy and upscale extended-stay hotel segments saw record-high demand in the fourth quarter of 2023, the report said. However, demand in the mid-price segment dropped by 2 percent compared to the fourth quarterof 2022. The mid-price segment's supply contraction due to re-branding negatively impacted demand while boosting it in the economy segment.
Total extended-stay hotel demand increased by 1.2 percent, a favorable contrast to the 0.6 percent decline reported by STR/CoStar for the overall hotel industry in the fourth quarter.
The rate of room revenue increase has declined since the significant gains observed after 2020. While fourth quarter 2023 growth resembled that of the third quarter, the total revenue increase for the fourth quarter marked the smallest percentage change in total extended-stay hotel revenue over the past 20 years, excluding contractionary periods.
Nevertheless, it surpassed the 2.4 percent increase estimated by STR/CoStar for the overall hotel industry, the report added.
Occupancy dips
In the fourth quarter, all three extended-stay segments witnessed a decline in occupancy for the first time in three years, marking the third consecutive quarter with lower total extended-stay occupancy compared to 2022, The Highland Group said. All three extended-stay segments achieved record-high ADR in the fourth quarter of 2023. Mid-price was the only segment to report a stronger ADR increase compared to the overall hotel industry in the fourth quarter.
Economy extended-stay hotels faced their third successive quarterly decline in RevPAR in the fourth quarter, although the drop was less than in the previous two quarters and notably lower than the 5.2 percent decrease STR/CoStar reported for all economy class hotels. Mid-price and upscale extended-stay hotels similarly reported their lowest quarterly RevPAR gain of the year in the fourth quarter.
Extended-stay hotels' occupancy premium above the overall hotel industry averaged about 11 percent from 2016 through 2019, following a typical pattern over the last 25 years, The Highland Group added. This premium tends to rise during contractionary periods and widened substantially during the pandemic-induced downturn, peaking at 21 percent in the fourth quarter of 2020.
At 12.3 percentage points in the fourth quarter of 2023, the premium remains unchanged from a year ago and about one point higher than in the fourth quarters from 2016 through 2019.
ADR, RevPAR growth
The Highland Group report further indicated that extended-stay hotels increased ADR slightly faster than the overall hotel industry from 2016 through 2019. Relative growth accelerated in 2020, with the ratio peaking at 88 percent before declining to 76 percent to 78 percent over the past two years as the overall hotel industry recovered ADR more quickly due to much deeper losses during the pandemic. In the fourth quarter of 2023, the ratio of extended-stay hotel ADR to overall hotel industry ADR was about two points lower than in 2016.
Relative RevPAR followed a similar trajectory, accelerating gains from 2016 through 2019 and peaking at a ratio of 132 percent in the fourth quarter of 2020. As the overall hotel industry recovered RevPAR more quickly, the extended-stay hotel’s RevPAR ratio declined to 91.4 percent in the fourth quarter of 2023, approximately the same as in the fourth quarter of 2016.
Economy extended-stay hotels show one of the highest RevPAR recovery ratios in the hotel industry, reaching 121 percent compared to fourth quarter of 2019. Leading the recovery, these hotels were the first to report a full annual RevPAR rebound in 2021. Despite a decline in RevPAR over the last year, economy extended-stay hotels achieved significant gains compared to economy hotels overall.
Mid-price extended-stay hotels swiftly returned to their pre-pandemic RevPAR level, remaining one of the hotel industry’s strongest performing segments. They also made gains compared to all mid-price hotels. In the fourth quarter of 2019, the ratio of mid-price extended-stay hotel RevPAR to all mid-price hotel RevPAR was 97 percent. Four years later, despite higher supply growth over the period, it increased to 107 percent.
Due to a higher concentration of rooms in urban sub-markets, upscale extended-stay hotels have been slower to recover compared to the overall extended-stay segment. Despite being fully recovered for over a year, the segment has experienced a decline in RevPAR relative to all upscale hotels since 2019.
Extended-stay hotels showed diverse performance compared to the overall hotel industry in December, with gains in supply, demand, and room revenues, according to The Highland Group.
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.
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.
Stonebridge Cos. added the Statler Dallas, Curio Collection by Hilton, to its managed portfolio.
The hotel, opened in 1956 and relaunched in 2017, is owned by Centurion American Development Group.
The property is near Main Street Garden Park, the Arts District and the Dallas World Aquarium.
STONEBRIDGE COS. HAS contracted to manage the Statler Dallas, Curio Collection by Hilton in Dallas to its managed portfolio. The hotel, opened in 1956 and relaunched in 2017, is owned by Centurion American Development Group, led by Mehrdad Moayedi.
It has an outdoor pool and more than 26,000 square feet of meeting space, Stonebridge said in a statement. The downtown Dallas property is near Main Street Garden Park, the Arts District, the Kay Bailey Hutchison Convention Center, Deep Ellum, Klyde Warren Park, and the Dallas World Aquarium.
“The Statler is an extraordinary asset with a storied history in Dallas, and we are thrilled to welcome it to our managed portfolio,” said Rob Smith, Stonebridge’s president and CEO. “Its blend of modern hospitality with timeless character makes it a natural fit within our lifestyle collection. We look forward to honoring the property’s legacy while enhancing performance and delivering an elevated guest experience.”
Stonebridge, based in Denver, is a privately held hotel management company founded by Chairman Navin Dimond and led by Smith. The company recently added the 244-room Marriott Saddle Brook in Saddle Brook, New Jersey, to its full-service portfolio.