Extended stay hotel supply and demand increases accelerated in 2024 and rooms reported under construction topped 48,000, gaining 8% over the previous year. The “accelerating growth cycle” going into 2025, said the report, resembles the start of the 2015-19 period, in which 100,000 new rooms were absorbed and room revenues increased $4.5 billion.

Mark Skinner, partner at The Highland Group, said that 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.”

Highlights of the report include:

• Room revenues for all extended stay hotel segments reached all-time highs in 2024. Excluding 2002, 2009 and 2020, which were the only years in which total extended stay revenues declined from the previous year since 1999, the 4.2% revenue gain in 2024 was the smallest since 2003. Monthly revenue growth was considerably larger in the second half of 2024 compared with the first six months, and the annual increase was stronger than the 2.4% gain STR/CoStar reported for the overall hotel industry.
• Total extended stay average daily rate (ADR) increased every month during 2024 after declining in the first quarter, and the rate of change accelerated as the year progressed. Extended stay ADR growth by segment generally reflects trends in the broader hotel industry, although the 0.8% increase in total extended stay hotel ADR was lower than the 1.7% gain STR/CoStar reported for the overall hotel industry in 2024.
• Monthly changes in extended stay hotel revenue per available room (RevPAR) during 2024 mirrored those of occupancy and ADR. Positive monthly RevPAR changes were achieved every month after the first quarter except September, and the 3% increase in the fourth quarter was the highest quarterly growth of the year. Excluding 2020, when extended stay hotel RevPAR declined, the 1% gain in 2024 was the smallest since 2019 and less than the 1.9% increase STR/CoStar reported for the overall hotel industry.

Image: Marriott