Overall first-quarter average daily rates at U.S. extended-stay properties increased substantially year over year and eclipsed 2019 levels, according to a new report released Monday from The Highland Group, in part because of a slowing pace of new supply growth.
The first-quarter average daily rate of $105.71 was up about 28.2 percent year over year and compares with ADR of $101.82 in the first quarter of 2019. Rates grew faster in the midprice and upscale tiers than the economy tier, according to The Highland Group, though the latter tier's rates were far sturdier during the pandemic than the other two, leaving less room for growth.
About 50.8 million U.S. extended-stay room nights were available during the first quarter, up 3.1 percent year over year. That figure in the first quarter of 2021 increased 8.9 percent. This year's year-over-year first-quarter growth is the lowest since a stretch between the fourth quarter of 2010 and the third quarter of 2014, according to The Highland Group, which suggested slow growth should be considered the new normal.
“With interest rates and construction costs both rising currently, extended-stay supply growth should be relatively low nationally for three to four years, and the segment should set more new performance records during the near term at least,” The Highland Group partner Mark Skinner said in a statement.
Overall first-quarter U.S. extended-stay revenue per available room, like ADR, eclipsed 2019 levels at $75.93 compared with $75.21. The 2022 figure is up 38.8 percent year over year.
Occupancy in the midprice and upscale tiers exceeded 2019 levels, but overall occupancy fell short of that benchmark at 71.8 percent versus 73.9 percent three years ago. Still, it increased 8.2 percent year over year.
"The pandemic had a far greater impact on midprice and upscale segment occupancy, with the latter now rebounding the fastest," according to the report. "However, upscale is the only extended-stay segment not to have recovered occupancy to 2019, and it remains well under its Q1 level in the years preceding 2019."
RELATED: The Highland Group's 2021 U.S. extended-stay analysis