Third-quarter U.S. extended-stay occupancy declined 1.7 percent year over year to the lowest Q3 since 2009, excluding the pandemic year of 2020, according to a new report by The Highland Group.
Occupancy, which was 76.6 percent for the quarter, fell across all three extended-stay tiers—upscale, midprice and economy—declining most sharply in the midprice tier, down 2.3 percent year over year to 76 percent. Economy extended-stay occupancy decreased 1.1 percent to 74.1 percent, while upscale fell 1.2 percent to 78.8 percent.
Third-quarter U.S. average daily rate declined 1.4 percent year over year to $120.75, the second straight quarterly decline, which "has not happened for 15 years excluding the impact of the pandemic," according to The Highland Group. ADR decreased 1.1 percent in the upscale segment to $159.54, was flat in the midprice segment at $115.58, and dipped 0.6 percent in the economy tier to $59.05.
Revenue per available room for the segment fell 3.1 percent year over year to $92.54, declining in each tier. Upscale extended-stay RevPAR decreased 2.3 percent year over year to $125.68, midprice RevPAR dropped 2.3 percent to $87.82, and economy RevPAR slipped 1.7 percent to $43.79.
Highland noted that extended-stay hotel demand, in terms of total room nights sold, rose 2.8 percent year over year as supply increased 4.5 percent to about 619,000 rooms, the fastest growth in four years.
"Extended-stay hotel supply growth is a concern in some markets highly favored by developers, and significant declines in ADR have occurred," Highland said in the report. "Consequently, new extended-stay hotel development is being deferred in certain markets and national growth in supply might plateau or even decline over the near term."
The Highland Group partner Mark Skinner in a statement added that "national supply growth could plateau or even decline over the near term."