The U.S. extended-stay market in 2019 added nearly 32,000 new rooms, a 6.9 percent year-over-year increase, the largest such gain in rooms since 1999, according to a new report from The Highland Group.
Demand, up 6.8 percent, kept pace with supply, and occupancy finished at 76.5 percent, the fifth time in the past six years that it was above 76 percent. It was the highest annual occupancy since 2000, The Highland Group reported in its 2020 U.S. Extended-Stay Lodging Market Report.
Average daily rate and revenue per available room ended the year with positive but decelerated growth. Extended-stay ADR was up 1.3 percent year over year, to $104.45. RevPAR increased 1.2 percent, to $79.90.
As of Dec. 31, there were approximately 47,000 extended-stay rooms in the U.S. pipeline. Annual revenues for the market increased 8.2 percent compared with 2018 to an all-time high of $14.4 billion.
Fourth-Quarter Results
Fourth-quarter U.S. extended-stay supply grew 8.3 percent year over year, which was the sharpest quarterly increase for 10 years. Demand for the quarter was 8.1 percent, which led to a 0.2 percent decline in occupancy to 72.8 percent. ADR grew 0.9 percent to $101.70. RevPAR rose 0.7 percent on the strength of the midprice market, which increased 1.5 percent, and despite the economy and upscale segments showing declines
2020 Guidance
The Highland Group expects 2020 U.S. extended-stay room supply to grow 7 percent year over year. Extended-stay RevPAR is on par with STR's overall U.S. hotel market prediction of zero growth. Forecasts, however, were made without considering the potential impacts of the coronavirus outbreak. The continued postponement or cancellation of large group events are not likely to have a major negative impact on extended-stay hotels nationally, wrote The Highland Group partner Mark Skinner in the report. "However, reduced travel related to coronavirus would impact extended-stay hotels, but it is too early to establish a basis for forecasting the impact.
"Fundamentally, the extended-stay segment is very well placed to handle the expected slowdown in RevPAR growth and the potential impacts of the coronavirus," Skinner said.
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