Despite Extended
Stay America's negative third quarter revenue per available room results last
week, the overall extended-stay market is performing well, according to The
Highland Group. Room supply increased 7.6 percent, or by 35,404 rooms over the
past year to September 30, for a total of 500,166. The company noted that this
was the highest change in supply recorded for this segment, and the growth in
supply from new construction was the fastest in a decade.
Demand increased 7.7 percent for the quarter, keeping pace
with supply. The increase was the fastest since the first quarter 2018 and is
ahead of the 1.8 percent gain STR reported for the overall hotel industry. Year-over-year
revenues rose 9.5 percent for the quarter, to $3.95 billion.
"The extended-stay hotel segment is in great shape to
perform well during the cyclical slowdown which is widely forecast over the
near term," said The Highland Group partner Mark Skinner.
Average daily rate rose 1.7 percent, to $106.94, with the
economy segment achieving the highest growth, at 2.7 percent, for the second
consecutive quarter. The Highland Group segments the price divisions as above
$110 for upscale brands, $60 to $110 for midscale brands and under $60 for
economy brands.
RevPAR growth of 1.8 percent was largely driven by the rise
in ADR. All three segments reported positive RevPAR. Occupancy was up 0.1
percent, year over year, to 80.3 percent for the quarter. This is the sixth
straight third quarter that occupancy exceeded 80 percent. Year-to-date
occupancy remained flat at 77.8 percent.