TOTAL EXTENDED-STAY HOTELS achieved new fourth-quarter milestones in 2023, setting records in supply, demand, ADR, RevPAR, and room revenues, according to
The Highland Group. Despite this, occupancy declined alongside the broader hotel industry trend, with slower growth in ADR and RevPAR throughout the year.
Consequently, extended-stay hotel RevPAR experienced its smallest fourth quarter increase since 2019, excluding contractionary periods.
Extended-stay hotel supply growth increased marginally in 2023 but remained very low, the report said. The last time supply growth consistently hovered around
its current level was from the fourth quarter of 2010 through the third quarter of 2014. Throughout this period, supply increases stayed below their long-term
historical average for 20 consecutive quarters, while the federal funds rate was about 10 times higher than its current level.
With interest rates and construction costs expected to stay relatively high, the risk of extended stay hotel oversupply nationally is low in the near term,
despite the launch of several new brands, The Highland Group said.