A look at extended-stay performance during COVID-19
A look at extended-stay performance during COVID-19
11 JUNE 2020 8:51 AM

Data repeatedly shows that the extended-stay segment weathers downturns and other challenges to the hotel industry better than other segments, and the coronavirus pandemic is no exception.

HENDERSONVILLE, Tennessee—The partial shutdown of the American economy has hit the U.S. hotel industry hard, and as many hotels closed temporarily, tens of thousands of service workers were furloughed or laid off. But one segment seemed to have weathered the ongoing storm better than many others: the extended-stay segment.

STR defines the extended-stay segment by grouping similar chains (so no independent properties) into an upper and a lower segment, delineated by year-end average daily rate. The sum of these two sub-segments then makes the Total U.S. Extended Stay segment. Because the brands cross chain scales, STR never separated the extended-stay segment out as its own scale by itself. The segment is part of our regular reporting and has, as of late, come into the spotlight. STR is the parent company of Hotel News Now.

What struck observers first was that the segment, while previously mirroring the U.S. revenue-per-available-room change, had performed slightly better as the industry hit the downturn. And after the data got “less bad,” extended-stay RevPAR changes were outperforming the U.S. overall.

Source: STR, © 2020 CoStar Realty Information, Inc.

The other data point that traditionally attracted investment and owners’ attention was that the absolute occupancy continuously outperformed the U.S. by a wide margin. As shown in the chart below, even in the prior two downturns, the extended-stay occupancy—on an annualized basis—never dipped below 64%, almost 10 points above the U.S. performance trough.

Source: STR, © 2020 CoStar Realty Information, Inc.

And while the impact of COVID-19 on the extended-stay chains is certainly visible in the weekly data, their occupancy performance never dropped as far as the U.S. hotel industry overall and is now recovering much faster.

Source: STR, © 2020 CoStar Realty Information, Inc.

So, while industrywide only roughly a third of all rooms were sold in the week ending 23 May, in the same week, half of all extended-stay rooms were filled. For the week of 11 April, the weakest weekly U.S. industry performance we have ever recorded, absolute demand data shows that 19% of all rooms sold—basically one in five rooms—were extended-stay rooms.

Charting this data slightly differently shows an interesting picture. When plotting the occupancy point premium of extended-stay chains over the industry, the following picture emerges:

Source: STR, © 2020 CoStar Realty Information, Inc.

In other words, almost all throughout the pandemic, extended-stay properties can maintain an almost 20-point occupancy premium over the total U.S. figure.

Dividing the data into its components creates an even more striking image. The lower-end extended-stay properties were able to perform much, much better than even the higher-end extended stay chains.

Source: STR, © 2020 CoStar Realty Information, Inc.

Two things stand out: The lower-end extended-stay chains enjoyed occupancies of more than 50% in the week of 11 April and sold just over 900,000 roomnights. In addition, currently the lower-end outperform the upper-end hotels by almost 20 occupancy points.

When we talk to operators about their demand sources, we do not get one definitive answer about what drives the continued healthy performance of extended stay. Rather, a multifaceted source of guests emerges. Some are construction crews on major projects while others are people in transition to a new job or a new area. Some guests are homeless populations organized by their local municipalities. There are also consultants on very extended assignments. Some are people simply living in hotels long-term.

In normal times, none of these demand sources would ever “move the needle” on their own, but these are not normal times. Industry observers are becoming quite aware of a type of room demand that just never goes away. In other words, for some guests, staying in hotels is just a way of life.

Jan Freitag is SVP of lodging insights at STR.

This article represents an interpretation of data collected by STR, parent company of HNN. Please feel free to comment or contact an editor with any questions or concerns.


  • Mark Skinner June 11, 2020 10:30 AM Reply

    Great article Jan. Hope you and your family are safe and well.

  • Chelsea McCready June 11, 2020 1:42 PM Reply

    Thanks Jan, this is very interesting. A portion of extended stay properties have some level of group demand; I'd venture to guess they would fall into the higher-end category. Do you have segmentation data on the higher-end extended stay properties? If you compare the overall performance of lower-end to just transient performance of higher-end, do they come out more evenly?

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