While no hotel escaped unscathed from the COVID-19 pandemic, extended-stay hotels reported some of the highest occupancies over the course of 2020.
The additional space and kitchen facilities offered by the segment, as well as the budget-friendly price points of most brands, made extended-stay hotels popular with key workers, displaced locals and essential travelers.
While extended stay hotel occupancy dipped in January 2021 amid a second wave of COVID-19 and a slow start to the U.S. vaccination rollout, the segment maintained its occupancy premium over other types of hotels, averaging occupancy 20 points higher than non-extended stay hotels.
In recent weeks, the resurgence of summer leisure travel has narrowed the gap, and while extended-stay hotel occupancy retained the top spot, recording 82.6% occupancy for the week ending July 17, the gap between extended-stay and non-extended-stay hotel occupancy narrowed to only 13 points.
While demand for the segment appears sky-high, average daily rate (ADR) for extended stay hotels has not kept pace. Extended-stay hotel ADR reached $139 for the week ending July 17, its highest level year to date and more than 95% of its 2019 level.
However, despite their lower occupancy, non-extended-stay hotels have reported rates above 2019 levels for each of the last four weeks.
The class makeup that gave extended-stay hotels an occupancy advantage may now be working against them: While mid- to low-tier hotel rates have improved over the course of the year, it’s the luxury segment that has had the most success in regaining ADR.
Non-extended-stay hotels’ pricing power gave them an edge, pushing both revenue per available room and RevPAR index ahead of extended-stay hotels for three of the past five weeks.
The race to the top has served both hotel segments well, with both segments reporting RevPAR more than 90% of the way to its 2019 level for the past four weeks and proving that driving occupancy or ADR can return RevPAR to pre-pandemic highs.
Kelsey Fenerty is a research analyst at STR.
This article represents an interpretation of data collected by STR, CoStar's hospitality analytics firm. Please feel free to contact an editor with any questions or concerns.