While no hotel was spared the COVID-19 pandemic, long-stay hotels reported some of the highest occupancy rates during 2020.
The segment’s extra space and kitchen equipment, as well as budget-friendly pricing from most brands, made extended-stay hotels popular with key workers, displaced locals, and key travelers.
While long-stay hotel occupancy declined in January 2021 due to a second wave of COVID-19 and a slow start to US vaccination, the segment retained its occupancy rate over other types of hotels, averaging 20 points higher than non-extended-stay hotels.
In the past few weeks, the summer vacation resurgence has closed the void, and while extended-stay hotel occupancy remained the top spot, the week ending July 17 saw an 82.6% occupancy, the gap between extended-stay and non-extension hotel occupancy reduced to just 13 points.
While the demand for this segment seems sky high, the Average Daily Rate (ADR) for extended stay hotels has not kept pace. The ADR for extended-stay hotels hit $ 139 for the week ended July 17, the highest level of the year and more than 95% of the 2019 level.
However, despite their lower occupancy, non-extended stay hotels have reported rates above 2019 levels in the past four weeks.
The class composition that gave long-term hotels an occupancy advantage may now counteract them: While mid-to-low hotel prices have improved over the year, it is the luxury segment that has had the greatest success in reclaiming ADR.
The pricing power of non-extended-stay hotels gave them an edge, driving both revenue per room available and the RevPAR index in three of the last five weeks ahead of extended-stay hotels.
The race to the top has served both hotel segments well, as both segments have reported the RevPAR to more than 90% of the 2019 level in the past four weeks and have proven that increasing occupancy, or ADR, has taken RevPAR to the highest levels before the pandemic.
Kelsey Fenerty is a Research Analyst at STR.
This article is an interpretation of the data collected by STR, CoStar’s hospitality research firm. If you have any questions or concerns, please contact an editor.
STR provides world-class data benchmarking, analysis and market insights for the global hospitality industry. Founded in 1985, STR is present in 15 countries with a North American headquarters in Hendersonville, Tennessee, an international headquarters in London and an Asia-Pacific headquarters in Singapore. STR was acquired in October 2019 by CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of information, analytics and online marketplaces for commercial real estate. For more information, please visit str.com and costargroup.com.
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