Extended stay hotels added to April’s strong performance metrics in May with growth in demand and revenues well above the monthly averages reported over the last year, according to the latest report from The Highland Group, a consultancy.

Occupancy for the segment increased for the second consecutive month after declining in all the previous 12 months, and average daily rate (ADR) gained for the second successive month following declines in the prior two months. Revenue per available room (RevPAR) also recorded another monthly increase after falling each month from December through March.

Mark Skinner, partner at The Highland Group, said, “May was another good month for extended stay hotels with demand growth achieving one of its largest increases in more than two years.”

Total extended stay demand gained 4.3% in May and represented a positive change in demand in 17 of the last 18 months. Excluding the leap year boost in February 2024, May’s demand increase was the second highest since January 2023 and compared very favorably with the 2.5% growth in demand STR/CoStar reported for the overall hotel industry.

In April extended stay hotels reversed a four-month trend of declining monthly RevPAR and built on that in May with a 2.1% gain, but the increase was lower than the 3.9% growth STR/CoStar estimated for all hotels over the same period. Economy extended stay hotels’ consistent monthly RevPAR declines started more than a year ago. However, May’s 0.5% contraction for that segment was the second lowest over this period and fractionally less than the 0.6% drop for all economy class hotels as reported by STR/CoStar.

Image: Marriott