Most extended-stay hotel performance metrics were well below the overall hotel industry in January, according to The Highland Group, a consultancy. The decline in extended stay demand was relatively large and the increases in average daily rate (ADR), revenue per available room (RevPAR) and revenues were comparatively small. Furthermore, economy segment extended-stay hotels posted their tenth consecutive monthly decline in RevPAR and the mid-price segment recorded its second successive monthly fall in revenues for the first time in three years.

Mark Skinner, partner, said it is unusual to see both extended-stay hotel demand decline and, during a winter month, the sector under-perform the overall hotel industry by such a wide margin. He said bad weather impacting the construction industry is likely to have been a significant factor in January.

Almost all performance metrics for extended stay hotels were lower than the overall hotel industry, according to the report . Except in the pandemic year of 2020, annual demand for extended-stay hotels has never declined in 25 years and monthly contractions are infrequent over the period. Weather was likely to be a factor in January as the construction industry is a major generator of extended-stay hotel demand, especially at lower price points.

Despite all the negatives, according to the report, extended-stay hotel occupancy in January was 14.4 percentage points higher than the total hotel industry which is within the historical long-term average occupancy premium.