Extended stay hotels outperformed the total lodging industry in September, but the segment’s metrics were mixed, according to the latest report from The Highland Group, a consultancy. Mark Skinner, partner, said, “September was a mixed month for extended stay hotels as demand growth lagged the change in supply and the increase in ADR (average daily rate) was not enough to stop RevPAR (revenue per available room) contracting for the first time in six months.”

Among the report’s highlights:

• Extended stay room supply gained 3% in September, an uptick compared with the average monthly increase over the last two years. September marked 36 consecutive months of 4% or less supply growth, and the annual change in supply has been less than 2% for two years. Both these metrics are well below the long-term average.

• Total extended stay demand gained 1.1% in September and represented a positive change in demand in 21 of the last 22 months. Comparatively, STR/CoStar reported all hotel demand fell 1.5% in September.

• The decline in extended stay hotel occupancy in September (down 1.8%) was the first in the last six months but smaller than the 2.5% contraction STR/CoStar estimated for all hotels. Extended stay hotel occupancy in September was 11.1 percentage points higher than the total hotel industry, which is consistent with the historical long-term average occupancy premium.

• Following monthly declines in February and March, which were the first in three years, extended stay ADR increased for the sixth successive month in September, but the gain was the smallest over the period and lower than the 1.2% increase STR/CoStar reported for the overall hotel industry.

• After posting five consecutive monthly increases, extended stay hotel RevPAR declined 1.4% in September. The contraction was fractionally worse than the 1.3% fall in total hotel industry RevPAR as estimated by STR/CoStar.

Image: Marriott