Resiliency of Extended Stay Hotels

Attribution: Branson Convention & Visitors Bureau | Creative Commons License: CC BY-ND 2.0 DEED

In my role as General Counsel for a hotel company, I’m spending more time understanding the hospitality industry. One segment we’ve taken a closer look at is extended-stay hotels.

While the hotel industry took a hit in the face of the economic upheaval wrought by the covid pandemic, the extended-stay hotel segment has proven its resilience, attracting significant investment and development interest. While revenue per available rooms for extended-stay and non-extended-stay hotels is nearly equal when indexed to 2019, extended-stay hotels have seen a supply growth of 17% in the past four years, compared to just 2% for other hotel types.

This robust demand has spurred industry heavyweights like Marriott, Hilton, and Hyatt to launch or reinvent extended-stay brands. The long-stay model also boasts lower labor costs and higher profitability, making it increasingly appealing to investors. Despite concerns about potential market saturation, experts believe the segment still has ample room for growth, as detailed in this recent article from Hospitality Management.