Total extended-stay hotels set new fourth quarter records for supply, demand, ADR, RevPar and room revenues in 2023.
However, like the overall hotel industry, occupancy fell as ADR and RevPar growth slowed throughout the year, resulting
in the smallest Q4 increase in extended-stay hotel RevPar since 2019, excluding contractionary periods.
Although extended-stay hotel supply growth increased incrementally over 2023, it remains very low. The last time supply
growth was consistently near its current level was from Q4 2010 through Q3 2014. Supply increases during this period
stayed below their long-term historical average for 20 consecutive quarters and the federal funds rate was about 10
times the current level. With interest rates and constructions costs likely to remain relatively high, the risk of extended stay hotel over supply nationally is very low in the near term, despite the launch of several new brands. Most forecasts for the hotel industry project 3% to 5% gains in RevPar in 2024, and the correlation between overall hotel industry and
extended-stay RevPar trends is very high. Consequently, extended-stay hotels should set more new performance
records during the near term.
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