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The Highland Group reports US extended stay hotel ADR increases of 30 per cent as supply growth falls

Felicity Cousins May 4, 2022 US: The Highland Group, which has released its March extended stay bulletin, has found extended stay hotel ADR has increased 30 per cent, as supply growth falls to an eight year low.

The monthly report, which surveys data from a select group of economy, mid-price and upscale extended stay hotels, shows extended stay hotels continued a positive start to 2022 in March with record high demand and monthly RevPar up by more than 35 per cent compared with March last year. 

This was the strongest monthly gain since rates started increasing one year ago – and the third consecutive month of accelerating average daily rate (ADR) growth. 

Occupancy at extended stay hotels has also increased by 4.5 per cent over the last year, predominantly in the mid-price and upscale segments. Demand growth these segments was also considerably faster than the economy segment, which is nearing capacity nationwide at around 80 per cent. 

Upscale extended stay hotels endured the largest fall in demand in 2020 but had the greatest rebound in 2021 with an 8.6 per cent change. All three segments reported record high demand in March this year.

At 2.8 per cent, the change in monthly room supply was the lowest since 2014 and the sixth consecutive month of 4 per cent or lower supply growth. March’s supply change further indicated that extended-stay hotel supply increases should be well below pre-pandemic levels during the near term. 

Mark Skinner, partner at The Highland Group said: “Extended stay hotel growth in demand and ADR are expected to moderate over the near term but with supply increases at an eight year low, the outlook for strong gains in RevPar remains very good”.

For more insight into the US extended stay sector check out the recent webinar US Extended Stay: Will the bubble burst?

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