“Demand is at a record high,” said Mark Skinner, partner at The Highland Group, in 2017. “More people are staying at extended stay hotels in the U.S. today than ever before, but what’s also true of the overall hotel industry is that these extended stay hotels are seeing record revenues. Just to put a number [to it], it’s probably $11 billion in 2016, not including corporate apartments, which would be $3 billion. For 2015, room revenue for extended stay hotels was close to $10 billion.”
The ways in which customers are using extended stay hotels are also expanding.
In the past, extended stay hotels were traditionally thought of as something specifically geared toward business travelers working on long projects or relocating. However, it has now become a lodging option for people staying four days or less.
Transient extended stay hotels are a rising star in an otherwise steady hotel industry, especially in the U.S. These properties—often distinguished by having a kitchenette in each room and taking reservations, instead of requiring a lease—saw room night demand go up 5.4 percent in 2016 compared to 2015, according to a U.S. Extended Stay Lodging Market 2017 report from The Highland Group.
That same report found occupancy for extended stay hotels remains steady at just over 75 percent.
To date, there are about 40,000 extended stay properties in the U.S. alone, and that number will continue to grow. Rooms under construction for this category were up 16 percent in 2016 compared to 2015—a record high.
Extended-stay hotels continue to outperform expectations, enjoying enough demand to remain ahead even as new supply weighs down occupancy numbers in some markets, sources said.
According to Price Waterhouse & Cooper (PWC), the following is expected for the extended stay lodging segment in 2018:
- The underlying macroeconomic and industry fundamentals are expected to remain strong.
- Supply growth is expected to reach the long-term average, while demand growth is anticipated to continue to support record occupancy levels.
- Strength in consumer spending and the potential for an uptick in corporate transient demand are anticipated to drive a slight uptick in ADR growth compared to last year, ultimately resulting in the ninth straight year of RevPAR growth—approaching the record for the longest consecutive quarterly growth cycle in over 30 years.
Bed and Breakfasts (B&B)
Typically, Bed & Breakfasts are individual homes that are rented out by the room. They have between four and eleven rooms, and the average Bed & Breakfast has six rooms. The homeowner typically is living on-site and acts as the host for the guests. The average stay is four nights.
AirBnB has emerged as the largest source for marketing individually owned Bed & Breakfast units.
According to the Cushman & Wakefield US Lodging Industry Overview for September 2017, “AirBnB has been characterized as the largest lodging company by rooms/listings, with 3.0 million individual units compared to Marriott’s 1.18 million.”
Wikipedia lists AirBnB’s 2017 revenue at $2.6 billion.
Hotels have evolved over the years to segment themselves for different types of uses. There are luxury, boutique and lifestyle, full-service, focused or select service, economy and limited service, extended stay, timeshare and destination clubs, motels and microstay hotels.
According to the Cushman & Wakefield U.S. Lodging Industry Overview for September 2017, U.S. Operating Statistics for 2016 were just over 5.0 million units. Total dollars spent in hotel lodging was estimated at $149 billion.
Serviced Apartments (also known as Corporate Housing)
Corporate Housing is a term used in the corporate and travel industry to mean a furnished apartment, condo, townhome or house available on a temporary basis to individuals, military personnel or corporations as an alternative to a traditional hotel or an extended stay hotel.
The industry’s trade organization is the Corporate Housing Providers Association (CHPA).
According to the CHPA’s Corporate Housing Industry Report issued March 2018:
- S. corporate housing revenue increased 12.9%, to $3.62 billion in 2017.
- S. corporate housing inventory is estimated at 71,201 units.
- Occupancy in the U.S. was down slightly to 86.4% in 2017.
- Overall, U.S. corporate housing average daily rate (ADR) increased to $161 in 2017.