“An overview of extended hotels”
In a bad global economy during COVID-19, it was a tough time for all the different hotel businesses. However, one segment that outperforms the rest of the hospitality industry is long-stay hotels. They tend to have larger rooms containing well-equipped kitchens and are priced to suit guests on a budget. They provide long term accommodation for people who need to stay; for a week, a month, six months, several years or more, such as businessmen on extended trips, families on extended vacations and / or people looking for more permanent accommodation. This means that these hotels can almost always hope to be profitable and remain stable in the market despite the volatile conditions of the global economy. Extended stay is rebounding despite the pandemic crisis and has reached an all time high in recent years.
So… what are extended hotels?
Long-stay hotels are also referred to as long-stay hotels (sometimes referred to as serviced apartments or serviced apartments). Due to a longer period, extended stay hotels often offer reduced rates. In addition, they have all the necessary amenities like self-service laundry facilities and an in-suite kitchen, and just like traditional hotels, extended-stay hotels vary in price and style. Some offer apartment or studio-style living, while deluxe options have multiple bedrooms, larger square footage, and special amenities like private patios. Some of the extended stay hotel brands are TownePlace Suites, Candlewood Suites, Hawthorn Suites by Wyndham and many more. Home2 Suites by Hilton was awarded the highest rated extended stay hotel brand in the United States of America in 2018.
Let’s move on to statistics …
According to a Savills study in September 2020, they found that the world’s largest operators are showing extended stay properties outperform their other hotel sectors. The result below illustrates the efficiency benefits in the extended stay industry.
IHG reported a 46% drop in revenue per available room (RevPAR) for its extended stay brand – Staybridge Suites – VS, a 59% drop for all brands in EMEA and Asia.
Hilton reported a 41% drop in RevPAR for its extended stay brands – Homewood Suites and Home2 Suites – VS, a 54% drop for all brands globally.
Marriott reported a 46% decrease in RevPAR for its Residence Inn brand, compared to 59% for all brands (North America only).
HVS studies show that the Q2 2020 performance statistics of brands reported by public companies reflecting the resilience of the economy, marks of prolonged stay during the first months of the pandemic.
As the graphs above show, economy, extended stay marks had the smallest impact, although still down 13% on average. In contrast, the occupancy rate of luxury brands has experienced an unprecedented drop of 67% on average. In addition, budget hotels, extended stay hotels and limited-service hotels were less affected by business travel, corporate group cancellations, group size restrictions and convention center closures. .
Marriott International reports that Q2 2020 results showed that of all its brands, Residence Inn had the highest occupancy rate, at around 40%, exceeding 18% at Courtyard and 8% at the Ritz-Carlton. Remarkably, Shares of Extended Stay America Real Estate Investment Trust are up 90% from mid-March, outperforming stocks in other hotel segments. During a presentation to investors in June, the company said 84% of guests who stayed at their properties used the kitchen. Researchers say that in an environment where people are trying to distance themselves socially due to Covid-19, customers tend to cook more at home.
The pandemic seriously challenges the hospitality industry. Customers are unwilling to travel. The level of travel is not at all close to pre-COVID levels despite the lifting of travel restrictions. This has put a lot of pressure on hotel companies. Morris studies in February 2021 showed that “Revenue per available hotel room fell by 50% between 2019 and 2020, and around 25% of all hotels nationwide are at risk of foreclosure.”
“In May, luxury hotels were operating at 15% of their capacity, compared to 40% of budget hotels. These figures suggest that the clientele that budget hotels rely on, such as truck drivers and extended stay customers, still use hotels in Tourists, on the other hand, are not. And these figures indicate that the luxury hotel industry may take longer to fully recover. We don’t know when tourism and hospitality will fully recover. If the current downturn lasts until 2023, many more hotels will be forced to close their doors, a trend that could be particularly common in luxury hotels. “
Overall, the extended hospitality industry outperforms other segments of the hospitality industry, particularly the luxury sectors. However, the key element here is the rebound in customer demand. As a result, PWC predicted some industry recovery for the second half of 2021.