Extended Stay Hotels See Gain In Demand
record levels set in 2008.
Overall U.S. extended stay
occupancy for the quarter increased to 67.7 percent, up 10. 4
percent from 2009 levels. While
extended stay hotel occupancy
remains at its lowest levels in
several years, it still is 15 percentage points higher than overall hotel occupancy reported by
Smith Travel Research.
Bill Duncan, senior vice president of brand management for
Hilton Worldwide’s Homewood
Suites, said the brand recently
has been reaching 70 percent
occupancy, even on Sunday
nights.
“We hit very strongly at the
beginning of the year, and occupancy is now growing from
10 to 15 percent per month year
over year,” Duncan said.
Marriott International president and COO Arne Sorenson
said his company’s extended
stay brands, Residence Inn and
CONTINUED FROM PAGE 3.
TownePlace Suites, were keep-
ing pace with the companies’
other brands in the demand re-
covery. “That business depends
on the projects that compa-
nies announce,” Sorenson said.
“That business will come back,
so we’re in a pretty powerful
place.”
Typically, extended stay ho-
tels lag other hotels in entering
a downturn and are slower to
exit, Highland Group principal
Mark Skinner said. This time,
largely because of the slow-
down in the construction in-
dustry, extended stay hotels in
the economy and midprice tier
actually were the first to see the
decline, he said.
Similarly, extended stay hotels
began to see revenue per available room increase—up 0.9 percent overall and by 1.8 percent
in the upscale tier—in the first
quarter of this year, a quarter
before the rest of the hotel industry saw gains.
“Extended stay hotels will
lead the comeback compared
with overall hotels,” Skinner
said. “Extended stay hotels are
a value buy against a compa-
rable hotel, and very much dur-
ing this recession the consumer
seems to be looking for a better
value in almost everything.”
Occupancy gains have yet
to translate into rate gains for
extended stay hotels. Over-
all extended stay average rate
dropped by 8. 6 percent year
over year in the first quarter of
2010, more than double the rate
of overall hotel industry decline
reported by Smith Travel Re-
search. The largest drops were
in the economy and midprice
tiers. The upscale rate drop was
a more moderate 4. 5 percent.
Skinner said extended stay
hotels would see rate growth by
year-end, particularly as construction begins to taper off. In
the past 10 years, the number of
upscale extended stay rooms in
Tunisair, the national carrier of Tunisia,
operates scheduled service to over 50 destinations
in Europe, Africa and the Middle East.
5% commission on published fares validated on TU/199.
U.S. EXTENDED STAY SUPPLY
CONTINUES GROW TH TREND
Total room supply as of the first quarter
2005 248,362
2006
2007
258,088
266,456
2008
280,805
2009
2010
299,861
316,425
LOWERTIER EXTENDED STAY RATES
DROP SIGNIFICANTLY
Change for rates in Q1 2010 vs. 2009
TIER YOY CHANGE
Total
Upscale
Midprice
Economy
- 8.6%
- 4.5%
- 16.5%
- 10.7%
EXTENDED STAY DEMAND UP
ACROSS ALL TIERS
Comparison of room nights sold in Q1 2010 vs. 2009
TIER YOY CHANGE
Overall
Upscale
Midprice
Economy
16.5%
14.9%
23.9%
5.4%
EXTENDED STAY FIRSTQUARTER
OCCUPANCY ENDS FOURYEAR
DECLINE
YEAR FIRSTQUARTER OCCUPANCY
2005
2006
2007
72%
73%
71.1%
2008
2009
2010
68%
61.3%
67.7%
Source: The Highland Group
Tunisair USA: 285 West Side Avenue, Suite 277, Jersey City, NJ 07305
Call: 201 526 7804 or E-mail: TU@groupsystemsamerica.com
the United States has more than
doubled, and overall supply was
up 5. 5 percent in the first quarter of 2010 from 2009, said the
Highland Group. However, the
number of rooms opened during the quarter was 77 percent
lower than in the first quarter of
2009, and Skinner said supply
growth is likely to drop below 2
percent in coming years.
Even so, major extended stay
brands continue to focus on
growth. InterContinental Hotels
Group recently opened a prop-
erty near Times Square in New
York, which immediately began
seeing occupancy in the 90 per-
cent range, said Gina LaBarre,
IHG’s vice president of brand
delivery for the Americas.
