Editor's Note: As the hospitality landscape evolves, extended-stay hotels have emerged as one of the fastest-growing segments, driven by shifting traveler needs, remote work trends and the demand for flexible accommodations. In 2026, Hotel Management is debuting a dedicated column on extended-stay properties to provide insights, strategies and innovations shaping this dynamic category. Our goal is to help owners, operators and investors navigate in this space.
The long-term relationship between the annual change in RevPAR for extended-stay hotels and comparable classes of all hotels is highly correlated. However, during contractionary periods extended-stay hotels usually experience lower RevPAR loss and recover more quickly than their respective classes of all hotels, especially at lower price points. This occurred during the years impacted by the pandemic and is repeating itself during the current hotel industry downturn. Furthermore, extended-stay hotels are continuing to gain market share.
The pandemic-induced downturn started in March 2020. The table following shows that economy extended-stay hotels more than recovered RevPAR losses by 2021 and mid-price extended-stay hotels achieved the same the following year. All hotel segments presented had recovered by 2023. However, economy and mid-price extended-stay hotel RevPAR recovery indices were higher and have remained so through Q3 2025.
The current hotel industry downturn started in April 2025 with declines in RevPAR reported each month through September. The economy class segment has endured the highest RevPAR loss while luxury hotels have increased RevPAR. Largely, economy and mid-price extended-stay hotels have been least impacted by the downturn in 2025 and the segments still have some of the highest RevPAR indices within the hotel industry, as shown in the following chart.
Mainly because of a relatively high concentration of room revenues in urban sub-markets upscale extended-stay hotels lagged the initial post pandemic RevPAR recovery. However, the segment is gaining compared to all upscale class hotels during the current downturn.
The following chart compares monthly changes in RevPAR between total extended-stay hotels and all hotels with upper upscale and luxury segments removed from the latter because they include negligible extended-stay room supply and their relatively strong performance distorts the broader hotel industry trend.
Summer leisure travel usually has a greater positive impact on the overall hotel industry compared to extended-stay hotels but RevPAR losses were very similar during summer 2025 and the ratio of total extended-stay RevPAR to all hotel RevPAR increased slightly year-to-date, as shown in the next chart.
As shown in the following graphs and charts, extended-stay hotels reported larger RevPAR increases than corresponding classes of all hotels early in 2025, after which monthly declines in RevPAR were mostly lower. All three extended-stay segments recorded RevPAR increases compared to corresponding classes of all hotels year-to-date through 2025 and the largest relative gain was in the economy extended-stay segment.
All extended-stay hotels derive some demand from the residential market, which is largely immune to cutbacks in government, corporate and discretionary travel. The amount of residential demand accommodated at extended-stay hotels is inversely related to price. Therefore, it is greatest in the economy extended-stay hotels and this is a main reason that the segment incurred relatively low RevPAR losses during the prior and current hotel industry downturns.
Another factor favoring extended-stay hotels during contractionary periods is that demand usually increases even as total hotel demand declines. Annual total extended-stay hotel demand has never declined for the last 27 years except for in 2020. Aside of the leap year impact in 2024/2025, extended-stay hotel demand has increased in 33 of the past 34 months. As shown the next graph and chart, extended-stay demand has gained year-to-date through Q3 2025 compared to the same period in 2024 as demand for all hotels has declined.
While annual extended-stay hotel demand growth is lower than its long-term average and it has been less than the gain in supply for the last nine consecutive months, it has enabled extended-stay hotels to maintain their occupancy premium above the overall hotel industry as shown in the following graph.
The occupancy premium usually widens during contractionary periods, peaking at 14.1 percentage points in 2021 before settling at around 12 percentage points for the next four years. Extended-stay hotels’ occupancy premium has remained stable in 2025 despite far higher room supply growth than all hotels, as shown in the next graph.
Excluding 2021 and 2022 when total hotel industry room revenues rebounded from the pandemic, extended-stay hotels’ share of hotel industry room revenues has increased every year since 2011. As shown in the following graph, market share of supply, demand and room revenues increased during the expansionary 2016–19 period, the share of demand and room revenues peaked in 2020 and all three metrics continued to grow from 2022 through the downturn, which began in April 2025.
The near-term outlook for extended-stay hotels is summarized below:
- Monthly RevPAR losses are unlikely to reverse until Q2 2026.
- Some sub-markets will experience increasing supply and declining demand.
- National supply growth is expected to plateau and possibly decline.
- The sector is forecast to continue growing market share.
Footnote: The data in the article is through Q3 2025.
Mark Skinner, ISHC, is partner with The Highland Group.
This article was originally published in the January edition of Hotel Management magazine. Subscribe here.