In a COVID-19 World: Extended Stay Hotels Have the Advantage

Extended Stay America - New York City - LaGuardia Airport - Exterior
Extended Stay America – New York City – LaGuardia Airport

Kalibri Labs has released a Special Report evaluating U.S. hotel performance using unique length of stay and rate category metrics for March 2020, the first month of the COVID-19 pandemic, with comparisons to Full Year 2019. The report specifically illustrates the distinctions between the Extended Stay Hotel category and the traditional hotel model as well as delves into Upper Tier and Lower Tier Extended Stay Hotel performance. Business mix plays a significant role as a driver of performance, with pronounced differences in COVID-19’s impact by hotel category, length of stay, and rate category.

Extended Stay Hotel Guest Paid RevPAR performed 14.4% better than the Non-Extended Stay Hotels in the Total U.S. during the first full month of COVID-19’s impact, March 2020, which is the only month in the last 5 years that this has occurred. Lower Tier Extended Stay Hotels specifically drove the Extended Stay resiliency at a -30% March 2020 year-over-year Guest Paid Revenue compared to -48% for Upper Tier Extended Stay Hotels and -54% for All Non-Extended Stay Hotels.

Cindy Estis Green, Kalibri Labs CEO comments, “in this difficult period facing the hotel industry, we are pleased that the insights driven by the Kalibri Labs unique database can provide visibility into critical factors such as length of stay and rate categories. This Special Report contributes to our objective to enable better informed decision making for all sectors of hospitality. Understanding the composition of hotel revenue is essential to building the plans for recovery.”

This report features several cuts of U.S. Hotel performance to provide additional context and performance metrics on the COVID-19 impact as it relates to Extended Stay Hotels.

Key Takeaways
Many of the fundamentals that made Extended Stay Hotels attractive over the last decade also mitigated its COVID-19 impact:

  • In 2019, 40% of Extended Stay Hotel revenue was driven by demand staying 7 nights or more as compared to 9% for Non-Extended Stay Hotels
  • In March 2020, longer length of stay hotel demand was not as severely impacted as the shorter length of stay hotel demand
  • In March 2020, Extended Stay Hotels’ largest contributing rate categories, Rack/BAR and Corporate, declined significantly less than Non-Extended Stay Hotels

Within Extended Stay, Lower Tier Extended Stay Hotels were the least impacted by the COVID-19 crisis:

  • In 2019, Lower Tier Extended Stay Hotels captured 22.4% more of their business through Rack/BAR and 3.1% more from Corporate in 2019 than Non-Extended Stay Hotels
  • In March 2020, shorter length of stay business (1-6 nights) was impacted the most in both Extended Stay categories, but Lower Tier Extended Stay Hotels proved more resilient across all length of stay tiers.
  • In March 2020, Lower Tier Extended Stay Hotels’ largest-producing rate categories, which encompassed almost 60% of their Actualized Room Nights in 2019, experienced the least reduction in demand