The Highland Group: Extended-Stay Construction Declines, Room to Grow for Boutique

ATLANTA—The Highland Group recently released two reports—the “2019 U.S. Extended Stay Lodging Market Report” and “The Boutique Hotel Report 2019.”

According to the findings, extended-stay occupancy is at an 18-year high as new room construction declines. Despite adding more than 80,000 rooms since 2015, the strongest trend in annual demand growth resulted in extended-stay annual occupancy above 76% for the fourth time in the last five years and the highest annual occupancy since 2000.

For the first time in seven years, extended-stay rooms under construction declined compared to one year ago and the net increase in rooms declined by more than one quarter compared to 2017.

“Despite the decline in supply growth, the timing of the 47,000 extended-stay rooms under construction will still be a major factor in the segment’s performance in 2019,” said Mark Skinner, partner at The Highland Group.

As for the boutique segment, revenues for boutique hotels increased 11% in 2018, more than double for the overall U.S. hotel industry. Demand increased 9% in 2018 for boutique hotels, resulting in a strong collective occupancy of 72%, even with an addition of more than 25,000 rooms.

“Supply has increased 14% and 21% for lifestyle and soft-brand collections, respectively, through 2018; however, over 50 MSAs are underrepresented with boutique hotel product. There is opportunity to develop in this segment,” said Kim Bardoul, partner at The Highland Group.

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