Extended Stay Stays Hot

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By most measures that matter, it seems as though extended stay is still the best segment in which to own a hotel. According to new research from The Highland Group, while the segment endured a 7.2-percent increase in supply in the third quarter, it posted a modest (1.7 percent) increase in demand, a milestone the overall hotel industry hasn't achieved in more than a year.

And while extended stay rates declined more than 11 percent in the quarter, the segment still posted stronger RevPAR results than the rest of the industry. It's no wonder developers love the product, and that's been part of the segment's problem lately. Nearly 7,300 extended stay rooms opened during the third quarter, and another bulge of room openings is forecast for the fourth quarter.

But good signs for the segment are on the horizon. The Highland Group says supply growth will slow significantly in 2010 and, combined with improving demand, the extended stay business should continue its long run as the star of the hotel class.

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