Extended Stay America And Others Win During Pandemic


Now, how about a little, um, pop-up pop quiz?

You. Put…the…iPhone….down.

Okay, then. What did Marilyn Monroe. Elizabeth Taylor and, oh, say, Tennessee Williams, have in common?

Whether compelled by business reasons — or simply because it was how they rolled – the trio lived in hotels. Probably beat the price of real estate. Even back then. Even for them.

Seems they were onto something.

Today, at least temporarily, a number of individuals – you know, us regular joes – also call hotels or motels la casa. Perhaps they’re working on location for relatively limited time on a short-term out-of-town job and, given the paucity of housing in many parts of the United States, other accommodations are nearly impossible to snag. 

The U.S. had a shortfall of 3.8 million homes in 2019 according to a report from Up for Growth, a research group, according to marketplace.org. Today, the shortage is significantly larger than in 2012, which explains why home prices and rent have thus far escalated as much as they have.

Among the top 20 cities short on housing, those most represented are located in the south, such as Charlotte, North Carolina, Austin, Texas, and Charleston, South Carolina, according to deedclaim.com.

Twenty-four metro areas out of 149 in the U.S. are in the cross hairs of a housing deficit, according to the site.

Furthermore, too few homes were built to meet demand in places like San Francisco, Los Angeles, and New York, according to the nytimes.com.

This is where extended stay hotels can serve as a home away from home for many of those on a job taking them on the road for an extended period.

For example, Extended Stay America prides itself on “the right level of simplicity and functionality,” Mark Williams, Managing Director of Franchise Development, told The Mortgage Note.

Williams said the pandemic generated “unprecedented hurdles” for the hospitality industry.

As a “pure-play extended stay hotel company,” he noted that the hotel continues to serve as a temporary home for traveling medical professionals, construction workers, government and military personnel, traveling professionals, and college students.

The hotel achieved an average occupancy rate of 77% for company-owned hotels and 83.3% for franchised hotels, while occupancy levels remained at 58% industry-wide as reported by STR.

Last September, the largest gain was racked up by mid-price extended stay hotels, according to the U.S. Extended Stay Hotels Bulletin: September 2021, reported Asian Hospitality.com, which covers the U.S. hotel industry. Among their upscale counterparts, ADR and RevPAR indices for upscale extended-stay hotels were nearly similar.

Last year, in July, the U.S. hit 81.8% and extended stay hotels struck their apex in average occupancy, according to a report from The Highland Group, according to AsianHospitality.com.

Since the dawn of the pandemic in December 2020, there’s been a steady uptick in occupancy for the segment. Compared to 2019, in 2020, all three extended-stay rate scales; upscale, mid-price, and economy, reported increased monthly revenues.

According to Lodging Econometrics, there are 1,517 projects and 157,064 rooms in the U.S. extended-stay construction pipeline, hotelbusiness.com reported.

In the fourth quarter of 2022, the occupancy rate of the U.S. lodging industry is predicted to reach 59.2 percent, according to statista.com.

Even during the pandemic, regularly, the performance of extended stay hotels, exceeded and continues to outperform other types of hotels, according to Asianhospitality.com. It’s reached the point where extended stay hotels have further juiced the interest of hotel companies.

The volume of transactions among extended stay assets is expected to remain competitive and active this year with the demand for hotel investments projected to continue unabated, according to phgproperties.com.

There are reasons why extended stay options are popular.

During the height of the pandemic’s initial spread in 2020, Caliber Companies initiated a program called Operation Sleep Safe, which offered nurses and doctors at participating hospitals complimentary hotel rooms.

“By resting away from home, these frontline medical workers were able to keep their families safe from COVID-19 exposure while treating patients at hospitals,” Jennifer Schrader, Calibers, president & COO, explained to The Mortgage Note.

Offering free lodging to frontline medical staff was a very tangible way that we could demonstrate our commitment to our local communities and contribute in a meaningful and immediate way, she continued. “Hotel management teams followed all necessary precautions regarding cleanliness and social distancing, operating the hotels at the highest possible standard to make sure guests stayed healthy.”

For those on a long-running assignment with an out-of-state employer, extended stay hotels can be just the ticket, according to Eric Almond CTO of Gearco, reported Forbes.com. He explained that based on his company’s sampling of 506 true extended stay properties, last year’s metrics showed an average length of stay of 1.7 years with the longest stay coming in just under 33 years — almost 12,000 consecutive nights!

For these guests, true extended stay hotels are, for all practical purposes, a primary residence.

He added that “true extended stay guests” are considerably more apt to embed themselves in the property for a prolonged period. “Hence the category — staying anywhere between seven nights and forever,” the site stated.

At true extended stay hotels, guests are king. In-house guests not only get dibs over new arrivals and they can re-up their stay anytime.

“We’re glad to hear that local leaders are using innovative ways to get people into housing, but we need long-term solutions,” Mike Kingsella, CEO of Up for Growth, told The Mortgage Note. With a national housing underproduction of 3.8 million homes, “we need to remove barriers preventing communities across the country from building more homes in areas where people can access jobs, education, transportation, and community assets.”

Right now, said Williams, the extended stay hotel model is more powerful than ever.

“One of the silver linings from the pandemic has been reshaping our lens on how we view life.”

Read More Articles By Chuck Green:

Multifamily Homes Needed: Will The Demand Be Met?

Lumber Prices Are Toppling, But Will Home Prices Come Down With Them?

Will Biden’s Housing Plan Make A Difference?

Email story ideas to Editor Kimberley Haas: [email protected]