Extended-Stay Sector faces pressure as long-term growth holds
Feb 18, 2026 | Source: Hotel Management
While 2025 was a challenging year for the hotel industry as a whole, the extended-stay market has generally outperformed other segments, according to the industry experts.
“Extended-stay hotel RevPAR has declined for eight consecutive months but the loss has been less than corresponding classes of all hotels especially at lower price points,” said Mark Skinner, partner at the Highland Group, a consulting firm tracking the extended-stay hotel market.
Extended-stay hotel supply growth accelerated during 2025, according to the Highland Group data. The 5.1 percent increase reported in the fourth quarter 2025 was the first quarterly gain to exceed the long-term annual average increase since 2019, if the pandemic related distortions in 2020 and 2021 are excluded. Consequently, except during 2020, extended-stay hotel average occupancy sunk to its lowest fourth quarter level since 2013.
The moderation and distribution of extended-stay hotel supply growth, as well as the performance of the overall hotel industry will be key factors in the timing of a return to positive change in total extended-stay hotel RevPAR, reports the Highland Group.
Excluding upper upscale and luxury segments, which have negligible extended-stay room supply, extended-stay hotels had a good fourth quarter 2025 compared to the overall hotel industry which has downturned since April, according to data from the Highland Group. Coming off a very strong performance in the fourth quarter 2024, extended-stay hotels reported increases in demand and room revenues in Q4 2025; both declined for the overall hotel industry according to STR/CoStar data. Extended-stay hotels recorded a relative gain in occupancy which was 14 percentage points above the overall hotel industry in Q4 2025. Comparative average daily rate losses were the same over the period but extended-stay hotels endured a slightly lower fall in RevPAR.
“Extended-stay hotel RevPAR is unlikely to show positive change until the second quarter of this year at the earliest, after which much will depend on the direction of the overall hotel industry,” Skinner surmised.
Kevin Davis, Americas CEO at JLL Hotels & Hospitality, remains long‑term bullish on the market but near‑term cautious. However, he sees short‑term structural and fundamental challenges that the sector is working through.
The market performance is being hit by the same K-shaped economy that the rest of the hotel industry is feeling: Luxury is outperforming while further down the chain scale are underperforming with negative RevPAR growth. “A lot of the consumers that frequent those properties are, unfortunately under just economic facing economic challenges, and are not traveling as much,” he said. “That is having an impact on performance of many extended stay assets that play in those various chain scales.”
Extended stay has improved its familiarity and appeal among the traveling public in recent years. More travelers understand the beneficial comforts and flexibility the segment offers – whether that’s for solo travel, with friends or family, or even with their pets, said Justin Alexander, vice president of global brand management, Holiday Inn Express, Staybridge Suites and Candlewood Suites, IHG Hotels & Resorts. "As a result, we expect a stronger shift away from transient hotels and short-term rentals and towards true suites properties for short- and long-term bookings," he continued. "This gravitation is particularly notable in urban and suburban markets, and potentially beneficial as more travelers consider suites brands for stays against the backdrop of tentpole cultural moments such as sporting events, conventions or concerts."