Enthusiasm for extended-stay hotels seems boundless among U.S. hotel developers. The national extended stay pipeline is now 44% of supply, up by almost 10% in the last 18 months.

Analysts at Bernstein, led by Richard Clarke, produced a chart in a research note on Thursday that captures the trend — using data from STR, the hotel performance benchmarking firm. The chart shows how extended-stay development takes an increasingly large share of the mix of hotel development.

richard clarke bernstein analysis str data of extended stay hotels in the us june 15 2023
A chart from Bernstein. Data from STR.

The chart has lagging data. Since October, several hotel groups, including Marriott, Hilton, Hyatt, Wyndham, and BWH (Best Western) have debuted new extended-stay brands. The new options may drive developer interest higher.

Looking ahead, which hotel groups are best-positioned to gain from the tailwinds?

“Marriott leads all asset light groups in extended stay exposure, at more than 15% of their global portfolio and 4.5% ahead of Hilton at number 2 — so naturally stands to gain from demand tailwinds. However, Hilton looks best placed to capture supply growth, with its Home2 brand boasting an impressive relative pipeline of 108% of supply, despite being well established with more than 60,000 rooms.”

—Richard Clarke, Niall Mitchelson, and Kate Xiao of Bernstein
What is driving the popularity of extended stay hotels?
Several factors are driving the popularity of extended stay hotels. One reason is the better business model they offer compared to full-service hotels, as they require less staffing due to less frequent guest changeover and housekeeping needs, leading to higher operating margins and return on investment (May 2023, Skift).

Blended travel patterns, where guests combine business and leisure, have also contributed to the demand for extended stay hotels. The resilience of blended travel is expected to continue, further propelling the extended stay category (May 2023, Skift).

Another factor is the long-term demand for extended stay hotels due to the U.S. government spending on infrastructure. Construction managers and workers traveling for nationwide projects require accommodations, and extended stay hotels cater to their needs (May 2023, Skift).

Additionally, the U.S. housing crisis has bolstered demand for extended-stay hotels, particularly in the economy segment. After the 2008 financial crisis, home construction failed to keep pace with demand in many U.S. markets, leading to increased demand for extended stay hotels as temporary housing solutions (July 2022, Skift).

Finally, the extended stay category has gained popularity due to its performance during economic booms and busts, partly due to the housing supply crisis (November 2022, Skift). As a result, many hotel companies have launched or expanded their extended stay brands, further fueling the growth of this segment.

Tags: Bernstein, future of lodging, news blog