The rise in remote work, the resurgence of air travel, inflation-driven price-consciousness, government funding for infrastructure projects and higher labor costs for full-service hotels have contributed to an increase in demand for extended-stay hotels. In response, many of the major U.S. hotel chains have recently announced plans for new extended-stay hotel brands. Choice Hotels International, Inc. announced Everhome Suites in January 2020; BWH Hotel Group (Best Western) announced the launch of HOME by BWH in October 2022; Wyndham Hotels & Resorts announced ECHO Suites Extended Stay by Wyndham in November 2022; Hyatt Hotels Corporation announced Hyatt Studios in April; Hilton announced Project H3 in May; and Marriott announced Project MidX Studios in June. Outside the U.S., French multinational hospitality company Accor S.A. announced the creation of Accor One Living in January and in May, Marriott announced the acquisition of City Express by Marriott in Latin America. The U.S. hospitality industry had 51.5 million extended-stay room nights available in the first quarter of 2023, up 43 percent from 2016, according to Axios (citing data from a report by The Highland Group).

Extended-stay hotels are less expensive to operate. Smaller common area footprints (efficient, less grandiose lobbies and no full-service restaurants), weekly rather than daily housekeeping, fewer check-ins/check-outs, reduced laundry expenses (towels and bedsheets are not changed as often), reduced hotel toiletry costs (more resourceful use of toiletry products) and a higher percentage of direct/online booking (thus less travel agent commissions) all contribute to lower costs. Labor costs at full-service hotels were approximately 24 percent higher in 2022 than the year before, while costs at extended-stay hotels increased by just under 12 percent, according to The New York Times (citing a study by Actabl).

Extended-stay hotel revenue has been growing at a CAGR of 3.2 percent over the past five years (2018 to 2023), including an estimated 2.9 percent increase in 2023, according to IBISWorld, which states that revenue is expected to total $20.9 billion in 2023, with profit set to reach 18.1 percent. Hotel News Resource reports that over the past 10 years, globally recognized hotel brand families have expanded their extended-stay portfolios by more than 50 percent—a CAGR of 7.1 percent versus 3.2 percent for the U.S. market as a whole.

Last Updated on August 6, 2023 by Ramin Seddiq