ROCKVILLE, Md. — Kalibri Labs has released a special report evaluating U.S. hotel performance using unique length of stay and rate category metrics for March 2020 with comparisons to 2019. The report specifically illustrates the distinctions between the extended-stay hotel category and the traditional hotel model and delves into upper-tier and lower-tier extended-stay hotel performance. Business mix plays a significant role as a driver of performance, with pronounced differences in COVID-19’s impact by hotel category, length of stay, and rate category.
In the United States, extended-stay hotel guest-paid RevPAR performed 14.4 percent better than non-extended-stay hotels in March 2020—the only month in the last five years that this has occurred. Lower-tier extended-stay hotels specifically drove the extended-stay resiliency, with a guest-paid revenue decline of 30 percent year-over-year (YOY) in March 2020 compared to a YOY decline of 48 percent for upper-tier extended-stay hotels and a YOY decline of 54 percent for all non-extended-stay hotels.
Many of the fundamentals that made extended-stay hotels attractive over the last decade also mitigated its COVID-19 impact, according to the Kalibri Labs report. For instance, in 2019, 40 percent of extended-stay hotel revenue was driven by demand staying seven nights or more as compared to 9 percent for non-extended stay hotels. In March 2020, longer-length-of-stay hotel demand was not as severely impacted as shorter-length-of-stay demand. Also, extended-stay hotels’ largest contributing rate categories—Rack/BAR* and corporate—declined significantly less than non-extended stay hotels in March 2020.
Within extended stay, lower-tier extended-stay hotels were the least impacted by the COVID-19 crisis. In 2019, lower-tier extended-stay hotels captured 22.4 percent more of their business through Rack/BAR and 3.1 percent more from corporate in 2019 than non-extended-stay hotels. In March 2020, shorter-length-of-stay business (one to six nights) was impacted the most in both extended stay categories, but lower-tier extended-stay hotels proved more resilient across all length of stay tiers. Lower-tier extended-stay hotels’ largest-producing rate categories, which encompassed almost 60 percent of their actualized room nights in 2019, experienced the least reduction in demand in March 2020.
*Kalibri Labs defines the Rack/BAR rate category as, “transient rack rates, best available rates (BAR), and flexible rates. Also includes long-term stay rates, but does not include contract or crew rooms.”