At mid-year 2016 there were more than 40,000 extended-stay hotels rooms under construction in the U.S. This is the highest number at any mid-year or year-end point for at least 17 years. Despite the opening of more than 20,000 rooms over the last year, there was only a small decline in extended-stay hotel occupancy and room rates grew at twice the pace of the overall U.S. hotel industry.
Recent levels of supply and demand growth indicate that extended-stay average occupancy in 2016 should decline from 2015. RevPar for the year should be up 3 to 4 percent. However, historical precedent portends that new supply will cause occupancy to decline and exert downward pressure on revenue growth for the remainder of 2016 and into 2017.
