CRYSTAL CITY, Va. — The extended-stay hotel segment is still having its moment. In fact, its shine may have never been brighter. The asset class, characterized by long stays, from several days, to weeks, to months, and design elements, such as in-room kitchens and onsite laundry facilities, accounted for 611,000 rooms in the U.S. as of May 2025, which is more than 10% of all room supply in the country. It is estimated that the segment will generate around $20 billion in revenue in 2025.
National brands like Homewood Suites, Residence Inn, Home2 Suites, WoodSpring Suites, Staybridge Suites, Suburban Extended Stay and Extended Stay America have operated in the segment for years and have recently been joined by extended-stay upstarts, including LivSmart Studios by Hilton, StudioRes by Marriott, Hyatt Studios and Echo Suites Extended Stay by Wyndham—all of which operate in the economy to midscale segments.
Extended-stay hotels are unique and distinct from traditional transient hotels, which fueled discussion during the ExStay Conference ESLA Workshop, held at the Westin Crystal City. While total U.S. lodging occupancy still lags pre-COVID levels, said Kristine Kacarab, senior director, enterprise sales for Kalibri, demand remains strong in the extended-stay segment, particularly in the lower-end of the market.
Extended-stay trades on both doom and cheer—a value option for vacationing families on a budget and traveling workforces, such as in construction, but also a need when there is family displacement, job loss, divorce or other intervening factors. During and after COVID, the segment outperformed. “On an annualized basis,” said Mark Skinner, a partner at The Highland Group, which specifcally studies the extended-stay market, “demand has never declined for extended stay,” adding that the segment typically weathers storms better than other types of hotels.
Still, it’s choppy, dynamic times, an economy where consumer confidence ebbs and flows on a monthly basis. Boring times they are not, but tedium is actually something many hoteliers in the space are after. “Boring times are not bad times,” said Vinay Patel, president and CEO of Fairbrook Hotels, which currently has four extended-stay hotels in its portfolio. “Make money and move on.”
Mark Carrier, president of B.F. Saul Company Hospitality Group, which owns and operates hotels across chain scales, doesn’t shy away from fluctuations in the greater economy, calling rollicking times “kind of fun,” though dmitting that there is market pressure, especially on the expense side, where necessities, such as property insurance, are up, against a backdrop of higher interest rates.
Carrier said that in order for owners and operators to achieve pricing power, an occupancy rate of 65% is optimal. Extended-stay hotels reached an occupancy rate above 70% in Q4 2024 versus 60% for traditional hotels. “We don’t create the demand, we reflect it,” Carrier said. His overall development ethos rests on the idea of understanding why someone would need to stay in a particular market and then select a business model for it. “Extended stay is flexible,” he said. “When we look to build, we look at extenced-stay models first.”
More To Come
New extended-stay supply is increasing with the addition of new products. According to The Highland Group, new extended-stay rooms in the market have increased 115,000 since 2019 and Skinner said that demand is growing more slowly than new supply. Deal volume, according to Emily Feeney, senior director of capital markets at Noble Investment Group, is also a laggard. “We are busy in acquisition and new construction,” she said, but “dispositions are frustrating.” She said there remains a wide bid/ask spreak, which has caused the stagnation in transaction activity. The goal of Noble, Feeney said, is to have 100 extended-stay hotels in its portfolio, calling it a target of CEO Mit Shah.
New development also has its perils, observed Patel. “The challenge is the risk that it will take two to three years before making any money,” he said, though he added that extended stay is less risky. Then there are the other inconstants: permitting, entitements, budgets, leading to will the hotel open on time?
Extended-stay hotels are typically easier to develop than other asset types with a streamlined operating model that typically is less labor intensive and absent costs like food and beverage. Noble’s Feeney said that while it can be difficult to convert a traditional hotel to extended stay, due to things like plumbing and electrical, the company isn’t afraid of ground-up development with a specific land piece in mind. “To reduce risk, we look for a piece of land that fits a mold: a 2-acre site that is zoned and entitled,” she said.
Brand Imprint
Developers build hotels. Operators run them. It’s up to the brands to make sure they are a market success through their networks, loyalty programs and other services and systems. Lodging companies, and their attendant brands, are laser focused on growth—what the segment refers to as net unit growth, or the ability to generate rooms in development and openings. As extended-stay hotels remain and become more popular with the traveling public, lodging companies have set out to satiate it. It’s compelled companies like Marriott, Hilton and Hyatt, all three that for years eschewed lower chain scales, to create brands in those segments, some of which specific to extended stay. They join others who have been mainstays in economy and midscale, such as Choice Hotels and Wyndham Hotels.
One thing is certain, as explained by Talene Staab, brand leader of of Home2 Suites by Hilton, all extended stay is not created equal. “You can’t lump it all together,” she said. Hilton launched midscale extended-stay brand LivSmart Studios in 2023 and recently opened its first property in Tullahoma, Tenn., with another to come later this year in Kokomo, Ind. LivSmart complements Hilton’s other legacy extended-stay brands, Homewood Suites and Home2 Suities, which operate in the upscale and upper-midscale chains, respectively. Since extended-stay is unique, Staab warned that you have to operate them differently than transient hotels. “People get excited by extended-stay performance, but if you start pricing them with transient ADR, then GOP erodes,” she said. At the same time, she challenged the notion that people who stay at extended-stay hotels are different customers than those who stay at other types of hotels. “It’s about reason for stay,” she said, “different stay occassions,” adding that Hampton Hotels, one of Hilton’s legacy, best-performing brands, acts as a funnel to Home2.
Choice Hotels International has long been a player in extended stay, with brands including WoodSpring, Everhome Suites, Mainstay Suites and Suburban Studios. Though new competition in the space is inevitable, Matt McElhare, VP and extended-stay segment lead for Choice Hotels, calls more brands “a new phase,” where driving franchisee value has never been clearer. “They look to harness the power of large brand organizations, [leveraging] their marketing and loyalty strategies and global sales. It’s about driving length of stay,” he said.
McElhare said that Choice recently signed a $500-million lending facility with Apollo to develop Everhome Suites.
LOS, or length of stay, is a major factor in extended-stay success, accounting for typically higher occupancy rates than other asset types. While transient hotels usually have a stay length of two to three nights, extended-stay hotels can generate stays of a week or more, or even months. This is compounded with the shortage of multifamily housing currently in the U.S., voiced by Chet Patel, SVP of Baywood Hotels, which owns and operates hotels. It’s also impetus for more extended-stay stock being built or converted to. “The lack of apartments fuels development from a brand side, and all at once,” he said, though adding that financing and development costs have slowed it down some.
Length of stay has always been a driver for Marriott, whose success with brands like Residence Inn and TownePlace Suites has made it a force in extended stay. Like Hilton, it recently created a midscale extended-stay brand in StudioRes, which opened its first property in June, in Fort Myers, Fla., and in partnership with Concord Hospitality and Whitman Peterson.
At the time of the opening, Mark Laport, president and CEO of Concord, said that part of the reason they got interested in the lower-end extended-stay segment was because it was already gaining institutional interest. “That was very important to me,” he said. Historically, the lower segments of extended stay were mom-and-pop kind of assets, where cap rates, for example, were higher on exit. They were not the strongest type of investment. But when real estate titans like Brookfield began to embrace the concept, it changed the game. In 2018, Brookfield acquired 110 WoodSpring properties from investment firm Lindsay Goldberg for around $750 million. Four years later, it sold the portfolio to Blackstone and Starwood Capital for more than $1 billion.
Ron Stewart, SVP of lodging development for midscale brands North America for Marriott International, said that when developers propose a site for extended-stay development, “we put our lens on it and see what fits,” considering variables like potential occupancy and LOS. Marriott uses companies like Buxton, which provides location and marketing intelligence so companies can decide what types of real estate may succeed. He’s bullish on the extended-stay asset class: “It drives success and better margins,” he said, alluding to its streamlined and limited operational model.
In order to make lower-end extended-stay models even more compelling to potential franchisees, companies like Marriott have turned to bundled fee packages that include things like the franchise fee, systems fee and loyalty fee. “The costs have to be midscale friendly,” he said.