The Rise of Extended-Stay Hotels

The pandemic and the surge in hybrid work arrangements have ignited a robust demand for longer hotel stays, propelling extended-stay hotels to become one of the fastest-growing segments in the hospitality industry. An extended-stay hotel is a reservation-based lodging facility that features a kitchenette or kitchen in each guest room and caters to customers who typically stay longer than seven nights, all without requiring a tenant lease. Offering cost-effective solutions, these properties boast higher margins and lower development costs than full-service hotels, making them attractive for investors seeking higher returns on investment. Recognizing the segment's potential, major hotel companies, including Marriott (Project MidX Studios), Hilton (Project H3), Hyatt (Hyatt Studios), and Wyndham (ECHO Suites), have rapidly expanded their extended-stay portfolios in recent years, with new brand announcements signaling continued growth. As a result of the potential profitability of extended-stay hotels, banks may be more inclined to provide funding for such ventures, particularly those associated with reputable brand families. With this as the backdrop, and digital-forward operating models on the horizon, extended-stay hotels are poised to enjoy even greater profitability and success in the years ahead.