Extended Stay Hotels Versus Multifamily

For many real estate investors, extended stay hotels are a bit of a mystery, viewed as a\ distant cousin of limited stay hotels, and catering specifically to business travelers. But those who understand property types like self-storage should find familiar attractive qualities here. Demand is buoyed by major life events (work re-location, temporary dislocation, extended travel needs, etc.) except instead of parking a sofa for six months, the consumer is securing a roof over their head.

Interestingly, unlike other hotel segments, extended stay’s business model has not only exhibited resilience but thrived in the face of the Covid pandemic. In 2020, Extended Stay America Inc. maintained average occupancies of 74% compared to 44% for all hotel types. Perhaps more than any other asset class, it has benefited from the shift to remote work, offering a “best of both worlds” option for employees not tethered to a desk and eager to travel for extended periods. What’s more, the re-opening of the economy brought greater demand for extended housing amongst workers hired for temporary or contract-based positions.