Intelligent Investment

Extended-Stay Hotels Led the Pack in 2020, But Will That be the Story in 2021?

April 8, 2021 2 Minute Read

By Robert Mandelbaum

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Extended stay hotels led performance in the lodging sector in 2020, but will that be the case in 2021? CBRE EA expects that the second half of 2021 will bring a big surge in business and group travel, which serve as the primary demand drivers for upper-scale hotels. Headlines after this summer should read more to the tune of, “Business travel and delayed vacations return, along with positive performance for upscale hotels.”

Recovery times do vary depending on the type of hotel and, to some extent, the market. For instance, we expect economy hotels to recover by 2022 (based on their robust performance last year), and upper upscale to recover by 2025 (based on how far they need to come to reach pre-COVID levels).

Going forward, brands, owners and operators will have to balance the need to maximize operating efficiencies and profits with the desires of guests for enhanced, or reinstated, levels of service. As occupancy levels rise, operators will want to raise room rates. However, to justify rate increases, it can be assumed the services and amenities cut in 2020 might have to be reinstated.