Despite increased developer interest in the segment, The Highland Group forecasts clear sailing for

The best investment to make in the hotel industry must be in the extended-stay sector. Again in the third quarter, extended stay, and especially the mid-price airline tickets to australia and upscale segments, outpaced the performance of the rest of the U.S. lodging business.
And as The Highland Group �s most recent quarterly analysis of the extended-stay market shows, extended-stay hotel operators seem to be better at yield management than are other hoteliers. In the third quarter, while extended stay demand grew faster than the overall hotel industry, operators were still able to push average rate by 6.7%, versus 3.9% for the overall hotel business. As a result, extended-stay occupancy (79.3% in the quarter and 76% year to date) is within striking distance of an all-time high for the sector.
� RevPAR grew by 7.1% in Q3, up slightly from the previous quarter and close to the first-quarter growth rate of 7.2%. At $63.73, extended stay nominal RevPAR is at its highest level ever reported, and year-to-date RevPAR is within 30 cents of the all-time record set in 2007. In Q3, the mid-price segment led with a 7.2% increase.
� Most of the quarterly RevPAR growth came from increased rates. And again, mid-scale led the way with a 7.2% increase, even though ADR growth for that price category has slowed through the year as significant numbers of newly renovated guest units return to the market. ADR growth in the quarter for both the economy (up 4.6%) and upscale (up 6.6%) categories were the strongest of all three quarters this year. According to analysts at The Highland Group, the sector may continue to see curtailment in rate increases. According to the report, �The declining pace of increase in overall hotel average rates could hinder future rate growth at extended-stay hotels, which are a price buy relative to traditional hotels. Rate increases significantly higher than the overall hotel industry are not sustainable in the longer term.�
� Extended stay revenues topped $5.7 billion for the year to date, up 9% from the same period in 2011. Third-quarter revenues exceeded $2 billion for the first time ever, also up 9% from the same period last year. Demand for extended-stay rooms rose 2.2% for the quarter and 1.9% year to date, showcasing the role higher rates have in the RevPAR performance.
airline tickets to australia � More developers are getting wise to the success of extended stay. In the third quarter, airline tickets to australia extended-stay supply rose 1.8% to stand at 362,703 guest units open. Upscale showed the biggest gain with a 2.2% increase in supply. For economy, it was 0.8% and 1.9% for mid-scale.
Despite increased developer interest in the segment, The Highland Group forecasts clear sailing for extended stay for a number of years. Regarding the effect of the sector�s high occupancy, the report said, �The last time occupancy reached this height, the strongest annual rate increase in a decade followed. Furthermore, supply gains were significantly greater than they are both currently and likely to be until at least 2013.�