Covid has certainly disrupted most every industry but out of the rubble this particular asset class is on the rise.
They may not have buzzy nightclubs or champagne bubble baths like some hotels, but one analyst told The Wall Street Journal that, for investors, extended stays “print money.”
At extended stay hotels…
… guests typically check in for 1 week to several months. They differ from traditional hotels in a couple of ways:
- They have cheaper nightly rates
- They come with kitchenettes
- They swap posh amenities for things like laundry and mail services
They’re also cheaper to operate:
With less guest turnover, hotels save on cleaning and staffing costs. And because guests frequently cook for themselves, they don’t need full-service, on-site restaurants and bars.
Plus, as they have proven, they can weather a pandemic, which is exactly what every investment portfolio needs to mitigate Wall Street.
At the onset of the pandemic, extended stays were used by health care and military personnel. In 2020, revenue per available room fell 48% YoY for traditional hotels, but only 33% for extended stays.
And now, experts say the lodging once popular with business travelers is attracting remote workers and vacationers, who are into the autonomy, low contact, and convenience they provide.
In 2021, extended stays enjoyed an average occupancy rate of 73% compared to 56% for hotels in general.
Perhaps actor Richard Harris had a valid point. He once said he lived in London’s The Savoy Hotel because “if you’re paying the mortgage on a home, you can’t ask the bank manager to fetch you a pint.”
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Source: The Hustle