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climate have been key drivers of its financial strength. During economic downturns, selectservice and extended-stay hotels typically maintain higher profit margins than full-service counterparts. In 2020, as example, GOP margins reached 26 %— outpacing full-service hotels by 11 percentage points. The lean model, characterized by lower staffing requirements, technology integration, efficient space usage and limited number of amenities continues to fuel its profitability.
Inflation-resistant performance has also boosted investor confidence. In the past four years, the sector’ s EBITDA per available room has grown at a CAGR of 23 %, significantly outpacing the 5 % rate of the Consumer Price Index. These inflation-beating returns have made the sector a reliable
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investment even amid economic volatility.
BRAND PROLIFERATION The U. S. select-service and extended-stay hotel market has witnessed a significant expansion of brands, growing from 184 brands in 2000 to 214 in 2024. Branded hotels in this segment now account for 74 % of the total supply, 9 percentage points higher than the pre- 2000 era.
Leading hospitality companies have responded to changing consumer demand by introducing new concepts, including Atwell Suites by IHG, Everhome Suites by Choice, Caption by Hyatt, Tempo by Hilton, ECHO Suites Extended Stay by Wyndham, LivSmart Studios by Hilton and Spark by Hilton.
Branded hotel supply has
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nearly doubled since 2000, with 3.3 million rooms in 2024, skyrocketing 90 % from 1.7 million rooms at the start of the millennium. This growth outperformed independent hotels by 76 percentage points. As organic supply growth slows due to rising construction costs and high interest rates, major hotel companies have pivoted to mergers, acquisitions and conversions to sustain their expansion. One of the most significant moves in 2024 was Oyo’ s acquisition of G6 Hospitality from Blackstone for $ 525 million, a deal that included all Motel 6 and Studio 6 properties. This shift towards conversion-focused brands, such as Marriott’ s City Express and IHG’ s Garner, signals a strategic approach to growing market share without the financial burden of new |
construction while offering more options to travelers.
LIQUIDITY, LENDING CONFIDENCE Since 2021, the select-service and extended-stay sector has attracted $ 62.6 billion in investment, nearly double the total of the previous four-year period and the highest 48-month liquidity total in U. S. history. Despite a 19 % contraction in investment volume in 2024, mirroring broader trends across the hotel industry, the segment still accounted for nearly half of the country’ s total hotel investment volume.
The appeal of these properties stems from their consistently higher yields and lower volatility compared to other commercial real estate sectors. Since 2007, the sector has maintained an average
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May / June 2025 hotelsmag. com 29 |