We believe the hotel and lodging sector acts as an effective economic barometer as it uniquely captures both leisure and business spending across various income levels.The lodging ecosystem includes many specialized participants, and the HOTL index is a concentrated portfolio that seeks to provide access to leading global management teams in the hotel and lodging sector.
One of the specialized areas within the hotel and lodging sector is the extended stay hotel sub-sector that is seeing demand from consumers and institutional investors. HOTL Index has exposure to the ‘extended stay hotel sub-sector’ via top-ten constituents:
- Candlewood Suites a chain that is part of the InterContinental Hotels Group
- Hawthorn Suites operated by Wyndham Hotels & Resorts and plans to launch its first economy-level, extended-stay brand this spring
- Homewood Suites and Home2 Suites operated by Hilton Worldwide
NBC News covered the importance of the sub-sector by stating:
As travel picks up and the phenomenon of remote work continues to blur the lines between business and leisure, extended-stay hotels are having a moment. […]
Now, big hotel operators and real estate developers are investing heavily to make that moment last.
“There is a definite blurring of business and leisure that includes longer stays, since employees can work from anywhere,” says Daniel Finkel, chief commercial officer for TripActions, a corporate travel service.
That blur has turned Airbnb and some other vacation rental companies into money-minting machines. During an earnings call last week, Airbnb CEO Brian Chesky told investors that 2021 was the company’s “best year in history.” He also described the changing landscape: Over the past two years, the average stay increased by 15 percent. Stays of a week or more now represent half of all nights booked, and long-term stays of 28 nights, or more, have become Airbnb’s fastest growing type of bookings .
The hotel industry has heard the message.
Although extended-stay hotels still account for less than 10 percent of the total lodging market, their share has been growing, according to STR. And nearly every major hotel brand is adding, or has announced plans to add, properties that cater to travelers looking to stay a while. Chains such as Extended Stay America, Homewood Suites by Hilton, and Residence Inn by Marriott, for instance, are light on amenities, but typically offer more space, full kitchens or kitchenettes, and lower rates than full-service hotels.
Wyndham Hotels & Resorts, which already operates the mid-priced Hawthorn Suites chain, plans to launch its first economy-level, extended-stay brand this spring. CEO Geoff Ballotti announced the launch last week during an earnings call with investors, where he described the extended-stay market as “recession and pandemic proof.”
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