By: Jeremy Gilston - Manager, Client Solutions
By now you’ve probably seen the news that extended-stay hotel development is booming. With many new shovels going into the ground, experts don’t anticipate this growth slowing any time soon. To complement the surge in extended-stay hotel supply and development, we introduced Length of Stay data to our Trendline report, effectively taking the guess work and estimation out of extended-stay investment analysis.
Historically, extended-stay hotel stakeholders have evaluated a variety of traditional performance measures when selecting a market and underwriting an opportunity, including estimating extended-stay demand (7+ night stays) because Length of Stay data was not available at scale. This often led to inaccurate or incomplete valuations. Now, by using our Site Selection Report paired with a Length of Stay Trendline, stakeholders can make better informed investment or divestment strategy decisions by evaluating the typical hotel performance metrics broken out by Length of Stay (LOS).
Trendline Report Details
Kalibri Labs’ client, Mark Skinner, Partner at Highland Group, recently said “For the first time, we have empirical data which provides accurate accommodated hotel room nights distributed by length of stay and ADR. A Kalibri Labs Extended Stay Site Selection Report provides a thorough understanding of an extended-stay lodging market.” - July 2019
Extended-stay hotel stakeholders use Kalibri Labs Length of Stay data to confidently and accurately approach extended-stay hotel acquisition, disposition, and development. Please reach out for a personalized product overview or schedule a demo.
The following is a 4-step geographic-based approach to identifying an extended-stay opportunity using Kalibri Labs LOS data.
Below we’ll compare the seven submarkets of Austin to the greater market performance to identify the best location for an extended-stay hotel.
Kalibri Labs: Austin, TX Site Selection Report March 2019 TTM
The demand analysis profiles 7+ LOS and 30+ LOS reservations broken out by extended-stay and non-extended stay brands to show how much LOS demand exists and which type of hotels are actualizing these bookings. This information for each submarket is then indexed against the total Austin market performance to illustrate relative demand capture for 7+ and 30+ night stays. For example, the Austin South submarket’s 30+ night stay reservations booked at non-extended stay hotels as a portion of the submarket’s total reservations is more than double that of the greater Austin market.
Kalibri Labs: Austin, TX Site Selection Report March 2019 TTM
The supply analysis profiles extended-stay hotel and non-extended stay hotel supply. This information for each submarket is then indexed against the total market performance to illustrate supply by submarket. For example, the Cedar Park submarket’s extended-stay supply as a portion of its total supply is more than double that of the greater Austin Market.
Kalibri Labs: Austin, TX Site Selection Report March 2019 TTM
The Market Opportunity Index, also broken out by 7+ and 30+ LOS buckets, is then a product of the non-extended stay demand index divided by the extended-stay supply index. The theory is that an area with 7+ and 30+ reservations being booked at non-extended stay hotels, that is also underserved by extended-stay supply, would indicate an opportunity for extended stay development. As such, the higher the market opportunity index number, the greater the extended-stay opportunity.
The example below unpacks the Downtown Austin 7+ LOS 218 Market Opportunity of 218:
<Underwriters use the Kalibri Labs Site Selection Report to best identify which market has opportunity based off unaccommodated extended-stay demand and which submarket is the right location to capitalize on the extended-stay hotel opportunity.
Once the market is vetted and the best submarket is selected, performance data for a grouping of hotels should be ordered using the Length of Stay Trendline report to best underwrite the existing or potential asset.